SaaStr

5 Interesting Learnings from Veeva at $2 Billion in ARR
How We Increased Sales Nearly 100% In One Quarter
What to Do When You Are Too Early To a New Market
New SaaStr Annual Speakers!! CEOs of Calendly, Y Combinator, Vimeo, President Shopify and More!!
In The Early Days, What You Think is a “Sales” Problem is More Likely a Marketing Problem

5 Interesting Learnings from Veeva at $2 Billion in ARR

Posted: 09 Jun 2021 07:32 AM PDT

Veeva Systems is a quieter SaaS enterprise giant that if you sell bigger deals, and/or do vertical SaaS, it’s worth learning more about.

CEO Peter Gassner is truly of the most impressive founders I’ve personally met and you can take a look at our deep dive from SaaStr Annual 2017 here not long after they’d IPO’d:

One of many remarkable things about Veeva: it burned about $3m on the way to IPO. Yes, $3m. In basically one venture round and a bit of angel investing. And that’s with a sales-driven, enterprise model.

Fast forward to today, they are growing 29% at $2 Billion in ARR!

5 Interesting Learnings:

#1. Professional Services remains 20% of revenues, even at $2B in ARR. We’ve talked a lot about professional services over this series, and seen folks like Qualtrics and now Veeva sell them profitably, for up to 20% of revenues, and others in the enterprise try to minimize the services revenue and have partners do most of the heavy lifting. Salesforce and ServiceNow do the latter. Different approaches clearly work for different vendors. But it’s interesting to see that even at $2B in ARR, Veeva continues to “in source” professional services:

#2. Revenue has accelerated in 2021 — even at $2B in ARR. It’s incredible how many Cloud leaders today at $1B+ ARR are not just growing quickly, but accelerating. Veeva is another. They are growing than the 25%-28% rate in 2018-2020:

#3. A 2 Product line is key to growth at scale. Veeva has 2 core products — it’s CRM-like Commercial Cloud for pharma, biotech and more, and its Vault product for similar industries. For a while, it seemed like the Commercial Cloud product had matured and Vault would be the future growth engine. Interestingly, at $2B in ARR, both are now making equal contributions. Commercial Cloud growth reaccelerated, and Vault growth normalized:

#4. NRR still going up, at 124% today. We’ve talked a bit on SaaStr about how your NRR often can stay high forever, and Veeva is another great case study. NRR is at 124% today, and that’s up from 121% in 2021 and 122% in 2019.

#5. 1,000 Customers at $2B in ARR. So about $200k ACV on average. And added 59 new customers last quarter. And many are well north of $1m ACV. Another reminder that the enterprise is far bigger than the Fortune 500 and Global 2000. Veeva already has 1,000 enterprise customers alone. And it’s adding 59 a quarter, so that’s another 250 new enterprise customers a year or so. A reminder there are 1000s of enterprise buyers for every leading product.

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How We Increased Sales Nearly 100% In One Quarter

Posted: 09 Jun 2021 05:20 AM PDT

A ways back, I asked Brendon Cassidy, VP of Sales at LinkedIn, Adobe Sign / EchoSign, and Talkdesk to put together his playbook for double sales. I thought it was a great checklist for all of us to take a look at.

Brendon wrote this post about his learnings about how he doubled sales once again in one quarter (the story of how he did it for and with me is here) a ways back at HackerRank, where he served as Interim VP of Sales. But the list works just as well today and with others.

You may be different from Khosla Ventures and YC-backed HackerRank, but take his 8 learnings and see if you are applying the same methodology if you are in the $1m-$10m ARR band. I think you’ll pick up at least one good idea or improvement. — Jason, ed.

….

How We Increased Sales Nearly 100% In One Quarter at HackerRank – Brendon Cassidy

For the past 18 months or so I had tracked the progress of a startup called HackerRank, and their founder Vivek Ravisankar, whom I met through a mutual friend. I thought Vivek was one of the smartest young founders in Silicon Valley. As importantly, he was truly a good guy. What I knew of HackerRank: a good startup that didn't yet have great sales execution.

About 6 months ago Vivek asked me to come in to HackerRank (I was consulting a couple days a week) fulltime to be interim VP of Sales. The mandate: Put HackerRank on a growth trajectory that rivalled the fastest growing SaaS companies in the world. At that time, I was not looking to do anything fulltime. But Vivek is one heck of a recruiter, and for me, the challenge of applying the principles I believe in again for a fairly short, consolidated window….seemed like a fun challenge, but a challenge. So I said I would give him 5 months, through the end of 2015, as the interim VP of Sales. HackerRank was not a $1 million or $2 million ARR business. They had significant recurring revenue and a lot of customers. This was not going to be easy.

The end result: In one quarter we nearly doubled new business and total bookings. In my book none of these changes required any particular genius. Common sense. Just an FYI: I've done some iteration of this 4 times in early stage startups. It's worked every time. Bottom line: the focus needs to be on simplifying at every turn, driving strong black and white themes, and hustling 24 hours a day, 7 days a week. And making some simple but important decisions

Allright. Here is how we did it:

Eliminated Traditional Territories. In my personal opinion, this is simply where most first time startup VPs of Sales just get it wrong. It's not always the right play, but 8 times out of 10 it is. And here is why: You have no idea what the territories are worth. You don't. You don't have enough data. What's most important is that sales people have an equivalent opportunity to be successful. That's a win for several reasons: A) It creates a sense of fairness while eliminating excuses. B) You create an apples to apples analysis of how good your team is. At HackerRank, which is a platform that assesses and ranks engineering candidates, there is a definite theme that 80% of the opportunity is in 20% of the territory. So having reps pound the pavement in Kentucky, Oklahoma, and Kansas is not the same as the Bay Area, New York, or Boston. At HackerRank, they had a traditional enterprise territory model. And not shockingly, the only reps who hit their numbers were the ones in aforementioned territories. Also: If you are expecting your AEs to do their own prospecting…stop expecting it. Not unless your ASP is really high.
Democratized Leads/Opportunities. This follows on the above. Once you've moved off territories — leads and opps can be distributed to the sales people evenly from the SDRs, round robin style. One might ask "well what about prospecting?" That we covered through our outbound SDR team, which does have geographic alignment. But once they get a meeting scheduled, that simply goes to the next person in the rotation, not the territory. In case you missed the memo, 99% of sales people are terrible prospectors. And it does not scale to ask your AEs to create their own dealflow. However, those that can and do prospect, they have an advantage. And they can prospect into any company that lacks an existing opportunity. Remember: Someday you will return to territories. But It's all about the appropriate structure for the appropriate stage.
Centralized Around Inside Sales, Away from Field Sales. Our best sales people were clearly on the ground in the Bay Area. Our remote field sales people were literally closing almost no business, and yet we were flowing the vast majority of strategic opportunities through them. One rep told me on our first call "Everyone knows it takes 6 months to close a deal here." UGH! So not what you want to hear. So, to me, it was a no brainer to start moving our SMB and Midmarket AEs upmarket to handle bigger accounts because they were just plain better sales people. As we managed out the field team, two things became clear: We started closing more business and we started closing it much faster. We did have one phenomenal field sales person (in the UK). And the reason he was and is successful: He is superb. Any remote field sales hire in a startup who is less than superb (I mean elite, 99.99 percentile good)is going to fail 90% of the time. Again, this can and will probably change the bigger you get. Once you are post scale, once you have won your market and are a category winner, then you can double down on a field sales strategy. But not until then more times than not.
Simplified Messaging and Pitch. HackerRank has a lot to show and sell, and needed to step back and lock in on primary themes and messaging. Which we did. Simplify our value points. Black and White. This helped a ton.
Attached concrete, Agreed Upon Next Steps and Success Criteria to (Shortened) Pilots and Trials Too often sales teams think that the pilot is supposed to do the selling for you. You have to do the selling. You have to create the urgency, the triggers, set the value. The trial does none of that for you. Oh yeah, we also limited pilot periods to a max of 30 days (from 3 months). That helped speed up sales cycles.
Rebuilt our SDR Team with Less Reliance on Email and More Focus on the Phone
Moved to a Monthly Cadence instead of Quarterly. You can live on a quarterly cadence if you are Veeva or Betterworks or Workday. (Big ASPs and slower sales cycles). If you are everyone else you have to live on months, not quarters. And yes, it can be a grind. But it will positively impact everything. Enterprise deals close faster. SMB and midmarket deals close faster. It creates more energy. More urgency. More repeatability. And month over month growth. You can go back to quarters when appropriate, which is WAY down the road btw.
We Hustled. Every deal became an analysis of how to make it bigger and close it faster. Every month a sprint from day 1 to day 30. Every opportunity a chance to move the needle, push the envelope. We didn't accept no for an answer. We pushed for reciprocity from customers and we held them accountable to their word. Understand one thing: Until you win, you hustle. And you do not stop until then. You hustle, hustle, and hustle some more. Until you've won.

And that's it. HackerRank now acts, looks, and feels much more like a fast growth (even hypergrowth) SaaS company. They have a chance to win, and win big. However, the key to getting on the right path and sustaining it requires constant vigilance. You cannot lose your hustle. You cannot lose your edge. But better to have the issue of trying to sustain increased growth than not having it at all.

(note: an updated SaaStr Classic case study)

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What to Do When You Are Too Early To a New Market

Posted: 08 Jun 2021 07:57 AM PDT

Folks that were very early to a new market often sort of lament it

Being much more than 24 months early is painful. There just aren't enough customers, that the later entrants benefit from.

But pushed, what they really realize is they should have just stayed in it longer.

— Jason BeKind Lemkin (@jasonlk) June 8, 2021

As a founder, I’ve been on both sides of market maturity.

In my first start-up, we entered a very mature market that was basically a monopoly. That meant it was hard to break in, but once you did, the customers had big checkbooks. We closed $6m our first year (more on that here). It wasn’t easy, but once we had the break-out product the customers wanted — the cash was there. Because the market was mature and budgeted.

The second time, at Adobe Sign / EchoSign, the market was way early when we entered. It was less than $1m in total size, vs. > $2.5B today. More on that here. But once the market finally grew, boy it got big. Not only is DocuSign on a tear, but Adobe Sign was Adobe’s fastest-growing product in 2020 and 2021, and even smaller players are worth hundreds of millions and more:

Some of us are intentional in which type of market we pick — mature and competitive, or new and emerging (and likely less competitive). Some of us really want to compete with a new entrant in a proven market, and explode like a Datadog. Others want to help reinvent or invent a newer space, like Snowflake or UiPath. But I think for most of us, we find a business problem we want to solve. And the state and the maturity of the market sort of ends up what it is.

So what do you do if you are way early? By that I mean, a market is there for your product, but it’s tiny today.

Be conscious that it likely will simply take longer. Assume even 3-4 years longer. So when you see other startups taking off faster, be challenged by that. But also realize your hyper growth may still be a few years out. Think about UiPath for a minute. It took 10 full years to get to $1m in ARR. And then went from $1m to $600m ARR in the next 5 years. More here. Make sure you are your co-founders at least are committed to the fact the journey may just take longer than planned for this reason.
Take advantage of the fact that competitors will quit. In very early markets, new competitors pop up because they think it’s easy. In fact, it often is easy to build a 1.0 in a new market because the feature set you need to be competitive just isn’t as rich as in a more established space. But most of these copycats and new entrants will quit when it turns out the market is a lot smaller, and progress a lot slower, than they realized. Simply staying the course often means you win here.
Keep the team together. Folks on your team may have an even harder time seeing the big picture when growth in the early days is slower than expected. They may start to simply believe the market will always be too small. Keep them inspired. Celebrate every new customer win. Show them how things are compounding, even from a small state. Compound any growing metric out for them, and show them how it will build into something pretty big in 5-10 years.
Lean into relevant partner ecosystems. Even if your market is tiny today, it might still be of high interest to a partner with massive scale like Shopify or Salesforce. You may solve an important problem on those platforms that on its own, is more obscure or less obvious. List on those platforms and try to build relationships and high attach rates. This doesn’t always work, but when it does, it can help grow your market significantly.
Be a thought leader. This can actually work in new categories and markets. A lot of marketers will want to try to turn their CEOs into “thought leaders” and it rarely works in established categories. But in new categories, you often have a shot. You can be an expert in your niche. Talk to anyone that cares about that niche.
Use micromilestones to build confidence. OK, it may take longer to get to $10m ARR in a brand new market. But you can show folks the path forward by instead focusing on interim, micromilestones. Has your user base grown 5x this year? That shows traction — even if revenue is tiny. What about usage? Leads? Focus on some micromilestones early to prove to your team — and yourself — that the market is in fact taking off. Even if it’s still the early days. More on micromilestones here.
Triple lean into customer success. In new markets, if your customers love you, they’ll often find you more customers. They’ll tell other CIOs and other VPs at peer companies how great your app is. This always works, but it works especially well in new markets. No one is doing a Google search for your solution yet. But get folks talking about how awesome it is, and that helps bridge the gap.
Stay in the game. Related to point #2, but it’s so important. And it may sound trite or obvious, but it isn’t. When you enter a new market, your gut may be wrong. You may not see the progress you are making. It may feel like you’ll never get there, even when ARR is still growing and NPS is high. Your gut is wrong. It’s absolutely true you can get less done in a year than planned, but far more than a decade.

These aren’t magical solutions to the fact that if you’re early to market, your revenues will often be tiny in the early days. But have the confidence to see that your market will grow. And that if you can just get to $1m ARR, you’ll find a way to get to $2m ARR. Then $4m ARR. Then at least $10m ARR. And that’s enough.

Enough to compound into something amazing.

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New SaaStr Annual Speakers!! CEOs of Calendly, Y Combinator, Vimeo, President Shopify and More!!

Posted: 08 Jun 2021 06:45 AM PDT

We’re continuing to gear up for the 2021 SaaStr Annual in the SF Bay Area, Sept 27-29!

Each week we’ll be adding more incredible speakers.

This week we’ve added:

CEO Y Combinator
CEO Databricks
CEO Vimeo, fresh off the IPO!!
CEO Calendly. Boom!! This will be fun!!
President Shopify
CRO Seismic
CMO Synk
CMO Klaviyo
CMO Freshworks
VPS VMWare
VPS HubSpot
GM Dropbox + so much more!!

Join us!!!

Grab final, 30% off early-ish bird tickets here!

The post New SaaStr Annual Speakers!! CEOs of Calendly, Y Combinator, Vimeo, President Shopify and More!! appeared first on SaaStr.

In The Early Days, What You Think is a “Sales” Problem is More Likely a Marketing Problem

Posted: 08 Jun 2021 05:08 AM PDT

The other day I met with a great founder doing about $40k in MRR that wanted to raise some extra money to “make sales more repeatable.” Sounds good.

I started to dig in a bit to understand what this founder really meant though. At this rough stage ($20k-$80k or so MRR), usually most SaaS startups finally have a regular stream of leads — just not that many. 10 a month, 20, 100, whatever it is. Leads now come in regularly because at least something is working, there just aren’t a lot of them. Not enough to grow fast enough, but enough to grow regularly.

So we dug into the math. This great start-up is closing about 5 new customers a month, and they want more. They want more “salespeople” and/or a magical VP of Sales to help them. But let’s dig into what’s really happening:

100 “sign-ups” a month
Which they turn into 50 “MQLs” (marketing qualified leads)
Of which 20 turn out to be bona fide prospects, or “SQLs” (sales qualified leads)
Of those 20, 50% need features or functionality the product simply doesn’t provide yet. So they can’t be serviced today at least.
Of the 10 that are qualified AND can actually get benefit from the product — they close 5. That month.
So their close rate is 50%!

That’s actually kind of amazingly good — a 50% close rate, with a sales cycle of less than 30 days — for a vendor in a very crowded space, with well-established competitors and zero brand awareness, that spends $0 on marketing.

So my advice was simple: you don’t have a sales problem. At least not yet. You have a marketing “problem”. The founders themselves can handle 10 qualified leads a month. Not only is that not very many calls, but in the early days, the founders are such experts in the product, its nuances, how to hack it, etc … you want them to keep selling, at least until it becomes > 25% of their time. 10 demos a month wasn’t yet > 25% of their time.

Usually, in fact, hiring your first salespeople won’t really help in sales until there are enough leads that the founders just don’t have time. That’s probably 25+ qualified leads a month, potentially more. Once you are there — hire your first rep (ideally two, in fact, more on that here). But before that, a warm body that doesn’t know your product well isn’t really going to help.

Instead, focus on hiring a head of demand gen. As we’ve discussed before, $500k in ARR is almost late for a head of demand gen. Have her help you go from 100 to 200 sign-ups a month. To work the funnel so those 50 MQLs turn into 25 SQLs, not 20. That’s where the leverage often is at this stage. More on this here.

Later, when you have a surplus of leads, sales will help you sell more. And after that, in fact, it will all become a capacity and numbers game.

But in the early days, it’s usually marketing to the rescue. Not some sales magician.