Category Archives: Sales

Appearance on The SaaS Growth Hub Podcast on Founder Sales Knowledge and Sales & Marketing Alignment

This is a post to highlight a recent podcast appearance I made on The Growth Hub podcast with Seija Lappalainen and Reeta Westman, who are both based out of Finland, and with whom I had a lot of fun talking. So much fun, in fact, that we ran long and they ended up splitting the episode in two parts: one focused on founder sales knowledge (material derived from the Balderton Founder’s Guide to B2B Sales that I wrote and about which I’ve blogged here) and the other focused on sales & marketing alignment.

In the podcast episode we address questions including:

  • Which role I most preferred in my career (e.g., CMO vs. CEO vs. NXD)?
  • What are my duties in my role as an EIR at Balderton Capital?
  • Why we decided to write the Founder’s Guide to B2B Sales?
  • What are key things founders need to know about sales?
  • The Andromeda Strain problem — what explains what chief architects and top salespeople have in common?
  • What is the most common thing that product-founders get wrong in approaching sales?
  • Why I think a popcorn machine is a better analog than a funnel when it comes to sales?
  • How do founders become good salespeople?
  • How can marketers best learn about sales?
  • How much has technology changed sales and how important are technology skills?
  • Why am I such a massive fan of conversation intelligence tools, such as Gong or Jiminny (where I sit on the board)?
  • What should founders know about marketing?
  • Why I think marketing is in part responsible for the confusion surrounding marketing?
  • How to better align sales & marketing (and why unfortunately it’s still worth talking about)?
  • How to resolve alignment conflicts between the CEO, CRO, and CMO?
  • Why marketers should be broad in skills, tools, and knowledge to help avoid the Maslow’s hammer problem?
  • What are my views on titles (and associated structures) such as chief growth officer, growth marketing, and performance marketing?
  • How to grow sales & marketing together, which touches on the pipeline chicken/egg problem and the inverted funnel model?

I’ve embedded a video version of the episode below.

The podcast is available on Soundcloud, iTunes, Spotify, the web, and YouTube.

I hope you enjoy it and thanks again to Seija and Reeta for having me.

Slides and Video From SaaStr Workshop Wednesdays: The 7 Things Founders Should Know About Sales.

This is a quick post to share the slides today’s SaaStr workshop where we discussed the seven things founders should know about sales. This material comes from the Balderton Founder’s Guide to B2B Sales that I wrote and we published last fall.

I’ve embedded the slides below. You can download them on Google Drive.

SaaStr has also provided a video of the session, and I have embedded it below.

Thanks to everyone who attended for being so engaged and asking such great questions.

The Seven Things Founders Need to Know About Sales: SaaStr Workshop Wednesdays, 5/3 at 10am Pacific

Just a quick post to let you know that I’ll be presenting at SaaStr’s Workshop Wednesdays this week, on 5/3/23 at 10am Pacific. Our topic will be The Seven Things Founders Need to Know About Sales, which non-coincidentally happens to be the first section of the Balderton Founder’s Guide to B2B Sales that I wrote and we published last November.

I’ve not done one of these sessions before, but the format looks to be pretty intimate in terms of size and pretty interactive in terms of content (i.e., some lecture but a lot of time allocated for Q&A).

Registraton is free. You can register here.

Here are the seven things that we’ll be covering at the workshop:

  1. Learn by doing: get out there and sell
  2. Customers buy solutions to problems
  3. Sales is 57% listening
  4. The best sellers are curious about everything
  5. Ask open-ended questions
  6. Manage the sales process as a quid pro quo
  7. Don’t talk about competitors unless directly asked

I hope to see you there. It should be fun.

Don’t Hide Behind Ending ARR

I’m writing to propose that we limit discussion of my top, pet-peeve SaaS metric: ending ARR.

Wait, but aren’t you the guy who said that if you only knew two things about a SaaS company and needed to value it, one would be ending ARR and the other would be its growth rate?

Yes. That’s true. But the primary business of a SaaS company isn’t valuing itself. And, as an operational metric, ending ARR stinks. I dislike talking about ending ARR for the same reason I dislike talking about revenue. In a SaaS company, revenue is a result, not a driver.  Revenue is a math problem, not a key performance indicator (KPI). The same is true for ending ARR. It’s a math problem; just a simpler one.

Let’s use an example to show my point. Imagine you’re at a post-quarter board meeting and one of the executives presents this leaky bucket …

… along with this narrative: “blah, blah, blah … well, it was a good quarter, we landed at 96% of plan … blah, blah, blah.”

How does that narrative make me feel? Generally, angry. How angry? Well, that depends a lot on who’s saying it:

  • If it’s the VP of New Customer Sales, then very angry. They landed at 60% of plan, not 96%.
  • If it’s the VP of Sales (responsible for all new ARR), then still pretty angry. They landed at 73% of plan, not 96%.
  • If it’s the VP of Customer Success (and they’re responsible only for churn), then not angry at all. They were spot on plan though we had a little more shrinkage ARR and a little less lost ARR than plan.  Good job, but I have a few questions.
  • If it’s the CRO, responsible for both new and churn ARR, then back to very angry.  Net new ARR (new ARR – churn ARR) was $825K, 60% of plan, not 96%.

Look, bad quarters happen.  I’m not angry about the bad quarter.  I’m angry when people try to pretend a bad quarter was good one.  Or, even more scarily, at the prospect that someone might actually believe that a bad quarter was a good one.

Talking about ending ARR is like a giant, “Hey look over here!” distraction.  It’s the green arrow that I added above.  Executives should talk about their area of responsibility and characterize theirquarter based on performance in that area.

When a VP of Sales who’s at 60% of plan talks about “a good quarter on ending ARR,” I ask myself when did they get promoted to CFO?  When a CRO who’s at 73% of plan says, “As shareholders we should be happy that we grew the ending ARR 67% year over year,” I think:  no, as shareholders, we pay you to hit the new ARR plan and you’re at 73%. 

When it comes to sales leaders, ending ARR, like patriotism, is the last refuge of the scoundrel.

The CEO and CFO can talk about ending ARR.  But even they need to get the delicate narrative right — remembering that for a SaaS company at the above scale, it’s all about acquiring new customers to join your NRR expansion flywheel. Here’s the right narrative:

Overall, it was a weak quarter. We landed at 73% of the new ARR plan. While we got close on expansion ARR at 93%, new logo ARR was a dismal 60% of plan — something we’re going to drill into with Kelly in the next section. On the churn side, things were pretty good. We hit the churn target of $625K and while we were able to beat plan on lost-customer ARR, we had $50K more in shrinkage ARR than plan, which Reese will discuss. The net result is that we ended the quarter at 96% of ending ARR, a gap of $550K which we think we can close in 2Q.

Why is this the right narrative?

  • It talks about by performance by area, where action and accountability happen, and not in aggregate.
  • It’s transparent.  It doesn’t pretend a bad performance is a good one, or that 93% of plan is good.
  • It tees up subsequent discussion by the relevant leaders.  Trust me, leading that discussion is a form of accountability all by itself.
  • It discusses ending ARR correctly:  both as a result and as a cumulative metric, which means that, unlike the other period metrics, it’s one that we should strive to re-catch.

The last point is subtle.  Instead of using ARR as a mathematical keel to damp underperformance (by a factor of around six), we’re doing the opposite.  We’re recognizing that even if we hit every other plan number for the rest of year, that we will still end the year with $550K shortfall.  We’re recognizing that and making a commitment to try and catch back up. 

We’re using ending ARR to increase accountability, not dampen it.  Goosebumps.

Hopefully, this explains my modest proposal:  unless you’re the CEO or CFO and it’s the finance section of the meeting, you should never talk about ending ARR.  Talk about what drives it, instead.

Appearance on the SaaS Revolution Podcast

SaaStock recently released an interview with me on their podcast, The SaaS Revolution Show.  The interview, conducted by SaaStock founder and CEO Alex Theuma, was notionally about the Balderton Founder’s Guide to B2B Sales that I published late last year.  While we ended up discussing that, we also covered a whole lot more, including:

  • My background as a CMO, CEO, and independent director
  • My work with Balderton as an EIR 
  • Which job I prefer, and why:  CEO or CMO
  • Why we made the Founder’s Guide to B2B Sales
  • Key takeaways from the guide
  • The transition from founder-led sales (FLS) to sales-led (SLS)
  • When to hire your first sales executive or leader
  • Why it’s important to define process (and metrics) early — before you need to
  • The Holy Grail of a repeatable sales process
  • Why salespeople are like airplanes (they only make money when they’re in the air)

If you’re interested in listening to the episode, you can find it here.

I’ll see you at SaaSstock USA in Austin this June where I’ll be talking about conversation intelligence, inspired by my work with Jiminny, a UK-based startup where I sit on the board.