Dear Reader,
Welcome to the 15th edition of the good reads newsletter by Malpani Ventures. Sharing your weekly dose of articles for this weekend’s reading!
Customer Marketing – Your Most Important Lever in a Down Cycle
https://www.stellarisvp.com/customer-marketing-your-most-important-lever-in-a-down-cycle/
Alok Goyal from Stellaris Venture Partners shares his learnings from his days at SAP & Siebel. He stresses that existing customers matter a lot (read: most) to SaaS businesses. Why?
Because his former employers earned 90%+ operating margin from the maintenance revenue stream
80%+ of the new license revenue came from existing customers
It is very expensive to acquire new customers even when you are a virtual monopoly in an enterprise sales motion
Money in the SaaS business is eventually made from existing customers
He also shares different customer marketing activities which you can undertake to focus on existing customers especially in a downturn
GTM Nirvana
https://docs.google.com/presentation/d/1M_j0F-IuqgaGfHPfvOh1ssBudpA_Wyp6VoHA46uOr80/edit
Caroline Clark (Arcade, Atlassian, Sequoia) shares her learnings for founders who are figuring out their go-to-market for B2B companies. Key messages:
Build a great product because it is miserable (not impossible) to sell or market a product which is not useful
Find your ideal customer, determine the acquisitions channels via which you will reach them, and plan to scale in your most efficient and effective channels
Getting to $50 million: How to avoid the SaaS Valley of Death
https://venturebeat.com/2019/03/30/getting-to-50-million-how-to-avoid-the-saas-valley-of-death/
Just 4% of SaaS companies reach $1mn in revenues, and only 0.04% of them make it to $10mn. This means you’re probably as likely to win a lottery as you are to build a SaaS company making $10mn+ in revenues.
How to get to your revenue milestones?
Getting to $1mn: Today a buyer evaluates at least 9 products before buying one. You have to be in the top 2 or 3 to be considered appropriately. And this can only be achieved if you have product-market fit. Do not worry about launching the most robust, feature-rich product, deliver a decent product fast. Find your key strengths in your GTM, and try to make your business more predictable and scalable than it was yesterday
Getting to $10mn: You want to experience hypergrowth which requires you to be execution-focused. Execute on the right ideas and say no to everything else. Do some desk research before expanding, develop milestones, and take the next steps with every milestone reached else you will burn a lot of money. Remember no plans work, but planning is everything.
Getting to $50mn: This step is all about managing complexity. People do not buy products, they buy solutions. For your company to stay relevant today and 5 years from now, you need to be constantly developing products which solve customer problems better than others. At this stage finding and managing talent the right talent is a huge barrier to overcome. What good are processes if there are no good people in your team to run them.
Thank you for reading. If you like what you read, please consider subscribing.
If you are a subscriber and you find this interesting, why not share with your friends?