Sunday, 2 May 2021

SaaStr

SaaStr

SaaStr Podcast 449: How Notion is Winning at Enterprise SaaS by Building Community

Posted: 01 May 2021 02:31 PM PDT

How does a SaaS company reach enterprise buyers? Enterprise decision-makers have unique problems they need to solve, but they don't always have time to experiment with a platform or sit through dozens of software demos to find the right solution.

Abadesi Osunsade, the VP of Global Community & Belonging at Brandwatch and Notion's CEO and Co-Founder, Ivan Zhao, share their secrets on how to grow an enterprise audience by building a community around your brand.

A Different Way to Approach Enterprise Leads 

When it comes to creating an enterprise pipeline, Notion takes a unique approach. Zhao says, "Our business model is B2B SaaS, but our sales motion is similar to a consumer-like company…there's a lot of B2C elements to it."

Notion has found the most success in attracting larger, enterprise-level customers through the recommendations of their internal team members that use Notion in their personal lives. For example, the use of Notion at Square began with just a few teams, but eventually, the entire company started using the platform and became a full enterprise client.

Zhao furthers his point by emphasizing that: "This B2C plus B2B motion gives us a lot of sales efficiency. But in order for us to pull off this motion, we have to have a strong consumer brand, not just a business brand." Part of this means investing in fun and approachable marketing, like social media and group forums. 

Osunsade adds, "When you have a B2C angle, you're actually getting a lot of those B2B leads from your happy B2C customers."

Building Community: Start With Ambassadors and Champions

To build a thriving user community around your SaaS brand, Zhao emphasizes the following essential elements:

  1. Product Flexibility: The product must be easily adaptable to serve a wide variety of customers. Your users must be able to create their own product relationship that's unique to them and suits their particular needs.
  2. Aligned Interests: Your business interests should align with your community's interests. Zhao says, "You cannot build a community that's just about helping yourself. You really have to understand what motivates the people who spend time engaging [with] your product."
  3. Nurturing Your Community: Notion employs full-time community builders. Their job is to coordinate with the community, listen and relay feedback to the team to keep the product at peak performance and to foster a positive customer-business relationship.

 

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Community & Enterprise Growth: Tactical Advice and Observations

It's one thing for potential buyers to hear positive things about a product from a business, but it's quite another to hear it from other users. The Notion team actively designs their enterprise community effort around two angles:

  • The Notion Consultant Community: This group is comprised of individuals who sell their Notion templates and who help SMBs and enterprise companies set up their Notion workspaces.
  • Notion Champions: This approach is still a bit experimental, but this group is made up of Notion fans who want to bring the platform into their mid-size to large companies. Notion intends to connect these like-minded fans to keep the conversation flowing and, hopefully, promote large-scale business adoption.

Furthermore, Notion enhances the appeal for enterprise buyers who are extremely busy and need to solve specific problems. They incorporate elements like Slack channels in their enterprise communities, so there isn't a confusing or lengthy process to find answers, and they don't need to download or learn to use brand new tools.

 

 

Key Takeaways:

  • Don't take ubiquity for granted. Every touchpoint matters.
  • Enable storytelling. This will appeal to enterprise clients as you scale. 
  • Always add value. Align your business goals with your user community.

The post SaaStr Podcast 449: How Notion is Winning at Enterprise SaaS by Building Community appeared first on SaaStr.

10 Criteria To Use To Pick Your Lead VC. If You Have Options.

Posted: 01 May 2021 07:06 AM PDT

Q: I'm a startup founder weighing multiple VC term sheets at similar valuations. How should I choose?

My force-ranked list of criteria:

#1.  Who do I truly trust the most?  This doesn’t mean who is the “best guy”, or smiley-est, or nicest.  In fact, be wary of “grin frackers”.  Find out — who can I truly trust?  If any of them.  You will be so, so, so much better off if you pick the one VC you can truly, really trust.  So, so much better off.  A different way to ask this question is —  who will most have my back?  If you aren’t sure, take your time and slow it down.  Spend more time together.  Do another Zoom.  You can slow things down at the end.  It’s OK.   More on that here.

#2.  Who can truly help the most?  In later rounds, this doesn’t matter much, but in the earlier ones, it does.  Pick that one.  Who can help me find that first VP of Sales?  Who can help us the most with potential partners?  Who can most help you build the company to the next stage at least?  Many VCs really can’t actually do anything to help.  But if you can find one that can move the needle, pick that one.  You only have so many slots on the cap table, after all.

#3.  Who will the Next Round VCs most want to follow? This is hard to know without really asking, but if you pick a VC that other great VCs want to follow, the next round will likely be much, much easier.  This is one reason to pick a more successful VC.  A lot of folks will want to invest in the next round of their startups.  A lot of them.  With a newer VC, or less successful one, it will be much more on you to find the next round of investors.

#4.  Who can promote me the most and help me be Hot?  Or At Least, Cool.  Later this doesn’t matter but some VCs really can promote you and help attract the best hires, etc. This does help with recruiting and partnerships.  There are just so many startups.  Many employees really do want to join one they see a well-regarded and popular VC has invested in.  Twitter matters.  There are influencer VCs, and at the margin, it’s better to have one for recruiting and partnership building.

#5.  Which partner has the most successes under their belt?  Nothing wrong with a first-timer or new GP, but a GP without any wins under her belt yet is often … more … nervous.  But as we noted above, it’s much easier for a successful VC to bring in other investors.  And perhaps even more importantly, they don’t sweat a loss.  Once a VC partner is up 3x-4x, any individual write-off won’t really matter.  Think about it a bit.  Let’s say a VC invests $3m into your start-up.  If they are up, say, $100m in that fund, losing $3m won’t really matter.  But if they aren’t up much yet, losing even $3m could be a really big deal.

#6.  Who has a bigger checkbook? This doesn’t always matter, sometimes not at all.  But it’s nice if they can give you more money, vs. being tapped out, or stressed about the next check.  This is especially important if you aren’t going to be particularly capital efficient.  If you don’t know — ask.  Make sure you ask. “How much more can you invest in us?  And when?”  Also ask, “If we need a bridge, how much could you bridge?”  Ask.

#7.  Who do my existing investors recommend?  They may not know, or have biases that you might want to ignore.  You may need to ignore this advice.  But if they are really experienced in the space … they’ll know.  At least they have some G2 to help you decide.  It’s a pretty small world, venture capital.  

#8.  Who will get out of the way?  Sometimes, this is all you really want, especially in later rounds.  To be left alone.

#9. Who makes the round structurally easier?  This sometimes matters.  Some funds want to invest so much, they want to crowd out all prior investors from the round, in whole or in part.  This can create a lot of drama, especially when earlier investors are forced to waive their pro rata rights.  It might be worth it.  But at the margin, it’s just easier if your next round investor can accommodate the pro-rata rights of the earlier investors.  It makes all your VCs friends.  And that is important.  More on why here.

#10.  Can I also get a great mentor as well?  The very best VCs truly can be mentors as well as investors.  Most VCs claim they are great at this, but in reality, most founders will say just 1 of their investors really played this role.  But if you can get it from a major investor, that’s special.  Because you’ll be on that journey together.  In many cases, for a decade or longer.

Finally, an important note that it really helps if you can build a diverse investor base early.  It just gets harder if you don’t.  And people will care.  Your employees will care.  Your cap table and your board should reflect the inclusiveness of your company — shouldn’t it?  Of course it should.

(note: an updated SaaStr Classic post)

The post 10 Criteria To Use To Pick Your Lead VC. If You Have Options. appeared first on SaaStr.

The False Choice of Prepaid vs. Monthly Contracts

Posted: 01 May 2021 06:20 AM PDT

In scaling the cash-flow side of SaaS, there’s almost nothing more powerful than annual contracts combined with prepaid cash.  It’s just such a huge benefit. You get all the cash up-front, and your churn almost by definition goes down. Because the earliest chance the customer has to churn is 12 months hence.

So get pre-paid annual deals whenever possible. 😉

At Adobe Sign / EchoSign, half the reason we went cash-flow positive at about $5m in ARR was prepaid annual and multiyear contracts.  Combine that with 100% or greater annual growth, and once you hit a few million in ARR, prepaid annual contracts bring in a lot of extra cash ahead of time.   Cash you can use especially to make those accretive hires (more on that here).

Our KPI here, in fact, was to bring in at least 120% of our monthly MRR in cash, each month.  We usually hit it.  More on how here.

But … to go to annual pricing or not … 

It's a bit of a false choice for most vendors.  Because the world already works certain ways here based on the context:

Bigger companies want to sign annual contracts, especially in exchange for discounts.  At least, once you have enough of a mini-brand to be trusted.  It's how big company procurement and budgeting processes work. Nothing is a bigger headache in a Fortune 500 company than having to go back to procurement every single month to get an invoice approved.

and … Most small businesses and individuals generally want to pay monthly on their credit cards.  Even if you provide an annual discount.  Not all – but most.  Think about yourself as a consumer. Very small businesses often buy more like consumers than large enterprises.  How often do you yourself prepay annually? Probably only for a subset of services you are confident you want for the long term.

So there is a natural continuum of how customers like to pay, and how they are comfortable paying.

A great example is Zoom.   As Zoom use exploded during Covid, even more SMBs needed Zoom.  And as a result, even more chose monthly subscriptions.  Zoom monthly billing exploded to 50% of ARR as SMB use grew 5x during Covid!  More on that here.

If you offer bigger companies a natural incentive to sign up annually, they will. At least, once you have a brand and they know they can trust you on Day 0.  And later, you can even force them to and make it the only option. But if you ask tiny businesses and individuals to pay for a whole year upfront, they will hesitate.  At least the vast majority.  So offer them a discount to do so (often 20%, a la the WP Engine above).  And some, but not most, will.

Figure out who you sell to, and why, and offer the options each customer segment wants.  And don’t push prospects to where they don’t want to go.  Get the deal done.

And lastly, be flexible in the beginning. Once you have a brand that customers trust, more will prepay annually. In the beginning, at a minimum, you may need to do more paid trials and proofs-of-concepts, or quarterly/monthly deals.  I know no one likes POCs and such, but you have to earn your right to skip them.

(note: an updated SaaStr Classic post)

The post The False Choice of Prepaid vs. Monthly Contracts appeared first on SaaStr.
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