Do Founders Get Value from Investor Updates?

Most investors eventually ask founders to send monthly email updates. These updates can seem like a tedious task, akin to your parents asking you to call them every week when you go to off to college. Since founders are busy and writing takes time, it's tempting to skip updates and hope no one makes a fuss. Besides, monthly check-ins only benefit investors, right? Wrong. Almost every founder that I've talked to finds the act of writing updates valuable, often to their surprise. Here are some of the key benefits of sending updates, from most obvious to most subtle:

Updates are a scalable way to deliver news and to ask for help

If you have fifteen investors in your seed round, and each of them asks for an update every 3 months, then you're going to be sending an average of 5 updates per month. Sending one update per month to everyone will save you a lot of time.

Similarly, if you have three areas where you'd like help, you can think about which investors can help with each area and email them individually, or you can list all of the areas in a single email that goes out to everyone -- a much more efficient approach.

Updates help you see the bigger picture

Seed-stage founders spend a lot of time fighting fires, focusing on key accounts and projects, and handling basic tasks like bookkeeping and searching for office space. It's easy to spend weeks or months in the trenches without ever having a chance to step back and think about big picture questions: is your company growing at a healthy pace? What are the company's strengths and weaknesses? What went wrong in the last few weeks and what can you learn from it? Writing an investor update forces you to sit down and think explicitly about questions like these.

Updates show respect to investors

Spark Capital's Nabeel Hyatt posted an insightful comment a few days ago:

Investors are not just check signers -- they are people, too. They are investing their time and their conviction as much as they're investing their money. When a seed fund offers you a term sheet, they're telling you: "Of the 1,000 companies and founding teams that we're going to look at this year, you're one of the top 10 that we'd love to work with most." As an investor, I assure you that that's a very heartfelt offer, and that feeling like an outsider after investing hurts.

Investors want to feel like partners, not like bystanders. Not providing updates proactively is like never talking to your parents unless they call you: it's fine, and no one is saying you have to call first, but investors (and your parents!) will really appreciate it if you keep them in the loop about what's going on.

Updates help you build meaningful relationships with investors

Here's a scenario I've watched unfold several times:

  1. Angel Alice invests in Founder Fred's company.
  2. Fred's startup chugs along for a year and business is great.
  3. During that time, Alice tries to contact Fred a few times, but he is busy and replies sporadically at best. Alice doesn't feel particularly close the company or to Fred.
  4. A year in, Fred emails Alice and says, "Hey, thanks for your support last year! My company is doing well, and I'm about to go raise my Series A. I saw on LinkedIn that you know Bill at Benchmark. Do you think you could introduce me to him?"

Alice is in a bind. She clearly thinks Fred is a good founder working on a useful project -- after all, that's why she invested in the first place. She also obviously wants to help the company find a great lead for its Series A. However, she's had very little interaction with Fred, and Bill is probably super busy, which makes it very hard to write a strong introduction. If she had been well-informed during the previous year, it would be different, and Alice could tell Bill how Fred is an amazing founder, and how she was impressed with the way that Fred dealt with a tough situation, and how the business is growing 70% each month. Alas, Alice is not well-informed, so she can't say any of those things. As a result, she either refuses the intro request (e.g. "Sorry, I don't know Bill that well") or she sends an intro that is weak and nondescript. Neither scenario helps Fred, and both result from not having a close founder-investor relationship.

Regular investor updates go a long way toward building these relationships. At a minimum, everyone will be up-to-date on how things are going. More likely, a lot of investors will reply to a founder's emails, even if it's with something trivial like, "Looks like August was another amazing month!" A lot of investors will also offer to help, or will offer encouragement or advice when your run into adversity. It's cynical to send updates solely so that your investors will help you raise your next round, but sending updates will definitely help you with your next round: you'll get more intros, you'll get better intros, and you'll get advocates who help convince notable VCs to invest in your company. You'll get all of that because you respected your investors' personal commitments, not just their financial commitments, and because you built meaningful relationships with them. 

Updates help you when you don't know what you don't know

Most investors work with a lot of companies (often 10 or more). Being exposed to so many companies at once reveals patterns that might be invisible to a single founder.

For example, if another company doesn't want to pay you for a pilot, do you know if that's common or if they're trying to screw you over? If 37% of your users come back to the site every month, is that high or low? Should a 4-person startup hire an office manager? Investors are very like to know the answers to these questions, and if they don't know, they're in a good position to survey ten or twenty startups and summarize the results for you.

An even more dangerous scenario is when a founder doesn't realize that something is off. For example, maybe he started 30 pilots over the course of ten months (which is usually way too many pilots). If he had been keeping investors up-to-date, one of them might have eventually remarked that ten pilots is plenty, and that if none of the ten turn into paid contracts then the problem is with the product and not with the lack of potential customers.

The theme here is that if an investor doesn't know what you're up to, they can't reach out to you when something seems out of whack. For that reason, updates are an amazing opportunity to learn about what "you don't know you don't know" because you can write a couple of paragraphs and include several bullet points about what happened since the last update, and proactive investors will chime in as appropriate.

If you're a founder, I hope this list of benefits is compelling enough to give monthly updates a try. If you're not sure what to write, check out this template.

Ten Tips for Raising Money from VCs

Yesterday, Semil Shah wrote a great post about having a process for raising institutional money. Semil observed that the most successful founders usually have a game plan for fundraising, and they execute against that plan ruthlessly.

This got me thinking: what are some concrete aspects of a good fundraising plan for companies raising a seed or Series A round? To answer that question, my partner Chad and I came up with a list of ten fundraising tips.

The overlying themes are: 1) don't waste anyone's time and 2) build momentum.

Don't waste time

1) Start with some informal meetings to gauge interest. Meet with some of the investors you're interested in and tell them that you're planning to fundraise soon and are looking for advice. You'll get feedback on your pitch and your round's timing, and you'll also have a sense of which investors are most excited about your company. Learning that you're fundraising a few months too early or that you need to have a better story around competitive differentiation will help you avoid a lot of wasted time and meetings.

2) Research the investors you're meeting. Just like you'd send a custom cover letter with each job application, you should tweak your pitch to each investor. My fund is focused on data, so when talking to us, you should allot some time to describing the dataset that you're building and why it's valuable. Another fund might be obsessed with market size or marketplace network effects, so you would spend more time discussing those aspects of your business.

You should also research the markets an investor likes and the investments they've made. If someone is focused on the Internet of Things, then pitching a Bitcoin startup to them will be a waste of time. On the other hand, if they invest heavily in Bitcoin, that's great -- but you should make sure they don't have any competitive investments.

3) Be transparent and honest. Some founders play games** in an effort to fake momentum. They talk about how "the round is almost full" when it's completely empty, or how "Big Name VC Firm is very interested" even though the only meeting so far was with the most junior associate at the firm. Don't be that founder. Investors see through these facades, and you end up looking shady or desperate rather than impressive.

4) Develop an amazing pitch. Setting up meetings is worthless if your presentation is weak. Make sure that when someone wants to hear your story, you can tell a damn good story. Know your metrics. Practice your pitch with as many friends as you can. Write down all of the questions you think you'll get and prepare strong answers for them.

Build momentum

5) Consider joining an accelerator program if you don't have any connections to investors. If you get into YC or 500 Startups or Alchemist or whatever other accelerator is in your area, you'll get to present at a demo day, which is an amazing confluence of capital supply and capital demand. Trading a 5% stake in your company for valuable advice and the ability to raise a seed round is much better than keeping the 5% but not being able to muster up significant investor interest.

6) Consider pitching to angel investors before VCs. Because their checks are smaller and they often have non-financial motives, angels are more likely to invest in your company than VCs. And while you probably can't raise a full $1m+ round with $10k and $25k checks, it's definitely possible to raise your first $100k or $200k from smaller investors. Closing investments from a few angels will give you confidence and provide some momentum -- especially if those angels are well-known. More importantly, angels are a great source of introductions to other investors, and it's hard to get a stronger intro than: "I liked this company so much that I put my own money into it. You should talk to them, too."

7) Talk to sites like FundersClub early in your process if you think you'll need help filling out your round. Just like angels, crowdfunding sites can help you raise a few hundred thousand dollars while giving you valuable feedback and a great confidence boost. They also provide you with a helpful group of micro-investors.

8) Start fundraising when your startup is showing a lot of potential. It's smart to fundraise around the time you're releasing a major product update, or just after you sign a big enterprise deal. On the flip side, trying to raise money during a period of nominal progress makes your job much harder -- if not impossible.

9) Pitch to one investor at a time while you're honing your presentation, then pitch to as many investors as possible in parallel. If you're pitching to one investor at a time and you get a term sheet, then you're in a very tight spot. You can either accept a potentially weak offer, or you can roll the dice, say 'no, thank you', and hope that you'll get other term sheets. To avoid this situation, start the fundraising process with as many investors as possible as soon you nail your pitch. By talking to many investors at the same time, you maximize the chances of receiving multiple term sheets simultaneously, and then you can weigh your options and decide which investor is the best fit for your company.

10) Do whatever you can to get the first term sheet. The first term sheet will be a forcing function for other investors you're talking to, and you'd be surprised (or maybe not) at how quickly everyone's diligence wraps up when there's an offer with a deadline attached to it. If you have a handful of investors who are interested but no one is pulling the trigger, ask each of them if there's anything you can do to get them over the hump. It might just take an extra diligence call with a fund's technical advisor, or a few more personal references, or a slightly lower valuation. Remember, getting a term sheet puts you in a position of strength, but you are not obligated to accept the offer.

If you have other tips and suggestions that are not on this list, please let me know in the comment section. I'd love to know what tactics and strategies have worked for others.

Note #1: All of these tips apply to seed stage fundraising. Most of them also apply to Series A fundraising, although #6 and #7 make more sense if you replace "angel investor" with "existing investor." That is, you should pitch to existing investors first to rack up some commitments, then ride that wave as you start talking to new investors.

Note #2: I feel strongly about tips #2, #3, #4, #8, #9, and #10. They are "must haves" in my book. Tips #1, #5, #6, and #7 are suggestions, not mandates.

** Playing games is a waste of time for everyone. Founders who lie about momentum often end up looking desperate and untrustworthy. It's a similar dynamic to investors who are afraid to explicitly pass. They think they're "preserving option value" and leaving the door open for future investments, but instead they're just alienating founders.

What Movies Can Teach You about Pitching to Investors

Pitching is hard, and pitching in different contexts is even harder. I frequently see people struggle to shift from elevator pitches (30 seconds) to demo day pitches (5 minutes) to full pitches (30+ minutes). The problem is most acute for founders who really understand their businesses; they have tons of compelling points and metrics at their disposal, which makes it hard to decide what to include and what to exclude in short presentations vs. long ones.

I think a great way to think about different types of pitches is to look at what the movie industry does in various contexts:

  • Movie posters are like elevator pitches. They're designed for an audience that only has 20 seconds of time to spare.
  • Movie trailers are like demo day pitches. A trailer shows enough highlights and explains enough context to get people excited about watching a movie, but it doesn't spoil the entire plot.
  • Behind-the-scenes featurettes are like full pitches. They are meant for people who are very interested in a movie and want to know everything about it. 

Each of these products appeals to different audiences, and that's reflected in the content and the design. For example, because posters are for passersby with short attention spans, they're unlikely to include paragraphs of text or shots from many different scenes. A poster is typically just a photo of the best known-actor(s) in the movie, a one sentence tagline, a background that provides a hint about the plot, and maybe quote from a famous critic. For example, here's the poster for Total Recall:

What does this poster tell you? The movie features Arnold, the tagline implies that it's an action film, and the pyramid with two planets next to it suggests that the genre is probably sci-fi. That's it. There's no mention of Mars or mutants or erased memories or Philip K. Dick or anything else. Whoever designed this poster understood the audience (teenage boys) very well.

There's no single formula for what a poster should show, only that it should show the most exciting things about your movie as quickly as possible. You absolutely do not have time for anything else. For example, a poster for The Expendables only highlights the action stars in its cast. It doesn't bother with a tagline or quotes from critics because those don't really matter compared to having Sly Stallone, Bruce Willis, and Jason Statham in the same movie. 

On the other hand, A Separation is a foreign film whose actors are not well known in the US, so its poster wisely focuses on awards and praise from critics. 

The Elevator Pitch

Your startup's elevator pitch should mimic the brevity and information density of movie posters. It should cover your two or three biggest strengths and be easy to understand for everyone, regardless of familiarity with your industry. For example, "We're a couple of Stanford grads who spent the last few years building trading platforms for financial institutions. Now we're building a mobile-first commission-free stock brokerage for the Millennial generation." (Robinhood) Or, "We're the team that built Siri, and now we're going back to work on an extremely powerful AI-based digital assistant." (Viv)

(Note: these are made-up elevator pitches for Robinhood and Viv.) 

Don't try to jam buzzwords into your blurb. Don't use problematic analogies that create more questions than answers. Don't make your elevator pitch longer than a few sentences.

The Demo Day Pitch

A demo day pitch is like a movie trailer. You typically have 3-5 minutes to talk about your company. While it's clear that this is not enough time to cover every single thing that investors might want to know, many presenters still try to include everything but the kitchen sink. They exceed time limits and talk at supersonic speeds, all while going through slides faster than Larry King goes through spouses.

The key principle to remember for demo day presentations is that your mission is not to get someone to say "okay, I'll invest", but instead to get them thinking: "this sounds awesome, I should set up a meeting to hear the full pitch." Like a movie trailer, your presentation should be a highlight reel, not 90-minute movie that has been compressed into an incomprehensible 180 seconds.

The Full Pitch

The full pitch is like a behind-the-scenes featurette -- or better yet, a special edition DVD loaded with commentaries and other extras. You want to cover everything there is to cover about your startup and how it works. Prepare a nice deck that stands alone -- because as much as you want to provide in-person narration when people first read your deck, that won't always be possible. Have appendices and supporting materials prepared for common questions about financial projections and customer acquisition. Weave a good story around your pitch, which will make your presentation more compelling and more memorable.

Common Mistakes

There are three common mistakes that founders makes when delivering pitches of different lengths:

  1. Focusing on the wrong details. For example, an elevator pitch only gives you time to cover the 2-3 most notable and important things about your company. If you have a Top Ten list of things you can mention in your elevator pitch, make sure you focus on #1, #2, and #3 -- not #2, #6, and #9. Analogously, you'll notice that the Total Recall poster highlighted Arnold Schwarzenegger, not Ronny Cox or Sharon Stone. Ronny and Sharon are good actors, too, but Arnold is clearly the main draw.

  2. Including too many details. If you have 5 minutes to talk about your startup, don't spend time talking about things like your cost breakdown or the competitiveness of the market. You can tell investors about those things later. You'd never see a movie trailer that says, "this is a really awesome racing movie... but The Fast and the Furious and Drive are also great!" -- so why would you waste your limited time on describing specific competitors or delving into accounting details?

  3. Omitting key details. The flip side of including too much information is not including enough of it. If everyone on your team has a PhD from Harvard or your last company was acquired for $800m, you should definitely mention those things. But those facts are meaningless if investors walk way from your pitch thinking "wow, that's a great team... but I can't figure out exactly what it is that they're working on." Any presentation that's a few minutes or longer should at least cover the problem you're addressing, the size of that problem, your solution, and why you're the right team for the job.

The key takeaway is that you should consider your audience whenever you're pitching. Do you have 50 minutes, 5 minutes, or 0.5 minutes? Does your audience know a lot about your industry, or nothing at all? Are you trying to get them to invest, to become interested in learning more, or to remember your name when they see you at a demo day next month? Whatever the ideal next step is, you should tune your presentation to get investors as excited as possible about that next step.

Fighting Bad Practices with Successes

There are many problems with how the world of tech operates: discrimination, glass ceilings, poor working conditions, and so on. The state of affairs is much better than how a lot of other sectors work, but there's also a ton of room for improvement. If you are a concerned founder or investor, what can you do to push things in the right direction?

Be the change you wish to see in the world

Last week, Greylock's John Lilly made a wonderful comment:

I think John's advice applies as much to creating structural innovations as it does to building products.

If you run a startup, you influence the world through the projects that you undertake. If you're an investor, you exert influence by choosing which projects you support. Not only can both groups affect what will be built, but they also have the opportunity to influence how things are built, and by whom.

I think one of the best things that founders and investors can do to combat injustices and bad practices is to set a good example for others, and to be successful while setting that example. For instance, if you make it a point to invest in founders from underrepresented groups, and on top of that your fund gets a great return, you're simultaneously showing that 1) people from underrepresented groups are very capable founders and 2) investors can make more money by supporting those groups than they would have made otherwise. Similarly, as a founder, if your company is successful while hiring minorities or offering longer maternity/paternity leaves or practicing enhanced transparency (like Stripe and Buffer), then that shows the world that you can win while being more diverse/more family-friendly/less opaque.

In my case, I frequently hear founders lament the lack of clear feedback from most VCs. As an engineer who loves tight feedback loops and optimization, I find the opacity of most investment decisions -- and of the VC world in general -- very frustrating. My attempt at improving the status quo is to blog about things I learn, to provide useful benchmarks whenever possible, and to offer direct, useful feedback to founders when my fund (Susa Ventures) decides to pass. My hope is that if when Susa becomes a 10x fund, that will provide a good data point for demonstrating that financial returns don't have to come at the expense of transparency.

Problems that need attention

Some sample problems in tech that I think founders and investors could tackle:

What if you're not an investor or a founder?

While investors and founders have a lot of leverage for creating change, the flatness and accessibility within tech provide everyone a great opportunity to make a difference. You can write publicly about problems so that they're not swept under the rug. Speak at conferences. Challenge public figures within the community on forums like Twitter. You can also speak with your boss or CEO and convince them to prioritize making the tech industry better. You can also vote with your feet by not taking money (as a founder or an employee) from crappy human beings.

Finally, crowdsourcing is a wonderful tool. Tracy Chou did a great job of publicizing the position of women within tech via a public GitHub repositorySemil Shah recently created an easy-to-follow Twitter list of underrepresented minorities within the world of tech. If you're creative, you can accomplish a lot with free tools.

I'd love to see what ideas others have for using companies and funds as vehicles for setting great examples for everyone. The world is an amazing place, but it's not perfect, and the startup ecosystem is a great vehicle for making it better by setting good examples.

Thanks to Rob LeathernTracy ChouSean Byrnes, and Aarthi Ramamurthy for providing feedback on earlier versions of this post.

Taking Time Off

With winter holidays approaching, a lot of people are taking a short break from work. Or, in the case of startup founders and many of their employees, they're thinking about time off but not actually taking any. I think that's a mistake.

People have preconceived notions about what counts as an appropriate work-life balance. A common opinion in Silicon Valley is that startup employees -- especially founders -- should focus 90% on work and 10% on life. That's BS. As an investor, I hate seeing emails that say "I've been really sick this week, but don't worry, I'm still working from home!" or "I'm going on a 6-day trip to see family. Unfortunately, this trip was already booked by the time I started my company." When I read things like that, I don't think about how dedicated the founder is; I think about how likely they are to burn out.

There's a difference between lacking commitment and needing a break. If you're a founder and you're nonchalantly taking long vacations during your company's first 6 or 12 months, that's a red flag. However, if you have been working hard for a while and you need a break because you're sick, or because you want to spend a week with your spouse and kids, or because you're starting to feel burnt out and just need a few days to unwind, then that's totally fine. If you're choosing between burning out or taking a week off (and becoming 25% more productive for the following month as a result), then please, please, please take a little time off and don't feel guilty about it.

While it's an example of selection bias, a notable example of a company that succeeded without expecting crazy workweeks year-round is LinkedIn, which I joined in 2003 when it had about a dozen employees. For the two years I was there, I took a few weeks off annually, and I very rarely worked more than 40-45 hours per week. I wasn't the exception; the rest of the engineering team, including the founding engineers, worked similar hours. That wasn't laziness or a lack of dedication, but rather a commitment to sane schedules that maximized productive time rather than time spent in the office. Despite having a small engineering team, LinkedIn pushed out a lot of significant features during my two years there, and its member base grew by 100x. I view that as good evidence that startup teams can succeed in a big way by working smarter rather than longer.

In the long run, I think it's very hard to build a sustainable company on top of unsustainable schedules. If you need a break, take it, and enjoy the holidays.

Fatal Pinches, Seed Follow-On Rates, and Estimated Marginal Dilution

Yesterday, Paul Graham posted a great article about "fatal pinches" -- situations where a startup still has a decent amount of runway in the bank, but its costs are high and its revenue growth is too slow to merit another round of funding. PG suggested that startups caught in fatal pinches have 3 main options: 1) give up, 2) cut costs -- which often involves laying people off, or 3) do whatever it takes to increase revenue (e.g. consulting).

I've talked to a number of startups in this unenviable state, and advice for how to survive it is extremely useful. However, the best advice is to try to avoid fatal pinches in the first place. A key component of that is to determine how much money one needs to raise in order to have the best chance of raising a Series A round in the future. It turns out that Tomasz Tunguz of Redpoint Ventures explored this topic a few months ago in his excellent post on seed follow-on rates. What he discovered by looking at CrunchBase data is that the odds of raising a Series A are low if you raise ~$300k, moderate if you raise ~$600k, and as good as they can be if you raise ~$900k or more.


It's not exactly earth-shattering to proclaim that raising a bigger seed round gives you more runway to find product-market fit and raise a Series A. However, most founders are reluctant to raise a bigger seed round because they are (understandably) paranoid about taking on too much dilution. Raising $1m at a $4m pre means you've sold 20% of your company, but raising $1.5m at the same valuation means you've sold 27.3% of your company, which is quite high if you hope to raise multiple rounds in the future. The typical mental calculation is: "I think I only need $1m, and the extra $500k wouldn't be worth an additional 7.3% of dilution." Most people only look at the 7.3%, without realizing that they should be looking at what I will call the estimated marginal dilution.

The 'estimated marginal dilution' is the difference between how much your capital costs now compared to how much it would cost in the future.* For example, what if you could either raise $1m at a $4m pre now and $3m at a $12m pre in 15 months, or you could raise $1.5m now and $2.5m in 15 months at the same valuations? In the first case, total dilution from your fundraising is 20% + 20% = 40%; in the second case, it's 27.3% + 17.2% = 44.5%. That means that taking an additional $500k now instead of later doesn't cost you 7.3% of your company, it costs you about 4.5%

To make the example even more interesting, what if the extra $500k runway lets you get to slightly better metrics before raising your Series A, so that instead of raising $2.5m at a $12m pre in 15 months, you could raise $2.5m at a $16m pre in 18 months? Now your dilution is 27.3% + 13.5% = 40.8% -- which means there's very little penalty for taking $500k now instead of later. If that's the case, there's a strong argument for taking the extra money now.

The final piece of the puzzle is figuring out what to do if you are able to raise more than you need. The truth is that you shouldn't dramatically alter your planned spending until you've found product-market fit. Growing headcount prematurely is how many startups end up in the fatal pinch in the first place. Basically, if you're raising e.g. $1m, consider raising $1.5m+, but run your company as if you only raised $1m until you reach product-market fit. The extra capital will give you more breathing room and decrease your chances of being stuck in a fatal pitch.

* An interesting example of taking into account current and future capital costs is to look at valuations of EIR-incubated companies. The terms for those investments might be something like $5m at an $8m pre. It's easy to look at that and think "that's crazy, why would someone take that much dilution in their first round?" The explanation is that it's just as good to take $5m at an $8m pre now as it is to take $1.5m at a $5m pre now, and $3.5m at a $19m pre later.

A Learning Technique Inspired by Computer Hackers

Malicious hackers commonly use a technique called the 'man-in-the-middle attack'. In that attack, the bad guy interposes himself between two people who are trying to communicate, eavesdrops on their communications, and potentially alters their messages. For example, let's say Adam is hanging out at a coffee shop when he remembers that he needs to email detailed wire transfer instructions to his new investor, Barbara. If Chuck hacks into the wireless router, he can intercept Adam's email, insert his own bank account details, and forward the altered email on to Barbara. Since Adam and Barbara don't know there's someone monitoring and modifying their communications, they won't realize they're being duped until Barbara's money is in Chuck's bank account.

Hackers use the man-in-the-middle attack for evil, but you can use it for good whenever you introduce two people to each other. The type of introductions I'm referring to are where one person with a specific question is introduced to another person who might be able to answer that question. For example: 

  • "Oh, you're interested in financial advice? You should meet my friend Roger."
  • "My friend Tammy is the best growth hacker I know. She can help you figure out how to make your mobile app more viral."
  • "If you want recommendations for things in to do in Spain, talk to Amy and Luke -- they spent 2 months there last summer."

These introductions are useful for the people who need help, but they also present a golden opportunity to learn something interesting. Here are two man-in-the-middle approaches that I've personally used to learn about a variety of topics:

Listen and Repeat

Sometimes you can circumvent an introduction by forwarding a question from person 1 to person 2, then passing person 2's answer back to person 1. This works well for questions that don't require a lot of additional context.



"John, meet Jane. Jane can help you with setting up an accounting system for your small business."


Step 1: Email John -- "Hey John, what kind of questions do you have about setting up an accounting system?"

Step 2: Email Jane -- "Hey Jane, my friend John is setting up a small business and has the following questions about accounting. Do you have any advice that I can pass along to him?"

Step 3: Email John -- "Hey John, one of my friends is an accountant and I sent her the questions that you had. She said..."

A Fly on the Wall

Introduce two people and ask if you can sit in on their discussion. This works well for open-ended topics where you won't be able to provide enough context to use the "Listen and Repeat" approach.



"John, meet Jane. Jane can help you with setting up an accounting system for your small business."


"John, meet Jane. Jane can help you with setting up an accounting system for your small business. Once you two decide on a time to talk, I'd love to join you if you don't mind. I, too, am interested in learning about accounting systems."

The next time that you're about to introduce two people, think about whether the topic they'll be discussing is personally interesting to you. If it is, turn the introduction into a learning opportunity.

Extracting More Value from Investors

Investors can be a great resource for founders -- and not just because of the capital they provide. Many investors have great operating experience and vast networks, or they've at least observed many startups from the sidelines and can offer good advice based on the patterns they've seen. Unfortunately, a lot of founders underutilize their investor network.

Here are the three most common mistakes that I see:

  • Never asking for help and declining offers of help. I'm not sure if this happens because founders feel guilty about asking for help, or if they're afraid of being judged negatively if they aren't handling everything by themselves, or if they think investors won't be of much help. The reality is that most investors like being helpful, and they have a lot to offer. They invested in your company because they'd like to work with you and because they hope to get a good ROI, and being helpful addresses both desires. Furthermore, any advice you get is not binding, so if you don't like it, you don't have to use it. It's still your company to run.
  • Asking for the same things as every other company. Every month, I see 10+ investor update emails that include some variant of "We need help finding awesome engineers." I know. I really want to help -- and sometimes I can -- but it's hard when every single company is also looking for awesome engineers. I might meet 1-2 strong candidates each month, but if there are 30 companies vying for those candidates, the math just doesn't work out. A more reliable way to get help is to ask for things that are not zero-sum. For example: the opportunity to talk with a cryptography expert for an hour, an introduction to someone on Google's Chrome team, feedback on your website redesign, and so on.
  • Only asking for help in one or two areas. It's actually perfectly fine to ask for help with hiring if that's not the only thing you ask for. The problem is that many founders ask for that and nothing else. By offering more options, you maximize the chances of each investor being able to help you somehow.

Fundamentally, most investors can be viewed as 1-2 hours of free labor every month. There are exceptions, like board members/major investors who'll be willing to put in a lot more time, or very casual investors who might not want to invest any time at all, but most investors are good for at least some (free) work every month.

So what can you ask investors for? Almost anything! Some ideas:

Introductions to...

  • Potential hires.
  • Specific customers or partners. ("Looking for an intro to a Director of Eng or higher at Foursquare.")
  • Customers in a specific vertical. ("Looking for intros to mobile gaming companies with at least $2m in annual revenues.")
  • Experts that could help your company. ("Looking for info on handling security questions from Fortune 500 companies.")

Comps for...

  • Leasing office space. ("What is a typical price per employee for SoMa/downtown Palo Alto/etc?")
  • Equity and salary grants. ("What is a typical comp package for a VP of Sales who is employee #8?")
  • Commission structures and goals for salespeople. ("What's a good monthly sales quota for a product with our target customers and price point?")
  • Company metrics. ("What is a good goal for my churn rate?" or "What is a typical CTR for marketing emails?")

Feedback on..

  • Website UI, UX, copy, etc.
  • Mobile app UI/UX.
  • Sales decks, pitch decks, marketing materials, etc.
  • Resumes of people you're thinking of hiring.

Advice for...

  • How to make the most of various growth channels. ("What are some best practices for using Facebook Ads?")
  • How to approach your next round of financing. 
  • Which vendors to use for PR, SEO, Health/Dental benefits, etc.
  • General company strategy: product roadmaps, expansion plans, customer segments to target, etc.

So next time you write an investor update email (and you should be writing those monthly!), list out 5-10 things that you'd like help with. It takes very little effort, and you might be surprised by the results.

Analyzing AngelList Job Postings, Part 2: Salary and Equity Benchmarks

A few weeks ago, I did a basic analysis of AngelList job postings. That analysis looked at attributes like job locations, vesting schedules, and commonly requested skills.

In this post, I'll look at salary and equity numbers based on startup size. In my experience, founders frequently give out equity grants that are too generous or too stingy. The dangers of stinginess are that candidates will choose to work somewhere else and that you will waste a lot of time interviewing people who definitely won't take your offer. The danger of generosity is that, especially for the first few hires, you are giving away much more equity than you need to. That equity could be used to give stronger offers to multiple candidates later on, to raise more money from investors, or to retain more decision-making power for founders.


Every job posting on AngelList has a salary range and an equity range. For example, at the time of this writing, Casetext is hiring a full-stack software engineer and offering $90k - $125k in salary and 0.3% - 1.5% in equity.

Two notes on these ranges: first, the more senior and well-qualified you are, the closer your offer will be to the top of the company's salary/equity ranges. Second, a lot of companies will let you trade equity for salary. That is, if a company is offering 1% - 2% equity and $100k - $130k salary, a specific candidate might get to choose between $100k and 1.75% or $125k and 1.2%.


I used AngelList's API to find all full-time jobs in Silicon Valley that were posted in the last 2 months and offered salaries of at least $20k. I then checked LinkedIn and manually counted the number of employees at each company. (This was exactly as fun as it sounds.) To keep the manual work manageable, I limited the companies I was looking at to those with an AngelList Signal score of 6 or more, which cut the number of companies in half. All of these filters resulted in a list of jobs at over 300 startups. Finally, I grouped startups by the number of employees they had, then graphed the equity and salary offers for different company sizes.


My methodology is far from perfect, and there are lots of areas where fuzziness was introduced. For example, not everyone is on LinkedIn, so employee counts based on LinkedIn data won't be perfectly accurate. The following data is meant to provide ballpark ranges for salary and equity offers. Please don't treat it as gospel.

Summary of Results

Note: These are benchmarks based on a medium-sized sample; they're not hard-and-fast rules. The benchmarks are for engineering jobs in Silicon Valley. (Non-engineering jobs are discussed at the end of this post.)

Assuming that a startup has two founders, here are some ballpark numbers for engineering job offers:


  • For employee #1:
    • 20th percentile salary range is $70k - $100k
    • 50th percentile salary range is $80k - $120k
    • 80th percentile salary range is $82k - $135k
  • For employees #2 through #13, salaries rise for higher paying jobs:
    • 20th percentile salary range is $75k - $100k
    • 50th percentile salary range is $85k - $125k
    • 80th percentile salary range is $100k - $150k
  • For employees #14 through #35, salaries rise for lower paying jobs :
    • 20th percentile salary range is $78k - $120k
    • 50th percentile salary range is $90k - $134k
    • 80th percentile salary range is $102k - $150k
Lower salary ranges tend to be for more junior or more specialized roles (e.g. front-end engineer). Higher salary ranges tend to be for more senior roles, or for full-stack engineers. That is, a Junior Front-End Engineer is more likely to get an offer in the 20th percentile, while a Senior Full-Stack Engineer is more likely to get an offer in the 80th percentile.


  • Hire #1: 2% - 3% of equity
  • Hires #2 through #5: 1% - 2%
  • Hires #6 and #7: 0.5% - 1%
  • Hires #8 through #14: 0.4% - 0.8%
  • Hires #15 through #19: 0.3% - 0.7%
  • Hires #21 through #27: 0.25% - 0.6%
  • Hires #28 through #34: 0.25% - 0.5%

These ranges indicate the maximum equity amounts offered by companies. These amounts are typically reserved for ideal candidates, or candidates who are very senior. If you're just out of college or not a perfect fit for a company, you will probably get a little (or a lot) less. A good way to frame these numbers is to add "up to" before each range. For example, a typical 6th hire will get up to 0.5%-1%.

Given the recent attention to burn rates, one interesting observation here is that the first ten employees of a company will own about 12% of the company, and will cost, on average, about $100k/month for salary alone. Companies that are able to raise $1.5m+ seed rounds are fortunate because they can usually get about 18 months of runway as their team grows from a few founders to 10-15 people.

Salaries for Engineers

After employee #1, salaries for employees were relatively close together, with one noticeable jump occurring around the 13th or 14th hire. I suspect this is around the size of a company raising a Series A, and as soon as an A round is closed, the company increases salaries a little bit.

Here are graphs of min/max engineering salaries:

The way to interpret these graphs is that the horizontal axis is the salary's percentile among all other salaries. For example, if a company is offering a salary range of $90k - $140k for an engineer who will be the 8th employee, then we can see that $90k and $140k are each at the 60th-70th percentile on their respective graphs, so the salary offer is pretty good (better than 2/3 of startups).

    Equity for Engineers

    The following graphs are histograms for max equity stakes of different job offers. Each bar represents a single startup's offer. For example, the first graph shows that for hire #1, 6 startups offered up to 2% equity, 4 startups offered up to 3%, and 3 startups offered up to 5%.

    I expected to see a consistent drop for each additional employee, but was surprised to find that offers remained consistently high for many employees at a time. For example, the equity for Hire #5 is often similar to the equity for Hire #2. This feels like a market inefficiency, as Hire #5 is taking on much less risk than Hire #2.

    What about latecomer VPs, Directors, etc?

    The dataset only had 7 data points for VPs and Directors of Engineering who came in when a company already had 10+ people. In those cases, their equity stakes were at the top of the ranges for their employee numbers (e.g. 1.5% for a VP who was employee #13), and their salary ranges were consistently around $120k - $180k.

    What about non-Engineers?

    The sample size of non-engineering jobs at early stage companies is too small to analyze rigorously. That said, here are some high-level observations:

    Sales jobs

    VPs tend to get 1%-2%. Directors tend to get 0.5% - 1.0%. Salary ranges for directors are often $80k - $140k.

    Non-director role salaries were very inconsistent, ranging from $40k - 60k to $80k - $120k (for the same job titles). Presumably there's also a commission structure, but that's not captured by AngelList.

    Equity stakes for non-director roles were generally 1% or less. For the first 10 hires, equity was typically 0.3% - 0.5%, then dropped off to 0.1% - 0.2% for subsequent hires.

    Marketing jobs

    VPs: not enough data

    Directors at < 15-person companies: $80k-$120k, 0.5% - 1.0%

    Directors at >= 15 person companies: $120k-$180k, 0.25% - 0.5%

    UI/UX/Designer jobs

    Median salary range was around $80k-$130k.

    Designers among the first four hires get up to 1-2% equity, occasionally only 0.5%. Designers among next 5 hires get up to 0.5% - 1.0%. 0.2% - 0.5% for employees #10-30.

    I'd like to reiterate that there wasn't enough data to deeply analyze non-engineering jobs. There were sales reps who joined early and only got 0.05% stakes, as well as marketers who joined late and got 1% stakes. 

    What about outside of Silicon Valley?

    I chose to focus on Silicon Valley because the dataset was more manageable. For other locales like NYC or Houston, a hack that might work is to look at a dozen random, high-quality companies and see how their offers compare to Silicon Valley's. Seeing where those offers fall can help calibrate expectations.

    That's a lot of data. Now what?

    There are four common problems with startup job offers:

    1. The founder's offer is too generous. In this case, the employee will be happy in the short term, but the company suffers in the long term. If the founder gives away 10% more than they should to the first 10 employees, then that's 10% less that's available for fundraising and future equity grants -- and that might break the company.
    2. The founder's offer is too stingy. In this case, the entire interview process is usually a waste of time for both parties. Furthermore, even if an employee takes the offer, it's harder to retain them because they'll either resent the founder once they realize they're being paid below market, or they'll just move to a company that pays better.
    3. The employee's expectations are too high. In this case, the interview process is likely a waste of time, and the employee is likely to pass on multiple good job opportunities before realizing they have unrealistic expectations.
    4. The employee's expectations are too low. If a founder exploits this, it hurts long-term retention and builds long-term resentment among employees.

    The goal of this analysis is to increase transparency, which can help mitigate these four issues. The benchmarks are just rough guidelines, but they can be helpful if the employee expects to receive 2% while the founder thinks 0.2% is fair, or vice versa.

    As a parting thought, I'd like to reiterate that these are not rules, they are starting points. There are plenty of reasons to have higher equity grants (e.g. a specific employee can change the entire direction of a company) and plenty of reasons for lower grants (e.g. there are significant non-financial perks, like working with an amazing founder or working on a particularly meaningful project).

    In the next and final post in this series, I'm going to look at which aspects of a company and job correspond to getting more job applicants via AngelList. If you'd like to be notified when that post is published, please subscribe to this blog or check back in a week or two.

    Thanks to Mike Greenfield and Cheng-Tao Chu for feedback on earlier drafts of this post.

    Extensive Notes from SalesConf

    As an engineer with no direct sales experience, I've always wanted to learn more about how to turn code into cash, but wasn't sure where to start. A few months ago, I got an invite to SalesConf, an affordable sales conference with a great speaker lineup. I bit the bullet and signed up, and I'm happy to say that I learned a ton. While the conference was targeted at SaaS startups, many of the lessons are broadly applicable.

    This post is a collection of my notes from the conference, which was held last Friday.


    There are a lot of notes here -- about 6,000 words in all -- and not everyone has the time to read that much. While I think there's a lot of value to reading the entire post, here is a summary of high-level points that came up in multiple talks:

    • You need a sales process -- don't just wing it, or expect your initial sales employees to just figure things out on their own.
    • Your pitch should be simple and clear, and tailored to the prospective customer you're talking to.
    • Know what you're looking for in an ideal customer and an ideal salesperson. 
    • Measure everything. Analyze the data for your best customers and look for patterns. Go out and find more customers who fit those patterns.
    • Specialize and do 1-2 things very well instead of doing a lot of things poorly. This advice applies both to team efforts and to individual efforts.
    • There are many great software tools for salespeople and marketers (links throughout the notes). Use them.
    • When your company is small, you don't have the bandwidth to handle a lot of potential customers, so identify your ideal customer profile and focus on companies that fit that profile.
    • Ask customers to pay for up-front development (for new products) and custom development (for enterprise PoCs).
    • Your first sales hire needs to be a great salesperson and to be able to build out a team. Don't settle for just one of those two skills.
    • Understand the milestones that lead to sales and customer success, then work hard to lead customers to those milestones.

    Ok, on to the notes! If something doesn't make sense, it's my fault and not the speakers'.

    Table of Contents

    1. How to Crush Your Sales Goals by Aaron Ross
    2. Uncovering a Treasure Trove of Sales Opportunities With Customer Data by Lincoln Murphy
    3. How To Fast Track Sales Reps To Peak Performance by Bridget Gleason
    4. Step-By-Step: $290K MRR In 14 Months by Tim Sae Koo
    5. Build A Massive Personal Brand-Powered Referral Network by Carolyn Betts
    6. Build a Hyper Targeted Lead List in 12 Minutes by Ilya Lichtenstein
    7. How to Sell a Product Before You Create It by Josh Isaak
    8. Growing B2B and SaaS Sales Teams by Armando Mann
    9. How to Write a 3m Page View Article by Nick O'Neill
    10. How Mattermark Sold Their First Million by Danielle Morrill
    11. Sales Hot Seats with Hiten Shah, Lincoln Murphy, and Steli Efti

    How to Crush Your Sales Goals by Aaron Ross

    Speaker background: Aaron spent 2002-2006 at Salesforce, where he built out the outbound prospecting team. He is also the author of Predictable Revenue. [affiliate link]

    Aaron talked about common sales mistakes and how to fix them. 

    Fatal mistake #1: not having a sales system

    Indicators of this mistake include high (>10% per year) churn on the sales team and/or missing your goals. You need to have a process in place, be able to describe your ideal customer, etc.

    Corollary: at large companies, missing quotas is often blamed on salespeople, who are then fired and replaced. But if recruiting, training, and other processes remain the same and quota continue to be missed, the problem is with the processes, not the salespeople.

    Fatal mistake #2: confusing your prospects

    When people are confused by your pitch, they default to saying "no." Don't pitch your product as a kitchen sink or ask your prospective customers what features they want. Instead, try to understand each customer's problems, then give a very focused, targeted pitch which makes it easy for them to make a yes/no decision. Confusion always defaults to a 'no' reply.

    Make the pitch about what customers want. They don't care about what you do, they care about what you can do for them. For example, don't talk about your "scalable platform," because a prospect won't care; they only care that you can solve their specific problems.

    Tips for improving messaging:

    • Instead of telling someone what you do from your point of view, pretend they asked you: "How do you help customers?"
    • Review your own pitch. For each bullet point, ask yourself, "so what?" or "what's so great about that?" Your answers are what you should be pitching to prospects.
    • Selling ideas is better than selling benefits, which is much better than selling features. Aaron used a great analogy:
      • Selling a feature: "This is a drill."
      • Selling a benefit: "You need to put a hole in the wall, and this drill makes that possible."
      • Selling an idea: "You'll be happier if you can cover your walls with family photos, and this drill makes that possible."

    Fatal mistake #3: driving growth by growing the sales team

    It's less common today, but the way people used to think about growing sales was "I have 10 salespeople, and I need to double sales, so I'll double the number of salespeople." The real lever is lead gen. If you have great sales but terrible lead gen, you'll struggle; if you have great lead gen, you can mess up the sales process and still succeed.

    3 types of leads: seeds (word of mouth), nets (marketing), and spears (outbound sales).

    Tips for word of mouth:

    • Improve referral rates by hiring customer success reps. Happy customers will recommend you to others.
    • You should hire a customer success manager (CSM) by the time you have 5-15 people, and should have one CSM for every $1m-$2m in annual revenue. 
    • Two baseline metrics: customer churn should be <15%, revenue churn should not be negative (if you lose customers, you win more revenue from upselling to existing customers and growing your customer base)
    • Triggers for having a CSM engage a customer: support/help desk interactions, billing/payment history (i.e. someone is paying on time), survey feedback, engagement with marketing materials, levels of usage of the product and specific features.
    • GainSight offers great dashboards for customer success management.

    Tips for marketing:

    • Just like the VP of Sales has a sales quota, the VP of Marketing should have a lead quota (with some balance of quantity vs. quality).
    • Most important metric to track: lead velocity rate. This is a measure of how much qualified pipeline is being created each month and helps you estimate growth/company health. Ideally, the velocity is high and growing every month.
    • Make your marketing emails personal. Messaging that sounds more human gets much better results. For example, use text emails instead of HTML with a lot images, and include a one-sentence story about yourself (even if it's something trivial like "I just finished my coffee and wanted to send this to you.") This advice is probably simplest thing you can do to make your marketing better.

    Tips of outbound prospecting (Aaron's specialty):

    • Your funnel should be to identify target customers, prospect with cold emails/calls/appointments, then start the sales cycle on qualified leads. For example, 1000 emails => 100 calls => 20 appointments => 15 sales qualified leads, each worth $50k/year.
    • Common sales email fails: too long, confusing/lots of jargon, filled with lies, boring, vague calls to action. Aaron's mantra: "make it simple to understand and easy to answer."
    • If you're vague, like "let me know the best way to reach you," it's easy for a recipient to not respond. Simple, specific questions are much more likely to get answers. For example, "Are you free Thursday at 3pm for a phone call?" Even if the reply is 'no', at least you've gotten the prospect talking.
    • Keep it short. Relevant HubSpot study result: the highest response rates were for emails that are 300-500 characters (1-4 sentences). Keep emails personal, but take out filler material. Don't beat around the bush.

    Fatal mistake #4: not specializing and trying to do too much

    Salespeople often avoid prospecting because they're either not good at it or don't like it.

    Over time, you want inbound and outbound salespeople who qualify leads, account execs who close sales, and customer success managers who increase the value of existing accounts.

    If salespeople own the entire process, customers get horrible service because salespeople focus on deals they're trying to close that month, and prospecting and customer success suffer.

    Even if you're at a small startup and you own the entire sales process, at least separate functions by day of the week so that you're not neglecting anything (e.g. Tuesdays are for prospecting; Thursdays are for customer success.)

    Most marketers try to do too much (webinars, events, white papers, etc). It's better to do a few things very well instead of a lot of things poorly.

    Specialization leads to predictability: you will get insights on what works and what doesn't, better scalability for each layer, and a talent/farm team system where you can hire more junior people and help them grow into more impactful roles. You will struggle without specialization.

    For some parts of the process, outsourcing can be effective if done right. See: LeadGenius and Carburetor (Aaron's company).

    Salesperson churn is usually due to unrealistic quotas, poor management, or lack of coaching. It's rarely about compensation.

    Online resources that Aaron recommended during the talk:

    Uncovering a Treasure Trove of Sales Opportunities With Customer Data by Lincoln Murphy

    Speaker background: Lincoln is a customer success evangelist at Gainsight, which offers products for customer success management. He also has a great blog called SaaS Growth Strategies.

    Tip #1: Even if you don't have enough customers for meaningful data right now, you need to start collecting now.

    Tip #2: Focus on your ideal customer. Founders are often afraid to do this because they have a fear of missing out on other customers, but in the early days, you don't have the resources to handle everyone, so you may as well be choosy.

    Ideal customers have 7 key attributes: ready to buy, willing to buy, able to buy, will get value/success out of using your product, profitable (you can make money off of selling to them), have expansion/upsell potential, and have advocacy potential. Lincoln focused on the last 4 attributes during his talk.

    General methodology for finding ideal customers:

    1. Determine what situation you're solving for (e.g. potential customers who will refer others or sign a contract quickly or pay a lot.)
    2. Get access to your customer data.
    3. Find existing customers who match your situational criteria.
    4. Look at all of the data you have for those customers: which product features do they use? What industries are they in? How many employees do they have?
    5. Look for patterns among customers who match the profile you're looking for.
    6. Use those patterns to find new customers who match your profile.
    7. Profit!

    Basically, find your most successful customers, then try to find more customers who are just like them.

    Different types of customers, and the patterns that reveal them:

    • Customers who are most likely to find success with your product. Data to look at: average Net Promoter scores over time, short sales cycle length, quick time to getting value out of your product, customer support data (tickets that are resolved quickly and thoroughly). You can also poll your account managers for their gut "health" scores for each customer. That may not sound scientific, but it's basically wisdom of crowds and it works. (Gainsight, Lincoln's company, makes tracking all of this stuff easy.)
    • Customers who are the most profitable. Data to look at: on the cost side, look at fully-loaded customer acquisition cost (ads, sales time, trials and POCs, cost of converting from free to paid). Include post-sale costs and ongoing support costs. On the revenue side, look for high lifetime value, long term contracts, increasing usage/purchasing of add-ons over time, and low support costs. Also look for short sales cycles.
    • Customers whose accounts grow over time. Data to look at: intra-company virality (land and expand), roles/departments of initial purchasers within the company.
    • Customers who are your biggest advocates. Look for: companies that speak at your events, participate in your case studies, refer customers directly, provide testimonials, etc.

    In general, customer success is a prerequisite for each of these customer types. That is, if customers are not getting value out of your product, they are not going to increase their spending, advocate for you, or be profitable for very long.

    How To Fast Track Sales Reps To Peak Performance by Bridget Gleason

    Speaker background: Bridget is VP of Sales at Yesware, which offers email-based tools that make salespeople more efficient and more effective. 

    Everyone wants to be a peak performer, but how do you increase each person's probability of success?

    • Culture always precedes great results. If people don't hit numbers and the rest of the company is okay with that, you get a culture of mediocrity. (Personal note: the reminds me of the Broken Window Theory in software development.)
    • Need to hire A players. If the team isn't exceptional, then other exceptional people won't want to join.
    • Need a great system. "A great assembly line comes before a high quality car."

    5 things to think about as you create your system and assemble your team: 

    Ideal sales reps

    Just like you expect salespeople to know ideal customer profiles, you should know the ideal sales rep profile (which might change over time). For your first hire, the ideal rep is probably someone who is both a great individual contributor and a great team builder -- not just one of the two.

    Strong onboarding program

    You can't just hire people and then expect them to hit the ground running. You should have a training plan for making reps more successful. This plan can include content you create, or a collection of public content like blog posts and videos. Regardless, you shouldn't expect people to come in and just 'figure it out'. You don't have to teach people everything at the beginning, but you need to provide enough for them to get started.

    Clear expectations

    New reps should know what to expect in terms of what they'll be working on, their works hours, quotas and goals, attitudes, etc.

    Team involvement

    Involve the rest of your team in onboarding (via training, mentorship, social events, etc). The more the whole team is involved, the more everyone feels vested in the entire team's success.

    Commitment to the system

    Onboarding is not a one time event, it's an ongoing commitment.


    Q: Thoughts on commission-only vs. commission + salary?

    A: Not a fan of commission-only because people aren't as committed. In the early days, when there's less predictability in the sales process, might need to pay higher base and less commission. Over time, shift to lower base and higher commission. Bridget favors people who prefer more commission because they are betting on themselves. At her previous company, Engine Yard, new hires were given a choice of taking more salary or more commission. (Personal note: this is like engineers often having a choice between more salary or more equity.)

    Step-By-Step: $290K MRR In 14 Months by Tim Sae Koo

    Speaker background: Tim is the CEO of Tint, which lets you display social feeds anywhere.

    Path to $290k MRR (and lessons learned along the way):

    • First 10 customers: LinkedIn direct targeting. Used Rapportive hack to guess emails.
    • Change your LinkedIn settings to let people see when you've viewed them. Occasionally, people you view might contact you.
    • Charging early makes you seem valuable from the get-go. Release a beta version of your product and your business model.
    • Charge more. People are afraid of charging because they want growth and usage. However, charging more lets you quickly figure out who your real customers are, the ideal customer profile, etc.
    • Charge based on value, not cost. Ask customers, "if you built this yourself, how much would it cost?" Charge based on their answers. Tim used Qualaroo on the pricing page to learn about what customers wanted.
    • You need a distribution strategy. Ask: where do your customers look for tools? In this case, Tint integrated with app stores, built WordPress plugins, etc.
    • Work on SEO for terms your customers search for. Add backlinks to landing pages within your product -- especially for non-premium customers. Those customers may not pay, but at least they will improve your SEO. Build up content on your blog, Quora, etc. 
    • Set up as many lead opportunities as possible: after you resolve issues, give people discounts; set up drip campaigns; upsell people who use the product the most; etc.

    Tint's sales tech stack/process:

    • Wufoo forms for inbound sales leads. Wufoo can track sources, which is handy.
    • Gmail for responding to form submissions.
    • for scheduling. Conversions were high because makes it so easy to book a demo.
    • For each inbound request, send a short email that basically says, "Here's a video describing the product, and here are a few times if you'd like to do a call with someone from the team."
    • Pipedrive to track the sales process.
    • DocSend to track docs. (Personal note: doxIQ is another good tool for document tracking.)
    • Boomerang for follow-ups. (Personal note: I like NudgeMail, which is currently free.)
    • Ballpark for invoicing.

    Tricks for scaling up:

    • Sponsor conferences.
    • When asking people to spread the word, offer pre-written email/Twitter/etc. templates.

    Build A Massive Personal Brand-Powered Referral Network by Carolyn Betts

    Speaker background: Carolyn founded Betts Recruiting, which helps companies hire sales and marketing people.

    After you attend a conferences or event: prioritize your follow-ups, make the follow-ups personal, and invite people out socially to form deeper relationships.

    Have a strong online presence:

    • Use professional photos and descriptive titles on sites like LinkedIn. Make sure your profiles are fleshed out.
    • Google your name to see what others see when they search for you. Polish up all of the results that you have control over.
    • Create relevant, valuable content and share it widely.
    • Be active on social sites, blogs, etc. Make connections with readers, and with other writers.
    • Build relationships within your company. This is often undervalued. When people that you have good relationships with move on to other companies, they might be able to get you new clients or help in other ways.
    • Pay it forward. Send referrals, connect people, compliment people to others, etc. The more you do that (in a genuine and honest way), the more people will want to work with you.

    Build a Hyper Targeted Lead List in 12 Minutes by Ilya Lichtenstein

    Speaker background: Ilya is the cofounder/CEO of MixRank, which helps sales teams automate lead prospecting (i.e. find new customers).

    MixRank has grown dramatically over the last year. Ilya talked about how the company did that while spending time on sales, but not on marketing.

    Main theme: you don't need marketing when you're starting out. If you have a product that costs more than a few hundred dollars per month, you don't need marketing, but you will need sales. Blog posts or SEO are helpful, but they're not required. In fact, at a typical company, 80+% of closed deals come from sales, not marketing.

    In the past, qualifying criteria included attributes like job title, company size, location, and firmographics. Today, it's also possible to use tech signals (what technologies does a company use?), social signals (who are they connected to?), fundraising signals, user activity (in freemium/trial product), etc.

    The traditional way to qualify a lead is linear: go through a list of leads and qualify them one-by-one. Today, you can take a more lateral approach: find reasons to say 'no' to most prospects and only focus on the perfect customers. When you're big, you want to add as many customers as possible. When you're small, you don't have enough bandwidth to sell to everyone, so just focus on the customers who are the lowest hanging fruit/the easiest to sell to. You can address other customers as your team grows.

    Think about who your ideal customers are, then figure out what they have in common. Some company attributes to consider: industry, location, funding level, and technologies used. Purchase attributes: seniority, title, and dpeartment. To generate more ideas, first look at common attributes among your own customers, then among your competitors' customers, then among your partners' customers.

    Use Google's advanced search operators to search LinkedIn for new leads. Google shows more results and allows you to do searches that you wouldn't be able to do directly on LinkedIn. Examples:


    Q: How do you find someone's email address?

    A: Use Google/Twitter searches to find people at the same email domain and see what kind of email address convention they use. Then try that convention for other names at the same domain. toofr is a handy tool for this kind of stuff. 

    How to Sell a Product Before You Create It by Josh Isaak

    Speaker background: Josh used to own a brick and mortar business, then went into consulting, then recently moved into SaaS where he has successfully pre-sold products before building them.

    Most businesses fail because they build something that's not wanted. Often, they start building too early and start selling when it's too late. One solution is to sell something before it exists.

    Two key topics covered in the talk: believe you can sell something before you write a single line of code; apply this process to create your first product, or to add new products to your business.

    The process:

    1) Ideas

    Ideas come from problems. Good ideas come from problems of people who have lots of money for solutions.

    So, pick a market that has people with money (dentists, engineers, etc.), and ask those people about their problems. You can just call or email them. You can use a very simple script like: "Hey, I saw your website and really liked __. My name is __ and I'm reaching out because I'm doing research on what problems lawyers are facing. Can you tell me about a challenge that you face? I'd love to hear back, even if it's just once sentence." 

    Email dozens of people a day until you have enough data.

    If you already have a company, ask your current customers about their problems.

    2) Validation

    Is the problem you're thinking of solving universal? Keep emailing and talking to more people until you're sure the answer is 'yes'.

    3) Pre-sell validation

    This is scary =).

    Remember that you have to deliver if pre-selling works!

    How do you presell? 1) build a wireframe, 2) get feedback from potential user, 3) tweak wireframe, 4) go back to user, 5) ask them if they want to join as an early adopter. (Note: users know they're looking at wireframes and not an actual product.)

    For wire-framing, Josh uses Keynotopia. For demos, he uses and Skype.

    After incorporating feedback, invite users to pre-pay to become early adopters. Given them incentives like the ability to be involved in product development and discounted pricing for life. Offer bigger discounts and incentives for longer up-front contracts. For example, you might offer 6-, 12-, and 24-month contracts at 30% off the retail price. If someone signs up for the 12- or 24-month plans, you will give them an additional 2-4 months free. Note that the discount is for life -- the value of great customer advocates is worth more than the lost revenue.

    When you're pre-selling, explain that you want customers to pay so that they can be committed to the product and to giving good feedback, and because pre-selling helps you fund product development. You can also offer a guarantee (e.g. refund within 3 months for any reason.)

    4) Launch!

    First, launch to early adopters and build up case studies. Next, launch to the public. Josh has done this twice now (with and, and both products were funded with pre-sales.


    Q: Beta customers often want different features, so how do you avoid feature creep?

    A: This works best if you target people in the same industry or with same problem.

    Growing B2B and SaaS Sales Teams by Armando Mann

    Speaker background: Armando build out sales teams at Google, Dropbox, and RelateIQ.

    3 parts to this talk: defining your sales process, measuring success, and maximizing success.

    Part 1: Defining your sales process

    Guiding principles at RelateIQ:

    • Computers are cheap and people are expensive, so...
      • "If a computer can do it, a computer should do it."
      • "If you do something twice, automate it."
      • The team should focus on tough problems that only humans can solve.
    • Use tools and integrations heavily because..
      • Reps do things faster, and that leads to more sales closed. For example, contacting someone within an hour of them singing up can double the close rate!
      • Tools help reps remember things so that their brainpower is freed up for other tasks.
      • Tool usage results in cleaner and better data.
      • Tools improve visibility into what's going on in the company.

    Part 2: Measuring success

    1. Measure key milestones (e.g. what makes someone a lifetime customer?)
    2. Isolate leading indicators for those milestones. What makes them happen?

    Milestones to measure: white paper downloads/engagement (see doxIQ), trial usage, customer satisfaction, renewals, upsells, etc. In general, measure everything. Identify the 3-5 metrics that drive your business. For RelateIQ, it turned out that trials and the brands of existing customers were among the key growth factors.

    Churn is a bad metric to measure (e.g. you might lose 10% of your customers over the course of a year, but be making 2x the revenue with the customers who stayed -- the churn metric looks bad, but your revenue actually grew dramatically). Instead, measure cohort growth over time (ACV by cohort).

    Ways to expand your business:

    1. Add capacity (more companies using your product)
    2. New use cases (e.g. RelateIQ can be used by the sales team, but also the customer success team, the marketing team, etc.)
    3. Adjacent orgs/teams within the same company.

    Random statistic from the talk: 15x close rate (!) for RelateIQ if someone from RelateIQ connects with a self-service client -- even if it's just for a short chat.

    Another lesson specific to RelateIQ is that most people sign up if they've imported data during the trial, so imports receive a lot of focus.

    The recurring theme: figure out what makes people sign up and stay, and then focus on that relentlessly.

    Part 3: Maximizing success

    Most sales orgs are set up like a production line: BD reps get leads, account execs close them, and customer success managers (CSMs) make sure those customers are happy.

    RelateIQ sets people up in "pods" with a biz dev person, a junior and a senior account exec, and a few CSMs. By setting the system up so that the same sets of people keep working together on accounts, accountability goes up. Pods also make it easier to create career progressions. For example, a junior account exec can move to a new pod as their senior account exec.


    Q: Thoughts about pricing?

    A: It's common to give discounts to enterprise, but Armando thinks it's better to go the other way: lower per-seat prices for small customers, higher prices for bigger companies. This could either be done with different license tiers, or with decreasing discounts as company sizes increase.

    Q: Thoughts on free/fremium?

    A: Free makes sense if it's winner take all, or if users don't get immediate value from using product, or if the end user and the decision maker are different. However, there are many situations where not offering a free tier makes a lot of sense -- it depends on the industry and the product.

    How to Write a 3m Page View Article by Nick O'Neill

    Speaker background: Nick organized Sales Conf and used to be a prolific blogger. He grew one content site to 1.4m uniques per month.

    The power law applies to articles. Nick has written 3,500 articles, and 25% of the total page views came from the single most popular article. Given that dynamic, it makes sense to work as hard as possible to produce a hit.

    Miscellaneous tips for content marketing:

    • Backlinko, Videofruit, and Nick's personal site are all great resources for content marketing.
    • Uses Google search suggestions for relevant keywords and ideas. For example, if you're writing an article about Facebook, check which c Google suggests for "facebook a", "facebook b", and so on.
    • Buzzsumo is a great resource to see what's shared by topic/domain. Look for patterns and inspiration.
    • Find a great, heavily-shared article and use the Skyscraper Technique to build something even better.
    • Follow Copyblogger's suggestions for magnetic headlines.
    • Link-building tips:
    • Invite people to do something (share/subscribe/comment/etc) at the top and bottom of every page.

    How Mattermark Sold Their First Million by Danielle Morrill

    Speaker background: Danielle is the cofounder/CEO of Mattermark, which provides private company research, prospecting, and tracking. Prior to Mattermark, she was the Director of Marketing at Twilio.

    Danielle told the story of how Mattermark reached its first million in sales in the course of a year. The talk was more storytelling than bullet points, but highlighted many valuable lessons.

    • When you're selling a brand new product, you need to have very, very high expectations. Because you don't know how high to set your goals, it's easy to settle for sales that seem healthy but are actually suboptimal.
    • Making the first sales hire is scary.
    • The first sales hire needs to be able to run the whole sales process. 
    • Upgrading from a spreadsheet to a CRM for tracking sales is a huge leap forward in effectiveness.
    • Lead velocity is more valuable than lead quality in the early days. If you have a ton of leads, that's a great asset for customer development.
    • Don't just go through questionnaires on your phone calls. You need to understand what your customers are looking for. A good technique is to spend the first 25 minutes of a 30-minute sales call engaging a potential customer, building rapport, and understanding their problems, then spend the last 5 minutes demoing just the product features that they would appreciate. That's a lot more effective than pitching the product in the same, general manner to every prospect.
    • If a potential lead isn't a good fit right now, save your call notes for future reference. The person might be a better fit as your product evolves, and taking good notes will help you close in the future.
    • Good practice: email customers about new features every few weeks. (Personal note: I like this practice and am surprised by how few companies seem to do it.)
    • LeadGenius is effective.
    • When hiring a VP of Sales for a startup, make sure they can function well in a small organization. Sometimes VPs from big orgs look great on paper, but are used to working with expensive tools and well-defined processes and a well-known brand. Those things rarely exist at small companies.

    Sales Hot Seats with Hiten ShahLincoln Murphy, and Steli Efti

    This was a panel Q&A session where attendees would ask the panel how to solve a specific problem.

    Problem: in a previous business, selling was easy because there the product had scarcity built-in. In new SaaS business, that's not the case. How does one create feeling of scarcity -- especially without fiddling with pricing and discounts?

    Suggested solutions:

    • Fiddling with pricing and discounts is not a bad approach. It works.
    • Instead of discounts, offer more product for the same price (e.g. free upgrades/more features).
    • Understand customer priorities and what is urgent for them, then try to connect that to your product.
    • False scarcity can also work. ("Only 3 more 10% coupons available for this month.")
    • Estimate customer's usage and predict the ROI they'd be missing out on. (Example: "you have 12 salespeople and our tool saves 2 hours of work per person per week, which means that at $50/hour, you're losing $1200 for every week you wait.")

    Problem: easy to get people on the phone, but they're rarely the decision makers. Often that's not obvious until well into the call. How do you quickly figure out who the decision maker is without offending the person you're talking to?

    Suggested solutions:

    • If you know who the decision maker would be (e.g. VP of Product), your emails can mention that that's who you're trying to reach.
    • Ask: "in the last 6-12 months, have you championed any tools? What was the process like? What can I do to help with that?" This doesn't hurt someone's ego and makes it easier for them to explain who needs to approve the purchasing decision.
    • If you know what you need to get the deal done, you can give the prospect a checklist so that they know who else to invite to the calls.
    • Treat the prospect as one of several decision makers. "After you approve, is there anyone else who needs to be involved? If you need to present to a team, what concerns might they have that I can help you address?"

    Problem: Product is truly scarce and can only be sold to a certain number of customers. How do you maximize profit/make sure you pick the best customers?

    Suggested solutions:

    • Tell prospects that supply is limited and you want to sell to the people who get the most use out of the product, so you want to determine how much the product would help the prospect.
    • Make prospects go through some hoops in order to demonstrate their level of interest.

    Problem: Sometimes sales cycles take a very long time, especially at big organizations. What can be done to address this?

    Suggested solutions:

    • Ask the potential customer what the process is on their end. For bigger companies with complex processes, ask if you can do some steps in parallel.
    • If you have the flexibility to set a unique price for each customer, ask them what a reasonable time frame would be, then offer a discount that incentivizes them to stick to that time frame. ("You said it should take 3 months? I can give you a 10% discount if it's done within that time frame.") People aren't put off by this and it makes them hustle more.

    Problem: When selling to larger companies, they often want custom work done before committing to a contract. How should that be handled? How should the custom work be priced?

    Suggested solutions:

    • Charge for the pilot.
    • Create scarcity for custom work. You can say something like, "we're very successful with small companies and are now moving to larger deployments. We're doing to work with 10 partners, and we want to work with the companies where this would make the biggest impact on success. If this turns out to be a good fit, you can put down a refundable deposit to be part of our early access program."
      • Note #1: note the use of 'partner' rather than 'customer'.
      • Note #2: note the use of 'early access' (which sounds exclusive) rather than 'beta' (which sounds buggy).

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