SaaStr Annual Digest: Be the Best Leader You Can Be
Updated: Aug 17, 2020
I started this series of SaaStr Digest articles with Product-Market Fit and the science behind SaaS business rapid growth, then continued with the benefits of being niche focussed and tips to scale upmarket.
In this final post, I’ll share some insights on leadership, culture and customer obsession to drive the expected business outcomes and build generational companies. Because most of the time, kiwi tech companies want to build a sustainable business and have a meaningful impact on their market.
What does leadership looks like to you?
There are many definitions, yet we can’t seem to agree and settle on one.
Michael Seibel, CEO of Y Combinator, shared ‘A Decade of Learnings from Y Combinator’ which earned him the title of ‘expert in failure’. Failure is necessary to become a good leader, but it doesn’t hurt to leverage others’ to avoid falling in the same traps.
Do not assume that raising a successful seed round means you’ve reached product-market fit
Do not hire too quickly – the primary focus of a CEO is to focus on product-market fit not manage & raise capital
Avoid taking on too many products at the same time before the first one has found product-market fit
Understand the business model and pursue the strategy that will take you where the customers are – can you afford the process you need to follow to acquire customers?
Understand when it is the time to sell to an early stage startup – if you sell key components to start ups you grow with them, you’d sell to the founder who has the buying power
Do not assume investors will be a large differentiator – there is only one skill that an investor often brings: closing, not helping
Establish best practices around hiring – build a pipe of good candidates, have good comms about equity, set clear expectations about role & responsibility, share vision, don’t be overconfident about the team
Establish best practice around management – consistent meetings, hands off meeting, buy in
Be transparent around financials and KPIs to the team
Define clear roles & responsibilities for founders and all staff so that only the most important decisions are the ones worth debating
Have level 3 conversations within the founding team
Do not assume series A are as easy to raise seed raise – be at your best to negotiate
Two speakers that profoundly demonstrated leadership and a strong sense of culture at SaaStr Annual 19 were in my opinion Jay Simons, President at Atlassian, and Ryan Smith, CEO of Qualtrics, when interviewed by Jason Lemkin.
From Jay Simons on ‘How To Scale an Open Culture’:
“At Atlassian, openness is core to everything we do: every employee can access most information on our product Confluence; “open company, no bullshit” is one of our five values; it’s a rigorous set of practices we work at every day. [...] Some would say that that level of openness is unnecessary, but we believe that trust and honesty are essential to maintaining the culture we’ve worked so hard to build.” - Jay Simons, President at Atlassian
Atlassian’s got a very deep understanding of the levers that fuel their growth, especially how the increasing collaborative nature of workplaces requires tools that are intentionally designed to enable better ways to move forward faster. Companies nowadays need to operate like SaaS companies.
Atlassian runs a 10x future exercise every couple of year to imaging what the world would look like in 10 years time and what they would have achieved. This helps them build architecture for the next 2-3 years with focused investment and measure the right things and velocity.
Openness is the way companies can unlock the potential of teams as it levels the playing field for people to contribute to ideas and enable a force multiplier. By creating a page that everyone can see, support, challenge, voice over - including the company’s strategy - you embrace vulnerability. It takes courage from both management and staff to let their guard down and shift their thinking from the traditional way of doing business to openness.
The architecture to create trust and empathy is shared understanding. When you get your people to understand the ‘why’, then they are connected with the ‘what’.
Atlassian believes that diversity is a strength, and focuses on the diversity of each team instead of at an aggregated level. Their culture does a good job at balancing how much people share and help people start meaningful conversations.
From Ryan Smith on ‘The Things Nobody Tells You About An $8B Acquisition’:
“Actually, sometimes, an influx of capital can make you take the shortcuts, and you need the scar tissue to run a business in the out years that you can only get from the suffering in the in years.” - Ryan Smith, CEO of Qualtrics
Qualtrics has been around for 17 years before being acquired by SAP, on the verge of listing for IPO. The founders bootstrapped their business and it took them 10 years to get to 30 million in revenue. Bootstrapping allowed them to develop the business despite the economic downturns of the 2000s.
Their initial target was the academic market, with PhDs as power users but no budget to afford expensive research tools. The great thing about this approach is that millions of academics user of Qualtrics took it with them into the workforce.
Developing a product where a PhD or researcher calls in requires the product to work and a very smart support team. That was what prepared them for going upmarket and target enterprise.
When Qualtrics went into enterprise, they did it a different way. If they had bought their way through, they wouldn’t have had that confidence or DNA to pivot the whole company and create this new category of experience management, which is really what SAP wanted. Now the academic market only represents 10% of their revenue whereas it accounted for the totality a few years back.
When SAP acquired Qualtrics, they “created more millionaires than any company” Ryan has seen. If you’re going long and build a generational company, your employees love you. What’s interesting is with SAP, every Qualtrics employee will make more money over the next five years than they did the prior 17.
Now, what that Jay Simons and Ryan Smith demonstrated as well throughout their interviews was customer obsession. It’s definitely a trendy topic in the marketing community but that should be the number one focus of all staff in or day and age.
Leela Srinivasan, SurveyMoney’s CMO, presented very actionable ways to put customer obsession into practice with ‘7 Tips for Using Customer Feedback to Build Rabid Fans and Make More Money.’
We live in the feedback economy, so what is your business doing about it? You can get better at empathising with your customers by using feedback to create content that will move the marketing needle.
Inform your biggest messaging decisions
Audit your starting point
Decide on guiding principles
Draft key concept to test with people who buy your type of product
Think of your customer feedback as the ultimate in data enrichment
Map you entire customer journey and insert “listening posts” at moments of bigger risks
Integrate to your customer facing systems so it’s easily accessible
Highlight ways to reduce churn and deliver exceptional experiences
Leverage feedback for surprise and delight
Have a B2H (business to human) approach
Generate high value, attention-getting, lead-generating content
Your customers care about what their peers think
And about what their customers think
Inform pricing & packaging decisions
Survey features & functionalities
Create a virtuous customer acquisition cycle
Set up a Customer advisory council to: share feedback, champion your business, refer customers, provide indisputable proof
Create devoted internal fans – consider the cost of recruiting = 1/3 annual salary
Bring your employees closer to your customer base
I hope that you’ve enjoyed reading this series of SaaStr Digest articles as must as I enjoyed writing them.
In summary, my main SaaStr takeaways revolve around a few key themes that I believe are important to help our tech industry thrive on national and global scales:
the methodology to establish product-market fit thanks to proven frameworks and data to maximise the market opportunity faster;
the necessity to be focussed on a core target segment to learn all about the customer and nail how to best market, sale and service them, and scale upmarket with a phased approach;
the importance of leadership, culture and customer obsession to drive the expected business outcomes and build generational companies.
Saatr Annual is definitely worth the trip from New Zealand - to listen to case studies, bring back best practices and actionable insights, network with experienced SaaS execs from around the world, establish or strengthen relationships with fellow kiwi tech execs, etc. I certainly hope to go in 2020!
In the meantime, I’ll see you at Southern SaaS in Auckland on 28-29 August 2019. I had the pleasure to be invited to speak and run a workshop with the Proxi collective at the inaugural conference last year and loved the event.
Feel free to reach out to me if you want my notes on any particular session highlighted above.