AMA with Christoph Janz, The Angel VC, on how to grow your SaaS business
Christoph Janz knows what it takes to grow a successful SaaS business. As Managing Partner of Point Nine Capital he’s backed SaaS success stories such as Typeform, Zendesk and Algolia among many others.
Christoph recently held an AMA on the SaaS Revolution Club slack community (you can join here, it’s awesome!) where he shared his insights on a variety of topics from early stage growth and post-PMF scaling to personal networking and boosting diversity in SaaS.
There were so many nuggets of wisdom that we wanted to share them with you (with the permission of the SaaStock team).
On early-stage growth...
What marketing activities should early-stage SaaS Startups (B2B) focus on? (Assume pre product-market fit)
CJ: If you’re pre PMF I think you should focus on trying to get a couple of customers to get closer to PMF. It’s not about scaling at that point - so CACs don’t really matter. You can try various things - some SEO, some SEM, personal intros from your network, some content marketing, outbound, etc. It’s really about trying a few different things at a small scale (and small costs). Once you’re at PMF and want to scale it’s a different question.
Before PMF, what would you more likely test depending on the size of your customers?
CJ: For smaller customers (rabbits and deer, as I like to call them) I would focus on content plus some content distribution (search, paid search, social). For bigger customers (elephants, whales), unless you have a bottom-up adoption model, you should try to get intros to the right types of customers and people. In general, I would start to focus on content sooner rather than later because it helps in so many different ways - to nail your differentiation, to start developing thought leadership, for sales collateral.
What sales process/methodology would you recommend for early-stage B2B SaaS startups?
CJ: The answer depends drastically on the type of customer - whether you are selling to developers, SMBs, or large customers. So it’s hard to come up with a generic answer; but either way, you need to align the sales process (and costs) with the size of your customer. i.e. What should NOT happen is that you spend a 12-month sales cycle on a customer who pays you $1000. For SMBs I’ve seen the most success with a low-touch sales model i.e. you generate demand mostly through marketing and a high NPS product and have an inside sales or customer success team to help with the conversion.
On scaling up...
How are things different when you want to scale (compared to early-stage growth)?
CJ: Once you start to scale (and I know there’s no clear definition of PMF and when to scale - it’s not black/white, rather a greyscale) you should try to find channels that are reasonably scalable. That’s a big challenge, because most channels work at a small level but you can’t scale them. For example it’s a big difference whether you are targeting developers or CIOs.
What has been THE most effective marketing tactic for SaaS companies trying to scale?
CJ: Good question. I gave up finding the silver bullet some years ago :) That said, I think content marketing (which of course is a very broad topic) is extremely effective, but requires a lot of effort.
Have you developed a preference over time for businesses focused on SMB vs. mid-market vs Enterprise? Any particular struggles as an investor that you'd like to point out?
CJ: I started my “saas investing career” with a strong preference for SMB focused companies, but over time I’ve started to love the beauty of going upmarket :) I think you can build a great company in each segment - SMB, mid-market, enterprise but the product, sales process and team DNA has to be aligned with the customer/ARPA.
What’s one thing the most successful (SMB) SaaS companies do, that less successful ones don’t (or don’t do well)?
CJ: They find a scalable acquisition channel, which may not be possible in some markets! So the size of the market, timing, etc. come into play too.
What would be your key advice for SaaS co’s (with PMF, £1M+ ARR) in a land grab scenario in an emerging enterprise market? (For example, what made Marketo, Eloqua & HubSpot the winners in Marketing Automation 5-10 years ago?)
CJ: If you truly have PMF and if it’s truly an emerging enterprise market and if it’s truly land grab… raise a shitload of money!! :) Hire some sales guys, hire a VP of Sales, hire even more sales guys. And probably go to the US.
Is it still necessary for SaaS companies to head over to the US? Do you see that changing?
CJ: I think you have to *win* the US if you want to build a huge company b/c that’s where ca. 50% of the global software spend goes. It doesn’t necessarily mean you need an HQ in the US, but it helps. There are exceptions - accounting, maybe HR - but most SaaS markets are global playing fields.
On marketing...
You've mentioned marketing towards developers a few times, any tips there? Is content marketing the way to go?
CJ: Yes on content, but the content really needs to be geared towards developers. And it must be written by engineers. Also, your *API documentation* is extremely important for dev marketing b/c that’s one of the first things devs will check out.
You’ve blogged about CAC and LTV a lot - what do you typically expect to see included in CAC? Fully loaded, blended, sales + marketing heads too?
CJ: It depends on what question you want to answer. Typically you want to know, what does it cost me to acquire a marginal customer? In that case you need an analysis by channel (no blending), and it should be all-in, i.e. any sales and marketing related costs that are associated with the acquisition of the customer because at the end of the day, what you want to know is: if I invest $5M into customer acquisition, how many customers will I get? So you need to think about all costs.
Should the head of product *ideally* report into the head of marketing or the CEO? (Essentially this question is seeking to understand the extent marketing should be involved in product development)
CJ: CEO. Marketing should inform the product, but marketing should not be product’s boss.
On Point Nine portfolio companies...
Algolia and Typeform are two of Europe’s fastest growing SaaS companies of the last couple of years. What are they doing right?
CJ: They are doing a LOT of things right, but in both cases it started with a kick-ass product. Typeform - 10x better UX. Algolia - 10x easier to implement and Google-level quality. So in both cases it was a 10x better product, coupled with super sharp founders who then managed to hire great people.
Point Nine is an investor in Zendesk, Front, and even Gladly, all customer<>business communication platforms and all quite similar in terms of the traditional marketplace. What is the opportunity that Front has over Zendesk, for example? And what has caused that delta in the market?
CJ: There is some overlap between Front and Zendesk, but they are solving different problems mostly. Zendesk is really focused on customer service and goes incredibly deep into that whereas Front is not only customer service - it’s about all kinds of incoming emails.
On networking, recruiting and diversity...
Regarding networks and personal intros, how easy is it when you’re relatively unknown to make those connections?
CJ: It of course depends a lot on what you’ve done before - if you have industry contacts already and so on. If you are a complete newcomer you just have to hustle like crazy :) And ask lots of people for favors. The good news is that asking is free and you don’t have much to lose!
Hiring tech is more and more difficult here in Paris. Guess it's the same everywhere. Entry salaries for non engineer devs begins to be more than 40k€. 50k€ for 1 or 2 years of experience. What would be your advices to attract dev talents? Have you seen some creative ideas in your portfolio?
CJ: As you probably know, hiring developers is special. The right people typically don’t respond to job ads. It’s really about creating a name/brand in the community as a company that has interesting/difficult tech problems to solve. You have to mingle with the community, go to events, organize events, etc - all of which of course takes time. You can also try to find developers on github or try to poach people directly of course.
How do we get more diversity in SaaS, having in mind that SaaS companies are born and raised global?
CJ: That’s a good question. I think it is absurd that > 90% of the people in our industry are white males. Obviously it’s not a problem that is specific to SaaS, nor one for which there are easy solutions. It probably requires a lot of effort by lots of people over a lot of time, starting with how people are raised and educated, but there are also things we in the tech industry can do. What I like, as one example, is how Jason M Lemkin is trying to get lots of female speakers on stage at SaaStr. I don’t know if it “works”, i.e. what impact it has, but it’s worth trying to always strive for a better gender balance. When it comes to hiring, I think companies should try hard to get women. Once you have some in the team it’s easier to attract more because a men-only company, I guess, might not be a place most women want to join.
BONUS: On animal reincarnation...
On our last AMA Patrick Campbell told us how he once met a bear. If you could come back in another lifetime as an animal what would it be and why?
CJ: Oh, wow, what a question. I think flying would be cool, so maybe as a bird; or as an animal that does winter hibernation. Haven’t really thought about the question before :)
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There’s a lot of valuable discussion taking place in the SaaS Revolution Club community on Slack and I can highly recommend to anyone who works in SaaS to join and get involved. AMAs like this are also part of the fun so check it out!
The community is run by SaaStock, Europe’s biggest SaaS conference, where Christoph will be speaking in September (and is also an investor in).
You can also listen to our interview with SaaStock Co-Founder, Alex Theuma, on The Growth Hub Podcast.
