← The Official SaaStr Podcast: SaaS | Founders | Investors
The Official SaaStr Podcast: SaaS | Founders | Investors
SaaStr 780: From Outbound to Channel Partnerships: Your Burning Sales Questions Answered by SaaStr CEO and Founder Jason Lemkin
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SaaStr 780: From Outbound to Channel Partnerships: Your Burning Sales Questions Answered by SaaStr CEO and Founder Jason Lemkin At the closing AMA of SaaStr Annual, SaaStr CEO and Founder, Jason Lemkin shared candid insights about what's really...
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A
Welcome to the official Saster podcast where you can hear some of the best Saster speakers. This is where the cloud meets up today on the Saster podcast. The classical approach to Outbound is dead. I think a lot of us have been saying that in sales the vendors are great because they're much more sophisticated platforms, but that old playbook of just load up a database with the same freaking email is dead. And I think most of us believe it's not dead. But the yield is really low. And I think what I meant to say by that is that AI is blowing that up. We're all getting a trillion AI emails and they're terrible, but they're actually better than the ones the humans sent. I got a DM from an SDR today. Dear Jason M. Will you be at Saster today? What time shall we meet? This is a human driven one. This is the quality of an SDR today. That is, that's what I mean is that is dead slow at the frack down. Stop with the dumb emails. Hey everybody. Thanks to the 10,000 of you who came out to Saaster Annual this year. We had a blast and big news. We'll be back in May of 2025 or in May of next year. That's right, SAS train will be a bit earlier next year. The 13th to 15th of May 2025. We'll still be back at the same venue in the SFBA in our 40 acre San Mateo county event center campus. And tickets are never cheaper than right now. So grab your tickets@saster annual.com with my code Jason50 for an extra discount on our very, very best pricing. That's Jason5zeroasterann see you next May at Saastra 2025. Hey, don't let sales tax slow your growth. It's important in SaaS now. Anroc's all in one platform handles global tax compliance for fast growing companies like Notion and Vanta. Those are some of the best of the best. Ready to simplify tax and to do visit anrok.comsasterday a n R-O-K.comsastertoday Foreign Please welcome Jason Lemkin, founder and CEO at Saster. Thank you everyone for being here. So this is great. Thank you for coming back. It's. I'm not sure how much time we have but this has become to the extent that I can help this kind of closing AMA has become a little tradition. Maybe just a couple few notes first. Maybe just more stuff for folks that have been multiple times we've been doing Saster Annual in September. Since that little bug went around in 2021, it was great. We did it in September because September 2021 was the first week we were allowed to do it. In fact, San Mateo county was the only county in 2021 that let us do an event. We tested 5,000 people three times a day. It was pretty fun. So we did September for three years. But September kind of sucks. There's way too much going on. There's Dreamforce, there's Inbound, there's a million things. So we're moving back. We'll be in May 13th to the 15th. May's the earliest we can do it that this venue's open indoor outdoors. So plan a little bit early. I think it'll be better. There's less going on, it'll be more fun. And Saster tickets are always relative. They're not cheap, but compared to anything else, they're cheap. But if you want super cheap ones, you can buy them today on sasserangual.com like they're literally more than half off if you buy them like this week at saster annuals. So May 13th, the 15th, it'll be fun. And just maybe just a couple nerdy things that are interesting to folks that have been part of Saster for a while. This event. In some ways the attendance is a pulse of SaaS. And it is interesting what the numbers show. The raw attendance is about 103% of last year. Just a tiny bit up. It's. That's both are great. In an ideal world, maybe it would be bigger, but it's pretty interesting that it's up. But the mix is pretty different of the people here. Of that 103%, CEOs and founders up about 150% of last year. Folks from other countries are up. As you can probably tell, it's always been diverse in 2021. The actual crazy it was we were in 2021, the United States was locked down. It was all Americans in 2021. I think this year it's a majority of folks outside of the US so that's fun. So founders and CEOs are up. Overall, CMOs, CRO, CCOs are up. Because we've had three, 200 plus summits here for CCO Sierra. We're going to do that bigger next year and integrate them more with everybody. So look for a thousand extra CMOs, CROs and CCOs to meet next year. That worked well. So that's. Those are good overall numbers. Founders are good. C levels are good. VCs are about 60% of last year. About 60%. This saster, it's not designed. We have a VC lounge. We do stuff. It's not unlike something that's not designed for VCs, but it's traditionally been a magnet for VCs because of the concentration of founders down 40%. I could hypothesize why. What is clear, no matter what you read, even great. We love all the Carta data. I quote it on Saster all the time. The aggregate data says VC is back. It's on fire. You heard that from Tomas and others. But not really. It's as we said in the opener, it's back, but it's different. And while YC is as hot as ever. Right. I talked to two YC founders in this batch that got 40 VC offers this week, and the batch hasn't even started yet. So that's hot. Portions of AI are so hot that, like, hair is getting singed off founders. But a lot of folks in Venture, even though it doesn't look like it, they don't have money to invest. They're struggling to raise another fund. They're sitting on the sidelines lines. They've slowed it down. They're worried. And I think, how true is that? I didn't know how true that it was until this week, but attendance is down. It's only 60% of last year. I think that's if you really want to know what the vibe is for Venture for real. Forget about the actual hard data. Thank you, Cardiff, but forgot the hard data. What's the reality of the human data? It's about 60% or down 40%. That's still down. So it's just something to think on. So that is down. And then a couple other interesting things. There are more CEOs, founders and CEO. The. The. The individual contributors, the managers that. That they're not our core audience, but they love Sasser. They're the ones that really want it. Not the reps working 10 hours a week from home, four jobs, but the ones you want to hire. Right. The ambitious ones. That group is down a bit this year, that we're. I'm worried about the next. I'm not worried about us. There's more of us than ever. I'm a little worried about the kids. I'm a little worried about the kids because that group is down, which we talked about in the opener. And then the last point I'll make, even though overall it's up, this was the first year we missed our inclusion goals here. And for folks that have Been here for a while. We were the first people that, that I knew of to have aggressive inclusion goals for underrepresented founders. Here we, I think we started in 2017. I think I realized that we had to have 50% women speakers. And as many diverse folks, we mostly hit our speaker goals this year. I think we came just under 50% women, which we shouldn't have, but I think we were like 60 something percent less represented speakers. But the weird thing was for attendees, we put a lot of money and energy into our inclusion program. We had about 30% less takers in last year. 30%. So I think, I hope that this is a little bit more representative and diverse environment than your average bro tech event. I hope that it is. But I'm disappointed on many levels that despite 10,000 tweets, probably a half million or more invested, that goal we didn't achieve, even though we've achieved it since 2017. And I could hypothesize why, but it's something I'm going to reflect on because I think overall I folks feel free to challenge me. But I think overall tech cares less about inclusion and being representative than it did two years ago. It cared. It cared, I think more in 20, March 2020 when we shut down the world than it cared today. And then there was a revival in 2020 when it was on fire. And then there, there may be a lot of reasons that I'm not here to even take any, to have any politics in it, but I think we all know that as leaders that the more diverse our teams are, the stronger they are on all vectors. The more socioeconomic, the more gender, the more background, the more countries you're from. I know when I was a founder for the first time, my co founder who was a Palestinian, Lebanese refugee female, she and I came up with only two rules. We wouldn't hire anybody from either coast. We didn't want anyone entitled in our company. So I was the only white male of some privilege in our Original team of 14. We had folks from everywhere, from Vietnam and Mexico and everything. And I don't know, I think the Bay Area is the place of SaaS. I would hire from here. But what I learned from that experience, we didn't know what we were doing. As a first time founder when she and I did that, our company was so resilient. Being that diverse, it was unstoppable. We did things that were actually, were thought to be scientifically impossible could I do. I think it's all because we were from 11 countries and had two out of three women on our founding team, I don't know. But I know that extreme diversity made us just resilient no matter what. And I worry as we've moved away from this that we're more brittle and it is easier to work with folks that look like you and that were in your dorm. And I think it's okay for your co founder to be your best friend, but I worry that we are building brittler startups and have forgotten and I don't have the answers. But I'm bummed that this is the first year we missed that goal and I'm going to try harder next year. But to be honest, but just between us, I don't know how much more I could do. I don't know how many more emails I can send. We. I don't know how many folks that came to our inclusion last year that we asked to bring a friend that we asked to share it. I can't tell you how many more leaders in tech. I asked about 20. I'll. I'll end it here. I asked about 20 CEOs and founders and CTOs in tech to help us with the inclusion program this year. Okay. You know how many offered to help? 1. Dharmesh Shah from HubSpot said he would fund the entire thing next year. The entire frigging thing? The entire frigging thing. Yeah. So tweet that out. Okay. He didn't make a big deal of it. I said do it next year where you can help us. He said just tell me what the check is and how I can promote it. And bless his friggin soul. Been disaster many times the only one. So some so love the founder Vibe founder power founders here more than ever more C level executives come back next year. There'll be even more C level execs to do. VC is interesting. A little worried about the next generation and I think we all have to do more on inclusion. Those are my learnings for this year and I could go to another but I think that's it. So anyone wants any questions or anything, let me know how we can what we want to chat about. Hi, I'm Victor early stage founder, B2B SaaS. Two questions. Yes. One you mentioned earlier Outbound might be dead. Yes. How would you advise a company in my situation to find the first 30 customers? The second question is in your data. Yes. You only get one but what's the second one? Yeah, remote work. Does it work from vicious company? Should it all be in an office? Do you have any data? How should it start. Look, those are fun topics. The first one is I think I did write on. I think I wrote on Saster. I'm not a clickbait guy. I like fun titles and fun images. I'm not a clickbait guy, but I did write something like that that maybe was exaggerated a little bit. I, I think what I meant to say and wrote was that the classical approach to outbound is dead. I think a lot of us have been saying that in sales, that the old classic spam cadences. I invested in sales off pre revenue. I watched it happen and Mixmax and others watched outreach that Playbook has. The vendors are great because they're much more sophisticated platforms, but that old Playbook of just load up a database with the same fricking email is dead. And I think most of us believe it's not. It's. It has, it's not dead, but it's the, the, the yield is really low. And I think what I meant to say by that is that AI is blowing that up. We're all getting a trillion AI emails and they're terrible, but they're actually better than the ones the human sent that terrible. I got that. I got an email. I got a DM from an SDR today. Dear Jason M. Will you be at Sasser today? What time shall we meet? This is a human driven one. This is the quality of an SDR today. That is, that's what I mean is that is dead. What are the. This. Who trains this person? Okay, so when I get the SDR emails, they're with AI. They're better than that. They're like, hey Jason, I'm so proud of this. But you can see that they all sound the same under the hood. But what I mean is because they're better than that crappy human I got today and because software will send it, we are already being inundated in SDR, Sam, and we're being inundated in LinkedIn comments that are fake. And now that spread to Twitter and X and all of my. I get a lot of engagement on LinkedIn if you ever see. I get hundreds of comments now 70% are AI. Right? So it's destroying this old cadence that used to work. That's what I meant to say. Now what I also said was that through all of the history of time, of software, back to the early tools of the 1700s and the early 1800s on those really early computers, of those four bit computers in the 1820s selling software, finding someone through a carrier pigeon parchment email, today at the Exact moment when they have a problem and sending them the solution has always worked. It has always worked. And I remember when I was first a SaaS founder I didn't, I'd never done outbound. I'd done I'd done like seven figure deal, pick up the phone for huge deals but I'd never done this type of outbound that we do. And then I was at Dreamforce actually which is next week and we had a customer panel and we had the CRO of SuccessFactors which is bought by SAP. So a big part of SAP today and I'm and he's I how did I find Adobe Sign, Echo Sign? It was last week of the quarter and my damn sales team, I couldn't take them standing by the fax machine anymore. And I got an email from you Jason at right the right time like me that was my head of marketing that sent it from me but literally the busiest CRO wanting a public SaaS company. Any other time it would have been hurt but he had that moment that day. He needed his problem solved. He had to close this deal. He could not stand it. This was the early day of E signatures and he bought that day a public company, right? So that type of outbound slow at the frack down re stop with the dumb emails. If you want to get your something is your so let's if you're trying to get something off the ground, be honest first. Do you have a 10x feature? Do you have one? Because your product, if it's early is feature poor, bug ridden, slow and does nothing. No one needs your product unless you have a 10x feature. What is 10 times better? And then figure out a hundred folks for real. Slow it down. Spend a week, a month if you need to research a hundred folks that you think have that 10x problem and spend an hour each writing them the email and hours research that email for an hour. Right. Hey Jason at Saster I was at Saster Annual I saw you had this issue around some of the networking complaints. I did it. I'm not trying to do this. I can solve this one problem for you today. Here's how the tool works. Here's how we did it for your competitor. Here's how we did it for someone else in your industry. I can solve this for you today and if you're busy I will do all the onboarding for you. I will do all the onboarding for you. Are you interested? If that's my top problem, I will take that email. I can't tell you for me Now, I'm not a typical customer. I get an email a month from someone that actually can solve one of Sasser's top five problems. That one gets responded to. I often follow, follow forwarded to Amelia, who runs Saster. But that one gets in. That gets responded in minutes. And the last. The related obvious point is there's so many tools. There's reasons that booths work because buyers come here. There's reasons that digital advertising works. It all works. But praise the Lord that email is an open system that people still use. You can reach. If you do it right, you can reach any executive with email. I was with Andrew Bielecki, CEO of Klaviyo $8 billion company yesterday. Someone grabbed him. I said, andrew, you don't. He was swarmed. I'm like, no, I'll talk to this one guy. The guy gave him a pitch. He gave him his personal email. I said, email me about it. Email works. Email works. But it's got to be great. It has to be great. And 99.99% of the sales emails we get are automated or mediocre or automated and mediocre. And AI is because AI is making it better. It's making it worse because there'll be 100 times more mediocre but not terrible email or being flooded with them that are almost good and it's not going to work. But boy, anyhow, we forget the point of Outbound is not to get. I hate this vibe of so many sales teams have their SDRs judged by how many folks they can get on the phone. I don't know about you, but it is. It was always true, but it has accelerated the last few years. Whatever it is with Croes and BB, the sales are like, we're going to judge SDRs by calls. I get so many, I will outbound to a vendor that I will buy from. Okay, there I forget there was a tool. I literally would just buy that second a couple weeks ago. I outbound is we have to get on the phone to talk about it. No, what I mean is these interactions are crappy. Make that email so good, then slow it down. Then this is the trick to pitching VCs too. Here's the thing, at the end of the day, this will always work. Find the hundred people that will really buy it from you and then slow it down. Make the best email and then before you hit send. And no STR on planet Earth does this, but founders can slow it the hell down and look at this email and say, would I buy my product based on this? Email. Be honest. Just the frigging email. Because clearly with this guy at SAP, I didn't even write the email. Marketer clearly said, are you struggling with your sales reps at the end of the quarter? Is it taking them hours? Are you unable to find the deal? Would you like something that can be signed and pushed into Salesforce in three seconds? His answer was, it was a great email. Right? No one writes that green email. I read all of them and forward the ones I get. Right. So no, slow it down. Is no one asks, is this email good enough to sell the company on its own? How many SDR emails have folks ever gotten in the room where you would buy the product Based on the email alone, it's one a quarter if you're lucky, because they're all crappy. Do that and. And I'll give you one last story. And it turns out I know it's not what you asked. It's the same story for venture capital, right? I published on Saster. So I've done maybe 10 investments from the founders cold emailed me. People say cold email doesn't work for investing. Many folks don't like it. Okay. I invested in the. The first one was a pipe drive from a cold email that sold for 1.5 billion. I cold the seed. Okay. I did Algolia, which is going to IPO. It's a 240 million from a cold email. Then the next one was a talk test. There were 10 billion that was a cold email. Okay. The fourth one was greenhouse for 800 million. I knew them. The fifth deal I did was salesloft. It exited for $2.3 billion of a cold email. Okay. I just did one last week that TechCrunch wrote up that I. TechCrunch wrote up that I invested from a cold email in this company called Mango Man. Okay. And then I wrote a whole thing on Saster. I asked David Sacks, Keith Ravoy, Aileen Lee, Satya Patel from over how did they. And they all said, here are the type of cold emails we like to work, but they have to be great. The reason I invest off cold emails is because it's not the one that says, you want coffee? Or I saw you at Saster, or when are you free? Or I'm in Palo Alto. It's like the email is so good. Like, I want to invest before I get below the fold. And I. And if you want to see some VC examples, I wrote an old post to email cold emails. I funded for millions. And the CEOs of Talk Desk And Mapistry let me publish their emails. When I show these to founders and they read them, they're like, yeah, I would fund that. I don't know much about Embassy, but yeah, so make your product email as good as those two. Okay. So that rambly answer and then I'll give you one last little anecdote and hopefully that's enough for the tomb. So I'll tell you, I got this as a founder, right? And then I remember we were acquired by Adobe and I was a VP or an SVP, but my boss was like an EVP. Okay. And he had had 11 VPs reporting to him. He had two secretaries surrounding him in his corner office and he had a lot of resources. And I remember sitting next to him in our E staff meeting and I'm like, Jesus, how do you at your. I'm just curious because I've never worked In a Fortune 500 tech company with how do you handle all the emails you get? And I'm watching him with his laptop. He didn't get that many. A lot. Okay. But my point is people don't go direct to him or add filters. Anyway, my point is even this, not the CEO of Adobe, but one level down. If you sent him the right email and it was great, he was going to sit there in our staff meeting and open it right there. It's magical. So, right. That email works in 2024-2014-2004-1994. Probably not before email was invented. But thanks for the question. Yeah, thank you.
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B
Hey, Dr. Lumpkin.
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I love it.
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Basically like a business doctor.
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Yeah.
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So context is I work at a company that builds a document editor and reader for enterprise clients. We have a lot of legal and banks right now. We crossed a million ARR at the start of the year.
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A
Congratulations.
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Thank you. Not by my doing, but sales has started to slow down and we built that business off of channel partnerships as.
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Well as cold call and email.
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So sales cycles lengthened and core dev team is pretty burnt out on servicing these legal customers.
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Yeah.
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And remedies have been floated to continue to grow the business by repurposing the product for its mass market. So that would consist of like building PLG approach and like meta ads. Early results aren't very promising and I'm personally pretty bearish on this. I think there's still a lot of stuff we could do in terms of growing our enterprise offering. Do you have any thoughts on like.
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How many customers do you have?
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We have about like 25 to 50 enterprise customers and then we have a smattering of individual small shops.
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Have you completely exhausted your market at 1 million error.
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Absolutely not.
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No. If you have 25 to 50 what are the odds you can get 50 to 100?
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I think very high.
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That's what you should do.
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Okay, just continue.
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I think. Listen. There's a chance this is wrong. I've written this many times over the years. But the biggest mistake folks make on the journey from 1 to 10 is the shiny penny is finding. I want something that's easier. This is too hard. What if we had a self serve motion? What if we did this? What if we did that? They but maybe growth is slowed and that's an issue. And it may be more team issue or competition because you've got to a million. There's no unless there are only 50 customers in the entire world. You have.001% of the market. You have found a way to get 50. There is no way on planet earth you cannot get to. So I would atomize it and get it to 5100 and not chase the shiny penny. Should you run a few experiments? Yes. Should you let the team do maybe one passion project that's not too distracting? Yes. But you got to not. We've all. Anyone here that has been there in the early days, some, especially the non believers are going to want to chase a shiny penny. I've lived it and you just got to say guys, this is what I would do. Our goal, I know it sounds simplistic. Our goal is 2 million. And literally when I went through this last story, I went through this at the end of the day. This is now three generations ago in SaaS. We went from 0 to 12 in five years. I thought it was slow. Okay. I thought it was slow. My co. My colleagues were Renee from Bill, my like vesting group, Aaron from Box, David Sachs from Yammer, Peter Gassner from viva. They all grew even faster. But I thought it was terrible. 0 to 1012 million in 5 years growing 100% with 120% NR. I thought it was terrible. It was a different time. We didn't know it was good. That was pretty good today, right? It's not whiz good but it's pretty good. But anyhow, it felt slow and it felt slow to my engineering team. I had a huge wall in our office on that. We. Our office was split quiet and loud for sales. Had a huge thing on the wall and I had this stupid curve from 1 to 10 with the superhero flying. And every week I would move the superhero up the curve 2.3 million, 2.32 million. 2.5 million. And every week we would do a team meeting. Every quarter, we would do a bigger meeting. And I would just. I would literally move this thing up the curve. And people probably thought I was a goofball and lame, but they saw that now the superhero was not flying as fast as Superman. This is the slowest flying Superman going up this wall. But they could see it. So maybe you'd just make project 2 million. That's what I would do. Atomized at 2 million. We've got 50 guys. We can't do it. And I'll give you one last story since the end of the day. So I. Again, we thought it was my. One of my co founders promised my other co founder we would, and it's my fault. I built the model. Okay. It's actually not his fault. Promised our CTO we would do 2 million our first year. Two generations ago, 2 million. Now some folks do 2 million. It's pretty hard and sass. Okay. We ended the year 300,000. Okay. Along the way, because of that, my one co founder fired my CTO. I had to run down the street and unfire him. Then he quit. The guy that fired this, there's a lot of drama because we didn't hit 2 million. But I. And I got my CTO to come back. But he was never the same after he got fired. It was too much drama from the other co founder. But I sat him down, and then I sat him down about six months later as we were coming up on a million. And he didn't think we were growing fast enough. And I know this isn't exactly recent, but maybe it's helpful. I think at a million, I think we accelerated. So I think in a million, maybe we were growing 60 or 70% a year, which is actually not that great from a compounding rate. Right? And I said, dan, you're the best engineer I've ever worked with. I get that you're not happy with 70, but what? Let's. And I just. I know this sounds so basic. I did a spreadsheet. If we just grow 60% a year, and then it declines. So next year it's 50 and 40 at a million, and then 2 million, we go 50. Like that kind of. That's not that good. Like we'll never freaking get there. I'm like, but what if we just went from sixty to a hundred? Okay, it's not that. Now let's look what the work would take. And then we would go one to two to four. To eight to you know, 16 to and I almost got through to him with it and now I look back and that was the magic like growing that little bit faster. We eventually figured it out but if we'd just been a better team. If I convinced him that day he was so good. He was so good. We built the first Salesforce integration like this had ever been done. The whole Salesforce engineering team in Dreamforce in 2006 came over to ask him how he did it. He built. He would just. He was one of these guys who's. He's one of the chief scientists at Adobe today. He's so brilliant. Like cranky as f but argue and are I. I'm like I hate arguing. I'm a conflict averse. Argue and argue. But if I could eventually convince him he would disappear for a week and do something that would take five people a year to do. This is a five or a ten. But I couldn't get him to see this compounding thing. It was one of my many failings. So get the team to see that you can get to two and then you know what, that's all we're going to talk about today. But if we can get to 2, we can get to 4 and then 8 and 16 and then you know what? Maybe this is actually he never thought it was worth and in fact I failed so much that one of the reasons we sold at 12 million was I don't think he ever really believed it would get big even though our team got it to 200 million. So get them to believe So a lot a big. A lot of answers to that one. Thank you. DTRON for Lofian Goko IO. We're a modern people first H R S platform for SMBs. Very good. So my question is at this conference, and rightfully so, we've seen and heard a lot of talk about is the SDR dead with the advent of AI? I think we just said it isn't dead. I think we just said the Lamo SDR is dying. Totally. Yeah. Yeah. So a lot of conversation around that topic. How do we use AI et cetera. But another really important go to market motion that I haven't heard a lot about in this conference is the channel consultants influencers. Indeed. In fact, I was supposed to. I wanted to spend 10 minutes with both Renee from Bill and from Klaviyo from Andrew from Klaviyo. And I should have done it first because I ran out of time. The last slide for both was talking about the channel Cleveland gets 40% of its 1 billion in revenue through agencies and partners. I don't know what, I don't know if Bill discloses it, but I do think the majority of their revenue is influenced or comes from accountants and others. And we touched on it. It's a super important topic and we should have done a lot, a lot more of it because way too many founders learn the direct motion and then they just get their ass kicked when their competitors figure out the channel and partner strategy. Right. HubSpot. Over 40% of the revenue comes from partners, agencies that deploy HubSpot. So if you think you're going to compete with HubSpot and you're going to all go direct, you're going to lose the fact that these agencies just deploy HubSpot. Shopify. I don't know what it is. 40, 45% of the revenue from agencies. Okay. ServiceNow, the majority of the revenue. Right. And Klavi, I want to ask Andrew, but I think it's in the 40s. And Bill, they may not. I think at least partially, it's probably 90%. Right. Our account, our accounting firm. I love Bill, but our accounting firm put it in. I. No one asked me. And they required us as a client to use Bill. And what people for the essence, what people miss is in the enterprise. The Accentures and others will really only partner with one or two and they'll strongly recommend it to their clients. So if you're not the strongly recommended one, you better be badass. Right? Because the, because you're not going to get recommended by the big five. And people slowly learn that. They're like, ah, my competitor is tight with Accenture and they meet someone in the innovation team and they slowly build a relationship that's hard enough to figure out. What they don't realize with SMBs is that like agencies and dev shops, they just pick one. They don't have time to learn. 4. Email marketing partners. They don't care if something's better than Shopify. I don't care. Shopify is number one. I'm a tiny team. I'm a tiny agency in downtown Cementeo. I have five employees. We have E Commerce clients. We're gonna learn one platform. We're gonna spend years becoming Shopify experts. We don't really care if your product's better. And, and I know, I'll let you finish your question if you watch. I did a video with Brian Halligan who, who's chairman and was CEO of, of HubSpot a week before a SnowMobile accident in 2021. Crazy story, but it was right during lockdown. He'd sit in Vermont working remotely in his lumberjack shirt. Living, living the dream. We all were during lockdown and watched this video of him. They were just crossing a million. It was so good. He was so direct. Everyone was briefly at peace after the drama subsided and the. But then the markets went up. It was a moment when life was easy. And I asked him, brian, how much of a moat is it that all that 45% of your revenue comes from agencies and partners? He literally laughs, almost like milk, out of the nose laugh. He gets as big a mode as you can imagine. So I know, I'll let you finish your question, but we should have talked more about it it and I meant for my two and particularly for my sessions. It was 0.9 in both of them and I screwed up and didn't get to 0.9 to everybody. The one bit of advice I would have is if you're selling direct, if nothing else, use public companies. Use Sasters. Five interesting learnings. Learn what folks in your industry and segment are doing through partners and channel and start doing it as much as you can now. Copy it, learn from it, skate around it, dance around it. Because in many of your industries you'll start off direct and you'll start off from early adopters and folks that find you in tech and they find you in Google and that's great, but it's not. It's often less than half of your world. And if you get boxed out because your competitor owns a channel or partner, sometimes it's almost game over. Like HubSpot. It's almost game over. Here's the one thing I have learned. Klaviyo kind of pioneered aping Shopify with this agency model. Shopify took off with these agencies. It boxed out Big Commerce and Magento and all these others. All this, it just catered to these small shops. Okay, maybe we'll get Toby here to explain how it happened. Okay, Klaviyo copied it. They copied it. And then I invested in a company called Gorgeous which is like Klaviyo for contact center. It's coming up 100 million. They copy Klaviyo. Okay. They literally hired a guy that had done this in the Shopify ecosystem. And importantly, they just hire a guy. They hired someone that was badass. And here's the, here's my one learning from this one case study. It's an entirely different department. Okay, so they had it. Gorgeous. And Gorgeous is coming up on a hundred million and twenty thousand SMB customers. And just like for the same reason. Just like Shopify and HubSpot, 45% of these almost 20,000 SMBs come from agencies and partners. And they only do Gorgeous for their help desk. They only. Zendesk is a great competitor. There's others. But these shots don't do Zendesk or the other kids. They've already spent three years learning Gorgeous and they don't do others. And you need a. This guy that was the head of it was half marketer, half indirect sales. He would do 200 events a month, 200 anywhere and travel to them anywhere. These agencies were no one else. We're all lazy. We're all sitting in front of our computers. And this guy Phil went constantly. He built a small team anywhere. You could bring donuts anytime. There was a tiny meetup, a tiny agency meetup in Boulder or Pensacola, Florida. Because these are small businesses. They would hit a team and they did it again and again and again and again. And it kept growing and working and they. And then once if you get a little bit of a mini brand going, right, and then Shopify would start to recommend them, then you would see triangulation. They're everywhere. That are all our events. And now Shopify is telling us to use it. What are you going to start to standardize on? Especially when Zendesk never showed up. Zendesk was a horizontal platform. Zendesk is much bigger that they required for 10 billion. But Zendesk only recently took Shopify seriously. They had a weak integration. Great company, weak integration. But they were selling direct and to big merchants. And Gorgeous is running around with a team doing 200 events a month. The big guys aren't doing it right. So that's one way. And they. But they didn't figure it out. Actually I just heard the story the other day. I didn't know it. He just. He was pushed by another vendor that's at 150 million that told him to do it. Who copied Klaviyo, who learned from Shopify. So emulate the playbook and dedicate enough resources like whether you can do it the way that ecosystem it or not. The meta lesson is you don't dedicate the resources to business development or partnerships or channels. It will fail. A related point. You didn't ask it, but thanks for coming up that you got to have a team to do partnerships and channels. You got to see if your competitors are doing a knockout boxed out. A related issue you didn't ask about. But this is a top 10 founder mistake. Related to it is partnerships and business development. And the biggest mistake, and I made it too, the biggest mistake many of you will make, especially if you're passionate and have some chutzpah and get out there is it's really just you will build those relationships. You will meet Andrew from Klaviyo or Renee from Bill and you will, you will get to know them and you will build this relationship and you will open the door and you'll build the integration. You'll get something going and then you'll move on to the next thing. And it starts off great and it's great. But then your other competitor comes in and puts four resources on it and brings cookies to the office and gets to know everyone in the enablement organization and gets to know everyone in the customer success organization. And even though you had, even though Andrew likes you and Renee knew you, you get boxed out. You get boxed out. So the number one mistake I see with founders don't do this partner channel thing. They wait too long, they screw it up and but they're okay at initiating these business developed partnerships but they don't have anyone working 120 hours a week on it. Three people, 120 hours a week. And the folks that do just box you out. It's so dumb. But they bring cookies. Okay, they bring cookies. They have cookie teams, they have cookie teams going up there, right? Cookie teams to Shopify to Salesforce to Zendesk folks. And talk to someone that's run this playbook before and it sounds silly but they have gift teams and it's dumb. But if you show up at the office just like folks try to do with doctors and samples, if you're showing up to the office with free samples. I've never done medical. I think the doctor's more likely to use your product than if you don't. And it turns out it's true in partners and channel two. Right. So you can't get, you can't get in the door of Salesforce or Shopify if you don't have that relationship. But you better friggin staff it up or you're wasting all your founder energy if you don't have full time backing up those B day relationships. So thank you. Can I ask you a last question, Jason? Yes, yes. I run a cold email SaaS. So we're at about 600k. I'm a one person shop now. My CTO quit last year. Sam Altman said you could go to a billion. Why would you hire anybody if you got to 600k yourself? Yeah, but my question is what to do first. VP product, VP marketing, or VP sales. VP marketing. Okay, okay. But having. I don't. I'm tell you exactly why. It's a good question. I think it's helpful to other people. I'm pretty certain of my answer. Having said all of that, I might have said this earlier. In this event, I'm not. Maybe I didn't say this earlier than that, but I've said it many times. It's probably one of the 10 best things I've ever said on Saster because it takes you years to figure it out. Yes, the right sequence is VP Marketing, VP Sales, VP of Product. I'll tell you why. I've got some great Saster posts on it. We made a cool chart that people have stolen and reused without attribution hundreds of times. AI just makes that so much easier. That's the reason. I'll tell you why. But the real answer, if you have something like you have, hire any great VB you can ever find. But great, not good. Not because you're tired, not because you need to do sales or you need to do marketing, you do product, we'll get there. But if literally you're here and you meet this and you're too early for a VP of sales, or you don't really need a VP of product today and you meet someone and you just know this person is 100 times better than ever you met, find the money. Take it out of your own pocket as a founder. Find them. So there is a sequence and I. There's a perfect sequence if you're capital constrained for your VPs. And I will say that second, but ignore all of it. If you find a 10 or if you have a logarithmic scale of 5, if you find a 5, I don't care if you have no money, if you ever find a 10x engineer of 5, hire her. Hire her because she will build that feature, that integration, that thing that that Google wants or Oracle wants and she will pay for herself in about 8 weeks at 10x. If you've never worked with the 10x engineer, you don't know what I'm talking about. If you have, you know that they're all accretive. They're all accretive for the ICs and the best VPs are accretive. So if you truly find them and in your heart of soul you want to get married, that they are the one for you, the one, hire them too early or in the wrong order. Okay, so that's. And trust me, having said all that in A perfect world if we had unlimited candidates, no problem sourcing them. We had a surplus of a players, everything was easy. Probably don't want to hire a VP of sales until you have two reps hitting quota. We've written about this because 99% of VPs of sales get you from rep 3 to 300. They take a process that is starting to repeat, that has order and the output of that order is 2 reps sitting quota. When you have 2 reps hitting quota, even if it's chaotic, even if it's founder led, you actually at the beginning of a process, a smart VP of sales will figure out what those two do and then bring in a third or fourth in the first 30 days and you're off to the races. Hire a VP of sales before you have two reps hitting quota. Hyper risky. And so typically that doesn't happen between 1 and 2 million in revenue. You typically don't have two reps. So you're better off doing finding two reps yourself, getting two to hit quota. And in a perfect world the next day you'd hire the VP of sales. If you could sequence it the day after your second rep hits quota. Okay, now so that's usually going to be 1 to 2 million. Is the physics of getting there. Think about marketing or demand gen or growth, whatever we want to call it. Someone that's senior. Not someone that just does infographics or does tweets, but someone that can do a commit to get you revenue. I wrote this. One of the earliest Saster posts I wrote. It's still one of the best. I hired my VP of marketing at 20k MRR. It wasn't a week too early. Okay, one of the best old one. I'll rewrite it. Go read it. And I laid out the math and hired my VP of marketing then just because I happened to find her. But then what I quickly realized is she got us like we went from 20. So she joined at 20k. So probably in a year we were at a million. Okay. Or something like that. So 20k mrr. So 300k to a million plus 700k one way or another. She probably got us 200k of that plus the pipeline that she built. So she was free, wasn't she? And she helped me train the sales team and she did the collateral and she fixed the marketing site. But she was accretive. So what if you think about that math for a minute. Depending on your growth rate ahead of someone that will own growth, not just again own an infographic or do One podcast a month for you, but will own a number. They're typically accretive at 20km or you're past that, right? So marketing 20kmr, if they're great sales at 1 to 2 million, head to sales and then product can vary. But I will, I'll, I'll go on a tangent, almost like it's a different question. Because I will tell you, I see more and more these days. The VP of product hire screwed up. I see it screwed up. And for fun, let's talk about it. Couple reasons I see the VP of product screwed up. One is old and one is newer. The old reason is most people don't know what a great VP of product is. Most founders have never worked with one. It's an old thing that I've dusted off a bunch of times today. You gotta meet a great one, you gotta know a great one. And most founders, if they're at a big company, they worked with a junior product marketing manager, product person that was super junior, but they never worked with a game changing VP of product that can spend 50 hours a week with the customers, with your workflow, with your integration product, with your API, fixing things with your customers, figuring out configurations of your products, figuring out onboarding, figuring out how to make those big customers happy, figuring out how to save them like that is epic. Because our products typically even after 4 or 5 million revenue for most of us, they get complicated. We start off with one or two workflows and then we add some integrations and then we add some other features. And pretty soon, if you start doing the Math, I've got 10 integrations, 50 workflows, three different editions, this, and I start multiplying. You've got 2,000 different configurations of your product. You need a VP of product to optimize that around all your other customers and get that complex, that complexity to the next level. So I find folks try too many founders, shoot from the hip and think, hey, I'll be the head of I'm the product vision. I just got back from my customer, I, I can do product five hours a week because I'm thinking about it 24 hours a day. And you know what happens? They miss all that complexity, they miss it all. So they wait too long. I see this again and again and don't do it, don't do it. But it's got to be someone that is hyper customer centric and knows product for real, ideally actually has managed an engineering team at some point in their life. They're just magical. When you find the combination. So thanks for the question. Okay. All right, let's take a break. Thank you for the questions. Yeah. Thank you. Hey, everybody. Thanks to the 10,000 of you who came out to Saster Annual this year. We had a blast. And big news. We'll be back in May of 2025 or in May of next year. That's right. SAS train will be a bit earlier next year, the 13th to 15th of May, 2025. We'll still be back at the same venue in the SFBA in our 40 acre San Mateo County Event center campus. And tickets are never cheaper than right now. So grab your tickets@saster annual.com with my code, Jason50, for an extra discount on our very, very best pricing. That's Jason50asteraster annual dot com. See you next May at Saster 2025.