5 Lessons from Scaling Six Products to $100M+ with Samsara's Chief Strategy Officer

Uh, my name's Kiran Saker. I am a chief strategy officer and part of the founding management team at Samsara. And I'm really looking forward to our conversation today about learnings from scaling 6 different products to $100 million in sales and beyond across 2 different companies. So these are the 5 lessons we're gonna talk about. First, a single metric that I have come to, to know and love dearly that helps us guide the decisions of when to scale, when to iterate, when to pivot. Second, the importance of discovering the entire market and mapping out all the ver— potential verticals for your products early in the process. Three, the incredible power and value of the mid-market segment as a way to start and scale a business. Fourth, the importance of building customer feedback into the DNA, both of your product team as well as your product itself. And fifth, the importance of going multi-product early, probably earlier than you think you should. So let's dive in. There are so many SaaS metrics out there. They're all valuable in their own way. Obviously, ARR growth and cash burn are some of the most important. If you can grow ARR without running out of money, you're going to do all right. But how do we achieve that? What are the metrics that we can use to really steer our business? Uh, there's one metric that I've come to really deeply appreciate because it's a single metric that can reflect market demand and product-market fit, how well our go-to-market engine is executing, and the product, the quality of our product. And that is CAC payback period. So as I expect most of you know, in SaaS, you incur a significant cost acquiring a customer before they pay you a dollar. This is your lead gen, your SDRs, your sales team salary and commission. You acquire the customer, they pay you a subscription. Some of that goes to providing your service, right? Your cloud hosting costs, et cetera. And the rest is profit. And eventually they pay back that acquisition cost. That time between when you acquire the customer and they pay back their acquisition cost is called the CAC payback period, typically measured in months. So this metric is incredible because it tells us so much about the physics of the business and how we should be scaling. It tells us about market demand. If you have a product that really resonates with end customers where it's solving a burning pain for them, they are gonna be coming to you. You're not gonna have to spend a long time explaining the product and they're gonna transact quickly. All that means you're spending less on leads. It means your reps can attain a higher quota. You're gonna have a shallower trough to dig yourself out of, right? Conversely, if what you're doing isn't solving a real customer pain, you're gonna have to spend a lot more resources to get onboard each customer. Also tells us a lot about the effectiveness of our execution, right? Are we generating high-quality leads at a, at a reasonable cost? Are we following up on them quickly and converting them at a high rate? Are our sales reps properly enabled, well managed? If so, these are all going to shrink your CAC payback period. Perhaps less intuitively, CAC payback period also tells us a lot about the quality of a product. If you have a product that is really complex, that requires a lot of customization, if SEs are in, you know, configuring and customizing the product for each and every customer who wants to try it out, if you have to overinvest in, in CSMs to Band-Aid over usability issues, these are going to increase the cost to acquire the customer. It's going to take you longer to pay back that acquisition cost. Likewise, if your software is inefficient, if every $1,000 you're getting from a customer, you're turning around and spending $500 of those to AWS, to OpenAI, to Twilio, to Stripe, it's going to take you twice as long to recoup that cost. So when I see a low CAC payback period, I want to figure out how do I scale, how do I add sales capacity? And if my CAC payback is unhealthy, if it's too long, I want to slow down. I want to give myself runway to figure out which of these areas is the drag factor, make sure that I've improved them before accelerating. So you might be asking, what is a good CAC payback period? Well, the answer is it depends. If you are in an enterprise business like ServiceNow, for example, where their customers never churn, they always expand, you'd be willing to incur a longer CAC payback period because that customer lifetime value is so high. Conversely, if you're an SMB business where you might have higher churn, less expansion, the CAC payback period needs to be really low. Most businesses are somewhere in between. I recommend checking out the Meritech Capital website. They have comps tables with all the financial metrics for publicly traded software companies. You can actually build a cohort that is relevant to your business, benchmark yourself, and see how you do. All right, so that's CAC payback. Next, let's shift gears and talk about how we think about the market that we're going after. At both Meraki and Samsara, we had competitors that were really narrowly focused into specific segments of the market. So at Meraki, there were people building Wi-Fi systems for healthcare or for stadiums, and we said, "Hey, the whole world needs Wi-Fi." At Samsara, we had some legacy competitors that had really just focused their entire company on long-haul trucking. We said, "Hey, there's this large, large world of physical operations industries. Trucking is just a part of it." And so we engaged with the entire market very early, understood what the common needs were across verticals, and really focused on those areas. Uh, I dug up a screen grab from one of our early, uh, decks at Samsara. This was actually pre-revenue when we were building our initial product and getting some beta feedback from early users. And you can see a pie chart, uh, what are the different industries that these customers are in? And we see schools, we see local governments, we see food and beverage, we see transportation. We were tracking this systematically from the very, very early days, and it really paid off. Right. We avoided going too deep into an area that was maybe a niche or limited to one, one vertical or industry and instead focused on the common threads. We can fast forward to when we were about 10 million in ARR. Another screen grab from one of our decks. These are photos of our actual customers. And you can see the industries, a lot of the same industry names, quite diverse. At Meraki, about $10 million in ARR, same story, right? Broad, diverse industries, everything from government to healthcare to enterprise to higher ed. And it turns out that setting these seeds early and allowing them to scale is incredibly beneficial. We can see now at nearly a billion in ARR, we have got a nice distributed pie chart of industry verticals. You can see some of our customers here, 5 of the top 10 waste management companies. 6 of the top 10 construction firms, 5 of the top 10 transportation firms, etc. And there was a surprising benefit here, you know, beyond the ability to scale revenue, which is that we got really interesting ideas from specific verticals. We'd go and ask all the other verticals, "Hey, is this something you'd thought of?" And they'd say, "You know, I hadn't really thought about that. I didn't know it was available to me, but man, that would be really useful." And it actually ended up making the product better for everyone. You know, in the early days when we were about 100K in ARR, we were very prescriptive about our go-to-market and where we were building pipeline. And, you know, we didn't want to over-index on any one vertical. So we said, hey, transportation is important. It starts with a T. Let's do Transportation Tuesdays. And so every Tuesday, the team would be focused on building transportation pipeline. So we were allocating 1 out of 5 days, about 20% of our sales capacity. You know, fast forward to a billion in ARR, so 10,000x the scale, and sure enough, we see transportation is just about 20% of our ARR. So amazing how those early seeds can influence the long-term outcome. All right. So this is a bit about thinking about verticals. Now let's think about customer sizes. Often people think about a binary choice between SMB and enterprise. And, uh, I think there's a really important third segment in the middle, which we call the mid-market, which has been an incredibly powerful element for growing and scaling both Meraki and Samsara. First, what do we mean by mid-market? Let's kind of define some terms here. Uh, quick show of hands, has anyone been to Pinhole Coffee in Bernal Heights in San Francisco? See, maybe one or two hands. Classic small business around the corner from me. I had the coffee this morning. I love Pinhole. Joellen's done an amazing job building that business. Classic small business. I won't ask for a show of hands of how many of you have been to Starbucks, but obviously a great example of a large enterprise. Now in the middle, how many of you have been to Blue Bottle? All right, a bunch of you. Blue Bottle is a great example of a mid-market business. They've got about 100 locations, and interestingly, while a small business like Pinhole might be sold to the way you'd sell to a consumer, right? You've got a generalist owner who's wearing a million hats and has to make a decision quickly. A mid-market business like Blue Bottle is sold to like an enterprise, but just in a more streamlined, lightweight way. In fast way. And so engaging with the mid-market early is an incredible way to not only develop product-market fit and a repeatable sales motion, but to start to scale the business. One of the beautiful things about mid-market customers is that you're engaging with professional buyers, right? So you might be talking to a director of IT or a VP of IT. They have the expertise and the time to really give you considered evaluation of your product. They're gonna give you great feedback about what your product does well, where it helps, and what the limitations or gaps are. Unlike an enterprise, they're not going to expect it to be perfectly tailored to their business, right? They're gonna be willing to accept trade-offs if it solves an important problem for them. And they can move fast, right? You can typically have sales cycles in a matter of months. But they will still spend a good amount of money, right? They'll pay 6-figure ACV relatively frequently. So you can be doing $20, $30, $50, $70K deals into the mid-market. And so your unit economics will support a sales motion that looks like a lighter-weight, scaled-down enterprise sales motion. You can have your paid demand gen, you can have your SDRs, your AEs, your CSMs, etc. Your AEs are probably a little bit earlier in their career. They're gonna be doing more over Zoom and they're not getting on a plane as often, but you get really fast feedback and you can iterate quickly. Conversely, with enterprise customers, you're gonna have a lot more stakeholders. Obviously, you're gonna have a number of requirements around security and customization that can be more challenging for a smaller business or an earlier product. And you're not gonna get as many data points about the market, right? If you're talking to 10 $50K opportunities in the mid-market, versus one $500K opportunity, getting a lot more signal about what's common across customers. And because these mid-market customers look like lighter-weight enterprises, when you have strong product-market fit and a repeatable sales motion, with healthy CAC payback, of course, you're in a great position to move upmarket and scale. So at Sapsara, we started really engaging with the mid-market as well as finding some of the enterprises that look like mid-market customers, but just a little bit bigger. There aren't as many of them, but they exist. And you can use those mid-market customers to reference sell into some of these enterprise customers with simpler requirements. And then over time, you can build out all of the security, the integrations, the organizational maturity to be able to onboard and manage these customers. And this is the journey that we've been on over the last handful of years at Samsara, really expanding up into the enterprise. And now we've got about 1,500 customers paying us $100K or more. We have, uh, many dozens of customers paying us $1 million or more. So we've got a really solid enterprise business, but about half of our ARR is still coming from sub-$100K customers, which we think of as the mid-market, right? So this is a large segment that you can scale over the long time. Now, when we were talking about mid-market customers, We talked about one of the benefits, which is the quality of the feedback that they give. And I'd like to talk a bit about how we think about gathering feedback in a scalable and structured way, and using it to really optimize our product roadmap. In the early days, before we were charging customers, before we had a sales team at Samsara, I actually hired a couple of ADRs, and had them cold call into potential customers and have them book demos. We're trying to find people who were willing to take half an hour to come see a product that was in development and give their feedback. And myself or our other product manager would do these demos. We'd learn about their environments. We would learn about the problems they were facing and really pressure test. Hey, if we built this, would you be willing to try it out Give us your feedback. And if it solved your problems, would you consider buying it? How much would we pay? And that gave us really direct feedback from the market while we were in the development phase. Once we started selling and revenue started to scale, you know, from that $1 to $10 million phase, it became unfeasible for us to, of course, be on every intro call. Uh, so we actually instrumented product feedback into our CRM. We created a custom object in Salesforce called a feature request, and if an AE, or a sales engineer, was on a call with a customer who asked for something we didn't do yet, they would do a search in Salesforce to see if that had been logged. If it had, they would attach their opportunity to it. If not, they could create it. And it allowed us to be very data-driven about understanding the needs for various features on the roadmap. Right? We have a sales rep coming up to us who has a big deal at the end of the quarter, and that customer really needs something. They can be very persuasive. Having this data across many, many, many customers and opportunities allowed us to make sure that we were putting our R&D resources in the right place, understanding what was going to impact the most number of customers as well as the largest deals. So with these tools and the ability to be data-driven, the sales team, and particularly the sales engineers, are incredibly powerful as a way to capture this customer feedback in a scalable way. We also wanted to make sure we were hearing directly from customers. And so we built feedback directly into the dashboard at Meraki, as well as Samsara. At Meraki, we called it Make a Wish. It was a little button that was at the bottom of every page in the dashboard. And so any user of the system, from the C-level exec who might be signing the purchase order, to a day-to-day administrator could hit the button, type us a note about what they'd like to see. And we did this again at Samsara. We improved it so we could actually capture a screen grab of what the user was seeing at the time, and we get thousands of these. We get ideas for new features and products. We get feedback like, "Hey, when I'm using this page, I'm also trying to do X, Y, and Z. Is there a way I could see this all in one place? It would save me some clicks." Right, we get feedback about new things we can build, and we actually pipe this directly from our application into a Slack channel, so any member of the R&D team can take a look and see what customers are asking of us in real time. So these techniques, they're very scalable, but they are no substitute for getting out and meeting customers in person. In our line of work, that can be kind of interesting. You might need a hard hat and a safety vest, or sometimes you get to hang out with people who sell beer for a living, which is a lot of fun too. But regardless of who the customers are, the type of feedback and the insights that you get are always so much richer when you're there in person. You can have the casual conversations, you can talk to the day-to-day users, you can take them out for lunch. So I encourage everyone to be doing that regularly. So all of these are ways to help scale products, to get product market fit early, to get the right go-to-market motion, allow them to compound over time. And I hope for all of you, this is not a skill that you use one time, but really something that becomes part of the DNA of your company and you can do it over and over and over again, which brings us to my fifth lesson. The importance of going multi-product early. As we saw in our timeline at the beginning, at both Samsara and Meraki, we had multiple products in the first couple of years that eventually ended up scaling to hundreds of millions, or in some cases billions of dollars in sales. And, you know, this is a little bit uncomfortable in a way, right? We think about our product portfolio a couple years in at Samsara, At the time, our first product, vehicle telematics, was doing really, really well. It had a multi-billion-dollar addressable market, and there's a lot that it didn't do yet. Uh, there were features and integrations, there were security capabilities for large enterprises that we very rationally could have put all of our resources into. But instead we said, no, we're of course going to keep investing in and improving our initial product, We're going to take some of our team and have them work on new products and do that very early. And this ended up being incredibly beneficial for a couple of reasons. First, there were some customers that we couldn't get to right away because we hadn't built out the features in our telematics product, but we traded those for another set of customers who said, "Hey, I'm willing to look past some gaps because I This company is offering me multiple products in a single platform, and that's incredibly valuable. Second, it established our identity as a multi-product platform very early. We developed the muscles around how to engage with multiple users within an organization. Customers got the expectation that, hey, Samsara can do more for me. I want to tell them about what I'd like to see from them next. Helped our engineering team think about our solution as a platform that's going to manage, that's going to support multiple applications over time. And we fast forward and we can see that at, you know, again, nearly a billion in ARR, we have a nice diverse mix of revenue across products. You know, people, uh, often say that at a billion in ARR, you really need your second product. I would argue that you need to start 100x earlier, right? Have your second product in market and scaling at $10 million. And boy, does it pay off. Interesting anecdote, actually. Our number one product by ARR was actually not our first product. It has overtaken our first product, and, you know, it's been incredibly impactful for customers. All right. So we just blazed through a number of lessons, right? The magic of CAC payback and using that as a governor for how fast to scale your business, when to iterate, the importance of discovering the entire market across verticals, the value of mid-market customers and how incredibly powerful they can be for building product-market fit as well as scaling, building product feedback into the DNA of your business, and going multi-product early. If you are interested in learning more, two callouts. First, there is no substitute for learning by doing. We are hiring across nearly all functions. Check out our, our careers page. And we're also investing. We invest in startups that are building products for the physical operations industry, and we provide not only capital, but a lot of our learnings, access to the early team who helped to build Samsara, and access to our customers. So if you're interested in either of these, please check us out.