LIVE from SaaStr Europa 2023: Workshop Stage - Wednesday

at better prices, and all the way from kind of core insurance products. So this is like health insurance, life insurance, all the way to lifestyle spending accounts such as health and well-being, etc.

So today we're going to be talking about how the sales function evolves from Series A onwards and ultimately scaling founder-led sales. So with that, it'd be great to hear from both of you about what the function looked like when you initially raised your Series A.

Yeah, no, so our sales organization was very slim. We basically had one SDR, and to be honest, it was mostly me and my colleague Victoria that were selling. It was kind of a cowboy era. We didn't have any decks, we didn't do any qualification, we didn't have any pipeline. We basically did everything ad hoc. What we did very well though was that we understood the customer's needs, pins very well, and we could improvise pretty easily and quickly and solve their problems in ways that others couldn't.

Yeah, so similarly, right, in the beginning it was mostly myself and a couple other people in the team just helping to effectively generate opportunities. Soon we hired kind of a couple SDRs to generate pipeline for us and us to be able to be kind of more efficient and having more conversations. And ultimately kind of using a lot of hi-fi mockups and things like that just to learn basically throughout the process. Towards the end, right before we raised our Series A, we ended up having again 2 SDRs and a couple of AEs that we promoted internally once basically I got too busy to take initial conversations.

And in the early stages, of course, you know, what you're most focused on really is bringing on net new logos, and that's kind of your core KPI. Over time, of course, retention becomes very important. But how did you think about systematizing KPIs early? What were you most focused on?

Yeah, so for me, it was, as kind of it says there, right? It's mostly about kind of activity over quality, right? So in the beginning, we were just learning in terms of what kind of matters, right? So it's having more and more conversations and more at-bats basically, so that we could understand mostly how to communicate, right? So in the beginning, we were kind of thinking through what does our product do? How do we— problem that we actually solve, right? Which is why activity was the most important thing. And as you mentioned, sort of time is the enemy, right? So it's a bit of a ticking time bomb in terms of just making sure that we were having as many conversations as possible effectively.

Yeah.

And so you get your Series A funding, you've got money in the bank. What do you do next? How do you think about putting that to work from the sales perspective?

So for us, we noticed that our ICP was not as relevant anymore. And would not get us to serious bid. So from there we started the work of going through our larger customers, understood who they were, why they were using us, what they wanted to use us for, what they hadn't used us for yet. And then we started a collaboration between marketing product to figure out how can we create more value for our customers and communicate that. We then started to build more rigid frameworks around pipeline generation, qualifications, so forth. We revised our pricing to tie it so that the pricing could scale better with the size of the customer. And of course, the continuous work on making sure that the product delivers the value that our customers need. And today, that has led us to having our— is this— are now 10x Audrey than they were a year ago.

Awesome.

That's awesome. Yeah, I mean, for us, it's really about, as I think we— there's a slide there that says founder scale— sales doesn't really scale, right? So it's really about kind of taking ourselves, removing myself from the process as much as possible, and trying to make other people productive and efficient. And the same process that worked for me, it was very obvious that it wouldn't work for the team that we had, actually, because as a founder, you can do different things than you might be able to do as a sales rep. So I can kind of talk about features that we didn't have, right? I could have— conversations and just learn through that process. Whereas once we can have sales reps that are becoming productive, it's really about how do we systemize this and make it into an actual process. So the stuff that Kira was talking about around, you know, doing proper qualification, stage gating between the different pipeline stages became really, really important. And then trying to systematize that so that every rep was— which is really difficult to do in the early days, right? So as you don't really have a process, people can't learn through kind of listening to other reps' calls, because you don't have those, and you don't know what great looks like. So it's really, for us, like trying to find what great looks like, and making sure that we are establishing that kind of stage-gating in the process.

Sure.

And on that note, you mentioned kind of bringing new people in. So how did you think about the first sales hire for you? What kind of profile did you go for? What was the rationale? And talk to us a little bit about how that worked out.

Yeah, no, absolutely. We hired a sales manager to help us set up more rigid sales processes in the foundation. And I think the biggest learnings from that was that, A, as David said, you can't scale founder-led sales, and you can't replicate it. And B, to set up early on leading indicators for your new hires so that you can evaluate what good looks like for you. So, and having leading indicators that is something else than just closed deals or, so tying it to the pipeline generation, the processes you have in place, the ability to hire other people, attract more talent to your team because you don't have, if it takes 3 to 6 months to ramp, You don't have that time when you just raised your Series A. You have maybe a couple of days. That's how it feels. Whatever plan you set up, you need to rip that out and replace with a new one. So that's, I think, one of our biggest learnings.

[SPEAKING GERMAN] [Speaker:JASON M. LEMKIN] Yeah, we started a bit differently in the sense that we began by just, again, kind of hiring— the most important thing for us in the early days was just generating pipeline. So it's like finding who to talk to at the right time at the right stage. And so we hired a couple of SDRs, actually put them through an SDR academy, basically. So they're junior grads coming out of out of uni, which is actually a mistake, I think, because I think we would have really benefited from people who knew what they were doing at that stage. And once we did that, it was then, okay, how do we get somebody to take conversations once I got too busy to take those initial conversations? And it's really, again, around the most important thing for us was just getting the messaging right, right? Figuring out how we are communicating what we do and always iterating on what that looks like. Yeah. So those are our first sales hires, really.

Sure. And as part of the interview process, maybe if we get into the nuts and bolts, the granularity there, what were you trying— what qualities were you trying to solve for? And what do you now see as kind of the core qualities in the sales talent that you have?

Yeah, for me, it was really about kind of grit, right? As in, like, in the early days, it's all about resilience. You don't have a playbook. You don't— you barely know what you're selling, right? And so it's really about kind of finding people who are going to be adaptable, who are going to be able to get on every conversation and pitch something slightly differently, right? They can flex. They are— again, I think the most important thing for us was resilience, basically. Like, are you going to be able to get at that and learn quickly? Having that curiosity as well, right? Just asking questions constantly. Those are some of the traits I think that we look for.

Yeah, no, I am— I agree with David. I think resilience, like thick skin, humility, honesty, transparency, those Those things are qualities that are really important for me and for our team. We value IQ and EQ. You need to be a bit scrappy as well. I think it's a mistake to hire someone who's only been at larger company. They expect more support. They expect more processes, frameworks to get started. You need someone who can be more of a self-starter and who can thrive in an environment where they're part of building what you're doing. Sure.

And on that note, how do you make sure that those people are properly incentivized at the early stage? How did you think about putting those things in place to drive performance?

Yeah, we played a lot with our comp model in the early days in terms of we really didn't know, we didn't have a quota, right? We didn't know what a good quota would look like. We didn't know what was realistic. And so for us, it was really trying to keep things as simple as possible and also tying the compensation to the things that they had more direct control over, right? So when we were talking about SDRs, we kept things really simple in terms of the typical kind of paper demo book. And then when it came to AEs, just like a percentage of the ACV that they were bringing in. But it took a while for us to figure out what was working right. And again, kind of playing around with what great looks like, 'cause we didn't know.

I think it starts also already like in the interview process. This is something we learned the hard way. You need to have really rigid frameworks for hiring. And this is actually something that Atomic Kitten has helped us with, to sort of figure out what questions to ask to get to know the talent that you're— the candidate really well. I know personally that I— so that the intersection so that you understand already that the candidate you'll bring in will have sort of shared the values that you and the culture that you have as a company. And then tying that to, so from the interview process, following that, I think there are 3 things that are really important. So it's of course stock options, so incentive programs. So, and really making sure that the person you hire understands that the impact that they can have on the company stock if they're successful, the company will be successful and will have a direct impact on their own sort of financial situation. And then secondly, it's also making sure that you understand the individual's goals. And I think as early as possible when someone starts, you want to sit down with them, understand like, okay, so now you've joined and we're doing this, uh, what are the things that you want in your own career and like personal development, and then understand, um, understand those deeply so that you can tie those in that individual's, um, ambitions, goals, and plans to the company's mission. And so that the comp— that the people understand that they'll have a, um, um, that they're incentivized and they have the conditions in place to grow. And then last is about Yeah, that's it. Yeah, yeah.

And how important was it for you to hire people with experience selling into your end industry in both your cases?

Yes, we're in the benefit space, so we thought it was going to be really important, but for us to like understand, hey, how do you sell health insurance? How do you sell retirement pension plans, etc.? Where actually I think the thing that matters— that mattered the most in terms of the hires that we made were kind of were they used to the same sort of sales motion? Right, so in the beginning, we hired a couple people who were more used to more of a transactional kind of sales motion, at a little lower ACV. Our ACVs typically, so the deal size are between, say, $10K and $50K, $60K or so. And we made a couple of hires who were much used to that faster sale, and they didn't work out as well, right? Because it's a bit different, right, in terms of, hey, you have to multi-thread, you have to involve more people throughout the sales process. So I think instead of industry experience, the thing that made the most difference to us was people who are used to selling at that same level of, deal size, for me at least.

Yeah.

And for you, selling to the legal industry?

Yeah, no, absolutely. Same for us. I think that's one of the things that we discovered pretty early. Like, you can't— it's not scalable to have that as a prerequisite that people have that knows the legal industry, because frankly, there are not that many people with the legal background that goes into sales. I guess I'm one of those rare cases.

Yeah, right. And so as you thought about scaling, and as you think about scaling into Series B, you know, what are some of the things that you're really focused on scaling and systematizing in order to hit your kind of benchmarks for the next round?

So for us, it's really, again, kind of— we had a— we have a process, right, during the Series A stage, but like ripping that up apart again and starting from scratch in a way. So we knew kind of the conversations that we're making as we're scaling to bigger and bigger companies who are using us. The sales process does need to change. And so it's kind of using that experience that we had in the beginning in terms of understanding, again, what are the stage gates that we're going after in each of the pipeline stages for what we do. A lot of times we're having a lot of conversations that we're managing at the same time. We're kind of lucky that companies will renew their benefits at least once in a year or once every 3 years or so. So there's a renewal date, which is really interesting because we kind of have been focusing the sales process on that. But that means that we need to manage a wide number of conversations, just keep them entertained, basically, because we want to make sure that when the time is right, they'll get back in touch with us. And so kind of just molding the sales process around that to make sure that we can do that at scale is what we're focused on for the next round.

Yeah.

And obviously, you know, the macro environment has evolved significantly in the last 12-24 months. You know, how did this impact how you thought about building the right sales team and the right balance perhaps in terms of focusing on net new versus customer success. Just useful to hear about that.

For us, it's still really around new customers. We're very small for the industry and the size of the market that we're at. So in terms of how we thought about building a sales team, didn't change that much. I guess what changed a lot was more of the way that we were communicating the product and helping enable them with the right materials and messaging. So that we iterated on quite a lot. And it is the thing that we're still focusing on in terms of like every conversation, are we focusing on hitting the right things for the right time? Focusing for us a lot more on like spend efficiency and ROI rather than before where we were much more focused on kind of employee engagement and well-being and these kinds of more soft metrics. So it was really about kind of changing the messaging and then reteaching the sales team to to do that, right? Because again, when you kind of have a stride, when the team is just starting to work, it's really hard to— which is why you need people who are very adaptable to want to change the messaging. But that's something that's worked for us.

Yeah. And it's perhaps slightly preempt the slide you can see, and the data you can see on the slide rather, in the hiring sales leaders is now one of the highest priorities for you. Why do you think this is?

No, I think— For us at least, and from what I hear from peers, like the market is just much tougher. You need to have more experienced and skilled people than you needed to have before. Someone who's okay in 2021 will probably not be as successful in a tougher climate. So for us, we noticed that we needed to go more upmarket, and to do that, we needed the competence to be able to do that. So we then hired our VP Revenue, Laura Cleaver, who joined us this year to help sort of improve our processes, have more rigid, scalable, and repeatable processes in place. And alongside that, being able to hire and train and develop the right talent, because I think sales has changed. As you've said, you've changed your messaging, and I think people need to be able to read the room that like messaging around growth or scaling up or accelerating, that doesn't really come through as well as it did before. And you need to now focus more on like the risk of loss and how you can— yeah, just having a stronger message that aligns with what people are thinking about right now or what is top of mind. Yeah.

And you mentioned it at the beginning, actually, but one of the most important things is making sure that you're hiring sales leaders who are really aligned with your values and mission. And that's becoming even more important in this market. I suppose, why do you think that is? How has that played out for you? And how do you kind of interview for that? How do you really, in granular detail, test for that as part of the qualification process in your interview?

Really great question. And I think for us as well, we've also learned this the hard way. I know that I have a tendency to hire based on gut feeling and emotion, making emotional decisions. So we've put a very rigid framework in place that have like several, um, have several steps through it. So we, we would ask questions, of course, to understand: is there consistency in performance? And is this person humble? Um, is this person curious about learning? Is this person joining the company to build build it together with us through the great times and the tough times. So to me, it's really important to bring in people that are resilient, humble, and that have a lot of heart. So I'd like to ask questions that is around more like, for example, what are— can you describe the 3 challenges in your life that made you who you are today? And I ask that because there are like two things to look out for. A, what are the things they list? If there's some— if it's something that is quite common or like a bit soft, it means that they might not know what tough looks like, which you need to. And then, which you need to know. And then B, how are they talking about it? Are they talking about it in a negative way or blamey way? Then that to me is like a flag of how they would react to challenges. I want to work with people that not only, like, respond to challenges with, like, in an okay way, I want them to want to solve challenges with continued excitement regardless what comes their way.

Yeah.

Yeah, I think, I mean, it's the passion, right, in the product and what you're selling. And I think that really shows through when folks are having conversations. If you really believe in something and you really believe in what you're doing in terms of where the company is going and what kind of the mission is, I think that makes a huge difference in the conversation that they're having, especially in those early days. So I think that kind of can, and you can see that really sort of flow through the conversation that our reps are having. So we record every call now and you can see that those are really passionate belief and in the product and what you're doing are just much more effective at selling it. So I think that's probably why it's actually— I think it's really tied directly to the efficiency and the performance in terms of how tight are people with the mission. And in terms of testing for it, it's really hard, right? Because notoriously, hiring sales folks, they're pretty good at selling themselves, right, if they know what they're doing. And so I think as Kira was mentioning, we kind of gravitate towards a similar kind of questions of like, hey, in your personal experience, what are the things that made you who you are, right? What's the hardest thing you've ever done? What are you most proud of? And it really doesn't matter if they mention something from work or from outside of work, but again, trying to get those characteristics of, you know, I'm going to try my best, go the extra mile, and that's what I think is really important in those early days.

Great. And once you've got those people in the door, then, you know, as you scale, one of the things that you also evolve, and you mentioned a few aspects of this, is how you onboard them and how quickly you can ramp them up. What are some of the things that you've done over time to try and improve that kind of onboarding efficiency and scale up ramp up time?

Yeah, so as I mentioned, one of the things that we did early, really early doors was starting to record all the conversations that folks were having just so that we could show people what we thought good could look like. And we're constantly changing sort of the discovery framework, basically giving people the tools to enable them to not have to start from scratch. So like, here are the questions that work, here are the things that you want to dig into when when people are saying specific things and making sure that we have all of that kind of pre-baked as we are scaling, adding more people to the team. Because as you say, right, the difference between somebody scaling or somebody getting productive in a month, 2, 3 months makes a huge difference in the early days.

Yeah, I think that's super important and something that we do too. I think, and sort of adding to that, another thing that we find is helpful is that we, with everyone joining the team, we invite them to sort of a base camp in Stockholm where we have our headquarters, and we invite them for a couple of days. So quite intense days, but I think for us, bringing everyone together and creating early on like environment and the conditions where people can feel safe and connected to each other and connected to the mission, we find, um, creates a better sort of momentum. And I think is sort of loyalty in the team. Because ramping them up in terms of skills and knowledge about the company is so critical. But it's equally important to make people feel that they work in a company where they can have real impact, that they're doing something that matters, and that they're engaged in doing it together.

Yeah, no, it makes a lot of sense. And as you scale the org, one of the most important things for you guys, of course, is then focusing on retaining the really high-quality talent. So I'd love to hear about how your thinking has evolved there. We mentioned a few things, of course, from incentive optimization on the options front, but it'd be great to hear a little bit more detail about perhaps new things you've tried or learnings there.

So I mean, for us, it was really about creating a culture of winning, right? So, like, when every rep, when every sales hire is hitting their quota, it becomes a much more infectious place to work at. And so, as long as we're kind of enabling people to do that, and, you know, when we kind of talk to other folks about that, we're like, hey, you can't control that, where, kind of, you control the quota, right? So you can say, hey, on a particular quarter, what is it that we're trying to achieve? And getting people to have that feeling of constant overachievement, I think, is really important because, again, like, a winning team wants to stay together, right? And you, like, as a founder, as an early-stage kind of entrepreneur, you have control over what that looks like. And so kind of creating that from the early days, I think, is really important. We obviously believe in benefits, so we're a benefits company, and we think that, like, having the right support for everybody makes a huge difference. And then just trying to upskill them, right? As Kira mentioned, It's all about trying to understand what each individual's personal motivation is and leaning into that in terms of we had a couple of SDRs in the early days who really wanted to become kind of an AE, a closer. And so creating that environment for them to be able to get there, I think is really, really important.

Yeah.

And Kira, you touched on a few, you know, having had some poor experiences perhaps, which is quite normal, you know, where you've ended up making a few mistakes, which, which everyone does at the early stage in terms of hires on this front. What are some immediate red flags then that you now know should disqualify people? And you spoke a little bit about that, but it'd be great to unpack it a bit more.

Yeah, no, absolutely. I mean, it absolutely starts in the interview process. I can't like emphasize that enough, like having super rigid frameworks and then close scrutiny and evaluation during your probationary period is critical. You need to treat the first 6 months almost like the interview, as it's part of the interview process, and to set up leading indicators for what success looks like and really be quite strict with those. And in the beginning, because of course it takes some time to ramp sales reps up and sales leaders, so what you need to do instead is set up leading indicators for what you think this person needs to be able to do in order for them to be successful later on. So that can be what we talked about, like pipeline generation and tiering of accounts, how they're qualifying, how they are interacting with the group. So other leading indicators that you think are important to make sure that they're equipped to do the job that you're asking them to do.

Great. And maybe, I mean, we've only got 4 minutes left and then we're going to move on to Q&A, but On that note, then, it'd be great to just end on your kind of key takeaways for scaling founder-led sales.

Absolutely. I guess first thing, founder-led sales does not scale, and so you need to find a way where you can get your message out in a way that anyone who you bring on to can replicate. And then I think the second thing was, at least for me, and I'm sure David, I think, agrees, is setting up this key leading indicators for what great looks like in your company. So having a way to evaluate as early as possible.

Yeah, I think obviously kind of that all resonates to me. And as I mentioned earlier, right, to create that strong culture of winning, which I think is really important in the early days. So you control that, right? You control what that looks like. And once that starts happening, it, it really starts being infectious. As Akira mentioned, right? I think kind of the premise of this is like founder skill, founder sales don't really scale in the early days. You're really about trying to figure out, okay, how do I get those first customers right? How do we get people using the product? How do I get people experimenting with it? How do I learn what resonates, what what doesn't resonate, and then from there kind of creating that playbook is the overused word, but how do you enable people in those early days to be really successful, right? So what that meant for us was kind of trying to step away a little bit more into the background, having closers, other people take the lead in those conversations, and then coaching them and giving them that feedback, right? To try to get them productive as quickly as possible. Yeah, those are the things that resonate for me.

Awesome. Thanks so much. Okay, so look, we're going to move into Q&A. For Q&A, we've been told that in order for people to be able to hear the question, it'd be great if people could walk up to the microphone. But put your hand up and I can repeat the question. But yeah, feel free, feel free to start.

Awesome.

Hi, thank you very, very much. One question. I'd love to hear the story of the first non-founder sale that your company managed to achieve and how that made you feel.

Yeah, so again, as I was speaking, right, for me it was— so we have one kind of was an SDR, became an AE, and then sort of leaning towards more of the background, right? So still joining the calls, and it was actually a significant sort of deal, keeping him, sort of coaching him throughout the process, basically like, hey, I would have said— you said this, I would have said that in a different way. Obviously, it makes you feel incredibly proud, right? Of having that moment of achievement. It's like, "Hey, I didn't have to do this one myself." Yeah, that's for me.

Yeah, I'm thinking very similar experience. I think for us, it was something around— I have to be really honest that when we launched in March 2020, it took us 6 months later, we had 17 customers. And we were so proud of those customers. We had like this keynote with all our investors. We're like, these are our 17 customers. And we thought that we'd really like started to figure things out. And then 6 months later, we had 100 customers. So I think for me, doing that together with my colleague Victoria, who was one of the first person to start selling Pokélo besides Olga, that sort of summarizes that feeling, I think.

Yeah.

Thank you very much.

Thanks.

Maybe I can throw a question in. Oh, no, you—

okay.

Hi, great story. I got a question. Well, we all know that financial incentives are very important for sales staff. They want to earn money. Money. And when growing your sales team, the new hires should also be trained, probably by the other guys in the sales team. So yeah, it might cost them some bonuses. How do you make sure your incentive scheme is set up in such a way that it's still stimulating the whole team to train each other while it might cost them?

Something.

You get it? Yeah, I think so. It's a good question, right? In terms of, uh, and we, we thought a lot about that, right? In terms of, hey, how individual do you make the compensation or the incentives versus how much do you make it team-based? Uh, we actually, uh, indexed on the making it very kind of individual in terms of what a person can, can actually control, uh, which I think at those early days is the right thing. But that doesn't mean that they shouldn't be sharing the learnings, right? Which in the early days I think you do naturally because you're like so proud of what you've achieved and the results that you're having. They're like, hey, in this case, this is what worked for me, right? And you make it more about kind of the recognition, right, around what they're doing. And everybody wants to kind of, again, like, have that feeling of winning or creating that culture. And so it's really about kind of giving them the space to be able to share what's working and what's not working and highlighting that as well, right? So we would constantly do that in terms of on a Slack channel or so, it was like, hey, look at what this person did. This is what exactly they did and worked. I guess those are some of the things that worked, but we still kept the individual compensation very much tied to individual objectives that they could control.

No, and so do we, but I think there are, again, going back to also how you retain people, I think really communicating the value of the stock options as well, and not only because it's money in the bank, because to give them the feeling that they should act as a shareholder in the company. How can you make them behave and make decisions based on having that feeling that they're part of this team? I think in the early days is super important. Of course, later on when you're, I know, 250 sales reps, maybe that doesn't work as well. And then I'm— there are of course like structures that you can set up that incentivizes for the team's quota attainment as well. But in the early days, that's That's what I'd recommend in addition to what David just said.

Thank you.

Thank you.

I guess the other piece around, while we have the question, the training bit, is we did get external resources to help us, right? Because again, we didn't know what great looked like for an SDR. We had never done that. And so we tried to get as much kind of advisors as possible, including folks from like Atomico, from our investors, for us to understand what does great look like, how do we get people people the training that they need because we don't have those enablement resources in-house, right? So trying to lean on external resources wherever possible. We didn't really have other sales leaders at the time.

Hi.

So I have a question, and I'm not sure exactly the stages of your company is now, but the question's kind of like, have you ever had to go backwards and sort of start again? Made it to Series B, and then obviously winter hit, and it's been very flat. And then now I've had to go back and try to figure out, like, how do I— I'm basically going back into founder-led sales and trying to figure out how do I change or fix or redo what was previously working, what's not working now. And I'm curious if you had to go through that, if you had to downscale sales teams or take out a VP of sales, how have you navigated some of those questions?

Yeah. Good question. So, I mean, we haven't had to kind of take out of VPL sales or so yet. We've had to make a lot of individual changes to the team. And I think the thing that we kind of got comfortable with is like ripping that, again, the messaging or the playbook apart when it wasn't working and going back into the weeds, right? So I think, I don't know, myself as a founder at least, is like, I want to still have a lot of conversations, as many as possible. So what that means is, but I can't have all of them, right? So, uh, it's trying to get involved for especially the bigger deals, the, the, the, um, the opportunities that we know that don't really fit in terms of what we do, right? Maybe they're a bit of a larger scale, maybe they've come through a partner that don't really fit that mold or the model, trying to get involved in those either really early on in the process to help to do that discovery qualification to understand whether it's actually something that we want to invest in, and then or later in the process, right, in terms of helping somebody to close them. But I think being very comfortable of identifying, hey, this particular opportunity doesn't really fit the mold, the conversation's not really going anywhere, how do I get more involved to help to facilitate that? Constantly looking at that, at least we are.

I'm going to throw a question in then. So perhaps I'll start with, how has your sales org evolved? And maybe we can also, to your question about the scale you're at now, number of people today and kind of, yeah, sales organization and where you think you guys will be in 12 months' time.

Yeah, no, absolutely. So ours evolved in the way that, yes, we started with the senior hire and then one SDR. Today we are— so, and then as we talked about, Earlier, we noticed that last year that our ICP wasn't really relevant anymore. So we needed to change the organization with the new focus that we had. So we discovered that our processes and frameworks wasn't really— they weren't robust enough for the upmarket. So that was what we needed to do. So we knew we needed to hire more experienced sales leader and sales team. So we shifted from being— having only is with one leader towards a team with where we've split account executives focusing on mid-market and then inbound sales managers. So focusing on the inbound list that we have. And in addition to that, we have a BDR team that supports the account executives. And then we have managers for those respective teams. And this is what we consider a more robust and rigid structure for future growth. So in terms of numbers, we're still less than 15 people, but we want to have a structure today that we can scale so that we can make sure that all the processes that we have are replicable. And repeat essentially.

Yeah, so we're currently about 8-9 people on the sales team. So we've got, uh, we had, uh, 4-5 SDRs, now, uh, 3 account, uh, executives, and bringing on in one enterprise account exec as well, and a VP sales who have— has really made a massive difference, right? And, um, trying to give kind of myself leverage again so I don't have to kind of do the one-to-ones, manage, do the coaching, uh, etc. Really trying to play an active role on closing opportunities. In terms of where I think we'll be, we'll probably have a bit of a pause now. So, right, we went through a bit of a hiring spree. We want to make sure that people are actually getting productive. The outbound machine hasn't really— it worked kind of for us in the beginning, then it stopped working, to your point, right? And now we're trying to message how do we make that work again. And that maybe has to do with kind of the changing of how we're doing messaging, the channels that we're using. And so I think that's what we're focused on now in terms of making that productive before trying to invest in adding more bodies to it, because we want to make sure that that's efficient as we're scaling.

I have a follow-up question. One of the most important things, particularly at the earlier stages, but as you scale, is also maintaining a very tight feedback loop between sales and product. As you scale the sales org, how have you tried and tried to systematize, making sure that feedback loop stays as tight as possible?

Oh, that's a very good question, and it's quite difficult actually because you need, um, you need to have the process and then you need to have like filters, um, so because there's a lot of noise and then you need to group the feedback and then some feedback is not relevant because you also need the customer success people or the person whoever is reporting the the feature requests to actually understand is like, should we challenge the customer on this? Is there a better way to do it? Customers doesn't always have the right answers either. So for us, that's been quite— it's been a challenge in the way that we've had needed to have a way to filter out noise and see what's relevant. So how we have done that now is that we have a feedback channel in Slack that are automatically populated into another tool that we have tickets so that we can sort them based on relevance and other parameters. Yeah.

Yeah, so we've always had a board where anybody across the company could suggest different product features and things like that. So that's from sales, customer success, et cetera. As Kirsa said, the challenge comes in sifting that out in terms of how important is this actually. And in the beginning, again, we didn't have a lot of the features that we were promising or talking through. So it was really about mocking that up, saying, hey, this is what it would look like, and trying to get to the kind of crux of, like, hey, if we didn't have this one thing, does that mean that you're not going to, like, go forward or sign? Trying to get that signal from the customer on, like, how important is this actually for you? And adding that as one of the things that we had to— that the team had to put into kind of that board so that we could, again, for the product managers who were having that conversation, be able to prioritize because the So that's the thing that's really difficult, I think, in the early days is understanding, okay, hey, you're gonna get all these different feedback from all the conversations that you're having. Sometimes it's the messaging, sometimes it's how you're talking about the particular feature. And so trying to get that signal of like, hey, if we didn't have this one thing, does that mean that you're not gonna be able to sign? And that really made a difference for us in terms of trying to prioritize what was coming through the door. But it is really difficult. Yeah.

Yeah. Sales, I'm also quite passionate about this when it comes to like product and like the features that you're having because like there is always going to be more. Like the customer will never be fully satisfied, there's always going to be this other feature, other product that they want in addition to what you already have. The great thing about that is because they have a lot of nits, they have a lot of pins, they have things that they need to have in order to like be as efficient and great as they want to be. I think it's going to be difficult to go against, for example, into like against a competitive solution or going into sales calls leading with like the feature requirement list. Instead, we need to talk about sort of the pains that the customers have and how our product solves them. And if there's a match there, then we can move forward. And then the other things that would make that experience even better is something that we can build on together. So really having a sales team that has the confidence going into a call knowing that this is a product that solves a really big pinpoint for these customers, and if they use it correctly, they will have a better business and a more rewarding way of working. So they need to have that confidence and not focus on sort of the missing features is always going to be missing features. Um, yeah, yeah, yeah.

I mean, I think to, to that point, right, it's really about kind of the discovery in the early days. For what we do, we have a really broad surface area in terms of what kind of the— what people come to us looking for. And it's really about identifying again very quickly what's that one thing that's going to really make a difference for you right now. And, uh, kind of that can be a challenge as well as like an opportunity for us in terms of— because a lot of— I think in the early days especially if you have inexperienced kind of sales reps, it's like, it's very easy to just like do the same demo to everybody regardless of what they're telling you they want. Whereas like the really great reps for us were the ones who like understand the pain, figure out, hey, this is the exact thing. I'm just gonna show you this part of it because that's what you want right now. And that's really make a difference in terms of how we'd be able to accelerate it as opposed to being like, hey, I'm gonna show you all these 50 things that we can do and you can do it in this way and this way and this other way. That tends to slow down conversations rather than just being like, hey, you told me you wanted this specific thing. Let me just show you how you can accomplish this. Here's a purchase order. Can you please sign?

We've introduced also a success plan. So we go through together with the customer a sort of plan to understand what from both a financial and technical perspective would be a success for them. And then that also allows the customer to be fully accountable for this plan so that we have that sort of aligned upfront before going into sort of the more later parts of the conversation. Yeah, makes sense.

And maybe a follow-up question, and we only have time for this one more question for me. So if anyone else in the room has one, now's your time, or I'll go. No?

All right.

I'm gonna go, um, you know, one of the, one of the toughest things also, um, which we've touched on as you try to get away or scale away from fully founder-led sales is the balance of, you know, flexibility versus standardization in pricing and structuring, um, you know, with it, with the end client, um, and potential customer. Um, how have you thought about that balance and what things need to get escalated to you such that you don't get bombarded with everything? Because there is going to be a lot of You know, you need still a lot of flexibility potentially at this stage. So how do you think about that?

That's also a great question. I think it needs to be simple, transparent, and the pricing needs to be simple and transparent, but it also needs to scale well with the customers. So having a clear way of tying the price to the value that the customer is getting. And so that I think is sort of in terms of what you can do with, with, with the structure and the process. But then I think it's a lot about like the culture and the way of working in the team is really, really important. So as you said, you won't— and, and I think it's to ensure that the team feels like the pricing is a tool for them to go out and secure revenue and customer for the company, and really having a way of them feeling okay that it's fine to make mistakes, uh, but be brave when they price the customer. So going into the call being confident and knowing that it's okay if they screw up as long as they tried and kept within certain parameters. But simple, having a simple and easy to understand pricing is important both for the reps and for the customers.

I think we're over time, so—

Oh, sorry.

Okay, great. Well, thanks very much everyone. Thanks so much for your time, guys. It was great. Thank you.

Thanks everybody.

Please welcome Dawn Capital's principal, Shamila Bankia.

All right.

Thanks so much, guys. Also, thank you for clapping. I love the warm, the warm welcome. As mentioned, I'm Shamila, my principal at Dawn Capital. We are an early-stage B2B venture capital firm, primarily investing at Series A, Series B, $20 million, $30 million. Typically in businesses that are European-based or with European founders who are somehow expanding to the rest of the world. And today I'm talking a little bit about valuation expectations, deal terms, and how to make sense of this new fundraising reality we somehow find ourselves in. So super excited to dive in and, you know, keen to hear your questions at the end as well. So I guess first things first, Hopefully none of the slides here are a surprise to you guys, but we're in a little bit of a global slowdown, right? It's been a tough 2 to 3 years. We're recovering from a lot of change. 2022 has looked a bit softer in terms of our growth. I wouldn't say we're in recession territory yet, but globally things are looking quite rough. And if you look at tech specifically, and I specifically focus on B2B tech, so I thought it would be interesting to look at specifically. Um, we're seeing softness there as well, right? We were sheltered and protected in 2020 from what was happening around the world because people were turning to software, using more stuff. In today's environment, um, that's, that's changing a little bit. We're seeing softness, and that's, that's impacting, um, the number of deals that are getting done. That's impacting the amount of capital that's being invested. And so if you look at Q1 of this this year, actually, in terms of capital raised, we're at about 10% of what we did all of last year. Obviously, the year is still going, and June has looked a bit stronger, but we're still, you know, definitely not going to hit those highs. And if you look at, well, the deals that are getting done, the transactions that are actually happening, there's just a massive gap there as well. So we are in a new setting given macro softness, and I think tech actually has suffered a lot more because we're protected prior to 2020. So the question is, you know, will software ever come back, right? The falling men on the cliff, by the way, are software, in case it's not clear, right? The question is, if we're in softness and experiencing a tough time, are we actually gonna recover from this? Is there hope, light at the end of the tunnel? And I thought that in order to answer and address this question, it would make the most sense to actually take a little trip down memory lane. And look at the past 3 recessions. So thinking about the dot-com bubble in the early 2000s, which hopefully everyone knows about, the infamous dot-com bubble that specifically affected tech actually as a recession. Then looking at the global financial crisis, which was much more driven by the financial markets but also had an impact on global softness. And therefore, I thought it would be interesting to look at tech companies in that space. '20s as well, and then obviously 2021+ what we've been going through and experiencing over the last couple of years. And I thought it would be helpful to actually focus on survivor bias. So folks in the companies that actually made it out of the different recessions, obviously in the early 2000s we probably have about, you know, 20 software companies that were trading and made it out alive. Over time we're now at about 200 companies. So this data that I looked at actually looks at public companies over the last 20 years or so and focuses not just on how they perform today but also how they performed over time. So it includes companies like SAP, Oracle, Mimecast, one of our portfolio companies, you know, all the big logos you expect to see in software to see what we can glean and learn from them and how that's impacting our expectations as investors of what's going to happen moving forward. So I broke it down into a couple of sections. The first is valuations. And for the purpose of this exercise, I've defined valuations as last 12 months EV over revenue. So what was your revenue 12 months ago? What's your EV now? And therefore, what's the multiple that you are effectively trading at as a business? So for example, if your business is valued at $50 million and your revenue over the last 12 months was $5 million, then you are at 10x LTM EV multiple. So looking at multiples in the dot-com bubble, so if we just look at 1999, 2000, 2001, 2002, we actually see that multiples were at about 9x LTM revenue, right, at that point in time. So we're pretty low, sub-5x. Everyone got excited. Things got super exciting. Climbed up to 9x. As the recession hit, those multiples halved, right? We went from 9x LTM EV revenue to 5x, 4.5x EV revenue. And actually in 2000, a couple of companies went out and IPO'd, including Akamai, which is a very, very— one of the first CDNs, co-liberate, existed. And they went at 100 times revenue. For their IPO, right? The following year, they were trading at 5x revenue. So massive, massive correction in terms of valuations. I think what's interesting as well there is that over that period of time following 2000, the valuations remained flat, right? It's interesting, right? You see a huge peak at the very top, and then there's flatness that follows, right, as things stabilize to 4.5x, um, sub-5x, um, over that period of time. So In my mind, there was almost no recovery to peak multiples from the tech bubble. Now let's look at the global financial crisis. So interesting, we'll see as well here, if you look at software multiples on average for those 200 companies, they were trading at again a little below 5 times, right? So that's the same number we saw post-correction from the tech bubble. GFC, we're at the same exact point. Recession happens, multiples actually dip to about 3 times during that financial crisis, climb up to 5x, which again has somehow been established as the new software normal. So again, kind of showing you that there is a little bit of correction to the mean over that entire period of time. Let's talk about today. As you guys all know, if you've raised money from venture capital, capitalists, if you've raised money at all, valuations have been fantastic, right? Prices have been great for investors and for founders, which has been— especially for founders, which has been, you know, a great, I think, uh, turn for software, especially here in, in Europe. So if you look at the median, uh, multiple in 2021, it was actually 13x, right? So that's actually higher than the peak of the dot-com bubble, which was 8x. That's way higher than the long-term average of 5x. You're kind of looking at almost 2.5x, 3x turns on the multiple. So a huge, huge improvement. Obviously, software was in a very, very different place then. People were working from home, there was remote work, there were all these macro drivers, the cloud, that meant that things were looking different, but it did feel a bit frothy. And hence, as a private company, if you were going out to raise capital, investors were looking at you and thinking to themselves, well, you know, things are trading at 13 times median, right? There are things trading at 100 times, you know, 150 times, right? And those filtered through into, into the private market. So understandably, investors, you know, raised their valuation expectations in that period of time. Now, 2022, we began to to see softness and correction, right? So we're now at about 8 times as of last year. If you look forward, if you look at how businesses are projecting revenue and what analysts and markets are saying about multiples moving forward, it's looking like it's back to 5x all of a sudden, right? Which is, you know, almost incredible. I'm an economist, so I don't like to draw conjecture, but I think it's pretty clear that 5x is not, you know, a terrible number to assume as a base case. And a correction to around that point in time is expected and potentially possible. All right, so that's depressing, talk about valuations. Let's talk about something more uplifting, hopefully, which is revenue. What happened to revenue for these 200 companies in the last 3 financial crises? How did they react and who recovered and by how much? So if we start with the dot-com bubble, I think this is a pretty depressing chart, sorry. But effectively, in 2002, the public company set of software companies was actually growing on average at 3% year on year. The revenue was growing at 3%, which is like impossible to imagine, especially because just a couple of years prior, growth was 30%, right? Everyone was doing great, everything was growing, and that corrected extremely sharply and quickly at the very, very bottom of the dot-com bubble. Now what I think is optimistic here is immediately following that, we're back at 10%, 20%, 25%, right? So software is resilient. Software did come back and grew again following the crisis, especially as budgets ceased to be as tight and as the macroeconomic conditions improved. Similar story with the global financial crisis, not as steep a decline, obviously, but still, you know, a huge correction from 25% growth down to about 8-10% growth during that crisis. But again, as you'll see, swift recovery, right? It's as soon as the recession is done, people are back to growing again, which I think is exceptional. I think shows the strength of the software market. And then we have today, where we had companies on a median level going at about 30% leading up to 2000, some softness from a macro perspective, 20%, but there hasn't been that correction of, you know, 10% growth on a median level. There hasn't been a correction to 2% growth on a median level. So expectation moving forward is that there will be softness in growth for software because people have tightening budgets. You guys are probably all seeing this. but I think that the glass half full story is that it comes back, right? So even if you're experiencing a particularly challenging time right now, every company has gone through that. If you make it out alive, you will come back, and therefore, you know, hold firm. That's what we're telling our portfolio companies as well. So I've covered a lot of what we've learned, you know, resilience, software. I guess other interesting things that there are long periods of declining revenue growth. —so, you know, 3 to 4 years of declining revenue growth in the last 2 financial crises. So it can be a long winter in terms of exactly how long it takes to recover, even if the recovery does happen as well. And the final thing that I found interesting was that if you look at the amount of years that there is declining revenue growth versus an increase, they actually somewhat mirror each other. This is a bit more far-fetched, but the idea is if you have a longer slump, you may have a longer recovery. So as you're thinking about planning for your businesses, just have that in mind as well. All right, let's talk about gross margin. So this chart makes it look like gross margin is moving up and down a lot, but actually the scale is from 60% to 90%. So if you look at it on a more condensed basis, there isn't that much change in gross margin. So on average, at the very, very bottom of the financial crisis and the dot-com bubble, there was about 65% gross margin, which is, you know, for software, terrible, but actually versus the rest of the world and versus the rest of companies, not as terrible as you think. And that margin is protected, right? So once there's a dip in 1999, 2000, 2001, 2002, everyone's just up to kind of protecting margin again because you have some control over that, right? You have no control over revenue because that's the market telling you what they want. If someone's not buying, they're not buying. But you as a business have control over your margin, and therefore companies moved to defend that over time. And you'll see in 2003 onwards, that's back to 80% levels relatively, relatively quickly. Similar thing happens in the global financial crisis. So there's a bit of margin dip in 2009, again to about 66, 67%, and then again recovers, frankly, relatively quickly to, you know, 70, 75% levels of gross margin. We have a few more, you know, infrastructure-heavy software companies beginning to trade at this point in time, so the average does come down, but in general, you do see a recovery over that period of time. And then if you think about today, there's actually been frankly, no change in gross margin for all public traded companies over this period of time. So people are protecting their gross margin and analysts' expectations moving forward are that gross margin will continue to look strong and be protected in that period of time. So what can we say we learned? Gross margin declines leading up to recession, comes back pretty quickly. The median bottom is 65%. So if you are a traditional software company trading at lower than that, But it's worth thinking about it as well. All right, finally let's talk about EBITDA margin. This is an interesting, this is my favorite set of charts and you'll see why in a moment. So EBITDA margins on a major level used to be about 20%, right, 10, 25% used to be a very, very normal expectation for a software company. And so in the global financial crisis, even though revenues had fallen, from 20% on an average basis to about 2%, people actually held EBITDA strong. So people protected their EBITDA margin regardless of what was happening on the top line. So people took control of their business because they couldn't control revenue and they could control their costs. They actually held relatively steady through the crisis. There is some correction, obviously, from 30% to about 20%, but in general, actually looking pretty strong. And coming out of the of the dot-com bubble actually rise, right, as businesses become even healthier, having optimized for cost and really when you're coming back, lots of upside to take advantage of and therefore very, very healthy EBITDA margins moving forward. And then if we look at the global financial crisis, an interesting story as well. So again, EBITDA margins decent, right, 25% also EBITDA margins for these very mature public companies. And then we start this downward journey in EBITDA margin from 20% to 15% to 11%. And then if you look at the last 10 years or so, you know, we've been at— we've been in negative territory in EBITDA margin, right? So actually, it's an insane idea, right? These companies which have hundreds of millions, billions of revenue, have these fantastic gross margins that don't get worse than 65% on average or 80%, have negative EBITDA margins, right? Obviously there are some very, very heavy influences on that. We have some big public traded companies that got into this comp set over the last few years that came with negative margin because growth was rewarded over some sustainability, but it's just interesting to think about, right? We're in a strange world over the last decade where it was normal to have a loss-making business, right? It was actually normal. It was normal to go public with a loss-making business. It didn't affect your valuation. Nobody cared about it. 2021, not great. 2022, not great. But all of a sudden, 2023, the expectation of every single public company is You got to get back to 20% somehow, right? 20% is the normal for a software company of scale. Therefore, figure out a way to get there. So analysts are projecting 20% EBITDA margin moving forward, and almost every single company actually is thinking very critically about how to get to EBITDA positivity much more quickly than they would have planned to pre-crisis. Now, the overlay to this, of course, as you probably all know, is is interest rates, right? Interest rates have been declining since global financial crisis. It's completely unprecedented. There's been lots of free capital available, which has meant that actually it's much more sensible to get revenue now at a loss-making— at a loss, frankly, for future valuation moving forward. As that's changed and as we move to an environment where actually the expectation is very much that interest rates rates will not be as low as they were. Quantitative easing has reduced significantly, especially in the US. It's happening in Europe as well as we try to fight inflation. Um, I think that's, that's a completely new normal, right? So I think EBITDA is all of a sudden going to become a conversation again for early-stage companies, and unit economics are a conversation again, um, for earlier-stage businesses. So I guess learnings here: EBITDA Ebitda margin, that matters. It's about 20% on average. So as you think about growing your business, if you're at $100 million ARR, if that's the ambition, how do you get to a 20% EBITDA margin on that? How do you show progress towards that? And the last decade has been an anomaly. So we shouldn't look at the last 10 years and think to ourselves, this is what a good business looks like. No, actually, we need to look at the companies that have endured over the last decades and think to ourselves, How do we actually mirror those and get ourselves to a sustainable position? All right, so what does this mean for you as a founder, startup, SaaS business? Like any good VC, I made a 2x2, which hopefully helps give some guidance in terms of exactly how you should be thinking about positioning your business. So I'll start on the top right-hand side. So let's say you're growing your net new ARR. So what that means is that somehow, you know, you're adding new customers, it's all going well, you have expansion that's actually working out, your churn's actually not been affected because of your category, and then on top of that, you have good unit economics. It doesn't mean that you are EBITDA positive. There is no expectation that a $1 million ARR business growing really, really fast has to be EBITDA positive, but for every customer that you're adding, how much are you spending and does it make sense? Is that ratio sensible and reasonable? In that case, I know lots of founders, I talk to lots of founders who say, well, I'm doing really well, I'm going really fast, my payback's 1x, my multiple is 1x, my CAC multiple is 1x, I think I'm fine. I'm going to wait for the multiples to come back. Well, multiples may not come back, right? There may be no return to the crazy highs that we saw. We saw in 2020, 2021, 2022. Therefore, if you're thinking about raising capital from venture, timing it in terms of waiting for multiples to come back isn't the right thing. Thinking more critically about the milestones you have for your business, how much growth you want to achieve, and how much capital you need to get there is much more important. And now is a good time to actually go out and raise money because multiples might remain low. If you're in the bottom right, so let's say you have slowing net new ARR, i.e., customers just aren't buying as much stuff, right? So you added, let's say, 1 million last year and this year you may add 100K or 500K, right, in new revenue. But you have good economics, right? So every customer you acquire makes sense. On a customer-level perspective, you're profitable. It doesn't cost you too much to serve your customers. Then I think you need to think about building a path to profitability and thinking through, how to build a sustainable business in the medium to long run. Now, on the left-hand side is what I've called everything that has margins in progress, which really is just, you know, you figure out economics, you're still thinking through exactly how to efficiently acquire new customers, it's still a bit of a journey for you. And in that case, if you are still growing net new ARR but are not sure about economics, you actually really need to focus them. So I talk to lots of founders who say, well, I'm growing 4x. What does it matter if it costs me, you know, $4 to acquire a customer that pays me $1? Well, it matters because EBITDA is cool again. It matters because margin is cool again. So actually, you will struggle to raise capital with that profile despite heavy growth. So actually, the best thing for you to do before going out and considering a fundraise is thinking through how to actually optimize that. And fix your unit economics before you go out to raise capital, because you will be penalized for bad economics if you go out to raise capital despite growth. And then the bottom left-hand side is, let's say you have slowing ARR, so, you know, things aren't firing as much, and economics haven't necessarily been fixed and addressed, then I think you probably need to consider more drastic measures, right? Evaluating burn, thinking about thinking through exactly how many people you need to set up in your organization, thinking of the efficiency of your go-to-market team. Do you need that very, very expensive CRO? Is he actually adding value? Are you adding enough ARR to hold all your AEs? And then I think you also need to think about, quite frankly, strategic exits as well, because if you come out of that bucket in the bottom left and progress to the top right or to the right in general, that's fantastic, but if you don't, thinking about strategic exits as well is sensible. And I must say a lot of people are thinking about those. And so the earlier you get on that bandwagon, the better and the easier it is for you. Very, very simplistic view of where I think you should be mapping your businesses, but hopefully that gives some guidance moving forward. So in summary, just to kind of recap everything that we've covered today, Multiples have contracted from 10x, from 13x, right? We're looking at potentially 5x multiples trailing moving forward. Happy to discuss more about what that means specifically for a startup, this public company data, blah, blah, blah. But you can expect that if companies were raising, call it at, you know, 100 times revenue last year, that's probably going to be 40, 50 times this year. If companies were raising at 50 times revenue last year, that's probably going to be 25 times our revenue this year. So just think about that as you consider fundraising and as you think about your valuation expectations from investors. I will say, obviously, there are exceptions. There are still businesses raising at those crazy multiples, but at a median level, we will see a correction. The second thing is that software is resilient. Growth will be back. This was very important for me actually as well, because I was looking at the world and thinking to myself, oh my goodness, Is it all over? Is it all ending? But actually, we've been through this before as a market, and we've always come back. People are always buying software. It has slowed down for a moment, but it will come back. However, prepare for multiple quarters, maybe years, of declining rates of revenue growth. So buy yourself the time to actually be able to survive what may be a very, very long downturn. The next point here is defend your current revenue. But not at the cost of gross margin. I think sometimes it feels intuitive to say, well, if I'm not sending you customers, let me just discount this and sacrifice gross margin to kind of, you know, somehow make sure that I grow. Well, actually, your margin is more important than your growth right now. That's what's being rewarded, your actual fundamental economics and how healthy your business is. So think about that as well as you think about trade-offs and discounts for especially new customers. I think it's different for existing customers. For new customers, think about that critically as you evaluate your business moving forward. You're in economics, you know, if you're an early-stage business, sub-$10 million, sub-$20 million, you need to think about CAC paybacks, you need to think about burn multiples. These are all very, very important things that we as investors are spending a lot of time thinking about. Think about profitability of each of your customers. Those are also very important things. If you're a bigger business, more than $20 million revenue, You think about EBITDA and when you're going to get there because the expectation now is if you want to go public, you want to sell your business, and you want to be at $100 million ARR, you kind of need to be EBITDA positive to be able to actually carry that story forward. And then the final thing is if you have great momentum somehow in a softening market with slowing software spend, frankly, with with slower budget availability, with longer sales cycles, with higher churn, less expansion. If you're somehow still growing in this market and you have great economics, do consider raising money now because there's a lot of capital that remains available to founders and VCs are looking for companies that are in that top right bucket who need capital. Right now. That's it. Thank you so much. That's my email address in case you have any questions and my Twitter. If you guys have— thank you so much. If you guys have any questions, please come to the mic and I'm sure I'm happy to answer anything that I can do. And if you have— by the way, if there's many questions, I recommend everyone kind of lines up behind the mic so we don't have a lot of walking time.

I run a seed stage SaaS. We're trying to disrupt the PLM space in a big way. We just launched our seed round. We have 3 high-profile enterprise clients on a paid trial. We've been fortunate with the clients because our software provides us pretty significant cost savings opportunities, so they seem to be gravitating even in this market. But our first 3 seed investment pitches were— came with a no, and the no came with a but. It was that they would have— it would have been a yes pre-pandemic. They didn't really have a problem with their valuation. They love our model, they love what we're doing, but given the amount of offers that are coming in, the insane deals, quote unquote, that they're seeing in the market right now, unfortunately we're a no. So we're trying to figure out what's going to make us stand out. One of them actually said that had our 3 paid trials actually been on full contract, they would have said yes. So they've actually given us the opportunity to come back at the end of summer and re-pitch, which is good, but I don't want to keep doing that all summer. So I'm trying to figure out what's going to make us stand out in the crowd. The clients love it. How do we get the investor to love it?

Thank you, Ryan. That's a great question. Um, if I'm completely honest, I would say that at seed stage especially and frankly, if you have any revenue, early-stage businesses in general, investors care about 3 things. The first thing is momentum. So I invest at Series A+, so my metrics may be a little bit different from yours, but for Series A+ businesses, what great looks like is growth of 2.5x, 3x year on year. So plus, right? There are businesses who are growing faster than that. So if you're looking to raise capital based on momentum, that's kind of the expectation. So if you have new customers, but the growth isn't necessarily there, that may be a part of the signal as to why investors are saying, let's give you some more time to prove that you've actually built out an engine that can repeatedly create and generate growth. So that's the first thing. The second thing is economics, as I mentioned in the chart. So investors are thinking to themselves, how much are you charging for each customer? What are your actual ACVs? How much does it cost you to acquire each customer? And do these ACVs kind of make sense? Are they defensible in this market? Do they look lower than your competitors? Are you somehow undercutting on price, which is why you're selling? Those are questions that matter as well. And beyond that as well, thinking about payback and economics for each of those different customers. And then I think the final thing that we look at, at least at Series A+, is just the team that you've managed to build and attract around yourself. So who is actually going to help you scale the business from just you, founder Ryan, today to more people in the organization? I think many investors are not often willing to give you direct feedback. They're not willing to tell you exactly why they didn't invest. So I would push them. I would ask for a follow-up call, ask for a conversation and say, listen, I grew last year and I have good economics. Why did you say no? Because the answer may not necessarily be exactly what it appears. I hope that that That's helpful, but without more context, I don't think I can give a lot more detail. Cool. Any other questions? Great. All right. Well, thank you guys so much. It's been lovely chatting to you all. If you have any questions or concerns, email me, come chat to me, and good luck with the fundraising in this crazy market. Thank you.

She was so determined to take him right out of my hands. I do. If you're right in love, they can see you from the very first dance. Why? She was young and pretty, and young and pretty's better than I. We gave them all our kisses, now they found another Mrs. 'cause we lost him to a DIY. Somewhere in the field, if you put her on a seat, it'll keep your fella out of reach. But it ain't always so if you can grab him from the boat. That's a lesson every woman can teach. But my man was just the sort you could trust. You could look a fella right in the eye. Well, he wasn't for deceiving, but suddenly he was leaving 'cause I lost him to a DIY. She was so determined to take him right out of my hands.