12 Key Levers of SaaS Success with Matrix Partners General Partner David Skok

Good afternoon, everyone. My name is David Apple. I'm the head of the software and SaaS vertical at Intac, which is the world's largest independent pure cloud ERP firm. We are the sponsors of the Tactical Stage today and it's my pleasure to introduce our third session on the tactical stage 12 lessons to learn to scale up your SaaS company, led by David Scott, who is a general partner at Matrix Partners. Been there a long time, but many successful investments and he's learned quite a bit that I think we can all apply in our business. As David and I were prepping for all this, we spoke a moment about a recent board meeting he's had. Has anyone ever missed the number before? So what David has in kind of setting him up for his discussion, that's a bad feeling. And what can you do to not only know the lagging indicators on what the health of your business is, but the predictive indicators of what the health of your business is? So you and your management team, for those of you on the management team, make your CEOs look good. For your CEOs, make your team look good. Go in with some confidence, go in knowing what the metrics are and then what you can guide, where you can guide the business. So with that, I'm going to introduce David to share those thoughts with us. Please welcome David Scott.

Thank you very much indeed. Good afternoon. It's a huge pleasure for me to be here. First of all, I get a chance to meet so many people who have commented and read and given me feedback on my blog. And I just want to say thank you to all of you. You've been an amazing inspiration over the years to keep writing and keep putting out information there. So thank you. So today I'm going to do something which is very different to what I did last year. If any of you were here last year. I'm going to try to do something simplifying, which is come up with an incredibly straightforward way to look at a SaaS business, which allows the whole company to snap to the same grid and get aligned and drive the right kind of performance that you're looking for. And then the second thing I'd like to do is show you which particular levers, as the CEO of that business, you can push on to get the most impact in running your business. So. So that's the goal that I have today. But before I do that, I just want to jump into a tiny preamble to help maybe set the stage of where I'm talking about. So I think of a SaaS startup, actually any startup, as having three phases. The very first phase has been written about enormously and that is the search for product market fit. And everybody, I'm sure, knows the lean startup and all of the stuff on that. I believe that phase is followed by a second phase, which I call the search for repeatable, scalable and predictable and profitable sales growth machine. And then once you've got that predictable growth machine, you should hit the gas and just scale the business because you know that it's predictable and you know that it's profitable and it just works. And I think the most interesting part of this is the second phase and that's really where I'm going to be talking about today. So I apologize. If you're in the product market fit stage, some of this won't be relevant to you, but that's where we're going to be concentrating on. And let's just define what it means to exit this stage. What do you need to be able to claim that you've got this predictable, repeatable. So the words really kind of describe is predictability. It is repeatability. It is the fact that it's a profitable growth model that you're running. And maybe one of the best signs that you've got there is that you have the ability to grow bookings quarter on quarter as opposed to you can grow ARR quarter on quarter, because you can do that with same bookings level quarter after quarter. And then one of the common questions that I ask CEOs to get them thinking about this is what happens if I wanted you to grow your ARR by six times, not your business plan, which is probably two and a half times. What's going to break, what's not scalable in there is a great way to start thinking about where the next problem's going to crop up here. So with that in mind, let's go to the first thing that I said I was going to try to do for you, which is give you a simple model to really try to understand your business and align everybody who's working in the company around one simple thing. So the good news is the model that I'm going to use is something everybody's familiar with, which is a funnel. This is a very straightforward thing. And the complete model for a SaaS business has not just the top of the funnel part of it where you get to the closed customer, but obviously, very importantly, we want to retain that customer and we want to grow revenue from that customer. So it has this bottom of the funnel part to it as well, and one of the things that I absolutely love about funnels is, is that they're driven by very, very simple math. The math that we're looking at is two variables. There are a couple of others, but the two really important variables are how many things do you put in at the top of the funnel, and then what's the conversion rate that you go and drive in terms of that number. So if you've got 100 people in the top and you get one out, your conversion rate is 1% on that funnel, then, and this is pretty cool, that we can define and drive our whole business around one simple model and two variables. Isn't that amazing? So that's a very nice thing when you can simplify life. Now, I will give you that there are a couple of other variables that matter in here. Your average deal size determines the amount of monetization you're getting per customer. Obviously, great if you can make that bigger over time. And how much does it cost you to run somebody through the funnel does matter. And how long does it take to put them through the funnel. But I'm going to leave those as really secondary variables and keep focusing on the top two, which is what's our flow in the top and what's our conversion rate. So let's start by looking at the two kinds of sales motions that I see in SaaS businesses. The first one is a very simplistic touchless model. This is the kind of thing that Zendesk had in the early days, Dropbox had in the early days. And you don't use salespeople really, as a fundamental part of how you drive sales here. And then later on, we'll come to look at the model where you do use salespeople and look at how they differ a little bit then. So in the touchless model, the simple way of looking at the funnel here is that you have a bunch of leads that you put in. You drive them to your website, and when you're on their website, you try to convert them into a free trial, and then you want your free trial to convert into paying customers for you. And if you're going to have one of those funnels, I'm sure every one of you knows that you couldn't come to a presentation by David Skock and not hear something about metrics. So metrics are important here. And the key metrics are pretty simple. What is the number of people flowing into each stage there? So how many people are coming to your website, how many people are going into each trial, and how many are converting into closed deals. And you want to track that over time so you can see whether you're trending in the correct direction. That and then of course, as we mentioned, the second variable, which is conversion rate. So we really want to track how well are our visitors converting to trials and how well are our trials converting to to paid. And we want to track that over time. And the overall conversion rate is useful to know. Now when you do that, you start to realize that we may have different sources for our leads. So we may be using Google in one, we may be using inbound marketing, we may be using Facebook ads. And it's worth recognizing that the shape of the funnel can vary by lead source and also potentially the type of customer you get out of certain lead sources. You may get very big customers out of certain lead sources and not out of others. So you really want to look at the overall ROI for each of these lead sources to get a feeling for which of those are working for you. So my advice when I talk to startups is fix the conversion rate first. It is the most important thing to start working on because if you've got a leaky bucket where you're bringing a ton of people into a free trial and only 5% are converting, there's not much point in pouring more people in there. Fix that conversion rate on that trial before you go further. And just as a very quick pointer on that, I would say the number one place to start is how good is your product market fit? And think about here, what can the product team do to overall change the value proposition so that that's resonating better then something that's amazing that we've seen that's really worth putting work into is understanding which customer segments are the right fit for what you currently have. This will change over time as your product gets bigger and better and supports more integrations. But for example, if your product initially only supports Shopify and Google Analytics, then your ideal customer does not have Adobe analytics because that's going to be another integration and you won't get very far in the sales cycle with them. So cut down, narrow down, slice down what's the ideal size of customer, what parameters they have and focus on them. And then a place where I think an awful lot of companies really need help with work on is the simplicity of their messaging. Because we're all product people, we get so carried away with describing the cool features that we've built in our products and we miss the fact that the business buyer doesn't give a damn about that. They're actually out there trying to solve a business problem and finding a way to convey the business value of what you've built in simple terms that the customer relates to is something that I think a lot of product people struggle with. So this is really worth putting a bit of energy into because it can dramatically help with this conversion rate thing. But here's the most fun part of what I hope to engage with you guys on today. Every single funnel I've ever looked at has blockage problems. And the quickest way for me to find out where your funnel blockage problems is to ask you what would happen if I wanted you to 10x revenues in the next 12 months. And you will immediately tell me, well, we're actually not going to be able to do that because of X or Y. So that'll tell you kind of quickly where to hone in. Even Microsoft, even Google, they all have a blockage point because if you fix it, it'll just simply move somewhere else. And what I'm going to share with you, something that I've learned over the years of going and talking to startups, is that there is a common source of these problems that I found in many of these visits that I've done, and it is that they've built a vendor centric design of funnel. So they designed the funnel by coming to a conference like this and listening to loads of people telling them, wow, you've got to have some SDRs, you've got to do inbound marketing, you need some sales reps. And they've heard this whole bunch of things. They go back and they say, well, we've got to have a funnel that has all of these elements in it. So they design the funnel around those elements. So I'm going to show you what I think is a better way to go about that. So let's take a look at what happens here. So a problem when we do this is we run into the blockage point because we want the customer to do something, but the customer's not actually motivated to do what we want them to do. So this basically comes back to the problem that we're talking about. You designed the funnel the way you wanted it to work, not around how the customer wants to work. And so let's see if we can help shine some light on how to change that then. So I'm going to give you one little example to start off with here. Some of you might have heard of a company called JBoss that made the application server for Java that was open source, that disrupted BEA, WebLogic and IBM's Web Sphere. I worked with these guys when There were about 11 people in a room in Atlanta. And when I first went to see them, it was a fun meeting because they had incredible success. We were hearing about them everywhere. Every portfolio company was using them and they had 5 million downloads that had happened. So I said, that's terrific. We've got an incredible base of people we can start marketing to. Do you have the database of who all these people are? And they said, no, we don't have the database. So I said, well, did you ever try asking for an email address before they did the download? And they said, yeah, we did, but it cut the download rate by a factor of 10. So clearly you understand why people would not want to give their email address. Everybody's fed up with being spammed, and so the last thing you want to do. So what was going on here? Let's take a look at how to think about things. So I have a model that I hope will be useful to you guys. I found it to be incredibly powerful where on one of these blockage points, what I do is I look at two factors. What's the friction that this step requires for the customer to go through? And secondly, what concerns do they have that's stopping them from going through this point here? And in our case, we're dealing with a concern of being spammed. And so we've got two options when we start dealing with a problem like this. What we could do is redesign the step. And I'll show you a few cases where we've redesigned the step. Or alternatively, if you can't redesign the step, you then have to come up with a motivation that is big enough to pull them through their concerns. And sometimes this involves literally, you see companies using money here. So you offer to give a free iPad for people to put their business cards into a bowl at a trade show as one example of that. I don't like using money or bribes like that. I think they kind of smack of a cheap form of sales trick. So I'm much more interested in using something more valuable. So in the JBoss case, we looked around for what value did they have that they could use to break through this? And the answer was they were selling the documentation for $27,000 every month, and they were very addicted to that revenue stream as a small company that was paying the bills, and they were break even on that. And after three months of working and arguing with them, they finally said, okay, we'll give that as the incentive to get the email address and bingo. That switched on 10,000 leads a month flowing into the company and they shot to 65 million in ARR in 2 1/2 years. That was an amazing success story and that was really one of the key unlocks in the story there. So let me give you a completely different example here. Every one of you, I believe, faces the problem of how do I get more traffic to my website? And fundamentally people are just busy. They don't have the time to be looking and researching and they're not incented to go and research for your particular product out there. So this getting found problem is tricky. So let me give you an example that I think everybody knows in this audience. But it's still useful to talk through why it works and what are the parameters behind it. This is HubSpot, which is kind of company that I was lucky to be on the board of in the early days. And they came up with this tool that was free called Website Grader. And the way Website Grader worked was pretty simple. You put in your URL and if you wanted, you can put in your competitor's URL. So very simple data entry. You click the generate report button and it ran through your website and it produced this incredibly rich, detailed report of what was wrong with your SEO on your website. And in doing that, when it finished the report, something super important popped out at the top right there. A score. Now unfortunately this score is really high because this is my own blog, but the average person would get a 55 or a 50. And guess what? You're all Americans. You've all been to school in America. And what do they teach you if you've got a bad score? Guilt. Right? You feel bad. So you're now under worry that your boss might discover that you've got this bad score. And so you've got to trigger. This is a super important thing in a buying cycle, which is can you trigger with your marketing somebody to switch out of simply being in the mode of thinking about or researching, just generally becoming aware of something. Can you trigger them into actually going into a buying process? And this score actually helps to achieve that particular thing for you. So they start thinking, okay, I ought to try and fix this. Who do I turn to? Well, hey, this company's just shown me that they're very good at this. They clearly know what they're talking about. So they've earned my trust enough to want to talk to them. And they've done something else. They've given me value before. They've even started to try to sell to me. So the lessons here, I've already gone through a couple of them. Free tools help you drive viral spread. Low customer work required, high value delivered. The score acts as a trigger and it builds trust through the fact that you are demonstrating your expertise in the process of doing this. To me, there's another really big deal out of this particular tool and that is that the product team were the guys who built websitegrada, not the marketing people. So what I believe has to happen to make marketing successful is that it isn't just marketing, it is marketing plus sales plus the product group and HubSpot have come up with a cool name for it. Now they call it Sparketing. So it's a combination of all of those things. But most important to me is the fact that if you want to create value for your customer, hey, the marketing guys try to write a white paper that ain't that valuable. But if you go to product guys to build something that actually does something cool for the customer, that's 10 times more interesting and can drive a lot more of the lead flow that you're looking for there. So that's one way of looking at this here. The second thing that I want to look into is that when we think about funnels right now, we think about them as a very high level. I describe the funnel as visitors, free trial, closed deals. So that would be a three step funnel and if I drew it as a three step funnel, I would miss the really big issues and the opportunities for change. So we need to actually go into what I think of as a micro funnel or a breakdown of one of these key steps here. And so anything that's broken your greatest blockage point, what I'd like you to think about doing is going and drawing the, the microfunnel for that. And let's take the free trial in this particular case because that's what many of you use, even if you're using salespeople. And let's break that down into the key steps here. So one of the most I've actually got just a very simplistic one at this point in time as an example. But I was working with one of my portfolio companies last week before actually after I'd done these slides on this very thing with them. And in their particular, let me describe the company first. It's called Salsify and they manage the product data that brands need to move across to retailers like Walmart and Target and Amazon to be able to get their products into the online Website. And it's a hugely broken process. And the most broken process is generally at the brand side. They don't have the information that they need and they can't get it into the right format. So they do a free trial with a brand. And they were complaining to me that the very first problem they have is the customer opens up their product and it's a very rich, sophisticated product and it opens up with a blank screen, no data in it, and there's no guidance in there to tell them what to do or how to get through this trial. And it's a problem. Now, the guidance part of it is not the biggest problem. The biggest problem for them is the fact that they don't have any data in there. And they to get that data in, they don't have control over how long that's going to take. And it could take months actually, while the customer tries to struggle to get this data in there. So the first thing we talked about was something they'd already thought of, which is we can actually get out onto the web and scrape that data from available places where these products are actually currently being sold and pre populate this database so that the moment they switch it on, it's got in the current data that's available. And we can then score them on how well their data ranks against what we know to be best practices that really gets your product sold well. So the score can act as that trigger point to make motivate them. But we still had a problem there, which was they still need to enrich that data by adding in all the missing pieces before they get to the wow moment. And the wow moment is a super crucial thing. In free trials. The wow moment is worth really paying attention to. It's the thing that you need to demonstrate to your customers to make them feel comfortable that if they press the purchase button that this thing's going to work for them. And so understanding first starting point is what is your wow moment? Have real clarity about that. Secondly, recognize that different buyers might have different wow moments. So you might need different paths to navigate through your product to get to what they're looking for. So a little example of what I'm describing there is I used to work with an HR company and they had buyers who would approach their product primarily looking for a payroll thing. Some would be primarily looking for an hras. So you needed to differentiate between those and take them through a different guided tour. Let's go back to Salsify for a second. So in their particular thing, the key wow moment is not the first time that they publish this newly enriched data to one of their vendors, it's the time that they publish it to the second channel because that is just a single click, whereas previously they've got to reformat it into the special format that Amazon needs or the special format that Walmart needs. And that's ages away. So this was a horrible process, too long in the customer's control, not in your control. So I asked them, was there a way that we could maybe get a wow moment straight away based on this pre populated data that they'd scraped from the web? And they realized yes, there was, because Google is trying to compete against Amazon as being the first place that you start when you're doing a product search. And so if they publish this data to Google's new API that they've worked on with Google, these companies could immediately get some new visitors, some new customers coming to them through Google search that they wouldn't currently get. And that would give them an instantaneous wow out of the free trial. So zero work and way shortened time to wow. And what were we doing when we were going through all of these analyses here? We were basically putting ourselves in the mind of the customer, not ourselves, not doing vendor oriented design. We were doing customer centric thinking here of how is the customer reacting to and thinking about everything we're asking them to do. What is painful, what has friction, which of these steps is the customer going to be concerned about? How can we shorten the time, how can we remove the friction, how can we take out the concerns, et cetera. And I've managed to, in umpteen dozen meetings with different companies by applying this really kind of simple way of thinking about things to come up with insight after insight that seems to have helped people, you know, get through major breakthroughs in their funnels. So it's been hopefully something that will work for you guys. Before I jump off of this, how many people in this audience are using SDRs or plan to use SDRS as part of their sales process? If you can just raise your hand to me, that will give me a quick sense of it. So a lot of people. So let me ask you something. When a sales rep calls you as a customer, how do you feel about that? Hate it. Thank you. So why are we introducing a process? And by the way, I'm a believer in sdr, so why am I recommending to my portfolio companies that they use SDRs when we're going to get them to do something that the customer hates? They hate being sold to, they Hate having sales calls and cold calls happening to them. So how do we fix that? So let's apply my same way of thinking here. Let me give you another little thought that I have. I believe that the best way to sell is not to sell is to treat the customer like a bank account. So make a deposit in the bank account before you ever try to make a withdrawal. Create some value for them first. So what does that tell me about the sdr? It tells me that I need an intermediate thing that is valuable to the customer that has no selling in it at all that my SDRs can use to create a relationship with the customer. And ideally, after I've created a relationship, I want to create trust with the customer. And if I successfully create trust, I will actually end up in a consultative selling situation with them without ever having started to feel like I was selling. The problem we have is that most of our sales guys are so trained to sell that the first thing they want to do is talk about the features in the product and they're terrified that if they're not doing that, they're not doing their job right. So we've got to change their behavior and we have to find an intermediate thing. So the intermediate thing could be something a educational that you invite them to. It could be something like data that you give them that's interesting. It could be meeting with peers that they like to meet with that they can't do ordinarily. But the key thing is don't mix selling at all in that intermediate thing because you will blow it in the same way that if a speaker is up on the stage and you came and paid money to come to the stage to hear educational stuff. If I started speaking to you about a product and selling selling, you would get very turned off, right? Because it's not what you came here for and it's kind of a, it's a no, no. And yet we keep doing that in our sales cycles. We keep going to selling way too quickly, way too early before we've earned the relationship and the trust there. So there's another example of how to re engineer something in your funnel from the customer standpoint then. So ultimately what I really am showing you here is a way of starting with your customer, trying to understand what business goals they're trying to solve first, then thinking about what decision criteria to arrive at our wow moment. What do they need to see from us before they ever going to feel comfortable to buy our product and then designing around their buying process a funnel. And that is really reverse to what I see most companies doing today. So this is a fabulous opportunity for you to get some real improvements in your conversion rates here. So, so far, I talked about the simple case. Let me just move to the more complicated situation where in your sales funnel, you actually use salespeople. And in this previous simple thing, we had a really nice piece of math working, which was if we multiplied the number of deals coming in the top by our conversion rate, we got a really nice linear relationship to how much bookings we would do in any particular quarter. Sadly, when we bring in a salesperson, we bump into a problem. A salesperson has a capacity limit. So if we put in one salesperson, they not only have a ramp time, but they will then tap out in terms of how many people they can have. So what ends up happening is our unit of growth becomes how many salespeople do we actually have that are available to handle this inbound flow of leads and do that work? And our salesperson is a starting unit for modeling. So I'm sure many of you have built models of how your company's going to grow in 2017. And you probably started by saying, how many salespeople do we have? What's the quota that they can achieve? And then you probably look backwards and said, how many leads do we have to generate for the salesperson? And how many support people do we have to have to support the customers that they sign? So that's our unit of modeling in a SaaS business when we build a model. So I want to look at the math behind this. The math is really incredibly straightforward. It's like the funnel. It's two variables. How many reps do we have? And what is our productivity per rep? So now we found two more, really key levers in the SaaS business model. We go to the first one, which is number of salespeople. So I've written a blog post about this ages ago, but one of the most common ways that I see my portfolio companies missing their sales plan is because they didn't hire salespeople fast enough. And they're kind of proud of it because, hey, they were in expense conservation mode. We didn't burn that money with these tires that we could have had. So we're doing well, but in truth, you're not doing well. And so one of the hardest problems to switch into when you start getting this repeatable model is realizing that you have to build a recruiting machine that is exceptionally good at bringing in grade A talent on time. And let me show you a key metric that may be Helpful to you to monitor this. So the graph on the left is really simple. How many reps do we have versus the planned number of reps that we should have. And that gap is a problem. And let me show you how it translates into dollars. So on the right hand side, the dotted red line is the ideal quota that we should have based on how many reps we thought we would have hired. But of course we didn't hire that many. So the blue line shows me what's the real quota capacity that we've actually got in the organization. And then the green line will be your bookings. You'll never actually hit the full quota. As you probably know. Some of your salespeople will be great, but most won't. So let's look at the key things that we found out you lost in this particular case, 500k in bookings because you missed your hiring plan. And so this is why this is an important thing to track here. And then the second piece of data that you can get out of this that's really useful is the difference between your assigned quota and how much you actually booked should start to predictably settle in at some level. And that settling in number, in this case I used an 85% number. We'll give you a great tool for double checking your sales forecast to make sure that if you said in your 2017 plan you were going to do 6 million and you assigned a quota of 6 million, but in the past you've only achieved 85% a quota, well, you've probably got an unrealistic plan, you should take the 6 million and discount it by 15% and that's you're more likely to achieve actual number there assuming you hire well. So hopefully that's helpful. So productivity per rep is the second variable in that, you know, number of reps times ppr, productivity per rep. And really key thing to focus on here is quality of sales hires. And again, if you don't build a machine and you're kind of desperately hiring because you can't find these people, you will end up hiring poor quality reps. And that's we all know is kind of a disaster because you end up actually wasting six months or so before you discover that they're bad and taking them out. But the other thing that I think is fascinating for every one of you as founders to think about here is what can we do to increase productivity when we hire these people? Sales training and onboarding is very powerful. And so if we can put the founders time and knowledge of the business into creating an onboarding course to help teach them that will have huge payback. And yet we often don't do that because we kind of consider that they're automatically going to osmosis. You know, get the knowledge from us. Viral osmosis. So a nice opportunity for them. Some quick charts that I have on this track your average productivity per rep over time and see how that's trending. You could look at it based on the tenure of the rep. So you see three lines here. New reps, reps that have been with you more than a year, reps that have been with you more than two years. And that's interesting. Useful to know how that trends then. I always like this chart which shows me in quick colors by rep, how they're doing quarter by quarter. So I can get a feel for am I really having a repeatable sales process. And you can start to see in the last quarter there we've got enough greens on the board to see that actually we do have a repeatable sales process. So we can actually start ramping this thing. But if you've got lots of reds and you've only got a couple of superstars, don't ramp because this is not repeatable, this is not predictable, it's not scalable yet. And then the last chart that may be helpful that I these, by the way, are all HubSpot charts. So I give the credit to them. They're the guys who showed me these. But they've been great for managing that business. How many Reps are above 75% of quota and how's that trending over time? How many reps are above 100% of quota? So I'm running out of time here and I need to wrap quickly. So one of the quick things that I will go through here, I'm sure all of you know this, but if you need to focus on how many leads have to be generated to feed the sales organization, we can do reverse funnel math using the conversion rates to to get back, realizing that one closed deal requires five opportunities. 20 sales accepted leads, 25 marketing qualified leads, 125 raw leads. And that becomes the way that we can compute how many leads have to be delivered to our sales organization. So if they hit their hiring targets, marketing must hit its leads target. And this becomes effectively the contract between your sales organization and your marketing organization for both sides to deliver on what they have to deliver on them. And I don't have a lot of time here to talk about the back end of the funnel. All I talked about Last year was churn and negative churn, so I didn't want to repeat that stuff this time around. If any of you are very focused on that which you should be, may I refer you to what I talked about last year as a place to go there? So let me kind of summarize this for you quickly. My top piece of advice for you coming out of this is that there's this fabulous model, the funnel. It's a great way to focus your entire team on one thing and snap them all into alignment to deliver the thing that will make your company successful. If you run your funnel successfully all the way through, you will have a great SaaS business. And so my things that I found here that really are helpful is most people think they know their funnel, but when I ask them to draw it, something strange happens. We get a lot of different viewpoints from people around the room and funnel. Funny, funny creative thinking starts to happen the moment they put these boxes up and they realize, oh my God, this is not a very good box. We could do this better. So I'm not even doing anything there. I've just simply asked them to draw it. And they are solving the problems just by having it up on the whiteboard. So there's a simple cool step that you can do and break it into micro steps for the key parts and bring your groups together. Maybe it's every two months, maybe it's every quarter, but hold a meeting where you, the CEO, get the sales group, the marketing group, and the product group in there and talk about what's broken in your funnel and how you might be able to improve it. And you will get some of the breakthroughs that I've been talking about here that really change the conversion rate of your funnel for you. And lastly, I apologize here because I think I've overrun my time. I've got a few seconds and then I can take some questions. What are these 12 key levers that I promised I would talk about? Well, I have to say I'm not sure that the number 12 matches exactly, but let's go through some of the ones that really matter here. So product market fit unquestionably can dramatically change the conversion rate in your funnel. So that's a great starting point. Then secondly, top of funnel lead flow. Thirdly, conversion rate, how much did it cost you to put them through the funnel? How many salespeople do you have? And focusing on recruiting, then what's your productivity per rep? And do you have enough leads to support that number of reps that, that you have? There. Lastly, for ltv, I didn't talk too much about this because this is the back end that I didn't have time to cover in much depth. But pricing is super important so you can get negative churn. You must have variable pricing so you could expand how much you're getting from your existing customer base to cover the lost customers that you will lose through churn. Customer retention rate and dollar retention rate, those are metrics for the back end of the funnel. You will need cash to finance your business, particularly if you want to grow. We've all talked about the cash flow trough in the past, so the key metric that I found really impacts how efficient you are on cash burn is the months to recover cac. So if you can reduce that, that's very powerful. And then lastly, I'm sure all of you know this, but it's unbelievably religious for us to focus on this because what we've seen is the really great way to build a successful business is to focus on who you hire and getting the quality of people that you hire right. And not sacrificing at all on that parameter. So I can't emphasize again the importance of building this recruiting machine to allow you to see the very best candidates and to have a flow of them so that when you come to actually adding people, you're not scrambling to add people and therefore adding poor quality people into the organization there. So that's really all of my 12 points there. I think I have just a minute or two for questions. One last thing, I think most of you know this, but I have a blog where I've been talking about this stuff for years. And if you are interested, these slides are actually up and posted on the blog and there's the link to them. So I have an incredibly hard time seeing you guys because of these lights that are in my face. But does anybody have any questions for me before I have to run? I see one hand here, Companies.

How are you either scoring those leads.

Or following up with them once you've got the email to, you know, enhance the conversion rate down the funnel after that point? Yeah. So I'm going to repeat the question because most of you, I don't think heard it. So the question was a lot of my portfolio companies are using free tools. How are they scoring the leads to know which ones to follow up with further on down the funnel? So what I'm seeing is a new term that again, the HubSpot guys came up with called a PQL rather than an MQL all of you probably know MQL Marketing Qualified Lead. A PQL is a product qualified lead. And so the first thing that you know from a PQL is that they're actually engaged with the product and they're using it. The second thing you might know is that if you look at the information they've given, are other people in that same organization using the product. And that gives you an indication of a higher score for a lead. And then a lot of them are using a number of data enrichments products that are out there. Clearbit is one of the ones that I happen to have very high faith in, but there are others as well, and they will be using Clearbit to enrich the information that they're getting in the form of an email address to start, then getting a full picture of the company. And then you can score the company using other tools that are out there to have you understand. For example, Datanize will help. You know, are they actually using some of the other tools that we already integrate with that would give them a higher score than somebody who requires you to integrate with something that you don't have that integration built? So there are many factors there that you can use to build an automated scoring machine and have your salespeople focusing in on just the very best leads for them. So hopefully that helps with that answer. There.