SaaStr AMA: Building a Startup Outside the US w/ Point Nine Capital Managing Partner Christoph Janz

Hello sasjoy fans. Welcome to our very first AMA in a new series we're launching called Lunch with every other week or so we will bring on a new leader in SaaS and talk to them about whatever is burning question with you. So as a founder, it's kind of the best thing ever, right? You send out your questions into the Twitter sphere, you tune in and somebody who's amazing in SaaS, the best in the business, will answer your questions live here on the Google. So make sure you subscribe to the calendar and then we think it's going to be great. But if you have feedback, definitely send it our way and we'll work on it. Before we kick things off, I want to thank our friends at Salesloft for sponsoring today. If you've got an SDR team that you need to optimize with tools, you need more leads converted to prospects, which doesn't then definitely check out salesoft. So today we're going to talk about, at least start off talking about building a company outside the US Outside the Bay Area. It's a complicated topic, right? When do you move to the us? Do you have to move to the us? What do you do to keep things from coming off the rails? If your sales team and your product team are 10 time zones away, is it really different to come and pitch in Sandhill Road as opposed to meeting with Christmas off in Berlin? But it is an ama, so go ahead and tweet in your questions with the little hashtag we've got right here and we'll try to get to everyone's also. So I am super excited to welcome Christophe Jans today. He is the managing partner and co founder at Point Nine Capital in Berlin. Christoph is amazing. I'm sure all of you are already reading his blog, the angel bc, but for the few of you who aren't, I highly recommend it. Christoph's a two time founder turned investor and he's launched over or funded over 20 SaaS startups including Zendesk, Clio Free Agent. He's just done a lot of amazing things and I think he might love SAS just as much as we do here at Sasker, which is really saying something. And he's also joining us from Berlin tonight. So Christoph, it's what, 9:00pm There a little after.

Yeah, for lunch. It's pretty late but it's still a.

Good time to have.

So for this one, maybe we'll rename it Late Night Snack with Chris Fox just in your honor. Thank you for joining us though. And then we also have of course on the call today, our very own sester, Jason Lumpkin, and he's joining us all the way from the other side of our office here in San Francisco. So we're really glad you could make it to Jason.

Thank you.

Yes, it was tough to Uber in, but I'm glad to be here.

Great. Okay, so without further ado, Krzysztofa, welcome and tell us a little bit about Point Nine Capital.

Yeah. Thank you very much for the kind introduction, Gretchen, and also Jason, thanks very much for the invitation. Great to be here. Point Nine is an early stage venture capital firm we're building, based in Berlin. We invest primarily in SaaS companies as well as online marketplaces. We do exclusively early stage, like seed rounds, maybe sometimes early series A rounds, but it's really early stage and we invest in Germany, but also all over Europe and in some cases even outside of Europe. So we're pretty agnostic when it comes to location, but we're pretty focused when it comes to stage and the types of companies that we're looking for.

Yep. Gretchen, do you mind if I jump in with a few questions? Surely jump ahead of the AMA folks. So, Christoph, I was thinking, you and I have known each other for a while and at least we've had a chance to invest in one or two companies together. But I was thinking lately at a higher level theme. So going back, we were talking before the hangout started about Web 2.0. So you're a founder yourself. Right. And something that's clearly happened, at least in my opinion the last couple years, is sort of the rise of the founder vc. Right. And you know, it happened with Andreessen Horowitz, which seemed kind of crazy. Right. But there's more of it and you're one of them. And what do you. Is that a change in industry? Is it what's happening? Do you think more and more venture will be taken over by founders? Do you even think it's a good idea?

Yeah.

What are your thoughts on founder VCs?

I don't really have the data to really answer whether today the percentage of founder like previous VCs with previous founder experience is. Is much higher than it was some years ago. But I would say it definitely doesn't hurt to be a founder or have had that experience before. I don't think you have to be a founder to be a great investor. I think you should have some experience, like some operational experience. I think it doesn't necessarily have to be as a founder of a startup, but I would say it certainly helps if you have seen a startup from the inside for some time and I think specifically the founder experience helps you to just have seen the thing from the other side of the table. I had my first interaction with venture capital in 1993. I was like, as green as it gets. I didn't even know that something like venture capital exists. And I asked the dumbest questions that you can imagine about the terms which the VCs proposed. So I must have been a horrible founder. But that makes it a bit easier for me, I think, to have some understanding now if I deal with early stage young founders who just don't have any experience from previous fundraisings and for whom this is a very new topic.

Yeah. Let me ask you an even more like industry insider view of that question though. Right. I think my experience is that there's a lot, a lot of people think pretty highly of you for a variety of reasons. I'm one of them. And I suspect at this point a lot of your deal flow at 0.9 are people reaching out to you. They want you as the investor in the company. They want you. Right. And I think this has changed the industry, at least stateside, a lot. Do you think that founders more and more want to pick founders to be their investors if they have choice, or am I seeing a trend that doesn't exist? And I think Angellist is a little bit of this too. Right. Naval is all about founder power too.

Yeah. I'm not sure if founders really say specifically. I just want a founder as my venture capital investor or partner. And I think they are smart enough to view the entire person with all his or her strengths and weaknesses. So I think people like founders know that it's not just about the firm, but also about the partner. But I think that doesn't mean that they all just want to talk to the founder among them and maybe specifically about us. At point nine, we work somewhat differently from other firms, I think, or at least from some other firms in that there is really almost no such thing as this is my deal and this is your deal, or this is my company and this is your company. We do divide our work to some extent. That obviously needs to be Pavel and myself and our principals. We can't be equally close to each company, but we have really a free flow of information around all companies and any one of the team is really always available to help any company in the portfolio. So I think in our case it's less important if I take the lead or Pavel or somebody else from our team.

I got you. So I Want to get to these questions that we have, which are a lot. But before we get there, I want to ask you one more meta question about the industry. You were kind enough to let me speak at one of your founder events about a year ago when you gave out these great unicorns, which you give out, right? Which are great. And I moved offices from Menlo park to San Francisco and I put all my stuff in a box and the wine and everything, and my unicorn kind of stumbled, if you can see it. It didn't fall, tilting, it's lifting a little bit to port. And I thought, we've had some flat IPOs. Nasdaq is flat. What's going on with unicorns? Are you worried? You're an early stage investor, so your basis in all your investments is right. You're going to make money no matter what. But for the founders and everyone here, what's your inside view? Are things plateaued? Are people pulling back? Is the market going to roar ahead? Where are we today in unicorn land?

So this unicorn is specifically the one you showed? It seems to be a somewhat fragile one.

Aren't they all fragile?

That's the question. It's a 3D printed one. So I think for the next generation, we have to make the legs a little thicker for like the metaphorical unicorns. I mean, I think this whole discussion around unicorns, although, I mean, I'm guilty of talking about unicorns and all those other animals myself, but I think it's a bit exaggerated. I think it gets too much focus about are you a unicorn or are you not a unicorn? And I even saw some statistics which proved pretty strongly that founders are optimizing for unicorn valuations. There's a huge amount of companies which got a valuation of just above a billion just to be in the unicorn club.

Yes. Not a coincidence.

Yeah, it's not a coincidence. Right. And that obviously doesn't make a lot of sense. And so I think in VCs, they care about unicorns, otherwise their fund models don't work. I think you wrote about this too, but it's kind of awkward that the business model of VCs dictates the strategy of startups. That shouldn't really be the case. Right.

Let me ask you a specific question around unicorns. So you just raised your second fund relatively recently, is that right? I may have my Roman numerals wrong. The second fund or the eighth fund or which you just raised another fund recently?

Yeah, it's the third one. The first one, however, was more like an angel investment type vehicle. So it's the second real one.

So has your investment pace slowed down at all the last quarter or anything like that? Are there any changes or is 0.9 pretty much same as it was at the start of the year? Focused approach investment.

We were pretty active in the last one or two quarters. We did quite a lot of investments, but I mean, it always goes up and down. Sometimes we have a busy quarter and then we have a much less busy quarter. I think since you mentioned a bit about all those unicorn valuations, are things somewhat crazy in the us? I think there are probably some signs of craziness in the US with respect to some of the private market valuations. I think much less so with regard to public market valuations. I think it's quite different in Europe, which is still where we find most of the companies that we initially invest in. So, I mean, absolutely. The valuations at which we invest today are not the same ones at which I did my angel investments five, six, seven years ago. But compared to a typical Series A in the Valley these days, our entry valuations are still quite modest, I would say.

Yep. So let's dig in a little bit on Europe and specifically for European founders, but even more as a higher level topic of outside the Bay Area. Right, yeah. So first of all, an insider question. I think Fred Wilson wrote a post saying how like a quarter of his investments are going to be in Europe. Right. As you know, I've accidentally made almost all my investments for at least ex European founders. Right. Either they've moved here like a talk desk, or they promised they might move here like Algolia or whoever they are. I think it's not, it's not. It wasn't a strategy like yours, but I have some experience. But as Americans, we think a little bit of Europe as tough labor laws. Right. A lot of institutional challenges. Why is Europe sort of blooming in SaaS? What's happening over there?

Yeah, I don't know if it's blooming in SaaS already. I mean, I think it's still lagging behind the U.S. probably several, if not many years at least, if you look at the big SaaS successes as well as generally cloud adoption. But it's great that there are more and more great SaaS companies being founded in Europe, even though it may be the best thing for them to move over to the US or at least move some part of the operations over to the US Just like talkdesk or Algolia or others. I mean, success stories like Zendesk or maybe success stories in the Making like Talkdesk and Algolia, they. I think they are inspiring for European entrepreneurs, and I hope we're going to see many more of them.

So let's dig in here a little bit. So tell us how you think about this. So you meet a founder from Berlin or London or Paris or Lisbon. How do you. I know every situation is different and you can qualify, but how do you think about. And then we'll dig in. How do you think about this coming to the US Question. Because when you're investing, they haven't. You've done direct US Investments recently, but historically there are folks that are coming to America but haven't come yet. So what's the filter? What's the thought process? And how does it vary based on target customer or anything at all?

Yeah, so at the stages at which we invest, typically this is like a potential move to the US Is still really up in the air and often several years away.

Just to be clear, it's not a condition of an investment.

No, no, not at all. I mean, sometimes it's something which we talk about and maybe which we will maybe increasingly talk about to get a sense for the willingness of the founders to, like, move to the US Also. I mean, generally to do what it takes, whatever it takes to build a big company. And often that may mean moving to the US but it's not like we have a playbook which says you gotta move to the US and if you don't do this, then it's not interesting for us. It's definitely not that black and white.

Yeah. And so you find that. And what percent? I mean, make up the number. I mean, it doesn't have to be actually precise. What percent of your portfolio has come to the U.S. at least the CEO. At least the CEO. What percent of the CEOs?

Yeah, it's hard to answer because I would have to look back at the cohort of companies we invested in, like, up until maybe a year ago or two years ago, because the newer ones, they didn't really have a chance to even think about that whole thing.

Do you think it's 50% or 20% or 75%?

Wild guess. It'll end up like 50% maybe, where like, the founder or one of the founders moves over. But I think that even with respect to the remaining other 50%, unless it's one of those rare cases where you really target a local market because you have an accounting solution or something like this, they have to have some kind of US Presence. So even if the founder doesn't Move over. I think you can't build a huge global SaaS company without having anybody on the ground in the U.S. i think that's impossible.

Let's talk about that for a minute. The question is, can I be a CEO of a global SaaS company selling, let's call it enterprise, like decent sized deals, five figure deals and up. Can I do that from London or Berlin or pick your capital, but hire my VP of sales in San Francisco? Can I find that person and can I manage them remotely? And will a great person join that remote environment?

Yeah, I would say it's not impossible, but it's certainly harder and probably less likely to work if you compare it and all other things being equal to a Silicon Valley based company. But I think it's not impossible. But it does require obviously a lot of traveling. I mean, even if the founder doesn't move over, he obviously needs to spend a lot of time on the ground recruiting that VP of Sales and building relationships on the ground. It probably also requires that the founder either has a network in the US already because maybe in a previous life he spent time there, or he has a great investor on the ground who helps him. But I mean, if you have absolutely no connection to the US and you fly over and you want to hire a VP of sales, then you're guaranteed to fail. Then you'll obviously only get the ones that the hot startups in town and the best startups in town are not able to recruit. So then you'll only get the lemons.

And let's just dig in on that because I've learned this question a lot of people think about, right? So do you have, across your whole portfolio, do you have successes? Because in the early days it's always true that the relationship with the CEO and management team is critical, right? I mean that's gotta be. You're like family in the early days. Or at least you're like a bunch of soldiers, right? The earlier it is, the even truer it is. I think it's always true. Do you have portfolio companies where the CEO was able to truly recruit a great VP of sales in the Bay Area and not be here 50% of the time? Have you seen them be able to build that relationship successfully?

I don't think we have seen it yet. Maybe we will see it in the future. Like for example, our portfolio company Typeform, they're based in Barcelona, they're doing great. They've hired amazing people in Barcelona. I'm really surprised how many great people they have either found in Barcelona or have found elsewhere and relocated to Barcelona. The gravity center of the company will continue to be Barcelona, but they will also hire some people in the US And I think they have a great shot at it because the word about the companies gets out not only in Europe but also in the Bay Area and then some really good investors. I think they have the right conditions to make that work. But you have to have a couple of things in place I think to have a chance of doing that.

Let's just dig in for a minute. Obviously I've used the product, I'm a fan of the product but I haven't paid attention to the business model like you have as an investor. So my guess is that Typeform is not doing a lot of six figure deals today.

That is correct.

Right. And so my somewhat data driven thesis is that the lower your acv, the more you can do it from anywhere. Right. It's easier. Right. As long as there's a university close that you can pull smart kids out of, you can build a quote and I don't mean this pejoratively but you can build a low end inside sales team almost anywhere today I think you really can. Right. Sometimes you might want to fake it a little bit with the accents but let's put that aside. But as the deal size goes up I think that's harder and so I don't know if type form yet because I can imagine in Barcelona you can get amazing talent but you're not going to get the VP of field sales out of box to come fly over to Barcelona and join you unless you luck out.

Yeah, that's true. And Typeform up until today is almost in between B2C and B2B and it's all viral and organically driven and self service and no touch or low touch sales. We'll see if that stays there are to what extent will go go up market. So I think maybe an example of an company where we do talk about six figure deals is one which you know very well obviously Algolia and in without like disclosing any confidential numbers we both know that they are doing really really well and but they, they are starting to hire more and more people in the US now so that will be one of these cases where we'll see. But of course Nicolas, he moved over. He has some good investors to support him so I think he has some shortcuts that he can take.

Yeah, that was a good. I want to dig in a little bit of the geo stuff but your insight which I know you are passionate about But I didn't fully internalize it to you just set on this video I may is if you have no network, right. Actually having a really hands on US investor can help, right? Yeah. You know, I mean I view investors as having a bounded amount of value add like it's real but let's. But they puff themselves up. But if you're like if you have no network. Right. It can be, it can be a huge force multiplier. Right. It can be if you have nothing. Right. And I hadn't really fully thought through that till now, but I think you're right. Right. So finding someone, it's not a reason to take someone's money but I do think it's a way to almost overnight build out your network if that investor is a real champion of yours and they have a network, right?

Oh yeah, absolutely. Yeah.

So let me ask you.

In fact I probably wouldn't recommend for a startup from Europe to move to the Bay Area unless they get a local investor to support them. I mean again to every rule you'll find exceptions but that's what I would probably usually recommend. I mean another part of it is that costs are so high you have to raise money and those amounts are hard to raise in Europe. So probably you'll just catch, I don't know, how do you say this in English? Catch two flies with one shot. Does something like this exist?

Yeah, yeah. People would be. I want to. We did this over the summer in London. We had a saster get together that about four people came to and a couple things one of them came out of when the CEO of Chopad was speaking. They just crossed 10 million ARR. So did the CEO of Conversocial and his employee costs are 50% higher in San Francisco than they are in London or Belgium. Us Americans think we look at the euro and we think everything's more expensive with those 30 hour work weeks in Paris. But it turns out San Francisco is shockingly more expensive than Europe isn't.

Is absolutely so related to that.

A good topic that came out of that session that I want to follow up with you what a lot of founders coming to America especially from Europe seem to do. I know Algolia did it for a minute. Conversocial did it. Chopad did it. They stop in New York. The time zone is so much easier to talk to Paris or London or Berlin from New York than it is from the Bay Area and the flights are so much easier. And so I really believe the communication is an order of magnitude simpler from New York But I haven't seen that work too well. It seems like you don't get enough of the benefits, but you get a lot of the taxes. But people do it. So what are your learnings or advice for stopping in New York instead of coming all the way out here to Bay Area?

Yeah, it's interesting. And Zendesk did that too. Like they spent three, four, five months in Boston before finding out that. Well actually the real destination of this company is the Bay Area.

Boston. They do sometimes too. Yeah, that's right. Yeah.

Yeah. And I, and I think you should, you should think really hard about what is really the ideal place for the company and then move, move there straight and like the flights are a little shorter, the time zone differences is three hours less. But I think in the end that shouldn't be the critical factor which should really impact the decision.

Yep. We got a question. This one is a tough one. I'm curious your answer. I'll put you on the spot a little bit because I'm happy to. I mean only a tiny bit. But this one is if I want to come to the Bay Area but my family can't move, what should I do?

Yeah, that's a good question.

It's tough. Some of us actually have kids. Right, I should know. How old are your kids?

Yeah, I have kids too. They are 4, 6 and 9. And what I did personally, what I did personally, we spent three months in San Francisco this year and the same thing last year. And for us it wouldn't be a no brainer to move completely, but it is different, like also different situation. We're building this VC in Europe. So it's somewhat theoretical, but I can obviously really understand if a founder from Europe has kids and a wife and a house and grandparents, it's not easy to make that move. I mean it's something which the founder has to negotiate with his partner. It's something which I like, which as an investor I think the discussion which you shouldn't participate in, I mean you can, I mean I think you can talk very openly with the founders, like about the importance of doing this and what you think. But then it's. The founders have to figure it out. I mean, I think ideally you're not the only founder. Ideally there's two or three founders and one or two of them can make the move. If none of them can make the move, then that's what it is and you got to work with what you have and you can still build a great company. It's just maybe a somewhat different path yeah, yeah.

It's just, it's a bigger, you know, talking. I should have known this talking with Nicholas from Algolia and he, you know, he brought his whole family over and they live in Berkeley, but I didn't realize his kids from Paris, they don't speak any English. This is my ignorance.

I just assume they're young enough to pick it up.

They spoke English, but they're in a school. The poor kids not only are going to a new country, but they don't even speak this crazy American language. I mean, I never had to make those sacrifices as a founder. I sacrificed a lot, but I didn't sacrifice like that. So it's a big deal. Right.

And if you speak English, you probably aren't allowed to return to France.

That I didn't really know.

So.

Good. So take a couple other questions from Twitter and then I'll come back because I want to ask you some other stuff. And this one, I'm going to tweak this question a little bit. So folks that are in the eu, do they have a competitive advantage with EU customers? And how should they manage that balance? Right. For example, Showpad, it was fun. When PJ talked to the event, it was only recently on the way to 10 million, they crossed a line where their majority of the revenue was US based. So how do you think about taking advantage of home turf? But at least for SaaS, it's still the smaller market, isn't it? It'll be a long, long time before the US isn't the prize in SaaS. So how do you think about home turf advantage versus trying to take advantage of the US market when you're selling from Berlin or London?

Yeah, we're not really thinking about that home turf advantage a lot. I think we're only thinking about it in the context of hiring and being able to hire developers from Germany for a fraction of the price, which they cost in the Bay Area, or maybe even from Eastern Europe, where it's again, a fraction of what they cost. So I think that is an advantage, a big advantage, especially given how things have developed in the Bay Area in the last 612 months or so. In terms of customers, I think you have to think about this globally. I mean, let's say Western world, like North America and Europe pretty much from day one. Maybe you do have an advantage winning bigger European deals, but the question is, should you really focus on them? Because at least anecdotally, what we've heard from several of our SaaS startups is that they have an easier time closing US companies even on the phone sometimes than closing a company locally in Germany just because Europe lags behind in terms of the whole cloud adoption.

Yeah, that's interesting. All right, so to summarize, you don't see at a gut level, you don't see any home field advantage in terms of Euro companies selling euro SaaS. Right. So go global from day zero?

Yeah, I think so. And maybe that could be a home turf advantage, but I think it could be a trap if you focus too much on it because then you're trying to satisfy the requirements of the companies in your neighborhood and maybe, I think that's probably not what you want to focus on if you want to build a large company.

Yep. So I want to modify a question we got from Robert from the Netherlands. He asked how do you develop a good team in the first year on growth in tech? But let me dig in. To me a more interesting question. My learning is that again, if you're in any major city, you can get together a small group of great engineers, I believe. Right. Maybe not 40 year veterans. Right. But there's great engineers in Barcelona and Berlin and Austin and Miami and everywhere. Right. But when you look to invest in SaaS companies, do you give them a little bit more of a pass if the sales and marketing team is greener or even of lower quality because the resources aren't already there? Right. So, so when you invest early, how fair is it as a vc, can you expect to have a great revenue side team? Right.

Well, at the stage at which we invest, there typically is no marketing team and no sales team.

How do you think about that gap between the day you finally come to the US at millions in revenue if it's that late, and developing that interim team? Do you just assume that it's going to be harder to get good resources and then you factor that into valuation or how do you think about the lack of, of those resources?

The typical founder team that we invest in is it's typically two or three product driven guys or like a tech founder and a product founder, hopefully with a strong commercial sense, but usually almost always without a lot of experience in selling something, let alone building a sales team. And I think you can get to a million in ARR without that. If the founders are smart, if they can sell their product, if there's good product market fit, and then we have to make a bet that the founders, well, first of all can get there themselves and in parallel develop the skills that they need to attract more senior people over time. That's one of the Most important bets that we make is on founders and their ability to grow and develop their skill set really, really fast because they are almost all unproven, at least with respect to some of the key skills which they will eventually need to build a large company. And it's super hard to predict. I think it's the toughest part of our decision making process because you have something which could look like a raw diamond and hopefully it turns into a beautiful diamond over time. But maybe it's just. Maybe sometimes it's not. Maybe sometimes it'll just gray little rock. But so far we've been really, really lucky. I think we've invested in a lot of relatively inexperienced people who have done amazingly well. So we've had a lot of luck so far.

Yeah. Let me ask you, I want to come to a question that I want to extend, but let me touch on one thing just for the sake of founders. So you talked about the diamond, the rough, right. When you invest early. Because this is something I did not understand as a founder. When you invest early, you're investing in the best possible companies you can. Right. But some of them don't make it right. Is it okay? How does that impact you as a vc? How does it impact risk? Because I always as a founder, I was terrified about losing anybody a nickel. I never lost anyone a nickel in my entire life. And now I wonder if I worried about it too much.

Yeah, yeah.

If you give me what's the smallest check? You're right. If you give me a half a million €250,000 and I do my best and I lose all your money, have I totally let you down if I killed myself day night?

Well, I mean, it's totally okay to lose our money. I mean, obviously we expect that everybody tries really, really hard to make it work. Not because they want to do us a favor, but because it's there in their interest. But it's obviously part of our model that a significant part of our investments will fail. Like either completely fail or return just a fraction of what we invested or maybe return what we invested, but not more. So that's totally built into the model. And then specifically if a company isn't doing well, it's really case by case question, depending a lot of factors, what you do. Like how like other founders still enjoying it or do they, can they build a small profitable company or do they want to give up and return whatever is left? I think an interesting aspect of SaaS is that it's relatively easy to build a profitable company. I mean, it'll be interesting for us to see. We won't know until in a couple of years but. Right. I think we have. There's only one write off if I'm not mistaken. Only one SaaS write off and that was a company that we invested in really really early on like pre product market fit. But if there is some product market fit and you're not crazy in terms of building up the burn rate, there usually is a path back to profitability like profitability at 50, 100 or a few hundred K MRR and you run the show with a you want it.

As a founder and you have product market fit, you can find a way.

Yeah, right.

If you have no product market fit, even Marc Benioff can't solve that problem. But if you have 10 customers you can get 100. If you have 100 you can get 200. Right. And so if you don't quit, you can find a way, right?

Yeah, yeah. And it'll be interesting to see like what really where these companies end up with like those that don't become big but become or stay small, profitable companies growing slowly but surely like if there is a market for them or if they just stay independent. And so that is a learning which we are going to make over the next five to 10 years. Yeah.

You know let me ask a related question that will from somewhere Rainey has, but I'm going to modify his question. Is the kind of advice that you give on your blog, right. Or on Sast or whatnot, is that relevant to folks running non VC funded bootstrap businesses? Right? Is this all this advice spot on or are we getting a lot of advice that's biased toward venture backed high velocity businesses?

So the stuff I write about is indeed largely biased towards VC funded startups. I tried to add a bunch of disclaimers to some of these posts just to I mean to make sure that basically that this comes across right. Because I mean the vast majority of the startups out there is not destined to become a unicorn at the same time VCs hunt unicorns. So there's a huge disconnect and just because a company is not on its way to become unicorn doesn't mean it's worthless or not worth pursuing. So I think we in the VC world have a pretty narrow view on a certain type of company. But there is a lot of other companies out there who maybe won't and maybe shouldn't raise venture capital and still have a very like very important function in this whole ecosystem and can still be very valuable as well, let me.

Ask you a related question and then I want to make sure with our limited time we get two more sassy questions in because it's interesting. There's definitely a phenomenon out here in the Bay area which you know well, even from Berlin where if you're pre hot it can be very easy to raise an angel round in the Bay Area, right? It can be like jaw droppingly easy, right?

Yeah, yeah.

And founders kind of hit a wall where actually they might get to 20, 30, 40k in MRR in a good space, but the bar has kind of gone up for an A, right? And they get trapped in this in the middle and they get lost because the seed was so early easy, right? It was just so like it took them, they came out of an accelerator or they walked down market and they raised a million bucks. Does it happen in Europe or whether it does or doesn't? What's your thinking or any specific advice here?

Yeah, I think it doesn't happen as much in Europe. Maybe it's relatively easy in Europe as well to raise a really tiny amount from business angels. But I think this is more like maybe 100,000, maybe even just tens of thousands or maybe a few hundred thousand if you have some good connections. But in the US you can raise an order of magnitude higher. As you said, if you're at YC for sure or if you're, if you have some good things, like maybe you have done something successfully before or you get some traction on AngelList. I think that just the amount of money flowing into seed startups is just enormously higher.

Yeah. So one last question before we run out of time. It's totally disconnected from all the rest, but I think it's a fun one. Let's just spend a minute chatting about it because sometimes we take a lot of these sales processes for granted that you and I are both so passionate about. So the question is, then I'll tell you what, we can dig in. The question is for deals with an ACV more than 100k, right? For six figure deals, do you still use SDRS for lead gen or do you need field reps? Do I need to hire a bunch of field reps and AES with a Rolodex to go out there and hustle and close me these six figure deals, right? There's a lot of loaded questions in there, give some of your thoughts and I'll add some color. Right? But six figure deals, right? Should I have kids? Should I hire a bunch of kids to make cold calls or should I hire A guy in an ill fitting suit to bang on doors with this Rolodex that he took or she took from Box or Salesforce or Zendesk.

Yeah, yeah. Well, I mean you are much more qualified at answering that question. So I just, I'll share some thoughts but I'll let you take over quickly. I think the most beautiful way I think is still if you can generate inbound demand, if you can do content marketing, if you can generate referrals, if you can get hot leads and then close as many as possible of them on the phone, I think even six figure deals can increasingly be closed on the phone with web demos. Some sessions like this, having to build a field salesforce, I would view it as a burden if you have to do it. If you just can't close those deals without personal meetings, well then you got to do it. But then you probably have to increase your pricing too to make, to make the math work.

Yeah, that's for sure. Yeah. No, it's a good, especially if you're capital efficient, right? If you can get to 5 or 6 million all on inbound leads, that's the most capital efficient way to do it, right? That's the math. I think my overall advice though, I'd say what has changed over the last two or three years is in SaaS with sales teams, we've all gotten a lot better and more focused on specialization. So the era of the full stack AE is dying, right? The AE that picks up the yellow pages, creates their own leads, calls them, sets up their own demo drives there. If they're local, everyone kind of gets off the ground with a little bit of that. Even if it was just you and me starting our companies, but now the companies are scaling faster than ever, right? You got to specialize faster. Net net. What that may mean is the quotas have to go up, right? Let's say you had an 800k quota and now I need SDRs, I need appointment setters and I need sales ops, I need special. So maybe I have to increase the quotas to a million just so that 200k can pay all the. But everyone's doing this, Everyone is hyper specializing every part of the sales process from all the pre touches to close and the age of the full stack sales AE I think died around 2011 even though we all have to start there, right? So that's, I think the answer to the question is do I need SDRs or field sales or this? Ultimately the answer is yes, yes, yes, yes, yes. Because if you have a bunch of generalists you're going to leave money on the table as soon as you can afford to specialize.

Yeah.

And the question is how much? You know, how early can we afford to specialize? But the best VPs of sales are specializing earlier and earlier and earlier in time.

Yeah.

So anyhow, we're just at the time, Christoph, this was an A triple plus. Thank you for the time.

Thank you.

We'll post this on Saster and we'll have some more commentary on that. This. And I will say, if you haven't met Christoph, he's one of the good ones and he's someone that I would recommend and that I would take money from. There aren't that many of those guys. So thank you again to Salesloft for sponsoring this. I think the Next one is October 29th. I think it sounds like we'll have Kyle from Salesloft and Brendan Cassidy, VP of Sales to the Stars. We're gonna try and have a Saastr holiday party in two weeks. Keep your eye for that. Hopefully we'll have a thousand SaaS founders there if they can pull it off. And if you want to meet Christoph and his team in person, come to the SAASTR annual in February.

We'll all be there.

He'll be there. You'll have a lot of chance to meet with the team. And there's a coupon code, October 1020, which you can cleverly find on saster.com, but if you do that, you can get 20% off and take a selfie with Christoph and meet the team. But thanks again, my friend, for the time and this was terrific.

Thank you so much. Jason and I will see you at the SAASTR in February at the very latest.

All right, talk to you soon.

Right, thank you. Bye bye. Speak soon.