S3E20 – How to sell Enterprise SaaS, Learn from a 100M+ ARR founder With Jim Yu
Wondering how to sell enterprise SaaS? Well prepare to learn from a 100M+ ARR founder. In this episode on the Grow Your B2B SaaS podcast, Host Joran Hofman dives into a conversation with Jim Yu, the founder and exec chair at BrightEdge, exploring the ins and outs of building and selling enterprise SaaS. Jim generously shares his journey, reflecting on the hurdles and lessons learned along the way. He stresses the importance of laying a solid foundation before scaling, understanding the nuances of sales strategies, and cultivating advocates within enterprises.
Furthermore, Jim delves into the necessity of a structured approach, the creation of effective playbooks, and staying attuned to the macroeconomic landscape. Offering invaluable advice to SaaS founders, Jim advocates for continuous iteration and optimization of value propositions, customer acquisition costs, and lifetime value. Drawing from his experience in growing BrightEdge to over $100 million ARR, Jim’s insights shed light on the intricate world of enterprise SaaS.
Jim’s Background
Jim reflects on his early days at Salesforce, where he witnessed the evolution of the SaaS model. This experience inspired him to start BrightEdge, recognizing the synergy between digital marketing and SaaS.
Enterprise SaaS vs. SMB SaaS
Jim discusses the distinctions between enterprise SaaS and SMB SaaS, emphasizing the unique requirements of enterprise customers such as security, scalability, and integration capabilities.
Go-to-Market Strategies
The conversation delves into the importance of having a sales team in enterprise SaaS, highlighting the evolution of sales models in the SaaS industry and the significance of personal relationships in enterprise sales.
Growth Journey of BrightEdge
Jim shares the growth phases of BrightEdge, from the challenge of category creation to identifying the right market segment and refining the value proposition for enterprise clients.
Jim emphasizes the need to “nail it before you scale it,” highlighting the importance of refining the business model before scaling up operations.
Sales Strategies for Enterprise SaaS
The discussion explores the shift from early exploratory sales to scalable sales processes, emphasizing the need for a structured approach and focusing on repeatability in sales motions.
Challenges in Enterprise Sales
Jim discusses the challenges of finding early advocates in enterprise sales and navigating the complex procurement processes typical in enterprise deals.
The importance of market awareness and adaptability in responding to macroeconomic conditions is highlighted, emphasizing the need to align value propositions with the prevailing business climate.
Strategies for Streamlining Procurement
Practical advice is given on streamlining the procurement process, including standardizing contract terms and negotiating efficiently to expedite deal closures.
Advice for Early-stage SaaS Founders
Jim stresses the importance of structured customer and market discovery processes for early-stage SaaS founders to identify the ideal target market and value proposition.
How To Scale to 10 Million ARR
As companies strive to scale their revenue from $10K to $10 million ARR, Jim emphasizes the critical need for developing repeatable and scalable sales processes. This entails creating playbooks and methodologies to effectively train sales teams, ensuring that successful patterns can be replicated and new team members onboarded seamlessly. He highlights the significance of optimizing distribution economics and establishing clear performance evaluation processes for sales reps to drive sustainable growth.
General Advice for SaaS Founders
Jim emphasizes the significance of understanding the economic model of SaaS businesses, focusing on customer acquisition cost, lifetime value, and market positioning.
Reflecting on Experience
Jim offers personal reflections on the resilience necessary for the entrepreneurial path, drawing parallels to advancing levels in a video game and underlining the mental strength essential for overcoming obstacles. Reflecting on a lesson he wishes he had learned a decade earlier, Jim compares the challenges of establishing a SaaS business to defeating bosses in a game. He underscores the importance of mental resilience in navigating the unpredictable journey of entrepreneurship,while learning about the unsexy truth about startup success and valuing perseverance derived from setbacks.
Reflecting on lessons learned, Jim wishes he had recognized the inherent difficulties of entrepreneurship earlier, acknowledging the persistence and optimism required to navigate the challenges.
Key Timecodes
- Show Intro – (00:00)
- Guest Intro – (00:36)
- Jim’s Background and Experience – (01:05)
- Early Days of SaaS and Salesforce – (02:15)
- Starting BrightEdge – (03:04)
- Enterprise SaaS vs. SMB SaaS – (03:18)
- Importance of Sales Team in Enterprise SaaS – (05:13)
- Growth of BrightEdge – (08:12)
- Mistakes Made in Enterprise SaaS – (19:53)
- Strategies for Selling Enterprise SaaS – (24:50)
- Challenges Faced in Enterprise Sales – (28:14)
- Quick Wins in Procurement Process – (33:13)
- Advice for Starting and Growing SaaS – (35:31)
- Advice for Scaling Your B2B SaaS to $10 Million ARR – (36:40)
- General Advice for B2B SaaS Founders – (39:29)
- One Thing Wished Known 10 Years Ago – (40:28)
Transcription
[00:00:00.000] – Show Intro
Welcome to the Grow Your B2B SaaS podcast. In this podcast, we cover all topics on how to grow your B2B SaaS, no matter in which stage you’re in. I’m Joran Hofman, the host of this show and the founder of Reditus, which is a B2B SaaS that helps other B2B SaaS companies to set up, manage, and grow an affiliate program. Being a founder myself means I’m going to the exact same journey as you are, experiencing the exact same issues, and probably have the exact same questions. And this is why I started the podcast in the first place. Get advice from industry experts on how to grow my B2B SaaS. So if you like this content, make sure to subscribe, follow, give it a thumbs up.
[00:00:36.340] – Guest Intro
Let’s just dive in. In today’s episode, we’re going to talk about how to build and sell enterprise SaaS. My guest today is Jim Yu. He’s a founder and exec chair at BrightEdge. Bright Edge. Bright Edge is an enterprise tool for marketing and SEO, serving more than 8,500 brands and doing over 100 million ARR. He started in 2007 and stepped away as a CEO last year when he took on the exact chair role. In this podcast, we’ll dive into what it takes to sell enterprise SaaS, the challenges and mistakes Jim made along the way. Welcome to the show, Jim.
[00:01:05.710] – Jim
Thanks so much, Joran. Great to be here.
[00:01:06.960] – Joran
I’m going to start with a Dutch blunt question. Why should people listen to you today?
[00:01:12.080] – Jim
I think one of the things that I’ve been able to learn a lot from is I started from maybe the earlier days of SaaS. I was at salesforce. Com about 20 years ago with Salesforce had just gone public and learned the whole SaaS model was being built by Mark Benioff and the team there. So I had the pleasure of being a part of some of that journey. So watch the SaaS model take off. I was a core part of the platform products there. So it was really about proving that the cloud can work for enterprises, that you could be secure, that you could customize it, that it could support different kinds of business functions. And I was there. So during that period when that model was being built at Salesforce. And then once I saw that was working, I set out to build BrightEdge. I saw this huge opportunity with not only software looting into the cloud, but also how digital marketing was changing. And as I connected the dots there between what was happening with digital marketing and what was happening with SaaS, that led me to start BrightEdge. And BrightEdge focuses on helping businesses be easily found online with organic surgeon optimization.
[00:02:15.490] – Jim
Websites were used by over 50% of the Fortune 500. And at this point, as you mentioned, over 100 million in ARR with profit. So that journey over the past 16 years of building BrightEdge and the go-to in the market and technology and how we sell and how we serve our customers. Lots of mistakes along the way. And hopefully, I always say one of the things I’m really passionate about is if I can help other founders save one or two years on that journey, then I’ve achieved my goal, my passion. So hopefully, some of the mistakes I’ve made are things that other founders can learn from. Because I think in our business of being entrepreneurs, tuition is very expensive and time is actually a diversity. It’s the most valuable thing that you end up spending from a tuition perspective.
[00:03:04.730] – Joran
Nice. I love it. We’re definitely going to dive in the mistakes. We’re going to start with the basics first, though, because we’re going to talk about enterprise SaaS. If we just start with the real basics, how would you explain enterprise SaaS versus the normal SaaS towards SMB?
[00:03:18.250] – Jim
Yeah. So I think when you look at SaaS, one of the things that’s really interesting is in any business function, thinking about your overall addressable market. In a lot of these areas, there are massive of addressable markets, whether you’re building marketing software like we are or sales software like Salesforce was or ERP software or any business function. There’s big addressable market. Part of what you have to figure out is what segment of the market are you going after? Are you going after general businesses around the world and small companies, or are you going after large Fortune 500 companies? There are enterprises, and there’s a lot of companies in between, a lot of mid-market companies as well. And so when you’re thinking about what is your go-to-market and what segment of the market are you going after, there’s a lot of different choices to make. So enterprise SaaS focuses on the upper end of the market in terms of larger companies that have different requirements. In addition to the business function, they’re going to care about being able to support multiple geographies. They’re going to care a lot about security. They’re going to care a lot about being able to integrate with their existing enterprise systems.
[00:04:29.750] – Jim
They’re going to care about how do you support different departments. And so the requirements, even though it might be the same business function, is going to be very different in terms of the solution, in terms of the value proposition, price points, and ultimately, critically also, how you go to market, how you sell How do you serve? How do you deploy into those customers? And so while all these businesses in SaaS can serve different parts of business functions, I think the target market is a very important part of the equation. And so enterprises is very different, both in terms of the value proposition, the type of capabilities you need in your solution, as well as the go-to-market.
[00:05:06.330] – Joran
To dive one step deeper down here, go-to-market. Am I correct saying you need to have a sales team when you’re going to build an enterprise SaaS?
[00:05:13.750] – Jim
Yeah, I think you do. But I think the really interesting thing is the world has changed a lot. If you take a step back and think about the early days of SaaS, Salesforce was probably one of the earlier players in SaaS. The whole idea was delivering software over the Internet. And the idea was the early slogan for Salesforce was point, click, close. So as easy as Amazon for salespeople to be able to use a CRM system. And so if you think about that, SaaS was very much the early model, and even that was done with free trial, to be able to sign up for a trial and starting to go in and register and be able to do things. Whereas the generations of sales software before that was always done with salespeople flying out, visiting the customer and being able to sell and deploy that software together with the customer. So even from the birth of SaaS, the distribution model started to change a little bit. Like the very first interaction that you have with sales force did not require you to meet with a salesperson. You could sign up the first time in the enterprise software for a free trial.
[00:06:21.340] – Jim
And that started to change. So then, as time went on, in the first generation of SaaS companies, once you got the free trial going, then they would send a sales to start to call you, do Zoom meetings, and WebEx meetings at the time. And then eventually, as you got more and more seats, they would send out field sales reps to reach. And so that’s first generation of SaaS. Then you had a whole wave of companies like Atlassian and Dropbox, and folks that were used an even more product-led growth motion that allowed them to get even further down the distribution path without necessarily putting in a sales rep. And so this whole model is gradually changing where the requirement of a sales rep, and now with AI, it’s going to change even more. So does it require a sales rep? Yes. I think in enterprise software, you still need sales reps because People buy from people, and that relationship is very important. And understanding the requirements of the customer is very important because of the more sophisticated requirements or complex requirements of enterprise companies. But over time, you’re seeing the models change a lot, especially post COVID.
[00:07:30.150] – Jim
Before COVID, almost most of the larger enterprise deals had to be done in person. The salespeople had to get on a plane, meet the customer, and be able to do that often multiple times in order to do a deal. Now, almost the vast majority of time, prospects and customers certainly will meet you over Zoom and virtually. And so all these things are changing. Distribution models are changing. And I think, yes, but it’s evolved.
[00:07:56.000] – Joran
It’s a good involvement. One question regarding BrightEdge, because I think you mentioned it, you started 16 years ago. You’re now above 100 million ARR. Could you give me some insights into the growth of Bright Edge? Where did you guys start it? And then how did you get to 100 million plus ARR right now?
[00:08:12.630] – Jim
Yeah, I think about it really in multiple phases, and it’s a goal with the market. So in the early days, in 16 years ago, the notion of enterprise SEO technology platform was a brand new concept, a brand new category. In fact, the way I got the idea I was at Salesforce for my day job, building platform capabilities. And then for fun, I’d always run websites. And to get traffic to those sites, I learned about optimizing a website for a unit search and discoverability and things like that. And then as I scratch, as I dug into it, I realized, why are businesses doing this? And so in those early parts of the phases of the company, it was all about category creation. And it’s very hard because you’re basically defining a full new category of software. I went up and down Sand Hill Road, pitching the idea, and people were like, What is that? Nobody knew what an enterprise SEO platform was, what an SEO platform is. In fact, we had to decide, What do you call the category? Do we call it an SEO application? Do we call it SEO software? We decided, okay, we’re going to call this category enterprise SEO platform.
[00:09:24.230] – Jim
So category creation in the early parts of the company is very, very difficult, but It’s also a very rewarding journey because you’re nearing a market. If you think about that aspect, when you are… Because I think startups tend to fall into one of two categories. You’re either creating a brand new category because there’s a new brand you need, or you’re disrupting an existing category where there already is a series of certain incumbents, but because of some disruption or new technology like AI creates an opening for startup to go in and disrupt how things are currently done. And so it’s tend to fall into one of those two categories And then the phases of evolution are very impacted by that. So the early days in the company, it was pretty lonely because you’re trying to get people to see the need. People would say, hey, why don’t I just run an app? Why don’t I just pay for the click? What is this optimization thing? Why do I need to tweak my website? It was just stuff that people didn’t understand. And when you’re doing category creation, a lot of the early part is we’re inventing technology.
[00:10:26.220] – Jim
So we built this, we realized if we want to help people optimize their website for a leading service, we created this thing that we call the data cube, this massive index of the web. We created data that can help you figure out your website versus competition and things like that. And so you’re building brand new technology, and you’re iterating You’re trying to find early customers, building early technology, defining what are the key capabilities that customers are going to need in that market. And so it’s a lot of this multidimensional moving parts that you’re trying to figure out. Who are the right early What is the solution that you need to give them? Is there enough value being created? Is there going to be enough growth in that portion of the market for you to be able to build a company? That’s a lot of times when you’re starting a company, a lot of that, you can’t be too early Because if you’re too early, you run out of funding before the category gets created. But you can’t be too late because if you’re too late, the winners have already played out. So for us in the early days, I think we were slightly early, so we were building technology in our early customers.
[00:11:30.940] – Jim
This is in 2007. So the early customers, we tested all these different ideas and segments and all these, we tried all these different customers. But we found what we thought was the early sweet spot in the social network startup. So this is Silicon Valley in 2007. It was the Web2.0 creator. So at the time, my space was the large social network. Facebook was just getting out of the college network zone. And then there was hundreds of social networks being created. So there was a social network for movie lovers. There was a social network for pets. There was a social network for senior citizens. So there’s so much venture funding at the time going into that. And that was our early adopter market that we thought was a great market because they were born online. So they intuitively understood the need to build their site in a way that could get traffic organically. But what happened was in 2008, the market crashed. And so most of the social networks died. And so we ended up having some of these social networks, but there was only a handful left that were still alive. Most of them went out of business.
[00:12:40.710] – Jim
And so we were there, we built all this technology. And then it was great because we were working with these massive sites and scale our technology. The only problem was there weren’t many of them and there weren’t even a pail on money. So that was the problem. And then we generated, and then we tested these different market segments. If you think about enterprise go-to-market, The part of it is you’re testing the different segments of the market. And when you’re creating a category, you’re trying to figure out essentially who’s going to be the early adopter, which segments of the market are going to be the early adopters. And so we went from these social networks and we tested a whole bunch of things. We had all these hypotheses. The way we did this is we had every Friday, we would go through these cohorts of prospects to try to figure out where is their fit? Where do we have traction in our sales? And then we figured out… So we tried a bunch of stuff, lots of failed experiments. But then we figured out big box retailers, e-commerce. So we ended up signing up one of the largest retailers in the world.
[00:13:46.060] – Jim
And then it was really interesting because we realized that they had the same need to scale like a social network. But the difference was when they were discovered, when they were optimized for different products and different categories, That turns straight to revenue for e-commerce companies.
[00:14:02.810] – Joran
Did you know that before you sold them or did they see it? You’re selling like an SEO tool. They have no idea what’s happening.
[00:14:09.440] – Jim
We did not know. This is why in the early days of a category, it’s very current because you’re just trying, you’re pitching it, you’re trying it, but you get these… What’s really cool is you somehow get connected as you test this to one or two of these early customers that just have… They’re the ones that connect the dots for And we just connected with one of the SEO leaders at one of these big box retailers. And at the time, it was almost all the used agencies. And this back then, it was all… They outsourced everything with agencies. But there was One person who is starting to do this and one of the big retailers. And then he’s like, What I really need to do is I need you to handle this data, but connect it back to the categories and the product detail pages and how much revenue and conversions I’m getting as I optimize these pages at a granular level. And that was the aha. The aha became, if we can build the software to help them answer the question of what optimizations, one, should they do? And two, what is the impact the before and after at a granular level when they do that optimization?
[00:15:28.280] – Jim
That was a very powerful value proposition because they were essentially flying blind. And so as soon as we connected the dots between that, what we call it a closed-loop analytics of SEO, then there’s this huge off. Because even back then, this is back in 2008, so this is like a long time ago. Even back then, once you connected in, it was hundreds and hundreds of millions of dollars in revenue, even back then when you connected it. And then you’re like, Ah.
[00:15:59.850] – Joran
But It’s interesting that the client actually came up with the problem, I guess, they’re trying to solve, even though you were- The customers tell you.
[00:16:06.560] – Jim
The early customers tell you. We worked with… Myspace was one of our early customers in the Web2, and they were the ones that really taught us about, look, the importance of indexability because their site was so big and so many profiles of people and artists and all this stuff. It actually broke the search engine’s callers. Even back there, it was so big. That It was one of the largest sites in the world that when the search engine went to index it, it ran into memory leaks and it would break the actual the search engine’s colors. And so we realized, so what you need to make sure you can do is that the software for managing a company’s SEO needs to be able to scale out and be able to call and audit all these different things that the company is doing before they publish it out to the world so that they can make sure the hygiene behind their search optimization is in good shape. The early customers teach you the use cases, but the building blocks don’t all come together until that takes some iteration before it just boom, comes together and you’re like, Oh, this is the core unique selling proposition that we can build that will then be repeated.
[00:17:21.240] – Jim
And as soon as we did that for one retailer, we start to then be able to then take that use case and basically go down all the major e-commerce providers and start to become a good market. Because I said that’s the early phase of the company. And then there are many phases after that in which you need to evolve and basically markets, technology markets, when it’s a new category What I learned was you have early adopters and then you get this early majority, and eventually it becomes mainstream. Each of those phases, you need to retune how your go-to-market, your value proposition, your offerings, and all those kinds of things. Different phases of the company, I think you end up really tuning for more of the market, getting more and more evolved and mature.
[00:18:09.570] – Joran
Right. You have to, as you mentioned, really figure out which segment are you going after, get your ICP right, and then from there, talk with them, work with them, get your product. That’s right. And get the aha moment together, where you always assume you need to create it yourself as a SaaS product, but in the end, you can create it together as well.
[00:18:28.560] – Jim
That’s right. And eventually, it becomes multi-segment. So the thing that happens is, I think from the zero to one million is very much you’re zooming in on one ICP, you can get that done. But once you get to about 10-inch, you start to see up. There’s actually multiple segments in there. And then you got to redo the same work. Where it’s, okay, this part of the market is going to be this ICP, this value proposition, this motion. And then this other segment of the market is going to have its own from ICP and qualification and value proposition, product offering, and GGM motion. So you become a multi-segment type of business with multiple motions.
[00:19:14.000] – Commercial Break
This podcast episode is sponsored by Reditus. Reditus helps B2B SaaS companies to set up, manage, and grow an affiliate program. In short, it means you’re asking other people, affiliates, to promote your SaaS. You would only pay the affiliates a kickback fee when they deliver you paid clients, making it a very cost-effective and scalable way to grow your MRR. See more at getreditus. Com.
[00:19:37.800] – Joran
You mentioned at the beginning already, you made a lot of mistakes. What to hear about those? And maybe also if you take it a bit wider, because you probably talk to a lot of enterprise companies as well. You see them also making mistakes. What are the most typical mistakes companies make or SaaS companies make while trying to sell to enterprise?
[00:19:53.850] – Jim
I think the first mistake is probably, and I think we made this mistake as well, is you You constantly have to be thinking about nailing your model before you scale it. Because in an enterprise software go-to-market motion, when you make the bet to scale, you’re basically going to hire a lot of people, and then you’re going to train a lot of people. And that is a high amount of investment. So you can easily go and invest a lot and then not have it work. So you really have to be very thoughtful about before you said, Hey, this is ready to go. Let me go scale this You want to be clear in advance what tells you that this is going to really work. And that applies very much to the segment that you’re going after, the pitch that you’re going to do, the value proposition, the type of sales team that you’re going to use in order to go after that. All those elements, you want to have that pretty well nailed before you go and say, Hey, I’m going to go hire 50 reps and scale it. So I think very much Which, to nail it before you scale it is extremely important in enterprise software because it’s not like running digital experience.
[00:21:07.710] – Jim
It’s not something where you can… Now, again, you can make the same mistake with digital. You don’t want to dump a lot of money into a lot of one cohort and then just have it flushed back out. But with enterprise software, you’re talking about hiring teams, ramping teams, having training for them. A lot of step function increase of investment when you’re making that scale decision. So you want to be really buttoned up when you’re making those choices. I think that’s lesson one. I think lesson two is that the selling motion for the early Explorer sales is very different than the rinse and repeat sales sales. So founder-led sales and early stage sales professionals have the ability to adapt to any prospect. So they’re essentially very good at pivoting based on the specific the prospect, the specific need, the specific situation, the specific person they’re talking to. They can bring that agile sales motion and almost an evangelizing motion to any audience. And that’s really good for testing and trying out different things. But you want to split that from when you’re going to then have an entire army of salespeople repeat a specific motion. Those two pieces are very, very different.
[00:22:33.440] – Jim
And just because you have something in the Explorer that is sales working, doesn’t mean it’s ready to move to the, okay, it’s ready to have 20, 30, salespeople do that. Because so even if the concept is ready, there’s an operational aspect of making that work. It’s not easy. And you got to be very soft about how you do that because you could really tank the company if you’re not careful about how you approach that. So that’s another major thing, especially in the 1-10 mode. In the 1-10 mode, the other thing that’s really hard is infrastructure for the company. If you put in too much infrastructure, the company grinds their holds. If you don’t put in enough infrastructure, the company basically keeps breaking in a bunch of places. So the balance there at that stage is very much like, how do you put in just enough infrastructure where you’re running maybe one step to a step and a half ahead of the company? And that That takes a bit of a feel, but be conscious of that. I think one of the things I learned, I still struggle with it sometimes, is that look at your time allocation between how much time are you spending on running the business, being in the details of running the business, versus how much time are you spending building the business in terms of the actual stuff that will make the business move forward?
[00:23:52.590] – Jim
Those two are very different things. So even when you pull up your calendar, you want to take a step back and say, how much of the time am I on sales calls or on customer calls or with engineering, are going and doing very specific things with your current release, your current customer, the current sales page, versus how much time we are stepping back and saying, okay, the next piece in the company is going to be this next phase and how to meet these three or four major things then in the current place. Those are some areas where I think I made a lot of mistakes with.
[00:24:22.720] – Joran
Nice. I’ll try to summarize. Lesson one, nail it before you scale it. And then basically, lesson two is related to that early sales is adopting the motion, so testings. And then after that, hiring sales is basically repeating the motion. So get process in place, but find balance to have enough infrastructure, but not too much. If we talk a little bit about this more, this is like a strategy. Are there any other strategies or processes you use to effectively sell enterprise?
[00:24:50.430] – Jim
There’s a lot of different techniques for selling enterprises, and those have evolved over time as well. But I think first and foremost, you always want to have, I think, in enterprise, really good early references. Enterprises fundamentally like to see that other enterprises have gotten value from your solution, and ideally in their industry. And so what you What we want to do is build up a series of case studies and references and companies within those industries. So in the early parts, it’s super important to have essentially those early adopters, think of them as your advocates that are willing to jump on a reference call for you and say, Yes, I’m that so and so bank, big financial services institution, and it works really well for us in a work well for you. But that type of selling is extremely important for enterprises is seeing that it works for other folks that are enterprises in their industries. The other thing that I think is really important for enterprises is enterprises really want to be able to buy, typically for something that is going to have a very clear ROI. So you want to have a very clear what is the value proposition that they are going to get from this?
[00:26:16.000] – Jim
But not only that, because I think value proposition is always really important, but for enterprises, I think one of the more unique aspects is you have to also make it easy for them to articulate why their current organization in their current team is able to benefit and actually execute on that value proposition together with you. So there’s really two parts. What is the value proposition? But two is, hey, this is what the deployment is going to look like for us at so and so customer to really get that value? Because they’re not typically going to be just downloading something, trying it out and saying, Okay, now I got the value. Typically, they’re working in teams. They’ve got a more complex organization. So they’re going to want to understand, Oh, this is how I implement and deploy, and I can indeed get this value. But they’re going to be more patient around how much time it takes to get that value. But it’s something where they’re going to have to be able to easily make the case to their CFO or what have you, that this is something that they can turn into a real ROI.
[00:27:22.050] – Joran
Yeah, I love it because in the end, you almost have to take it by the hand because as you mentioned, more stakeholders, longer processes. So you have to show them the path to success, and success is going to be their ROI at the end of the tunnel. The fun part you mentioned is like, turn early users into early advocates and then build up case studies for the people who are listening at the intro. You mentioned you have 50% of the Fortune 500 companies, so you already dropped that validation in there. If they’re now enterprises listening, they probably think, Oh, if 50% of the Fortune 500 companies are using them. We probably have to check them out as well. That’s a nice one to always mention. I always love to talk about challenges, mistakes, obstacles. Any challenges you faced while selling enterprise, and maybe even at the early stages, because I think that’s the, and correct me if I’m wrong, but the hardest part, if you don’t have those early advocates yet and you don’t have those case studies yet, what did you face?
[00:28:14.420] – Jim
The hard The first thing in the earlier parts is finding the enterprises who are willing to take a little bit of a risk. Because in the beginning, you don’t have a brand, you don’t have the social proof of other enterprises is using you. So a lot of that is networking and finding somebody who’s willing to raise their hand and stick their necks out. Because enterprises are a little bit more risk averse in general. They’re not going to just Turn on a piece of software and just start buying it without some structured evaluation. So somebody actually has to raise their hand and say, look, I really believe in this thing. And then they’re going to have to work through their organization and advocate for your solution in order for you to get through procurement. Because the way enterprises buy, they’re typically not buying just on a credit card. They’re typically buying through a procurement process where there are multiple checkpoints. They have to get buy in from their boss. There has to be budget from finding. There has to be security audit. There has to be going through certain compliance reviews in some cases, IT reviews, if it’s touching some internal systems.
[00:29:29.840] – Jim
And so all these aspects make it so that you have to have a very strong advocate. So early challenge is even understanding that, I think was a big aha, is do we have an advocate that is going to be able to really go to bed for us. And that became something that we were constantly looking for. How do we get these folks? There are going to be advocates for us. And then once we have advocates, how How do we equip them so they can easily make the case? So that became something that we constantly started to… And this might sound pretty simple for us. It took some time for us to understand, When you’re doing an enterprise, there’s all these toll gates Maybe you’re going to have to get through, so you got to have a strong advocate. So that became something that took us a little bit of time to, I think, structure the problem that way, to think about it that way. And once we had that aha moment, it was like, Okay, this is what we’re really going after, is finding those girly advocates.
[00:30:32.070] – Joran
Is there a moment with those tool gage you mentioned where deals get stuck or maybe that evolves as well? Because at one point, if you see that it gets stuck at some point, you iterate. Is there maybe a place where typically enterprise deals go bust or is it purely iteration, making sure that it doesn’t happen again?
[00:30:50.390] – Jim
That’s a great question. For enterprises, there’s a couple of things I’ve learned over the years. Number one, the macro market is extremely important. What I mean by that is, you know how you see in the news a lot, like inflation, interest rates, things like this. These things have a material impact on how enterprises buy. So like in 2007, everybody was trying pilot projects, web stuff was all good. In 2008, after the crash, after the great recession, nobody was spending money. And so all of a sudden for enterprises shifted from innovation and coming up with some cool new stuff to how do I do more with less? So all the pictures had to be around, okay, here’s how are you going to generate the same or more revenue while spending less than what you currently spend. And so the macroeconomic environment impacts a lot of how enterprises do business, and that flows all the way through their organization. So it’s going to flow through to the different functions of the business. There are some exceptions to this. If there’s a big government compliance requirement, sometimes there’s a deadline for HIPAA compliance or GDPR compliance or these different ones where there’s a deadline where all the enterprises have to move.
[00:32:15.860] – Jim
That’s another thing that will drive them to do things. But in the general circumstance, in most business functions that you’re selling into, it’s going to be really driven by the macro climate of, is the macro economy one where the the businesses are trying to drive for growth or is it an environment where they’re trying to drive and the present is trying to drive more for efficiency and productivity? And those two are very different value propositions. So you want to make sure when you’re selling the enterprises, you understand what macro environment you’re in, and then you want to make sure you tune and change your value proposition to top line or bottom. Those two are very different business cases. Because ultimately, what you’re doing is you’re building business cases to sell into the enterprise.
[00:33:01.650] – Joran
That’s a really good point. I don’t think there are quick wins, but I’m going to ask, are there any quick wins to move up or make the procurement process quicker, faster? Are there any things you can do?
[00:33:13.640] – Jim
Yes, there are There’s really a lot of different things you can do to help with some of the procurement stuff. I think probably the most important thing is really having a very regimen process. If you have a very internally, if you have a very clear process, you will see that you can make it much more efficient. Let me give you a very concrete example. All enterprises will negotiate with you on the specifics of details of the terms. So the software has the… It’s got a master services agreement. And so they’ll either want to do it on their paper or they’re going to be okay with doing it on your paper. To the extent that you can standardize it on your paper as the core part of your selling motion, you will speed up the process. And within that, you will find that if you make it so that your standard approach is not overly lawyer to be in your benefit and is not underlawyered to be totally in their benefit, because they They’ve got the power to push a lot of terms onto you. Standardizing that and what are you going to find after doing 20, 30 deals?
[00:34:21.630] – Jim
They’re going to negotiate for the same stuff. The venue or jurisdiction, they’re going to negotiate with you on renewal terms. They’re going to negotiate with on liability caps and causes, they’re going to negotiate with you on IP. So what you end up with is a template. Okay, they will ask for this. Our response typically will be this. That’s just one example. But there’s pieces of a structured process that you can, if you’re not doing it ad hoc and you have a process, you can optimize a lot of these different pieces. And that’s just an example. But overall, I’d say, look, have a well-defined process that you’re continuously improving. And markets do change. As I mentioned a little bit, I alluded to GDPR and things like that. When we started the company, none of those regulations existed, and so those were not standard terms. Now, you’re going to have a security review with an enterprise more than 70% of time. And so you’re going to want to have your certification and things like that in place south of the Antecross.
[00:35:20.660] – Joran
Makes sense. Nice. Let’s dive to the final four questions. So when we talk about enterprise SaaS, what advice would you give somebody who’s just starting out and growing the 10K monthly recurring revenue?
[00:35:31.890] – Jim
I think the first thing is be very structured about how you do customer discovery and market discovery. I think you want to be able to find the sweet spot. I alluded a little bit to this in our early days. Every Friday, we’d go look through with a group, the different prospects and who we had pitched and what pitch resonated, what were the titles of people that we sold to, and how did those deals progress. And we would systematically figure out Where do you have that wedge? Where do you have that sweet spot ICP? And so you want to keep iterating on that, and you’ll find pattern. Once you find that pattern in there, you can start to rinse and repeat that. So I think in that early phase, it’s all about have a structured way to iterate across different types of enterprises. So I think that’s definitely one of the most important things to do.
[00:36:27.090] – Joran
Nice. When we, I guess, have that, we have find a sweet spot ICP. We’re going to go beyond 10K MRR. We’re going to grow to 10 million ARR. I know it’s a big step. What advice would you give somebody who’s growing to 10 million ARR?
[00:36:40.970] – Jim
Once you’re trying to move to 10 million, once you have your first million, you really want to then take that pattern and solve for the problem of how do you make it repeatable? Scale to 10 million is all about how repeatable it is. So you need to then be able to take the target market sales pitch, the value proposition, the sales pitch, the onboarding, the implementation, and turn it into a methodology and have it be something that can be easily taught to people. This is the critical thing in enterprises. The ramp for all those functions is very important. You have to be able to take a person of a certain experience set, teach them the formula that you’ve built, and then have them be able to learn it. Typically with in three months, you’re going to hire them, they’re going to go strong-boarding, and they’re going to get trained, and it’s going to take them about three months before they get to the sea legs underneath them and they start to become productive. And so each one of these pieces to the 10 million push is all about making it repeatable and where you can turn it into something that is a formula, that is a series of playbooks that you can teach each of these team members that you’re going to bring on into these functions.
[00:37:58.330] – Jim
And you’re going to specialize those functions. So you can take the formula that you built, specialize it, and then make it repeatable for all the different types of people that you’re going to bring in across that specialized set of teams.
[00:38:11.010] – Joran
Because I can imagine if you don’t have those playbooks, if you don’t make it repeatable, if you don’t know what is working, what isn’t, because with enterprise SaaS, it takes a really long time to close. If you sell your sales, it’s going to take a long time to figure out, can they actually sell? Because it’s three-month ramp up-time, and then they have closing deals. I guess the processes will help you define in the early days or in the early months to figure out, is this person actually going to make it or not?
[00:38:37.980] – Jim
That’s right. That’s exactly right. Very important to figure that out and then figure out the distribution economics because you’re not going to ever have 100% success rate of the sales reps. You’re not going to ever have a 30-day ram, typically. It is going to take about three months, even if you’re really good at ram. And so all those things, you have to bake into your financial plan for how you’re going to fund and build the distribution of the 10 million. Because each one of those things you can’t… You have to assume it’s not going to be perfect. It’s going to take a couple of revs for it to work.
[00:39:17.080] – Joran
Yeah, makes sense. If we zoom out, would you have any general advice towards other SaaS founders who are now on their journey, either selling enterprise SaaS or SMB SaaS? More general advice.
[00:39:29.240] – Jim
A couple of things. The first thing I think a lot about is in all of SaaS, there’s this interesting… At the core of it, it is about understanding, right, that out of your total addressable market, what is the segment you’re going after? What is your ICP? And then what is the value proposition that you provide to that customer? And then ultimately, what is the LTV that count? What’s the lifetime value you’re going to drive? And then the customer acquisition cost. And so I’d say, keep tuning that all throughout as you’re building it, because that’s the underlying economic engine of what you’re building. I am a product person by background in the early. I’m always like, my default load is innovation, product, what we’re customers. But you got to really think through that underlying economic model that you’re building out. Because when you go and scale that, you want to make sure that economic model really works very well.
[00:40:21.970] – Joran
Makes sense. I guess the final question, a bit of a personal one, what is one thing you wish you knew 10 years ago?
[00:40:28.510] – Jim
I think one thing that I didn’t realize is just how hard it is. I knew it was hard, but I didn’t realize how hard it is. It’s one of these things where no matter… In the early days, a company, God, if I could just get the first customer, if I could just get the first million, if I could just get the first 10 million, if I could get… And then it’s just, if I could one day get to 100 million, at least for me, it was like, if one day I could get to 100 million, that would be amazing. If I could get the possibility. And each stage, it’s like you get punched in the head over and over And there’s a couple of days a year where you just feel like, Gosh, nothing’s working. And you just basically have to keep getting back up. And you still have to be very optimistic. You got to drive the business forward. And I think actually the superpower of founders is actually that combination of being able to keep getting back up and being able to be persistent and take all the punches and yet keep learning.
[00:41:24.980] – Jim
And so out of front of mind, as an entrepreneur, that had started some companies before me, and he said to me, he said, Jim, most founders have that passion and intensity, so it’s easy to take things very personally. The hits come hard, but we get back up. But the thing is, he said, if you If you just mentally think about it a little bit more like levels in a video game, and you’re just trying to beat the boss at that next level, each level, it takes a couple of tries to crack it. And think about it like that, It just mentally gives you a little bit more space to stress out a little less. Not that it takes away all the stress, but it’s just I wish… That the psychology of it is hard. I think that’s one of the things that’s hard for founders. Certainly is for me.
[00:42:16.830] – Joran
I love it. Gamify, building a SaaS, and then work your way until the end level, whatever you define as your own end level. That’s the fun thing. That’s right. If people want to get in contact with you, Jim, how can they do so?
[00:42:30.070] – Jim
Yeah, so on LinkedIn, so follow me on LinkedIn. I’m Jim U on LinkedIn, Jim U1, and then Jim@brindedge. Com as well.
[00:42:40.500] – Joran
Cool. We’re going to make sure we’re going to add a link to your LinkedIn profile so people can type it in. But it is only five letters, so you cannot make many mistakes. Thanks for coming on. For people listening, leave us a review for the podcast. Help us support. And then we’re going to add a poll to this podcast as well to hear what you thought of this. Thanks Thanks again for coming on, Jim.
[00:43:01.980] – Jim
Thanks so much, Joran. Really enjoyed it.
[00:43:04.530] – Joran
Likewise. Cheers.
[00:43:06.590] – Jim
Cheers.
[00:43:07.570] – Joran
Thank you for watching this show of the Grow Your BDB SaaS podcast. You made it till the end, so I think we can assume you like this content. If you did, give us a thumbs up, subscribe to the channel. If you like this content, feel free to reach out if you want to sponsor the show. If you have a specific guest in mind, if you have a specific topic you want us to cover, reach out to me on LinkedIn. More than happy to take a look at it. If you want to know more about where it is, feel free to reach out as well. But for now, have a great day and good luck growing your B2B SaaS.
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