6 ms·

Lecture 19: Sales and Marketing – How to Talk to Investors

130 points by TheBiv 12y ago

Michie 12y ago
Anybody have an idea where can you find the YC open source template document Tyler is talking about? Thanks.
- raja 12y ago
  I haven't watched the lecture but I believe he is referring to YC's SAFE docs - https://www.ycombinator.com/documents/ https://www.ycombinator.com/documents/
  - Michie 12y ago
    Hi Raja, he was actually talking about the Sales/Closing document/contract that is given to clients, not about financing documents. But thanks for the reply. :) Do watch the lecture, it's nice and very helpful! :)
- greattypo 12y ago
  Hi Michie, Tyler here. Last I heard YC is working on the official docs and hopes to have them up soon. But... if you need a copy sooner, feel free to send me an email (tyler at clever).
  - Michie 12y ago
    Thanks so much Tyler. I'll do send you an email. Thanks for sharing your experiences too. Love your talk.
- deleted 12y ago
  [deleted]
cj 12y ago
Question for Tyler (or anyone who signs contracts with their customers): What's the minimum deal size that you'd want to have a contract with a customer? If you're a $50/month SaaS, it probably doesn't make sense, but I could see the benefits as you approach $50k+ / year deals. Is the primary benefit to lock in the customer (ie. annual commitment)?
- greattypo 12y ago
  I'd recommend using contracts when you have sales people involved. That typically describes products that cost >=$5k/year (at least for inside sales). The primary benefits for you are: predictable usage, predictable revenue, and easier commissions. It also turns out that most companies prefer/expect to buy these products this way.
- patio11 12y ago
  It is at about $10k ACV for negotiated terms, and driven primarily by cost concerns. Below $10k, the cost of contract negotiation and signing blows out the sales model. Your reps would need to close ~25 deals a month, and that is hard when redlined are flying back and forth. Contracts of adhesion you'll have from $1. The primary benefit of negotiable contracts to a SaaS business is unlocking deep pockets which require specific, custom language to buy anything (or anything "expensive.") Edit: For bonus karma, spot the error I made while posting before first coffee.
  - jonahx 12y ago
    s/redlined/redlines
  - peterjancelis 12y ago
    Why would your rep need to close 25 x 12 x 10K ACV = 3 million USD of customer value each year to make it profitable? Shouldn't 25 per year suffice?
    - patio11 12y ago
      This was indeed the goof-up. If $10k is a typical contract, you're probably looking at 40 to 50 sales a year to hit quota. If $10k is the minimum buy-in, 25 a year is probably fine.
tptacek 12y ago
The first 20 minutes of this, with Tyler, are the best thing I've seen in this lecture series so far. And, in particular, this slide: https://www.dropbox.com/s/axgpmehewplt7hs/Screenshot%202014-12-02%2019.39.10.png?dl=0 https://www.dropbox.com/s/axgpmehewplt7hs/Screenshot%202014-... ... has to be a contender for the most valuable single slide they've shown in the course. It is dense in an almost Tufte-sort of way: * It exhorts you to diligently follow up with prospects * It gives you an idea of how much work it takes to convert a prospect * It gives you permission to follow up when prospects go dead(!) * It reassures you that this is what actual, real, live prospects really look like * It tells you what you're in for with real prospects and so shows instead of simply telling why you need to get good at lead qualification. So great. Could go on and on. There should be, like, an "email (no response)" tattoo we all get. This was outstanding. Thanks for publishing it. The "talking to investors" stuff is good too. I liked Michael Seibel's One Simple Trick for arranging first meetings with investors to create competition. And Dalton and Qasar's mock investor pitch was funny --- but if they wanted full verisimilitude, they'd have ended the worst conceivable pitch with the investor saying "We're excited! We definitely want to invest!"
- aleem 12y ago
  Couldn't agree more. This talk crystallises so many wonderful gems and this slide is the essence of the sales cycle. I had my largest client say flat out "no" to me twice during what was an 8 month negotiation for our news publication software. It was quite testing, we had a lot unanswered emails and I got a wonderful education in sales. Perseverance pays off but don't let it turn to desperation. That slide was 3 times worse for me, however, at some point during our sales process I had distilled the strategy down to focusing on "positive, forward momentum". That meant that if the conversation went quiet for a few weeks, momentum was lost and the next conversation took longer (this happened to me) and there are good ways to mitigate this. If the client has queries you are unable to satisfy, the momentum is working against you--internal discussions are now about how your product is not feasible or inadequate and that kills momentum and moves the pendulum against you. This too happened to me and we remedied this by adding conditional clauses, as Tyler points out. Any sort of negativity is contagious, whether its coming from you or from the client. It latches on to all people involved. You must nip it in the bud, always.
JoseVigil 12y ago
"fund raising is not equal to sucess" my best quote
- raminassemi 12y ago
  If that's your favorite quote, maybe you'll like this post from Alex Turnbull https://www.groovehq.com/blog/turning-down-vc https://www.groovehq.com/blog/turning-down-vc where he laid out his reasons why he said no to a $5 million funding offer.
rajens 12y ago
I think it would've helped to separate the sales/marketing form the how to talk to investors portion, as this lecture seemed to pack a lot of material into a short period. Having said that, I think the sales and marketing part was done pretty well. It didn't cover a lot of sales tactics, but the fact that it was highly focused on the $0-1M in revenue portion of a company was important. There is lots of 'startup' sales advice out there that is more focussed on scaling sales and sales process, which is generally more useful for companies greater than $5M in Rev. Anyhow here are 33 if my top quotes from the lecture published here: https://medium.com/how-to-start-a-startup/33-quotes-on-startup-sales-marketing-and-how-to-talk-to-investors-2deddc7b01d3 https://medium.com/how-to-start-a-startup/33-quotes-on-start...
- JoseVigil 12y ago
  They both tackle the same spot in time, the crossroad. Blow or getting funded / making revenue. You are right, but that is why I think they are bundeled.
itazula 12y ago
I enjoyed Tyler's lecture greatly. One of the side-benefits of seeing lectures over the course of the series is to see which presentation styles work, and which don't.
smzia 12y ago
Here is the clipped version of lecture #19 for those who want to skim through the video. https://clip.mn/video/yt-SHAh6WKBgiE/ https://clip.mn/video/yt-SHAh6WKBgiE/
godzillapm 12y ago
Sorry to be a party pooper but this is sales 101 - nothing special either about the talk or the slides. Maybe interesting for people who has zero experience. I won't drop a dime for this education - sorry if I am being harsh.
- w1ntermute 12y ago
  > I won't drop a dime for this education Then I guess it's a good thing that it's available to you completely free, isn't it?
- blackoil 12y ago
  It is supposed to be 101. It is for people planning for 1st startup, maybe still in college with no exp or sales training.
deleted 12y ago
[deleted]
elvis635 12y ago
Thank you Tyler for your talk (and also to Michael, Qasar and Dalton), your talk is probably the best one I've seen during these 19 lectures. I've a question for you (and to any other company which has sales reps), how do you pay sales agents? I'm reading a lot on that subject, and I still cannot figure out what would be the average commission to pay to sales agents in a SaaS/tech company world, would it be 10%? 20%? 30%? Based on every payment (ie. recurring) the customer does, or just on the first one? With or without a base salary and caps? I'd love to know how you figured it out and maybe some numbers Thank you!

130 points by TheBiv 12y ago

Michie 12y ago

Anybody have an idea where can you find the YC open source template document Tyler is talking about? Thanks.

raja 12y ago
I haven't watched the lecture but I believe he is referring to YC's SAFE docs - https://www.ycombinator.com/documents/ https://www.ycombinator.com/documents/
- Michie 12y ago
  Hi Raja, he was actually talking about the Sales/Closing document/contract that is given to clients, not about financing documents. But thanks for the reply. :) Do watch the lecture, it's nice and very helpful! :)
greattypo 12y ago
Hi Michie, Tyler here. Last I heard YC is working on the official docs and hopes to have them up soon. But... if you need a copy sooner, feel free to send me an email (tyler at clever).
- Michie 12y ago
  Thanks so much Tyler. I'll do send you an email. Thanks for sharing your experiences too. Love your talk.
deleted 12y ago
[deleted]

cj 12y ago

Question for Tyler (or anyone who signs contracts with their customers): What's the minimum deal size that you'd want to have a contract with a customer? If you're a $50/month SaaS, it probably doesn't make sense, but I could see the benefits as you approach $50k+ / year deals. Is the primary benefit to lock in the customer (ie. annual commitment)?

greattypo 12y ago
I'd recommend using contracts when you have sales people involved. That typically describes products that cost >=$5k/year (at least for inside sales). The primary benefits for you are: predictable usage, predictable revenue, and easier commissions. It also turns out that most companies prefer/expect to buy these products this way.
patio11 12y ago
It is at about $10k ACV for negotiated terms, and driven primarily by cost concerns. Below $10k, the cost of contract negotiation and signing blows out the sales model. Your reps would need to close ~25 deals a month, and that is hard when redlined are flying back and forth. Contracts of adhesion you'll have from $1. The primary benefit of negotiable contracts to a SaaS business is unlocking deep pockets which require specific, custom language to buy anything (or anything "expensive.") Edit: For bonus karma, spot the error I made while posting before first coffee.
- jonahx 12y ago
  s/redlined/redlines
- peterjancelis 12y ago
  Why would your rep need to close 25 x 12 x 10K ACV = 3 million USD of customer value each year to make it profitable? Shouldn't 25 per year suffice?
  - patio11 12y ago
    This was indeed the goof-up. If $10k is a typical contract, you're probably looking at 40 to 50 sales a year to hit quota. If $10k is the minimum buy-in, 25 a year is probably fine.

tptacek 12y ago

The first 20 minutes of this, with Tyler, are the best thing I've seen in this lecture series so far. And, in particular, this slide: https://www.dropbox.com/s/axgpmehewplt7hs/Screenshot%202014-12-02%2019.39.10.png?dl=0 https://www.dropbox.com/s/axgpmehewplt7hs/Screenshot%202014-... ... has to be a contender for the most valuable single slide they've shown in the course. It is dense in an almost Tufte-sort of way: * It exhorts you to diligently follow up with prospects * It gives you an idea of how much work it takes to convert a prospect * It gives you permission to follow up when prospects go dead(!) * It reassures you that this is what actual, real, live prospects really look like * It tells you what you're in for with real prospects and so shows instead of simply telling why you need to get good at lead qualification. So great. Could go on and on. There should be, like, an "email (no response)" tattoo we all get. This was outstanding. Thanks for publishing it. The "talking to investors" stuff is good too. I liked Michael Seibel's One Simple Trick for arranging first meetings with investors to create competition. And Dalton and Qasar's mock investor pitch was funny --- but if they wanted full verisimilitude, they'd have ended the worst conceivable pitch with the investor saying "We're excited! We definitely want to invest!"

aleem 12y ago
Couldn't agree more. This talk crystallises so many wonderful gems and this slide is the essence of the sales cycle. I had my largest client say flat out "no" to me twice during what was an 8 month negotiation for our news publication software. It was quite testing, we had a lot unanswered emails and I got a wonderful education in sales. Perseverance pays off but don't let it turn to desperation. That slide was 3 times worse for me, however, at some point during our sales process I had distilled the strategy down to focusing on "positive, forward momentum". That meant that if the conversation went quiet for a few weeks, momentum was lost and the next conversation took longer (this happened to me) and there are good ways to mitigate this. If the client has queries you are unable to satisfy, the momentum is working against you--internal discussions are now about how your product is not feasible or inadequate and that kills momentum and moves the pendulum against you. This too happened to me and we remedied this by adding conditional clauses, as Tyler points out. Any sort of negativity is contagious, whether its coming from you or from the client. It latches on to all people involved. You must nip it in the bud, always.

JoseVigil 12y ago

"fund raising is not equal to sucess" my best quote

raminassemi 12y ago
If that's your favorite quote, maybe you'll like this post from Alex Turnbull https://www.groovehq.com/blog/turning-down-vc https://www.groovehq.com/blog/turning-down-vc where he laid out his reasons why he said no to a $5 million funding offer.

rajens 12y ago

I think it would've helped to separate the sales/marketing form the how to talk to investors portion, as this lecture seemed to pack a lot of material into a short period. Having said that, I think the sales and marketing part was done pretty well. It didn't cover a lot of sales tactics, but the fact that it was highly focused on the $0-1M in revenue portion of a company was important. There is lots of 'startup' sales advice out there that is more focussed on scaling sales and sales process, which is generally more useful for companies greater than $5M in Rev. Anyhow here are 33 if my top quotes from the lecture published here: https://medium.com/how-to-start-a-startup/33-quotes-on-startup-sales-marketing-and-how-to-talk-to-investors-2deddc7b01d3 https://medium.com/how-to-start-a-startup/33-quotes-on-start...

JoseVigil 12y ago
They both tackle the same spot in time, the crossroad. Blow or getting funded / making revenue. You are right, but that is why I think they are bundeled.

itazula 12y ago

I enjoyed Tyler's lecture greatly. One of the side-benefits of seeing lectures over the course of the series is to see which presentation styles work, and which don't.

smzia 12y ago

Here is the clipped version of lecture #19 for those who want to skim through the video. https://clip.mn/video/yt-SHAh6WKBgiE/ https://clip.mn/video/yt-SHAh6WKBgiE/

godzillapm 12y ago

Sorry to be a party pooper but this is sales 101 - nothing special either about the talk or the slides. Maybe interesting for people who has zero experience. I won't drop a dime for this education - sorry if I am being harsh.

w1ntermute 12y ago
> I won't drop a dime for this education Then I guess it's a good thing that it's available to you completely free, isn't it?
blackoil 12y ago
It is supposed to be 101. It is for people planning for 1st startup, maybe still in college with no exp or sales training.

deleted 12y ago

[deleted]

elvis635 12y ago

Thank you Tyler for your talk (and also to Michael, Qasar and Dalton), your talk is probably the best one I've seen during these 19 lectures. I've a question for you (and to any other company which has sales reps), how do you pay sales agents? I'm reading a lot on that subject, and I still cannot figure out what would be the average commission to pay to sales agents in a SaaS/tech company world, would it be 10%? 20%? 30%? Based on every payment (ie. recurring) the customer does, or just on the first one? With or without a base salary and caps? I'd love to know how you figured it out and maybe some numbers Thank you!