Lean Startup taught the world how to find product/market fit, but in the B2B world that isn’t enough. B2B founders must then find a way to build repeatable, scalable and profitable growth before they are ready to step on the accelerator and grow at high speed. In this talk, five-time serial entrepreneur and author of the ForEntrepreneurs blog, David Skok, breaks this journey down into 9 distinct stages and explains the playbook at each stage. Warning: trying to force growth by skipping a step is the number one mistake entrepreneurs make, and it is often fatal.
5. The Missing Step
Search for Product
/ Market Fit
Scaling the
Business
Search for Repeatable, Scalable
& Profitable Growth Model
6. Product Market Fit Phase well covered:
Search for Product
/ Market Fit
Scaling the
Business
Search for Repeatable & Scalable
& Profitable Growth Model
7. WE’RE GOING TO FOCUS HERE:
Predictable, Repeatable, Scalable, Profitable Growth
Search for Product
/ Market Fit
Scaling the
Business
Search for Repeatable, Scalable
& Profitable Growth Model
16. Startup Value Creation Happens
as Key Elements are De-risked
“Do we know
what problem
we are solving?”
“Will many
people pay?”
TIME
VALUATION
“Does it
actually
work?”
“Will
someone
pay?”
Credit Pete Kazanjy
17. Key Startup Inflection Points
TIME
VALUATION
Can we scale
profitably?
Does our growth
process scale?
Can we scale without
excessive churn?
Can non-founders
sell this?
Will many
people pay?
Does it actually work?
Will someone pay?
Do we know
what problem
we are solving?
Credit Pete Kazanjy
18. Not Only is Risk Reduced…
but Focus and Business Motion also Change
TIME
VALUATION
Inflection Points
20. The Sub-Phases
Test hypothesis
“What are we solving? How?”
Prove the Value
“Does it actually work?”
Prove it can be sold
“Will someone pay”
Search for Product
/ Market Fit
21. The Sub-Phases
Find repeatable Sales motion
“Will many people pay?”
Prove non-founders can sell
“Can non-founders sell this?”
Make it Scalable
“Does this scale?”
Ensure Customer Success
“Can we scale without churn?”
Make it Profitable
“Can we scale profitably?”
Search for Repeatable & Scalable
& Profitable Growth Model
22. Scaling the
Business
The Sub-Phases
Hit the Gas & Scale
“Does this keep scaling when we hit the gas?”
Scale the organization & it’s processes
Expand internationally
Add additional Product lines
23. THE SCALING PHASE:
Startup Value Increases Rapidly
Can we scale
profitably?
Does our growth
process scale?
Can we scale without
excessive churn?
Will many people pay?
Does it actually work?
Will someone pay?
Do we know
what problem
we are solving?
CAN WE KEEP
SCALING WHEN
WE REALLY
HIT THE GAS?
TIME
VALUATION
Can non-
founders sell this?
28. Trying to force progress by jumping ahead
before completing the current phase
#1 mistake
29. Common Variations
• Building product before meeting enough buyers
to validate the hypothesis
• Hiring salespeople before founders have proven
they can sell the product
• Scaling sales before growth process is repeatable
• Scaling sales before solving churn problem
31. What We’ve Learned
NOT PREDICTABLE HOW
LONG THIS WILL TAKE
Search for Product
/ Market Fit
Scaling the
Business
Search for Repeatable & Scalable
& Profitable Growth Model
32. Conserve Cash until the Scaling Phase
Search for Product
/ Market Fit
Scaling the
Business
Search for Repeatable & Scalable
& Profitable Growth Model
CASH BURN
33. A Common Mistake…
Search for Product
/ Market Fit
Scaling the
Business
Search for Repeatable & Scalable
& Profitable Growth Model
Founders
remain in
burn avoidance
mode
Fail to invest for
fast growth
34. Prioritize Focus & Actions based on Stage
Search for
Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
Test
Hypothesis
Prove the
Value
Prove it can
be sold
Find
Repeatable
Sales Motion
Prove non-
Founders
can sell
Make it
Scalable
Ensure
Customer
Success
Make it
Profitable
Hit the Gas
and Scale
Scale the
org & its
processes
Etc.
1 2 3 4 5 6 7 8 9 10 11
Scaling the
Business
35. Avoid jumping ahead
Search for
Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
Test
Hypothesis
Prove the
Value
Prove it can
be sold
Find
Repeatable
Sales Motion
Prove non-
Founders
can sell
Make it
Scalable
Ensure
Customer
Success
Make it
Profitable
Hit the Gas
and Scale
Scale the
org & its
processes
Etc.
1 2 3 4 5 6 7 8 9 10 11
Scaling the
Business
36. Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
Our Focus Today:
37. The key sign that you’re getting there:
Bookings - (NOT Revenue or ARR!)
For SaaS:
Bookings = Net New ARR
(New + Expansion – Churned)
Q1 Q2 Q3 Q4 Q5 Q6 Q7
41. What are we trying to learn?
• Which target market?
• Who in the organization to sell to?
• What pain / use case to target?
• What messaging?
• What sales motion?
• What pricing?
• What new product features are needed
47. Pathfinder/Trailblazer Sales People
• Not like ordinary sales people – who follow a playbook
• They have to create and evolve the playbook
• Which target market and use case?
• Who in the organization to sell to?
• What Message?
• What Pricing?
• What Sales Motion?
• Key missing product features?
52. Brian Halligan, CEO - HubSpot
“In the early days of HubSpot, we couldn’t decide which
target persona to go after. We argued about it for years.
By not deciding:
- our marketing team had to serve multiple personas
- our product team had to serve multiple personas
- our services team had to create multiple offerings
Once we finally got focused on one
persona, everyone could focus on
attracting and delighting
that persona.”
53. Ideal Customer Profile - ICP
Ideal Prospect
Characteristics
• Industry
• Use case
• Company Size
• Job function
• Key characteristics
Negative Characteristics
54. Messaging
• Business benefits, not product features
• Clear
• Simple
• Short
• Explains differentiation from competition
55. Credit: Harvard marketing professor Theodore Levitt:
“People don’t want to buy a quarter-inch drill. They want a quarter-inch
hole.”
56. Find Repeatable Sales Motion – Exit Criteria
• Sales to multiple customers
• Who fit the Ideal Customer Profile
• Happy and realizing the promised business benefits
• Using a repeatable sales motion that can be taught to a Sales rep
• One target market, one use case
• How leads are generated
• Who to call
• What messages to use
• How to engage
• Pricing
• Etc.
60. Prove that an ordinary sales rep can sell
• Founders must step back and take a different role:
• Hiring
• Onboarding & Training
• Managing
• Coaching
• Building sales tools
61. Can Non-Founders Sell – Exit Criteria
• At least one “ordinary” Sales rep selling effectively
• Ideally both of the reps
• Productivity at > 4x their OTE
• Customers remain happy
• Realizing the promised business benefits
62. Common Mistake
• Founders don’t hand over selling to the reps
• Hard to do, as the reps are so much less capable
• It’s OK for founders to keep doing a few deals
• But that should NOT be their top priority
63. Phase 6: Make it Scalable
Find repeatable Sales Motion
“Will many people pay?”
Prove non-founders can sell
“Can non-founders sell this?”
Make it Scalable
“Does this scale?”
Search for Repeatable & Scalable
& Profitable Growth Model
73. Etc.
Finding Scalable Lead Sources
Facebook Ads
Paid Search
Lead volume
Time
Paid lead sources tend to hit a limit
74. Other Staffing
Founders
Pathfinder/Trailblazer Sales (Rep/Director)
2 Reps 2 Reps 2 Reps
Find repeatable Sales
motion
Prove non-founders can
sell Make it Scalable
2 Reps 2 Reps2 Standard Sales Reps
Recruiting, Customer Success,
Marketing, Sales Management
75. Phase 6 – Make it Scalable – Exit Criteria
• Predictable, Repeatable, Scalable Growth
• Consistent growth in Bookings (not just ARR)
• Proof that you can add salespeople, and make them productive in a predictable way
• Proven lead sources that can scale
• Internal Recruiting function working well
• Strong Executive Leadership team in place
76. Deliverables at the End of the Process
Customer SuccessSalesMiddle of FunnelTop of Funnel
Strangers Visitors Leads Customers PromotersAttract CloseConvert Delight
Marketing Playbook Sales Playbook
Customer Success
Playbook
Sales Enablement
Tools
Onboarding and
Training Tools
Automation and Technology layer
Metrics
77. Example Sales Playbook
Definition Activities Milestones
Clearly identify whether the
Opportunity continues through the
Sales Process. Conduct a 2-way
exchange of Prospect’s business
challenges, pain, objectives and
goals.
Document and confirm we
understand Prospect’s goals,
objectives, business challenges
and pain. What is the potential
business impact and value-add
with NewCo.
Justify the specific Newco
solution to the key decision
makers. Justify solution with
business case, ROI, custom demo,
technical review, customer case
studies where applicable.
Agreement / Contract has been
delivered to prospect and
agreement to steps as chosen
vendor to complete procurement
cycle.
Validate next steps in the
evaluation process including the
criteria and decision process.
Present solution to champion and
executive sponsor. Quantify value
and dollarize opportunity in SFDC
Ability to dollarize the solution
Define use case(s) and map solutions value to prospects corporate strategy
Perform demonstration to the Champion that addresses prospects Pain, Goals and
Objectives
Confirm decision criteria, process, budget, timeframe
Present detailed sequence of events / closing plan
Deliver custom demonstration to all relevant stakeholders (PoC)
Collaborate and present business case justification, Identify power user and project
team
Discuss and present standard onboarding document & Integration review and technical
gaps addressed
Engage Legal and Procurement
Update Customer Success section within Opportunity record
Negotiation on legal, price and business terms
Schedule and complete references
Alignment call with customer success team as required
Finalize order document and vendor approval process
Contract signature / Initiate Customer on-boarding process
Identify timeframe, compelling events, current environment
Pitch and present focused on strategic value
Identify executive sponsor to continue evaluation along with additional stakeholders,
technical influencers, budget holder, economic buyer
General pricing & budgeting discussion
Identify prospect is at the influencing level and there’s interest in evaluating NewCo.
Identify Critical Business Issues, other potential influencers. Is the prospect trying to:
- Achieve a Goal
- Solve a Problem
- Satisfy a Need
Framing, Diagnostic and Confirmation Questions
• Solution development / Menu of
goals
• Pre call plan / confirm persona
• Critical Business Issues
• “Get before you give”
• Solution development prompter
• Menu of goals
• Plausible emergency
• Champion letter
• Sphere of Influence
• Sequence of Events / Timeframe
• Customer stories
• Demonstration
• Order Form / Terms of Service
• Technical Documentation
• On boarding documents
• Alignment call
• References
Qualify
Discovery
Validation
Proof
Due
Diligence
1
2
3
4
5
$
“Why Change?”
“Why Now?”
“Who / How?”
“Why us?”
“When?”
Tactics / Tools
Identify Pain and Tactical
Challenges in Organization
Uncover key Metrics and
Strategic Initiatives
Mutual agreement to evaluate
Chosen vendor
Confirm legal complete
Sign order form
Identify Champion
Identify Executive Sponsor
Define, Influence, Confirm the
Decision Criteria
Qualify your Champion
Document the Decision Process
Access to Executive Sponsor,
executive sponsor and confirm
budget
Prospect approves solution
Confirm IT approval & legal process
Confirm access to budget holder &
signer
Mutual agreement on business case
justification
78. Sales Onboarding at the Scaling Phase
• Section Titles
• Company Information
• Case Study & Stats
• Our Products
• Market Landscape
• Battlecards
• Account Executive Role
• MEDDIC Sales Methodolgy
• Customer Success
• Business Development Rep
79. Phase 7: Ensure Customer Success
Find repeatable Sales Motion
“Will many people pay?”
Prove non-founders can sell
“Can non-founders sell this?”
Make it Scalable
“Does this scale?”
Ensure Customer Success
“Can we scale without churn?”
Search for Repeatable & Scalable
& Profitable Growth Model
80. Ensure Customer Success
• Has to be done at all phases
• But called out as a separate phase as it’s common to see churn increasing as
sales starts scaling
81. Possible Solutions
• Tighten definition of who is a good customer
• Understand the best and worst segments
• Don’t sell to the wrong customers
• Stop sales from over-promising, or selling when the fit with the customer is
poor
• Adjust sales compensation to reflect whether the customer stays or churns
• Improve the Product to fix areas that are causing customer unhappiness
• Improve onboarding
• And the customer success organization and processes
82. Ideal Staffing
Founders
Pathfinder/Trailblazer Sales (Rep/Director)
2 Reps 2 Reps 2 Reps
Find repeatable Sales
motion
Prove non-founders can
sell Make it Scalable
Ensure Customer Success
2 Reps 2 Reps2 Standard Sales Reps
Recruiting, Customer Success,
Marketing, Sales Management
84. Ensure Customer Success – Exit Criteria
• Customers are consistently successful and happy
• Negative Dollar Churn
85. Phase 8: Make it Profitable
Find repeatable Sales Motion
“Will many people pay?”
Prove non-founders can sell
“Can non-founders sell this?”
Make it Scalable
“Does this scale?”
Ensure Customer Success
“Can we scale without churn?”
Make it Profitable
“Can we scale profitably?”
Search for Repeatable & Scalable
& Profitable Growth Model
86. Make it Profitable – Exit Criteria
• LTV:CAC > 3
• Time to recover CAC < 12-18 months
• Gross Margins > 70%
87. Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
Phase 9: Scaling the Business
88. Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
Scaling Phase – Total Change in Mindset
Cash Burn
89. Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
A common mistake…
• Not hiring enough sales
people in the Scaling phase
• Founders remain in burn
avoidance mode
90. Common Mistakes
• Failure to build a really strong recruiting function
• Leading to failure to hire key functions (including sales reps) on time
• Failure to hire a really strong team of Executives
92. Prioritize Focus & Actions based on Stage
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
1 2 3 4 5 6 7 8 9
Test
Hypothesis
Prove the
Value
Prove it can
be sold
Find
Repeatable
Sales Motion
Prove non-
Founders can
sell
Make it
Scalable
Ensure
Customer
Success
Make it
Profitable
Hit the Gas
and Scale
Scale the org &
its processes
10
Etc.
11
93. Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
Don’t Jump Ahead!
• E.g.:
• Hiring too many sales people before the sales process is repeatable
• Expand internationally before you have nailed scaling profitably in the US
• Etc.
94. Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model
Manage Cash Burn According to Stage
Cash Burn
95. Don’t run out of cash before reaching next milestone
Time
Valuation
Next Key
Milestone
x
Cash Out Date
96. [ ]FOR MORE INFORMATION
WWW.FORENTREPRENEURS.COM
Editor's Notes
I'd like to share some learnings from my time as an entrepreneur and board member.
One of the best books giving startup advice was Lean Startup. However it gave the impression that right after finding product/market fit you would be ready to hit the gas and start scaling. While this works for B2C, it doesn't for B2B.