From Impossible to Inevitable: How SaaS and Other Hyper-Growth Companies Create Predictable Revenue

by Aaron Ross

“Here's the problem we are the best at solving … with our repeatable solution we have delivered 100 times. Do you have it? No, you don't have it? Do you know anyone else who might be interested?”

Talking about why it’s better to build a product. The conversation with the customer changes to this.

You don't need a lot of interviews: One is better than zero, and rarely do you need more than three to five unless you're creating an entirely brand new product and pitch.

This is about discovery interviews

You need the first five interviews just to truly understand the white space and the current opportunity. Yes, you probably think you already understand it. But you are the vendor, not the purchaser. You need to understand your prospective app from the purchaser's perspective, for real. You need the next five interviews to confirm your pattern recognition. You learn from the first five; you confirm in the next five. You need interviews 11–20 to nail your pitch and hone your thesis. Once you truly understand the white space from a buyer's perspective, and you've figured out the nuances and challenges, it's time to nail your pitch. And by doing this, you'll also hone your thesis and strategy. That's what interviews 11–20 are for: To filter out all the “nice-to-haves’“from the “must-haves” in your pitch. To dig in on what is really 10 times better, not just two times or five times better.

This is how to do discovery interviews

No doubt you can find a million formats and templates for elevator pitches on the Internet. Here's one sample format that's worked for us: Start by saying, “You know how some people have [problem]? Well, we [solution and/or benefit]. For example, [one sentence case study].”

For [target customers] Who are dissatisfied with [the current offerings in the market], My idea/product is a [new idea or product category] That provides [key problem/solution features]. Unlike [the competing product], My idea/product is [describe key feature(s)].

Whether you have a fancy pitch ready or not, the next time someone at a party asks you what you do, pretend instead that they asked, “How do you help people?”

Today, content needs to be longer, more in-depth, specialized, and add new value. We are seeing more and more detailed how-to guides, white papers, case studies, and ebooks. Instead of producing an endless amount of short, simple content pieces, success is had with a smaller number of lengthy expert pieces with unique insights. All the while, striking a balance of evergreen content that will last for years to come and timely, one-off content that is important now.

Additionally, marketers are already doing outbound marketing but not attributing it. Pay-per-click (PPC) is regularly referred to as an Inbound function, but is it? Only when remarketing to an existing subscriber/visitor database does PPC count as an Inbound function. All other forms of digital advertising fall under the Outbound marketing umbrella. From Google AdWords to social advertising, you can create campaigns to proactively reach audiences that are not already aware of your business or your offering: This is Outbound.

If you have to handle marketing part time, or have a tiny team and budget, this section's for you: how to get the most results with (very) limited time and (no) money. This has worked for me for years, while I'm juggling everything else—writing multiple books, growing a business, growing my family, and maintaining a 20- to 30-hour workweek. Everyone feels like they aren't doing enough with marketing. The possibilities are overwhelming. Content, markets, niche, blog posts, videos, messages, webinars, newsletters, landing pages, social media, conversion rates… . Your head can feel like it's going to explode, until you say @#$^ this! and give up. Especially when you feel like you're publishing stuff that no one is reading—and sales are slow.

If you're struggling or don't have much to rely on, here's a simpler approach. First, here are some mistaken beliefs in marketing: Build it and they will come (a fairy tale). More is better (not necessarily). Inbound leads are free (an urban myth). It should happen fast (an evil expectation). If you let go of these misconceptions, it'll help you create a marketing strategy that costs relatively little time and money—and works.

Not because they generated leads or customers, but because they are Forcing Functions to foster clarity and progress.

When you host live events, especially in person, it's a visceral experience to see people show up and get value. Or not. You're forced into clarity, revisiting which niche you're trying to nail: Who do you want to attend? Why would they come; what will they get out of it? What will you teach or offer, and how will you deliver? What action do you want them to take afterward?

WHERE OUTBOUND WORKS BEST—AND WHERE IT FAILS If you want to go big with outbound prospecting, it works best when you have these four conditions in place: You can sell deals that are large enough to be profitable, usually $10,000–$20,000 in lifetime value (bigger is better). Yes, outbound can work with smaller deals, but it's harder to do it profitably. Your value proposition is easy for a prospect to understand and say yes or no to. If your proposition or messaging is jargonish or vague (“we can help you grow revenue or reduce expenses”), you'll struggle. Products tend to be more concrete than services, so tend to be easier to sell. We're talking on average. The more concrete you can make your offering and value—even in services—the easier for a prospect to “get it,” the better. You've Nailed a Niche and know very clearly what kinds of companies need you, what they care about and how you stand out from their other options. You're selling something they “add in” without having to rip-and-replace a prior system: If you're trying to call in and compete with DropBox or some financial system, to get a company to rip that out and replace it with your service, it's hard. You have to have a damn good reason for them to do it—a reason that you're 10 times better. It's much easier to look for opportunities where the buyer doesn't need to replace or trash an entrenched system that works “well enough.” Whether you call this white space, green fields, blue skies, or magenta flowers, lo...

Phone calls aren't obsolete: Don't let reps succumb to “phone fear.” Pick up the damn phone! Prospectors should be having live conversations every day.

Send 600–800 cold outbound emails a month. Make 350–450 outbound calls a month. Daily: Mix in some social media touches (LinkedIn, Twitter, etc.) and personalized emails to executives. Schedule 20 longer demo/discovery calls between influencers and Acquia salespeople, per month. Tally 15 Sales Accepted Leads (SALs) passed to and accepted by salespeople, per month.

When we analyze all the lead sources across our portfolio companies that add new customers, outbound prospecting, and especially cold emailing, has created the most predictable pipeline (it commonly sources ~70% of new deals). But not all cold emails are equal, and the difference between amateur and expert cold emailing is dramatic. We target a 1-in-200 email-sent-to-meeting-booked ratio (yes, it can be much better in small samples, but not at the scale we operate at). We've seen an email-sent-to-meeting-booked ratio as poor as 1 in 9,000. The value of a qualified new initial meeting can be worth $5,000 or even much more, so improving this ratio is worth millions to us.

There are thousands of them, because it's easy to buy a sales enablement tool, database, put up a shingle, and make bold claims. Have them share case studies and intimate details on how they create success. It's easy to highlight wins, but how they handle challenging situations? How specific can they be about when a client is not a good fit? What are their metrics and milestones from beginning to revenue? Are they email-heavy, phone-heavy, or integrated, and can they tell you the pros and cons about it to your specific market?

Outbound prospecting metrics and dashboards are different (a huge error executives make all the time, lumping inbound and outbound metrics together in single “Sales Development” reports). “Lead conversion rate” means something in marketing. Not in prospecting. Prospectors are targeting Accounts or Prospects, not leads. If case studies are in a PDF document, “white paper” format, or videos longer than three minutes, they aren't “outbound ready.” Even worse: They're vague without any concrete details or tangible results.

SDR sends a cold email to the “Decision” level in the organization and it catches their attention. The Decision level forwards this email down to the “Staff” level to investigate The Staff level investigates potential fit. If the Staff level believes there's a fit, they will begin to push this information back up the chain to the Decision level. The Decision level will review the findings and if they believe this can solve a real problem they will set the strategy and kick-off an official initiative. The “Advisor” level pulls together the tactical requirements of an official project. Once the Advisor level kicks off a project it's now on the Staff level to begin evaluating alternative solutions. Alternative solutions are evaluated at the Staff level, a recommendation is made and finally the Decision level makes a decision.

PCR measures your growth in qualified leads and pipeline, measured month-over-month, every month. PCR is real-time, not lagging, and it clearly predicts your future revenues and growth—and, even better—your growth trend.

Your Key Metric, which you should track and score yourself on, is Pipeline Creation Rate (PCR, also sometimes called Lead Velocity Rate).

About pipeline creation rates

As long as you're measuring some version of Qualified Leads—not raw or unqualified leads—with a consistent formula and process to qualify them, you can begin to See The Future. Hit your PCR goal every month and you're golden. And with practice, you'll see the future of your business 12 or more months out, clear as can be.

If you find yourself saying “When people get it, sales are easy. When they don't, it's hard,” then maybe you're stuck selling to Early Adopters, on the high-trust side of the Arc of Attention.

Worth reading the section on his definition of an early adopter. It’s very different to crossing the chasm.

When you find ways to do this systematically—seeing six months of month-over-month growth in qualified leads (i.e., your Pipeline Creation Rate keeps going up six months in a row)—you're approaching hypergrowth territory.

Specialization: Your #1 Sales Multiplier If you haven't specialized your sales team roles yet, nothing will make a bigger impact in your ability to increase sales productivity and grow. If you don't specialize, you're going to struggle.

This whole chapter is about sales specialisation

Create a clear picture of who you want to hire. Step 2: Write authentic, interesting job descriptions. Paul's descriptions read more like a personal letter or invitation than the boring, generic descriptions most companies use. Find the job description and download-able hiring guide at FromImpossible.com/recruiting. Step 3: Include a video in the job description. The video made it easier for people to get a feel for who Paul is and what he stands for. This helps to better attract the right people and turn off those who won't be a cultural fit. Step 4: Spread the word. Paul didn't need to do a big sourcing project; he got enough applicants (about 400 in total for all three roles) just by posting on LinkedIn and forwarding it to friends and acquaintances. [Note from Paul: “Next time I will spend more time ‘prospecting’ to find the right kind of people in addition to looking via word of mouth.”] Step 5: Assign homework. Paul sent an email outlining the steps of his interviewing process to all those who had applied, as well as anyone else he thought had potential, and asked them to write a 300-word essay (a) on any aspect or trend in digital marketing that they found interesting and (b) why they would be a great fit for the role. This helped eliminate the people who weren't serious or qualified and helped Paul quickly get a sense of how/if they'd fit. Step 6: Define evaluation criteria. Paul put his shortlist of candidates into a simple spreadsheet with his criteria and rankin...

Steps for hiring a sales team

A common number for a SaaS rep doing low-five-figure deals to juggle is 25–30 opportunities. Yours may or may not be different. For yours, look to your own history. How many have your best reps juggled? Does it vary much by segment, type of customer, or average deal size? When was it too many?

All I need to know is: What's your top-line growth? How much money are you burning? With these two metrics, I know the whole story. I'm interested in one thing: a startup that grows at least 15% month-over-month without hemorrhaging cash after they get to $1 million in revenue. As long as the burn rate is tolerable, if you can grow 15% or more, if you have $1 million in revenue, great founders, and you're in a great space, I'm probably going to write a check.

Exceptional founders who are better than I am, and the ability to go from $1 million to $10 million in ARR in five quarters or less—that's what gets my attention. Beyond that, I don't really care what your SaaS product does.

The Slacks and Talkdesks do it in five quarters or less. The best ones find a way. And it's not just because their founders are better (they aren't a lot better, actually), it's because all the markets keep getting bigger. The percentage of the CIO's budget that's going to SaaS is higher than ever and growing. And a 1% transition of that budge...