00:00hi and welcome to the a 16z podcast I'm
00:02Hannah and today we're talking about
00:03another aspect of growth this episode is
00:06about the growth typically attached to
00:08bottoms up consumer companies but that's
00:10now more and more showing up an
00:11enterprise so what does that more
00:13Bottoms Up growth for enterprise look
00:15like how does it affect company building
00:17how does it change how we evaluate
00:18growth and what do we look at joining us
00:21to talk about the tactics and questions
00:22we should be thinking about in this kind
00:24of hybrid scenario are a 16-0 partners
00:27martine casado and andrew chen and russ
00:30Huddleston CEO and co-founder of
00:31dachsund the first voice you'll hear is
00:33Martine followed by Russ and then Andrew
00:35let's start with a super basic question
00:37which is what exactly are you starting
00:39to see happen with this shift in
00:41enterprise so traditionally in the
00:44enterprise you'd build a product and
00:46that product would be informed by your
00:47knowledge of the market and then once
00:49that product was ready you'd go ahead
00:50and sell it by hiring salespeople in the
00:52salespeople go directly engage you
00:54probably do some sales let marketing
00:56well maybe the salespeople would go find
00:57the customers or you'd have some basic
01:00marketing to do it but like the majority
01:01of the go-to-market effort in the early
01:03days was this kind of direct sale and
01:05we're seeing kind of this huge shift
01:07especially in SAS and an open source
01:09where companies establish massive market
01:13presence and brand and growth using
01:16these kind of more traditional consumer
01:18ish growth motions and then that very
01:22seamlessly leads into sales and often a
01:24very different type of sale and so I
01:27think a lot of people in the industry
01:28are on their heels both investors and
01:31people have started companies in the
01:32enterprise before to try and understand
01:34exactly what's going on is it actually
01:35seamless is it a seamless transition
01:37there well I mean that's often the
01:39question right so we've seen companies
01:41moving on either sides of this some
01:43companies like you know listen we're
01:44just gonna do organic growth and they
01:47don't actually do sales and in our
01:50experience these tend not to be kind of
01:51hyper growth on the revenue side right
01:53so they'll continue to kind of grow
01:54customers but it's hard for them to
01:55actually get these nice hyper linear
01:57revenue growth on the other hand we see
02:00companies that will just do sales and
02:02for them it's actually very difficult to
02:04grow quickly because they don't have the
02:07top of funnel that you'd get from the
02:08growth metrics and the ones that seem to
02:10have figured out the best what they'll
02:11do is they'll create kind of a brand
02:13they'll get this growth I get that
02:14engine working and then they do kind of
02:16tack on some sort of sales on the back
02:19end and then those two motions working
02:21tandem so if you're a small start-up
02:23breaking into that big AC V sale is
02:26tough you've got to have a really high
02:28annual contract value and everything is
02:30becoming more crowded and it happens
02:32occasionally but it doesn't happen as
02:33often and if you're trying to target a
02:36specific buyer just getting access to
02:38them can be very challenging and that's
02:40just a huge hurdle to overcome like how
02:42on earth could anybody break into that
02:44consumer understands a lot of different
02:46tips and tricks because you have to be
02:47really frugal to acquire a customer that
02:49you're just supporting with advertising
02:51to get someone who you make six bucks a
02:53year off of like you can't spend any
02:54money to get that person so there are a
02:56lot of tactics there that are really
02:57interesting and if you apply those to
02:59some of the b2b value propositions you
03:01can actually break in in a way that no
03:03one else is really thinking about before
03:05well let's get into those what are some
03:07of those the way we broke into the
03:08market is we took a relatively simple
03:10workflow which is sending content from
03:12one business to another business and so
03:14we said okay a better way of doing that
03:16is to allow the person sending it to
03:18create ten different links to that asset
03:20send them off to ten different companies
03:22and see what happens to them how long do
03:24you look at each page who do they
03:25forward it to you can see what people
03:27care about and so the first version Docs
03:29I'm just free that actually just gets
03:31people using the product and it's cheap
03:33enough that they can keep everything
03:34else in their stack so we're not
03:36replacing anything we're purely additive
03:37at that point that's really how we got
03:39our toehold in the market how did you
03:40get your first hundred users
03:42I think the first revenue we got was in
03:44the form of a bottle of whiskey that
03:45someone gave me a thank you for giving
03:48them an account that they used for their
03:49own fundraising cross what kind of
03:51whiskey I think our office consumed it
03:55relatively quickly so I don't think it
03:56was around very long but from a top of
03:58funnel standpoint where did you get it
03:59was all word of mouth 42% of our signups
04:02are still word of mouth about 28% of our
04:04signups are from someone viewing a link
04:06and then getting interested in coming
04:07into the product when you look back at
04:09Dropbox the first thing they did to get
04:10traction was to announce on Hacker News
04:12and also dig at the time was such a big
04:15deal right these days maybe the actual
04:17platforms have changed like maybe you'd
04:19go to product hunt instead maybe you'd
04:22go to Twitter but you know ultimately
04:23doing a big announcement but then get
04:26all the sort of viral word-of-mouth
04:27means that a lot of your first users end
04:30up experiencing it because one of their
04:32friends wants to show them the product
04:34or they just decide they want to try it
04:36as opposed to having somebody email you
04:39or I'll call you up is there a certain
04:40kind of company that this works for
04:42better than others I think that there
04:44are certain kinds of products that can
04:46be all the way pegged to completely
04:48self-serve you know bottoms out versus
04:50like maybe what's kind of in the middle
04:52right is the product a horizontal enough
04:55product that literally you can bring
04:57almost all of your co-workers things
04:59like Dropbox asana slack these are all
05:04things that everyone in your company can
05:05use and so naturally is gonna spread
05:07much faster because at every moment each
05:09node in the network is going to be able
05:11to have access to all 15 to 30 people
05:15around them where it can spread the
05:17second thing is products that are
05:19actually really front and center in your
05:21workflows all the acquisition that we
05:23see especially virally happens because
05:26of engagement they're deeply deeply
05:28linked with each other because as you
05:30engage and as you're using the product
05:32more inevitably then you're sharing
05:34links you're assigning tasks to people
05:36you're commenting on people's files like
05:38these are all things that bring people
05:40back and bring new people into the
05:41product there's a whole class of
05:43products that aren't completely
05:44horizontal that maybe only apply to a
05:47particular job title or function and so
05:50that's all of a sudden gets harder
05:51because maybe it can spread within the
05:53department within the function but it's
05:55not gonna go really broadly and
05:56eventually you get to the set where it's
05:58like maybe there's only a couple buyers
05:59in the entire company and for that you
06:02don't go bottoms up at all it's just
06:03literally this middle zone is what we're
06:06talking about where there's some
06:07indication but it's not completely
06:08horizontal and viral it needs a little
06:10bit layered on the new thing is that you
06:13know the fact that users can then bring
06:16these products into their workplace and
06:18you might get you know a large company
06:1920,000 people with like a patchwork of
06:22folks using a whole bunch of different
06:23products before IT actually makes a
06:25decision like that's new and very
06:28every company tends to have some form of
06:30super power that's available to it based
06:32on just what their business is and what
06:34their product does so we typically add
06:36teachers in one of three buckets one is
06:38to increase the spread
06:40a business to another business one is to
06:42get more lock-in within a company itself
06:44so getting that spread within the
06:45company and then the third is just
06:47making our customers more engaged
06:49because the more they're using it the
06:51more they're sending it outside the
06:52company our top request at one point was
06:54I need to send a folder of content and
06:56you're like okay that makes sense but
06:58what they really wanted was this kind of
07:00like deal room thing so we ended up
07:02building spaces and that just really
07:03increased engagement of our customers
07:05that is why one of the really
07:07interesting things that Martine you and
07:09I end up talking about what these
07:10Bottoms Up companies is evaluating the
07:13engagement on the products using
07:14consumer metrics because often it's the
07:17engagement that's really the leading
07:18indicator for growth both from an
07:21acquisition standpoint as well as
07:23retention which then is sort of the
07:25leading indicator for like are they
07:26actually going to renew their
07:27subscription over time so to me this is
07:29one of the key questions we see these
07:31companies that fall in between this kind
07:32of consumers growth and the center price
07:34thing and actually a question I've been
07:36meaning to ask you that I haven't yet
07:37right yeah so is it the right thing to
07:41evaluate these things purely from a
07:43consumer lens are the growth patterns
07:44like should be they the same as you
07:46would see like consumer X X let's even
07:48just put aside the question of sales
07:49like should the growth metrics be the
07:51same as a consumer company when you're
07:53evaluating even purely consumer products
07:55you have to really look at what the
07:57expected behavior is and so I would kind
07:59of turn the same question for the kinds
08:01of things we've been working on which is
08:03obviously if you have users that are
08:06trying out some new email security
08:07product let's say like hopefully they're
08:10not interacting with it that much but
08:13you know if the whole pitch of the
08:15company is hey this is gonna be the
08:16system of record for like everything
08:18that your team's gonna work on for all
08:20of their projects or whatever and
08:22they're gonna use it every day then it's
08:24like alright that let's actually start
08:25using you know daily active metrics in
08:28order to evaluate if that engagement is
08:30actually there what about from your
08:31point of view Martine are there metrics
08:33that you well yes I think it starts to
08:35get a little complicated so there are a
08:36number of consumer metrics you track
08:37right one of them is engagement which
08:39gives you a sense of how often it's used
08:40and maybe that's like some thing that
08:42you can proxy the value there also is
08:43just simply top of funnel growth like
08:45how many people know about it what is
08:48the brand the world I come from is
08:50nobody knows about the product when you
08:52organic growth marketing at best is
08:56linear with the dollars you put in like
08:58the number of customers that are top of
08:59funnel it's probably sublinear all the
09:02value and monetization is driven by
09:04direct sales and so you're its account
09:05base sales it's a cup a sale so your ACV
09:07has to be high enough to cover the
09:09marketing camera so that's one book in
09:11the other book in is all of this gross
09:14stuff you do acquires tons of customers
09:16and then the product will monetize
09:18itself right so you know my big question
09:21is there a slider bar here if you slide
09:23the slider bar all the way to the left
09:25there's the Alaskan model there's very
09:28little sales any of you slide your
09:29slider all the way to the right then
09:32it's just directs ales and no marketing
09:33and then the question is is what does it
09:35look like in the middle because you look
09:37at it like the slider brows all the way
09:39to the left and I like it was all the
09:41way to the right but more and more we're
09:43seeing companies that actually they're
09:45very interesting on both sides but
09:47they're not classic on either totally so
09:49let's assume we just take the case with
09:50a slider bar is all the way to the
09:52organic growth and it's purely
09:53horizontal and it's growing like crazy
09:55so the question is does it still makes
09:57sense to build the direct sales force as
09:59in well then increase the unit economics
10:01if you do I think our experience here
10:04with slack in with github and with many
10:06companies is it's definitely yes right
10:11because that's how you maximize a CV per
10:15customer because there is a procurement
10:16process and just finding the budget and
10:19maximizing that is something a human can
10:21do much better than a product at this
10:23point in sales right and in fact I think
10:24actually even the virally spreading
10:26products end up going tilting towards
10:28enterprise over time for a really simple
10:30reason which is that with larger
10:32companies your cohorts will look better
10:34because there's revenue expansion
10:35because no matter what when you're
10:38I find it very hard to get better than
10:40let's say a 5 percent per month churn
10:43all these little companies keep going on
10:45a business all the time they're fickle
10:46they have small budgets etc and so what
10:48you quickly find is like you have to go
10:50to the big guys all the budgets there
10:52and so then that inevitably leads you
10:54even when you're completely bottoms up
10:56to start building stickier products for
10:58enterprises and that the sales team at
11:00customer success and all of that so I
11:02think that is in the natural trend my
11:03question is when is that happening
11:05that happening in tandem all along are
11:07they sort of naturally that hybrid from
11:08the beginning or do they slide along as
11:10things change in the company cycle
11:13specifically were you thinking about
11:14sales when you started no the common
11:18refrain yeah we launched Docs and we
11:20didn't have any background in b2b so it
11:22kind of caught us by surprise and we got
11:25a lot of interest that we weren't able
11:26to convert into dollars because we
11:28weren't even charging people if we could
11:30do dachsund over again I think we could
11:31build it in half the time because I
11:33think this is a new type of company that
11:34there aren't that many examples for if
11:37you were to put that very broadly as
11:38like the type of company you mean what
11:40is that type of company if you create a
11:43business value like a b2b value for
11:45something you build some product and you
11:47release it for less money than you
11:49should or free you're gonna get some
11:51usage of it if you're creating a b2b
11:53value you kind of pick your target
11:54audience you get your hundred accounts
11:56you want to sell it into and you have
11:58people just pound on their doors until
11:59you do if we start at the top of the
12:01list you go to the bottom then you go
12:02back to the top of the list and I think
12:03when you compare it to a consumer I mean
12:04for most consumer kind of audience based
12:07plays you really defer monetization like
12:10for really long time because you have to
12:11AG recuit this huge audience and then
12:13you start talking about okay let's look
12:15at ad based models and so and you
12:17contrast that to these b2b products
12:19where you can actually monetize from
12:21early on and in fact when you monetize
12:23it actually unlocks a bunch of data
12:25acquisition channels and it'll unlock
12:27sales and stuff I think that's very
12:29confusing for people who you know they
12:31get started and they're like they're
12:32kind of in this consumer products
12:34mindset and so they often end up kind of
12:36like oh how do I grow how do I increase
12:38acquisition what are the signs that
12:41that's the right time when it begins
12:43shifting the sort of tipping point where
12:45you're like okay or do I need to pay
12:46we were just selling some small deals on
12:48the side so I was like I think we should
12:49hire a sales person so we hired her
12:51first SMB ayyyy and in her first month
12:54we're like we don't think she's gonna
12:55sell anything and she sold twice what
12:57the quota was supposed to be there was
12:59just a lot of money laying around where
13:00if you actually talked to someone on the
13:02phone and explained to them they might
13:03about one seat before but now they're
13:05gonna buy 15 didn't you have a support
13:06person collecting checks we had a
13:08support person selling a lot of dockside
13:12yeah that's another really good
13:14indicator also now that we are going a
13:17okay you actually need someone who's
13:18able to run a good sales process even
13:20though they're not doing the outbound
13:21part of it once you get them in the door
13:23running a good sales process having good
13:25sales hygiene really understanding who
13:27your buyer is you need to do all those
13:29you really need to marry both sides of
13:30it another chef I've seen which is
13:33important from a company building
13:34perspective so if you think about direct
13:36enterprise sales the actual lead-up to
13:38the sale can take nine months to 18
13:40months and you're working the account
13:42you've got an S C in the account and
13:43you're educating AM et cetera so with
13:46these new companies often the customer
13:49is educating themselves they're already
13:50trying and so so much of the actual
13:52total value of the account comes after
13:54they have users of the product and so
13:55it's about expanding the account so now
13:57there's this very interesting
13:59relationship between sales and customer
14:01success where a lot of the values
14:03actually being driven by customer
14:04success I don't think the direct
14:07enterprise is used to this model yeah we
14:09always say you in the renewal when you
14:10do the onboarding and getting everyone
14:12really engaged quickly with an account
14:14really helps with expansion and renewal
14:16when we do onboarding we have a little
14:18raffle so if you've got 50 salespeople
14:20at your company and if you send a
14:22certain amount of docs and links and
14:24sternly in the first two weeks then
14:25you're eligible in this raffle and you
14:27get like one of three different prizes
14:28it's like a two hundred dollar bottle of
14:29whiskey or tequila or Amazon giftcard
14:32and that'll actually what kind of
14:33whiskey but that will actually get
14:38everyone using the product really
14:39quickly and then they look at that and
14:41they say oh we bought the product for
14:42our sales team man we should use this
14:44for our customer success team or our
14:46support team and so then they build
14:48faith in it and then it kind of
14:49naturally expands sometimes you need a
14:50sales person involved but more often
14:51than not customer success is just saying
14:53yep you can use it for that too and then
14:55they expand so I want to get into the
14:57timing question of when when this starts
14:59happening when you happen into this
15:01moment when all of a sudden you realize
15:02well this would be helpful how do you
15:04begin to actually make that happen what
15:05are the signs and signals that are
15:07telling you like now is the time well I
15:09think one really important one is what
15:11kinds of companies and people are
15:13signing into your service where you're
15:15starting to see both prominent tech
15:18companies as well as fortune 1000s just
15:22signing up to try it even on a purely
15:24bottoms-up basis you create the funnel
15:26from signing up to using a contact
15:30and starting to score all of these new
15:33users that are coming in and if you find
15:34out that a large proportion of them are
15:36actually enterprises that's actually
15:38pull demand from the market that you
15:40should actually be up leveling faster
15:43one of the things we actually did to
15:44spread that awareness faster is we
15:46decided that marketers will send off
15:48tons of things to people so why don't we
15:50just support the marketing use case not
15:52because we make more money from that if
15:54we power for instance a research report
15:55for a company they're sending that to
15:57tens of thousands of people that then
15:59get exposure in lots of areas that we
16:01weren't even in before so it really kind
16:03of allows it to hop into other places
16:05and then we then generate more of that
16:06demand coming in you need to take a look
16:08at who's signing up for your product and
16:10you need to think about what might they
16:11be looking for then what problems might
16:13we be able to solve for them another
16:15thing I might add is what kinds of
16:16feature requests the folks are having if
16:19you're building something that's like an
16:20email client write something that is
16:22really horizontal or is a new document
16:24editor everything's great and all of a
16:27sudden you start getting these future
16:28requests for Salesforce integration and
16:30you're like oh ok this is like a
16:31different another request we've always
16:34gotten has been Doc's end you can't
16:36actually send anything from Doc's end
16:38and it's really nice to be able to send
16:40from email and customize it and there's
16:41a different philosophy around that but
16:43we were thinking like man just let
16:44people send stuff right from Doc's end
16:46because then it's got a doc send email
16:48that they get and so it's actually a
16:50good growth thing as well and so you can
16:51kind of reprioritize your product list
16:53based on how much it's gonna spread
16:55awareness about your product outside of
16:57the company which is a great lens for
16:58every company in use when thinking about
16:59trying to make these viral loops go
17:01faster that's interesting
17:02ok so say ideally you have this kind of
17:04blended model going on are there
17:07conflicts ever and the types of
17:09information that you're getting from the
17:11different sources at the highest level I
17:13think there actually are a lot of
17:14conflicts and these motions in a number
17:16of areas I mean the most obvious one and
17:18this is something that's so prevalent
17:19and open-source is a good way to get
17:21organic growth does give something away
17:23for free and if you give it away for
17:24free it may be hard to monetize it
17:26because a lot of the assumptions here
17:28are predicated on organic growth there's
17:31always an open question of how much do
17:33you give away versus how do you monetize
17:35an enterprise really is all about
17:37monetization because there is no
17:38conversion between eyeballs and dollars
17:40like you do in the kind of more
17:41advertising like domains right and so
17:44real tension there so how do you think
17:46about that balance it's sort of funny
17:48because it sort of implies that you can
17:50go one way and not the other meaning if
17:51you have a product that's making a bunch
17:53of money and you have a highly
17:54functional sales team and then a product
17:56person in the org is like hey let's have
17:58a free offering that was not gonna
18:00happen the other way where you have
18:04something that's product lead and it
18:06generates a lot of users and then you
18:08build this whole pipeline you know off
18:09of that and then you build the sales or
18:11great if you do it in that order all of
18:13a sudden the freemium product actually
18:15feels like it's actually very helpful
18:16nevertheless eventually free tends to go
18:19away or become you know pretty crippled
18:21as the whole business evolves but
18:23freemium can be so disruptive in these
18:25industries because if you're a large
18:27enterprise b2b software company you're
18:29not going to be able to do this kind of
18:30like low-end free offering yeah a lot of
18:32what we're talking about just pricing
18:33and packaging which is something that's
18:35so hard for everybody because you'll
18:37look at a company and you look at their
18:39pricing and packaging and you'll get
18:40congratulations you've done it but then
18:42when you look at a new company and
18:43they're like well what should their
18:44pricing be arrows like I have no idea
18:45and it's hard because you can't a be
18:47test it and so you have examples of
18:48what's worked but it's really hard to
18:50predict what will work for a new given
18:52business and so you could say on the low
18:54end we got a free thing on the high end
18:55we got an enterprise thing and then
18:57maybe there's something in the middle we
18:58actually just increased the pricing and
19:00added a couple new plans and we thought
19:02that conversion would come down but we'd
19:03make more money what happened was that
19:05conversion went up and we made way more
19:07money and why do you think that was
19:09happening we moved some features around
19:11and then we talked about the plans
19:13differently and who they're for and so
19:15people also trusted it a bit more
19:17because they're paying more for it
19:18people then value it more and actually
19:20use it more because I think right well I
19:22mean this is the difference between also
19:23when Netflix increases their monthly
19:26subscription by $2 everyone's you know
19:28screaming bloody murder and b2b is
19:30obviously less all it'd be good I know
19:32than that there's some price signaling
19:34that you get as well but it's also
19:35important to compare it to traditional
19:37pricing and packaging the general model
19:39used to be when you first come to market
19:41you are as expensive as possible and you
19:44know you're gonna go for a limited set
19:45but AC fees high enough to cover it and
19:47the sale cycles are long anyways and
19:49then after you feel like you're
19:50saturating that you offer lower price
19:52units so that the aggregate market is
19:57so you don't want to cannibalize
19:59yourself in the way you do this is
20:00market research of existing customers
20:01you know the target customer base and
20:03you can maybe test you can do actually
20:05do kind of fairly small rollouts because
20:06it's not marketing lead that motion is
20:08lost in this world because basically as
20:11soon as it's publicly available for free
20:12everybody knows about it and it's very
20:14difficult then to kind of retract that
20:16so if you have to be very thoughtful
20:17about pricing and packaging upfront
20:21because any experiment basically is
20:23reality now and that's very very
20:25different than the traditional
20:26enterprise motion we experimented with
20:28pricing so much in the early days and
20:29the only thing you had to hold
20:30sacrosanct was price very expensive
20:33early on because you're only gonna get
20:3410 customers anyways and you just can't
20:36do that motion even the way that you do
20:38pricing it can potentially impact
20:40engagement where do you put your pay
20:42wall is it a time-based trial is it a
20:45usage based thing those things become
20:47really important because especially when
20:49you have a product that is growing
20:51virally it's building a network inside
20:52these companies you don't want to cut
20:54off the network prematurely because the
20:56network is what makes the whole thing
20:57sticky so for example it would not make
20:59sense for a product like slack if they
21:02were like well we're gonna cap the
21:03number of people that can join a channel
21:05to five that doesn't make sense because
21:08the entire network effect is based on
21:09how the columns there right and so what
21:11you end up wanting to do is your gating
21:13these features that you know the IT
21:15admins won and those are the things that
21:17end up being how you differentiate the
21:19enterprise customers from purely the
21:21consumer ones when you start thinking
21:22about like forecasting or planning do
21:25you ever get competing signals and
21:27information from this blended model
21:29where you're doing two different kinds
21:31of growth and sales well I think is a
21:32really interesting question of for
21:35wherever you are in the lifecycle of the
21:36company let's say you have a dollar to
21:38spend on go to market how much of that
21:39dollar goes to brand and marketing
21:41versus how much that dollar goes to
21:42sales right and that is a question I
21:44don't think anybody knows the answer to
21:45but what are some of the ways you start
21:47figuring it out the traditional view in
21:50the enterprise that you spend it all on
21:51sales basically until you've got a
21:53working pipeline and repeatable sale
21:55then you have unit economics you
21:56understand and then you start increasing
21:57the top of funnel that's the traditional
21:59model but now we're marketing lead and
22:00so how do you know how to split those
22:02dollars up and when to do it a lot of it
22:04has to do - with the DNA of the founding
22:06team my two co-founders and I are all
22:07engineers and product people and so
22:10we've basically used our
22:11product as the marketing engine for the
22:13company so far we haven't done any paid
22:16acquisition we haven't been doing a lot
22:18of marketing stuff that's been driving a
22:19lot the top of the funnel the product
22:20itself is driving the top of the funnel
22:22but that would be what most of these
22:24companies are doing in this kind of
22:26company that would be common well okay I
22:28mean there are a number of companies
22:29that will actually just buy their users
22:31I'm totally not used to that Andrews
22:33total he used to that and so this is
22:35kind of a Muslim spokes that they're
22:39spending tons and tons of money on
22:41Facebook on Google etc that's very
22:43common the other one as well is a huge
22:45focus on content marketing as being one
22:48of the primary channels I think that is
22:49really different it's kind of going back
22:51to what we said earlier where should
22:52companies invest in sales and my view on
22:54that would be if you show me a coming
22:56that's growing organically I'll show you
22:57a company that's performing better if
22:59you also had a sales team to it if you
23:00can get it working with the product you
23:02can actually probably get a good
23:03baseline of growth but you should
23:05probably spend more on marketing and
23:06sales on top of that and if you can get
23:08the unit economics anywhere near
23:10reasonable for paid acquisition you
23:12should probably put everything you can
23:13into that channel knowing it's just a
23:15component of your overall strategy and
23:16the thing that makes it hard to
23:18normalize a bunch of these efforts is
23:20they happen on very different timescales
23:22you can literally increase your hit
23:25acquisition budget and see a spike in
23:27signups and self-serve conversions
23:30within a 24 hour period if you're gonna
23:32go and hire and build out your sales
23:34team it's gonna take you months to build
23:36the team and then months to recruit them
23:38but when that revenue hits from these
23:40really large contracts it's huge
23:42hopefully you have kind of multiple
23:44systems that are mutually reinforcing
23:46each other as opposed to feeling like
23:49they're in conflict but that certainly
23:50happens if you are trying to figure out
23:52where do I put the next dollar I mean
23:53what are some ways around dealing with
23:55that discrepancy between timeframes and
23:57planning and forecasting when you're
23:58trying to match up these two very
23:59different chronologies yeah I don't
24:00think there's any recipe like there's
24:02never a recipe to doing a startup
24:03anyways there's no recipe to find
24:04product market fit I don't think there's
24:05any recipe to knowing like what's the
24:07right balance between like growth and
24:08sales and when to do it but here are
24:10things that founders should think about
24:12that has traditional enterprise
24:14expertise in like the new world the
24:15first one is R and you normally don't
24:17think about brand but brand does Drive
24:19viral growth product focus right and the
24:21product itself actually creates virality
24:23the enterprise very rare
24:25thinks about believe-it-or-not product
24:27they think more about solving problems
24:28really that's so surprising it's not
24:30about making the product quote unquote
24:31delightful or easily consumable it's
24:33solving a real problem than adding
24:35business value less about consume
24:37ability right now you have to think a
24:39lot more about consume ability like
24:40single player mode like self-service
24:42mode right very different than
24:43traditional enterprise you need to
24:45design your company for bottoms-up
24:46growth whether you're open source or
24:48you're doing SAS or whatever because
24:51this is the new method of consumption
24:53and I do think that the one most
24:55important is if you're doing bottoms-up
24:57growth I think you have to expect a
24:59lower HCV which is a different way to
25:01build a sales team and so you just have
25:03to be more comfortable with either
25:05inside inside outside models and then
25:08you have to be more comfortable with
25:09focusing in on expansion rather than
25:11upfront a CV so these are all very very
25:13different than the traditional
25:13enterprise they're sort of mind shifts
25:15almighty right right there are new
25:18organizational structures that end up
25:20being built within these companies that
25:22sit alongside sales because you know all
25:25of a sudden you can have multiple
25:25revenue centers right and that's a very
25:27different approach than the people that
25:30you hire for this end up being designers
25:32and pm's and engineers that are kind of
25:34this business see metrics focus folks
25:36going back to Dropbox I know the most
25:38recent incarnation were sort of biz ops
25:41people turned pms that were previously
25:44working oftentimes in consulting or
25:46banking so it's a new hybrid kind of
25:49role in organization as well that comes
25:51down from this right exactly interesting
25:53you want to hire the engineer into this
25:55team that can run a whole bunch more of
25:58these AP tests or do you feel that your
26:00sales team or these are the kinds of
26:02decisions that these companies have to
26:03make these days for us did you see that
26:05as well that kind of hybrid role yeah
26:06there are a lot of things that aren't
26:08just salespeople from calling and you
26:10know getting contract sign Enterprise
26:12sales is like a playbook that makes
26:14sense for the bottoms-up company you'll
26:17see this perfect curve and the kind of
26:19the outside view of that is they did
26:21something brilliant at the beginning and
26:23then everyone went on vacation and it
26:24just kept growing but in reality behind
26:26the scenes it's a series of very smart
26:28things you did to keep that growth going
26:30and what got you from A to B is not
26:32going to get you from B to C's you often
26:33have to redo your organization you have
26:35to add in new roles and you have to
26:37recognize when you're going to hit
26:38of diminishing return for a type of
26:40investment and you have to get ahead of
26:42that and say well what's the next type
26:43of investment we're going to be able to
26:44do to get us to the next stage of things
26:46another layer right right for every
26:50company there's no one right answer the
26:52really important key thing is the
26:55importance of not just a great product
26:57but literally great you know user
26:59experience and design and all the fit
27:02and finish that you would expect with a
27:04completely modern you know consumer
27:06facing application now that's coming to
27:08this world today exactly like envoy that
27:10is an amazing b2b viral story it's
27:13they're very rare but the reason why
27:15people use that now is because offices
27:17are part of the brand experience and
27:20then after they use the thing then
27:21they're kind of like oh yeah we're using
27:23pen and paper back at the home office
27:25like we need to upgrade to this to these
27:27examples crossover both a consumer you
27:30know sort of design world all the way to
27:31sales all the way to performance
27:34marketing you really have to leverage a
27:35lot of skills in order to execute these
27:38strategies the expectation for the
27:39usability of software I think is going
27:41up in enterprises larger companies
27:43expect more polish and more usability
27:46and if it's not there they start to
27:48really worry about it being shelf where
27:50it not delivering on the value
27:51proposition and shelf where is a pretty
27:52big problem at a lot of big companies
27:54one of the funny anecdotes at uber was
27:56that for a long time we were officially
27:59but there were so many teams across the
28:01company that would have their little
28:03secret slack literally rebel and just
28:13use whatever they won and so as a result
28:16as companies selling into these your
28:18products have to be really good to
28:19compete with everything else that's out
28:21there I didn't understand how powerful
28:23actually just growth tactics were
28:25independent of product actually
28:26independent of sales and Andrew you and
28:28I were looking at a company which was a
28:30made like the growth was amazing like
28:31all of these arms are amazing the
28:33engagement they were monetized like
28:34everything looks great and the
28:35conclusion we came to it was like it's
28:37because they just had like such an
28:39amazing growth team as almost
28:41independent of the product that we
28:44literally came to the end we're like wow
28:45this could be anything this could be
28:46like you know dog food this could be
28:49yeah whatever if you figure out how to
28:50do it right it's a very very powerful
28:53thing and by the way that used to be
28:55what you said about sales what you used
28:57to say about sales is if you have a very
28:59good sales team that understands the
29:00buyer it's kind of independent a product
29:03awesome thank you guys so much for
29:04joining us on the a 16z podcast great
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