Originally posted on Medium, this is the second in a series of interviews with a variety of SaaS founders who have successfully made their first $500k in ARR (Annual Recurring Revenue). As I mentioned in my last post, I’ve seen many people write about how to scale from $1M in ARR to $100M in ARR, but I haven’t seen much written about the grind of getting started and getting to your first $500K. The founding story and the scrappiness of getting your first customers is different for each company and I wanted to tell those stories. My hope is that we can pull out key insights and some commonalities that others can use for their own businesses.
Last time, I interviewed Sean Thorne, co-founder & CEO of TalentIQ, a data-integration service. This time around, I sat down with Scott Salkin, CEO and founder of Allbound (full disclosure: Acceleprise is an investor in Allbound). Allbound’s SaaS partner sales acceleration platform lets any size business accelerate growth through their sales and marketing partners via a single platform for content marketing, collaboration and customer success.
I asked Scott what inspired him to start a SaaS business, what tactics they used to close early customers and how he thinks about building Allbound in Phoenix vs. San Francisco. Below are a few key takeaways I got from the conversation but if you are interested, I recommend reading the full interview further below:
- Don’t be afraid to sell early, prove companies are willing to pay for what you are building before you build it by actually getting them to pre-pay for it if you can. Sell the vision!
- Focus on Customer Success early and often! Their first key hire was a Director of Customer Success and many of their initial customers came from referrals. They are maniacally focused on making their customers wildly successful using their platform.
- Outbound selling into the enterprise without having a content marketing and post-sales customer success strategy DOES NOT WORK.
- Top three products Allbound has used since the beginning and couldn’t live without — HubSpot, Linkedin and Google Apps.
If you’re looking for practical advice on how to launch and scale a SaaS startup, whatever its speciality, these interviews and those to follow will hopefully make for a useful read. And if you’re a SaaS founder that fits the bill and would like to share your story, don’t hesitate to get in touch.
1. Why did you start the company? What was the inspiration?
I’ve spent my entire year working in high tech sales and marketing and, as a result, in the channel, where up to 80% of the industry’s revenue can flow through. In fact, I spent the last seven years building a professional services business helping companies build tools and put processes in place to be more efficient selling through the channel. It was through that experience especially that we realized how large the problem was and started Allbound to solve it.
Despite it being such a critical part of business, pretty much anyone you ask will tell you that the channel is broken. Or archaic at best. The systems, processes and workflows are typically cobbled-together or built internally. They’re expensive, difficult to manage and, for the most part, ineffective. And the existing technology and software vendors in the space were just the same — started and run by the very people who created these problems in the first place.
I guess you can tell that I’m hell bent on changing this. Making channel partnerships a more simple, more predictable, and more cost effective way to grow a business. The channel can be a critical tool for scaling revenue while lowering customer acquisition costs — especially for SMBs and startups. Plus, in today’s subscription economy, there’s more opportunity than ever to utilize partners to improve customer success and reduce churn. It’s a no-brainer — and with Allbound, we’re hoping to create an intuitive, modern SaaS platform that creates a new standard for the industry.
2. Is your idea the same now as it was when you first started? If not, how quickly did you change it and why?
At its core, our vision is still very much the same — to create technology that changes the core economics of how business grow together, through partnerships. That being said, our product and solutions have been evolving from day one as a result of feedback from customers and prospects.
Channel sales and marketing has been done the same way for last 30 years. And while most admit it’s broken, they can also tend to be afraid of change. It’s the seven most dangerous words in the English language — “we have always done it this way.” To fight that challenge, we’re pushing to be even more different — to truly get people thinking different and take them out of their comfort zone. We’ll continue to constantly innovate to improve our product, but with features that clearly align to what we think are the “Four C’s of Successful Partnerships” — Content, Collaboration, Customer Success, and Culture.
3. How long did it take from idea to first revenue? How long from first revenue to $500K in ARR?
We had revenue before we officially launched by selling prospects on the vision and potential of our product. The Allbound platform was spun-out of our former B2B marketing agency where, for more than seven years, we had consulted with companies who were facing the exact problems we were solving. That gave us a list of initial leads for Allbound. Once we landed our first couple of customers, we convinced one with a brand name to do a webinar focused on highlighting their channel strategy and how Allbound fit into that. The credibility helped us drive registrations and attendance (50+), which helped us land additional appointments and business almost immediately.
We managed to hit $500k of true software ARR within our first five months of launching the product and hit $1M ARR just before our first anniversary of going to market, which will be on April 1st, 2016.
4. What are the top 3 products (sales, marketing, hiring, productivity, etc) you use for your business that you could not live without?
The top three products we couldn’t live without — HubSpot, LinkedIn, Google Apps…and Allbound!
5. What has been your biggest challenges along the journey so far?
Our biggest challenge thus far stems from our biggest opportunity — the complexity of the channel and its lack of innovation and disruption. Many long-time industry insiders and competitors are still pushing old-school, archaic systems and methodologies that they themselves know not to work very effectively or efficiently. But it’s familiar and comfortable. We’re pushing real change, oftentimes forcing executive leadership teams to look themselves in the mirror and admit that they need their sales and marketing practices to evolve and align to today’s buyers’ journey — or risk dying.
6. What have you done to succeed that you knew wouldn’t scale but was very helpful at the earliest of stages?
We hear time and again from our investors and colleagues that we’re a scrappy organization — a team of “do-anythings” who will work their tail off and put on as many hats as needed to grow the business. As we’ve really started to scale, however, we’ve had to think more and more about separation of duties and specializations — marketing, sales, customer success, development, operations. And then break those key areas down even further — in customer success, for example, we now have specialists for implementation, account management and strategic consulting. In marketing, we now have specialists for inbound and content marketing, and have hired an agency to assist with tasks that we don’t have the capacity to handle internally, but aren’t yet ready to hire full-time resources for.
7. At what point did you make your first hire and what were your initial key hires for?
Our very first hire was a Director of Customer Success, who came onboard right after we raised our initial $200k in funding from friends and family and were ready to officially launch our website and go to market with our MVP product. Because we are selling an enterprise product in the $20k-$100k ARR range that is critical to growth and has huge potential for stickiness, we needed our customers to be wildly successful from day one. Early on, we could grow the fastest through happy customers and great word of mouth through the industry.
Our next hire was a Director of Marketing with extensive experience in inbound marketing and content creation. With our goal and vision of truly disrupting the industry, we needed to clearly identify our buyer personas, build our story, and evangelize the hell out of it. Today, we are generating 15–20 inbound leads per week that are extremely qualified and average 45–60 days to close. Although SDRs are all the craze right now, “inbound” is a model that I would recommend to any enterprise startup out there because of its flexibility and our ability to track and measure results.
8. Any other advice you would give to founders just getting started with a SaaS company?
It all goes back to the first 10 people that you hire. The journey to growth is long and hard — 10x harder than you’ll ever imagine. But don’t make it even harder on yourself by focusing solely on hiring inside sales reps to pound the phones without having any marketing, branding or thought leadership to back-up your story, plant your flag as an industry leader, and help move prospects through the pipeline. Sales without marketing and post-sales customer success DOES NOT WORK. Period. You’ll churn as fast as you grow.
9. What have been the pros and cons of building Allbound in a smaller tech market like Phoenix and why did you ultimately decide to stay in Phoenix vs. move the company to the Bay Area?
I came back to Phoenix for two very specific reasons — its lower cost of living and proximity to the Bay Area. As an early stage company, you’re always going to be pressed for cash — so making that cash stretch as much as possible is critical. Every dollar lost on rent is another dollar that could have been spent on a great hire who could be the difference maker in hitting your next goals. Your business is all about your people and your ability to help them grow and hit their own, personal goals. I found that I had just as great of an opportunity to do that here in Phoenix, while having a longer runway to get there. And because of our proximity to a great airport with regular flights to San Francisco, Oakland and San Jose, spending a day or even a week in the Bay Area is easily accessible when I need it.