Listen to the podcast below to hear the full conversation with Steli. Prefer reading? Then check the summary below.
At which point did you know that Close would become a success?
When we launched in January ‘13 I knew that we had a great piece of software and I believed in the product that we built. This was after developing the product for a year within our own sales outsourcing company, so I was fairly confident that we had a good solution.
Still, I also knew that we were entering one of the most competitive spaces in software, which is CRM, and I knew that a great product is not enough. The world is full of amazing products that never succeed.
So even though the first few months after the launch went really well, every month I tamed my enthusiasm and kept a sceptical inner-dialogue. It took 5 months of growth and positive KPIs until I allowed myself to believe that we were on to something really big – that we had a winner in our hands.
What did you have to understand about your target market before things could really take off?
Many of the things that drove our success happened organically, instead of being planned strategically. Because we developed the product internally and were doing many different sales projects for different B2B tech companies, we had a pretty good understanding of who our customer was.
One thing that was even more important though, was to know who our customer was not. In prior companies I had made the mistake that when we would be approached by large corporates or governments, we allowed ourselves to be distracted. Because they came inbound, we tried to sell a little bit to them. But actually, there is no “little bit” when serving these kinds of customers, so we failed miserably.
Therefore, with Close we were determined to be hyper-focused. We were saying “no” to lots of customers from day 1. We had a policy that if you did not fit our profile, we were going to tell you not to buy our software. And that really requires discipline, but it was one of the most important things we did to become so successful with such a small team.
So it’s not just about knowing who your customer is, but also knowing who your customer is not!
What was the biggest mistake you made, and what would you do differently today?
The first three years at Close were exceptionally successful. This was in many regards a result of the things we had learned in prior startups. We were just 6 people and we were crushing the competition and driving in millions of revenue. That was a great time.
One of the biggest mistakes I made as a CEO was that I got a little drunk on that success and I got a little dogmatic on some of the way we got that success. I was pushing the idea that we didn’t have to hire for way too long.
We were 6 people in the first year and we were crushing it. We were 6 people in the second year and that was actually already too small, but we were still seeing good results. When we got to the third year, we really ran into scaling issues and by that time it was too late to hire, because I was determined not to repeat the mistake of hiring fast which I had made in a previous startup.
So we had to take a year of slower growth and focus all our efforts on bringing in the right people, which costed us millions in revenue growth. Hence it is important to stay flexible and even if you are seeing success, to know that things will have to change as you grow the company. What works today will have to change tomorrow.
What would you say you understand about building a SaaS startup that is often overseen or underestimated by other founders?
Two things. First, all the results you are seeing today are lagging indicators. They are the results of the things you have done 6 to 9 months ago. And everything you do today, you will see the results of that in 3 to 6 or even 9 months from now. This massive delay that happens in subscription businesses is difficult to navigate.
Because naturally, if you see success today, you connect that with the things you are doing right now. But it’s always coming with a delay. This can lead to startups to stop doing what was really working because they still see the same results coming in when they stop doing it, only to find out after a few months that results are going down and not knowing why.
The second is that retention is key. Most important is making your current customers really successful. You don’t just want your customers to just be happy. You want them to get a lot more value from your product than what they are paying AND that they are fully aware of this. That is my definition of a successful customer.
We received a question from Eveline from Amsterdam. She asks that with the new year now started, does it even make sense to plan for 2018? Because things change so fast that you can often throw the plans out the window after a few weeks. How did you do this as Close?
I don’t think it makes sense to have a detailed 12-month plan for the year, that’s a waste of time. We always have theme for the year. We know what the big and important things are that we want to tackle this year. We know what the one KPI is that will be our north start for the year. But the tactical planning we do on a month to month basis only, because we don’t know what the world will look like in 6 months.
Manfred from Austria noticed that you often emphasize the importance of having the right team. How did you put together your winning team for Close and what were the most important considerations for this?
To me every problem in life is a people problem. At the end of the day, it is going to have to be a selection of individuals that have to come up with a solution for no matter what kind of problem you are trying to solve. So you have to make sure you work with good people.
My most important piece of advice for this is that when you find exceptional people, never let go of them. My recruiting timeline for exceptional people is 25 years. I’ll try to work with you forever until I get a chance to do so. Two very exceptional hires that we made that really transformed the business were both hires where I had to recruit for a really long time.
Working with exceptional people is such a game-changer that it doesn’t matter when they join your company. It will always be transformational.
To close off, is there something our listeners and readers can do for you?
I love to hear from people. Let us know what the most valuable thing in the interview was for you of what you’d love to hear more about.
If you are interested in more podcasts in this space, check out TheStartupChat.com. Finally, I want to give a little gift to people who are reading – I’ve written 6 books on how to do sales in SaaS, build a team in SaaS and much more. Send me an email on email@example.com and put “Bundle Motherfucker” in the subject and I’ll send you all my books for free.
Alright. Thanks so much for your time Steli. It’s great to hear these insights first hand and I am sure you will have inspired other SaaS founders out there on their journey to success.
Thanks for reading! It’s still the early days for SaaS.CEO so if you have any feedback or ideas on how we can improve, the please reach out to me under firstname.lastname@example.org.