Investment Decision Criteria, When to scale SaaS sales force, Predictions for AI in 2024 and more #0026

20/12/2023

INVESTMENT DECISION CRITERIA

Fabrice Grinda, Founding Partner at FJ Labs on his approach to evaluating and investing in marketplace startups in “Marketplace Startups Masterclass with Fabrice Grinda of FJ Labs”

• "I only invest in extraordinary talent and Extraordinary People"

  • "...the founder is both an extremely eloquent Visionary and salesperson because if you're amazingly well spoken you're going to attract better people [...] do better BD deals [...] raise more Capital at better terms and you're going to get more PR."

  • "[..] we also want people that know how to execute."

• First call:

  • "... on a 1hour call we evaluate TAM [...] also unit economics

• Investment Decision Criteria:

  • "...we need to believe that with scale without every Star in the Multiverse aligning you're going to get there as well."

WHEN TO SCALE SAAS SALES FORCE

Jason M. Lemkin, Founder of SaaSer and SaaStr VC, provides guidance on identifying the right time for SaaS founders to scale their sales force in "Dear SaaStr: What Are The Signs We’re Ready to Hire More Sales People to Scale?"

• Identifying the Need for More Salespeople in Early Stages:

  • Quote: "For a higher-velocity, in-bound driven SaaS product, most sales reps will have trouble processing more than 50 or so truly qualified leads a month. There are only so many demos, so many Zooms, so many follow-up calls you can do."

• Shift in Strategy as the Company Grows:

  • Quote: "Later, as you approach $8m-$10m ARR, it will flip around. You’ll start to have a pretty fine sense of your lead and opportunity velocity, and sales will become a capacity game. You’ll start to learn how much ARR you can close per rep, and it will be about putting trained bodies in seats."

• Sales Capacity Becomes a Growth Driver Post $10M ARR:

  • Quote: "Put differently, after $10m in ARR or so, if you have a real engine going, the yes, more salespeople will = more sales, to an extent.[...] Your revenue growth will be sales capacity-driven (with lead generation of course critical as well, but #2)."

• Before $10m AFF qualified leads is a growth driver:

  • Quote: "Before $10m ARR or so, more qualified leads = more sales. Just make sure you hire enough salespeople to keep up with the leads, that’s all.

8 PREDICTIONS FOR AI IN 2024

Devin Coldewey, Writer at TechCrunch, forecasts the development and impact of artificial intelligence in 2024. He focuses on trends in AI applications, the evolution of major AI companies like OpenAI, and the implications of AI in various domains including politics, legal, and entertainment in: "8 predictions for AI in 2024"

• OpenAI Transforms into a Product Company:

  • Quote: "The 'app store for AI' will be pushed hard as the platform to get your AI toys and tools from [...]. They have an excellent model to work from, Apple’s, and will follow it all the way to the bank."

• Growth in Agent-Based Models and Generative Multimedia:

  • Quote: "If AI is going to help you do more than summarize or make lists of things, it’ll need access to things like your spreadsheets, ticket buying interfaces, transportation apps, and so on. 2023 saw a few tentative attempts at this 'agent' approach, but none really caught on. We don’t really expect any to really take off in 2024, either, but agent-based models will show their stuff a little more convincingly [...]"

• Marketing Meets Reality for AI Tools:

  • Quote: "[...] the hype built up in 2023 is going to be very hard for companies to follow through on. Marketing claims made for machine learning systems that companies adopted in order to not fall behind will receive their quarterly and yearly reviews [...] Expect a considerable customer withdrawal from AI tools as the benefits fail to justify the costs and risks."

• Apple’s Entry into AI:

  • Quote: "Apple has an established pattern of waiting, watching, and learning from other companies’ failures, then blowing in with a refined and polished take that puts others to shame. The timing is right for Apple to do this in AI [...] because the tech is ripe for their kind of improvement. I would expect an AI that focuses on practical applications of users’ own data [...]."

MARKETING TACTIC

Alejandra Montero Rosas,  Specialist at CXL Marketing shares how FounderPal increased lead generating in "Accelerate lead generation by ungating your primary free offer"

• Experiment with Delayed Email Collection:

  • "FounderPal's strategy involved giving users part of their paid tool for free, without asking for an email [...] leading to a significant increase in lead velocity for their new offer."

• Create a Curiosity Loop by Offering a Free, Ungated Portion of a Paid Tool:

  • "Only after Founder.ai proved their value with the free tool, did they offer the traditional gated asset promoting 9 additional tips to make the data more actionable. This opened a curiosity loop that would presumably offer more 'free' value in exchange for an email address."

• Achieving High Engagement and Conversion Rates:

  • "71% of the people who saw the zero-friction offer tried it — and 20.1% of those users were satisfied enough to provide their email for the second step."

• Utilize the Principles of Influence:

  • "The free offer must provide immediate, apparent, and complete value, adhering to Cialdini’s principles of influence."

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