RVNU #013: 5 Simple Steps to Kickstart Rapid Growth
A guide for SaaS startup founders struggling to make sales work
Notebook LM AI generated discussion of this Newsletter
Introduction
There’s no MBA out there that teaches you about early stage revenue growth in the world of software. The knowledge is confined to the few that have successfully navigated the arduous path to fast mult-million $ growth.
The problem up until now is that the secrets of how they did it have not been productized successfully, resulting in founders having to pay handsomely for their time, and either hire them as full-time employees or as fractional operators. Rarely is either optimal. There a time or capital trade off neither side is totally comfortable with.
RVNU is changing this by democratizing access to the knowledge and guidance that was pivotal to the rapid growth of startups like: Maxymiser, Guidebook, Wonderschool, Tableau, Spekit, Brightwheel, Tailscale and many others, where myself and my co-founder, Laura Wheeler, have instigated or led rapid revenue growth efforts
The problem statement:
We speak with 100s of early-stage founders every year. Many come to us with some version of the same problem statement:
“We have product market fit, but we’re struggling to make sales work”
When I was a full-time operator focused on one company at a time, founders and VCs would hunt me down and attempt to convince me to become the revenue leader of startups at this growth crossroads.
I love this problem, and run towards this kind of conundrum and chaos. Fortunately for me, I’ve been able to make a career out of bringing calm and clarity to these situations and creating pathways to revenue riches. It genuinely brings me both joy and meaning to solve these problems in these environments. (It’s ok, you can call me “weird”, I won’t be offended!)
Throughout my 25 years of doing this, I have learned that the single biggest unlock was and still is, aligning with founders on the health of their fundamentals. If you can get them to be honest about their fundamentals and what downstream action is required to course correct, you can typically agree a plan that requires courage, ambition and a ton of grit. If you can’t, and they continue to bury their head in the sand there’s not point wasting your energy helping them course correct.
Here is the 5 step process I have used throughout my career to align founders around how to course correct their sales team into a position in grow revenue in line with or ahead of VC expectations.
Step 1: Re-educate
There are multiple phases and stages of growth in SaaS startups. Most founders intuitively understand the general stages but the majority fail to appreciate the nuance, especially when it comes to go-to-market.
There’s no MBA program that teaches this stuff (that I’m aware of at least), so that’s on companies like mine to take the lead.
Founders need education about the 4 phases and 16 stages of growth. However the first 3 phases and 13 stages are the most important for founders to appreciate when it comes to laying a foundation for efficient and repeatable revenue growth. These stages form the foundation for long-term revenue success. Without them, the startup will almost certainly fail to meet its potential.
It’s critical founders are educated on what it takes to successfully exit each stage and phase of growth, and that they make that part of their DNA.
Note: Sign up here for the RVNU GTM Navigator waitlist, where we will do a deep dive into every stage, and share detailed frameworks outline exactly how to successfully exit each stage of growth.
Step 2: Activity Review
A founder is typically under some kind of pressure to grow revenue. For a venture-backed founder, it’s typically the promise they made to their growth hungry VCs that they will 3x ARR in the following 12 months. For bootstrapped founders, it’s often market forces offering them signal that now is the time to grow revenue aggressively.
As a result, they focus on building a sales team, stage 11 in the RVNU framework. However, they quickly realize the sales activities required to grow revenue aggressively are not yielding results as expected.
How founders react at this moment, is often the difference between whether they will survive or die. In the ZIRP era where money was cheap, founders could ignore the data and sales team feedback, and just cycle through revenue leaders and account executives with little recourse, other than lost time, hoping that they eventually chance upon someone to magically figure out their problem.
The effective infinite runways we saw in the ZIRP era created a collosol amount of damage not just to enterprise values of startups, but also to education of founders and revenue leaders about what it takes to build a real business. In my opinion, the ZIRP era has created a lost generation of entrepreneurs.
Fast forward to today, late 2024, the game has changed entirely. Unless you’re an AI native startup, capital is much harder to come by, and efficiency is the name of the game in SaaS. You have to know how to build and run a business much more in the traditional mould. Efficient, and profitable or break even growth are the name of the game.
In turn that means founders seek the truth, they want an accurate diagnosis of why they can’t quite make sales work, with an action plan of how to turn things around, fast!
Step 3: Deep Dive Audit
Sales activities will fail if the foundation for their activities is compromised, the only way to establish the fidelity of the foundation is by doing an audit of the go-to-market maturity of the startup.
RVNU has a free GTM debt self assessment, that takes 20 minutes to complete and will provide any SaaS founder an accurate assessment of their GTM maturity. It cuts right to the heart of what is working and what is not.
The delta between a startup’s actual maturity and where they are attempting to operate is what we call their “go-to-market debt”. The primary objective of the RVNU audit is to discover if there is such a delta and expose the “GTM debt” for the founder to tackle.
The delta (or the ‘GTM debt”) are the missteps glossed over by the founder as the startup grew in their primary years. They are the underlying cause of the sales team’s activities failing to yield as forecast.
This exposé is a frightening realization for any founder. In the majority of cases they uncover foundational cracks in the product market fit phase of growth, however in the most extreme examples, those cracks may exist further back in the idea market fit phase.
Founders know they face a difficult task reframing this to their investors and internal team. And they likely need to conduct a reduction in force (RIF) too, but better to get the RIF done in one fell swoop. It’s either that or burn capital unnecessarily, which presents an existential threat to every founder.
In 25 years of building startups, I’ve never seen a founder regret carrying out these tough but necessary actions, and if they act quickly good investors will deeply appreciate the honesty, transparency and courage of a founder making these decisions.
Step 4: Rehabilitate
Once they reconcile they have to take a few steps backwards in order to fulfill the promise of their startup, founders recalibrate themselves and their core team to conduct activities that focus on paying down the observed “GTM debt” in order to create the requisite foundation for rapid growth.
Often this requires the founder to re-take a more hands-on role with all aspects of the business that impact sales.
It’s their job to stop the bleeding and then lead the rehabilitation of the company back to full strength.
Here are some common activities a founder will take on when critical debt is observed by the RVNU assessment in the product market fit stage of growth.
- They get back to selling to clients, or finding new design partners
- They sit with clients and measure the value exchange their product is delivering
- They use the intel to iterate their ICP and value proposition
- They test the iterated learnings at scale with the wider market (non-friendlies)
- They rinse and repeat until they can more scientifically validate they have product market fit.
The main question I get here is: “how long will this take?”
In the RVNU GTM Navigator program we offer frameworks to more definitively make this calculation, as it differs from one company to the other.
Step 5: Rapid Growth
Once the GTM debt is paid down and the startup is fully rehabilitated, the founder is now in a position to systematize selling at scale.
If the surgery and rehab worked they should be in a position to rapidly grow revenue long into the future.
Now, the founder will be in a position to 3x ARR and look towards the holy grail of achieving “escape velocity” and focusing on scaling the startup.
Conclusion:
It takes a brave founder to be honest with themselves, their team and their investors that they’re struggling to make sales work.
The truth is that more often than not, it’s not competition or poor product that kills a startup, rather it’s “go-to-market debt” - and today there’s no reason for GTM debt to exist.
Auditing your GTM maturity is a critical step.
These audits can be expensive, so if you’re early in your evolution you’ll unlikely be unable to afford the best minds to carry out the best audits. For example, our manual deep dives take anywhere between 4-8 weeks and can cost up to $40,000.
However, the RVNU GTM Debt Self Assessment was developed after years of refining these $40k manual audits, and serves as very effective proxy to any manual audit. In many cases it’s significantly more insightful than what you’d get from a “fractional CRO” so we encourage all founders to start here - even those that insist they want to spend $40k with us!
A founder can conduct this self-audit in their own time, without our guidance. It consists of 70 multiple choice questions, takes 20 minutes, and it’s FREE for “Zero to RVNU” newsletter subscribers until 30th November 2024.
Click here to activate your free access.
You’ve got this 👊🏼
Wayne