Braydon Anderson:
Welcome to the session of WinLossWeek, the world's largest online event dedicated to win-loss analysis. This event is hosted by Clozd, and we'd like to thank all of our partners that have been a huge help to making this event such a success. The title of this session is Win-Loss Your Way to a Successful Fundraise. And today we're joined by Benson Metcalf. Benson is currently the COO and member of the board of directors at SaltStack. As part of his role as COO Benson, oversee sales, sales operations, services, customer success, finance and HR. Personally, he and his wife, Lindsay have four kids and live in Holiday Utah and in my opinion, most importantly, he is determined to inspire the entire family to play golf. So thank you so much for being here today, Benson.
Benson Metcalf:
Thanks, Braydon. Certainly it felt a lot more losses than wins when it comes to getting my kids into golf, but it's worth pursuing. So I'm going to stick to it. It's great to be here, Brayden and thank you all for having me. This is an exciting topic for me. We've just concluded our fundraising process and there's a saying amongst entrepreneurs who know the challenges of fundraising, that it only takes one. It just takes one investor to take the risk on you. Whether you're building a syndicate of investors or you're just looking for that one investor to back you, you get that one investor and you're off to the races. It's a tough job. Fundraising is ridiculously hard. You learn from every conversation because most of them are passes as opposed to successes. They're mostly losses versus wins. And so I want to tell you a little bit about the lessons we've learned in growth stage fundraising, and how you can win-loss your way to success.
At the center of a good fundraise is building a good business. And so as you think about this, this is obviously very basic, but think about the building blocks that you need to put in order for you to have a really attractive business at the time of the fundraise. Now, as I've learned this, the center of a good growth stage business is getting product market fit right. Investors are looking for evidence of product market fit. And typically it's along three vectors. The first is customer engagement and they look at that by evaluating trends and gross and net dollar retention. Do your customers engage in the product, do they need it, and come back for it?
Second is in terms of growth. Is your annual recurring revenue growing at a clip that demonstrates there's a market dynamic and a need that all work together for future growth? And then third is around sales efficiency. Often it's depicted as LTV account or lifetime value as a ratio of the customer acquisition costs and these and other sales efficiency metrics really help an investor have confidence that if I put money into this business, they're going to know how to scale and replicate.
So taken together, these are the kinds of things that illustrate product market fit. And just as a vote of confidence on this message, one of the world's leading venture capitalists put it this simple, "The only thing that matters is getting to product market fit." When I think about this, I boil it down to a buyer persona. Do you know your buyer persona. Buyer personas are critical because it's their problem, their need, their goal that you need to articulate in order to successfully build market and sell a product to them because ultimately you've got to meet their needs. This takes iteration. It took us more than a year to get right. And I want to walk you through some of the things that we did from a win-loss perspective to really nail product market fit.
The first is we looked at win-loss rates by role, and it was fascinating for us to realize that when we sold to managers and engineers, we were way behind in our win-loss rates relative to when we could sell to a VP and director. Now we'd love to always sell to a C level. They're hard to get to. And we learned that that VP director level was a sweet spot for us.
The next thing we looked at was win-loss rates by use case, and we have such a powerful product at SaltStack, the use cases are almost innumerable. It's tempting to say yes to, "Yeah, we can do that. We can do that. We can do that." It's really boiled down to a couple of use cases around security and IT, where we found repeatability. Another cut was wind-loss rates by industry and automation software, which is what we sell is applicable to pretty much every industry. Five ended up standing out to us. And we have narrowed some of our focus in that regard. Not shown here, but we did also look at deal size, company size, and win loss rates versus competitors and incumbents, as a means of narrowing down the strike zone and the persona that we were pursuing. We also did some interviews and I want to share a quote from a loss and a quote from a win that illustrate how we learned from wins and losses to narrow our focus.
This is from a manager and if you think back to what I shared regarding managers in our win-loss data, this is really telling. This manager clearly had immediate goals and needs around security. They took a look at SecOps, but they felt like it wasn't ready and by the time we could get their attention, they said that they'd already built their own solution. Clearly this manager was looking to build rather than buy. And when we compared that to a senior director, interviewed almost around the exact same time, it's so interesting to us because they similarly had a problem around security, that was their biggest factor in their decision and the biggest risk that they needed to mitigate. But they didn't have a good way to do it. In fact, their alternatives were all manual, building and running their own scripts and playbooks. Instead, they saw the feature rich offerings of our product and ultimately made the job very different perspective on how to think about the value and the pain.
And so as we look at the data and these interviews and all of the things we learned, it boiled down to these three points around our buyer, persona. Number one, navigate to the VP or director level of seniority. That's the type of seniority that can understand the perceived value. Number two is stay in the use case strike zone. There are so many temptations to go out beyond the core capability, but really having the discipline to stay in the strike zone. And then third is, connecting with pain. So once we have these conversations, really kind of boiling it down to the common pain point around manual time consuming work, that it can be replaced through automation. As we got this right, we successfully moved from startup to growth stage. And as we're talking to growth stage investors now it started to resonate because we could demonstrate that we had really reached product market fit.
In fact, we took these conversations. We talked to 118 different growth stage investors, showcasing the data-driven approach that we deployed to nail product market fit. We provided quotes of our wins and our losses from third-party interviews and then getting a little bit meta here, we actually used win-loss muscle throughout our investor conversations. So as an investor chose to pass on SaltStack, we took an opportunity to learn why they passed and really drill into whether or not that investor was in strike zone of the kind of investor that matches up with our business. Fundraising is so hard. You see way more losses than wins and you learn with each conversation, but you just have to get to that one that will say, "Yes."
It only takes one investor to take that risk on you and if you can find that one investor, then you can build momentum from there, ultimately after 118 different investor conversations. I can't say more because of just the confidentiality around how we're wrapping things up, but a very successful fundraise in the midst of a pandemic. Really kind of proud journey for us and we couldn't have done it without win-loss and building that muscle.
Braydon Anderson:
Thank you. That's such cool insight. Thank you for sharing that story. I think what I mostly love from this is how you guys were able to focus from the findings of your win-loss data, which helped you create that product market fit to get to the growth stage that made you actually get to the point of finding the right investor. So super cool use case. Love seeing that. So thanks again for meeting with us today, Benson and sharing your story and thanks to everyone that attended today's session. We hope everyone has a good day.
Benson Metcalf:
Thanks all. See you.
