What It Takes To Go from 0 to 1: The Big Picture (Part I)

This post is Part 1 of our four-part series on What It Takes To Go from 0 to 1.

You may have heard that seed funds have grown significantly in the past decade, and that there are many more angel investors these days, plus incubators and accelerators. 

While this is exciting, what it also means for you is that getting to Series A is harder than ever. That’s because the same VC’s from more than 10 years ago are still the only ones offering Series A financing.

Take for example, a fund like Accel. The number of Series A companies that they fund has remained more or less constant. But now, there are more startups graduating from incubators and seed funds—so there is more competition for Series A funding than there was 10 years ago.

To put it into perspective: if you consider 2012 numbers, 631,817 new companies were started. Of those, only 4,671 received seed funding. Then, only 1,153 made it to Series A. That’s 0.18%. If you were a high school hockey player, you would have a higher chance of making it to the NHL. 

Moreover, the rounds themselves have shifted. The valuations of seed and Series A companies have (way) more than doubled in the last decade. This is because the companies that get funded are now older and farther along—meaning that the journey is also now longer.

Even with all this, we know that your goal as a founder is not merely to make it to Series A. You have ambitions to build a category-defining company. As you probably know, our world likes to refer to such companies as “unicorns,” defined as companies with valuations of at least $1 billion.

In 2012, there were only 22 unicorns—that’s 0.004%. Perspective again: that’s 10x harder than being a high school basketball player trying to make it to the NBA (where your odds are 0.03%).

The Startup Journey

Now, all these numbers are not to discourage you as a founder! We simply want you to know the reality of just how hard this journey is before you embark on it. We think you should know exactly what you’re getting into. 

All that said, we’re committed to helping more founders get there, and we want to share what, in our opinion, it takes to do it. 

As much as the funding landscape might have changed, the startup journey itself has not changed all that much in the last 10 years.

At 0, you are in the idea stage. We would call this the “pre-seed” stage.

At 0.5, you have a product that you, as the founder, can sell. We call this “seed.”

At 1, you have a valuable product that a team can predictively sell, without the founder.

What It Takes To Go from 0 to 1: A Four Part Series

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At Pear, we consider ourselves 0 to 1 venture capital. We partner with entrepreneurs from day zero to build category defining companies. 

You might be thinking: so many other VC funds have said all that too, but then they keep telling us that we’re “too early” or asking for “traction.” 

So what do we really mean when we say day zero? What are we actually looking for? And what is this 0 to 1 you keep talking about? How do I actually get to 1? 

Taken from Mar’s much-loved talk, we think this philosophy will shed some much needed granular and specific light on all of these questions!  

You can also read the original deck here: pear.vc/landscape or watch Mar’s original talk here: youtube.com/watch?v=B0seWrrz3Dg.

The Series

PART 1 — The Big Picture
It’s hard to get financing when you’re in the 0 to 1 stage. Even harder to become a category-defining company. We think it’s important to really understand why that’s true. You should know exactly what you’re getting into and be prepared for the reality of how hard this journey is before you embark on it.

PART 2 — Step 0: Make sure you’re in a big enough market for venture financing
Did you know you might not even need venture capital? We’ll break down what “big enough market” means quantitatively and qualitatively, and how you can communicate that effectively to venture capitalists.

PART 3 — From 0 to 0.5: Show us product love
At 0, you have a big idea. At 0.5, you have a product that you can sell and you’re ready for seed stage financing. What we look for at this stage is product love. Believe it or not, there are quite specific signals for this that we’ll explain here.

PART 4 — From 0.5 to 1: Prove that you can systematically sell your product
You’re readying yourself for Series A now. Your task is to prove two things: (1) someone who is not you can sell your product (2) you can optimize and scale that process. The most important thing you need to do is make a plan and measure your progress. We’ll walk you through it.

Can You Describe—Exactly—the Problem You’re Solving?

This is an excerpt from partner Nils Bunger’s talk for Pear Accelerator S20.

Pear Accelerator is a small-batch program, where our partners and mentors work hands-on with exceptional founders through the journey to product-market fit. Learn more: pear.vc/pearx

The tricky thing about finding product-market fit is that it’s easy to be misled (and to convince yourself) by false signals. As Ajay mentions in his talk, the worst case scenario is when customers are lukewarm about your product. They will seem excited about it and talk about the features they want, but when push comes to shove, they won’t buy the product, no matter how many features you add at their request.

The hard truth is: that’s because they don’t actually need or love it. If this is happening to you, you haven’t found product-market fit.

Again, from Ajay’s talk, if your users love your product, they’ll tell you.

So how can you get to that point of love? How can you set yourself up for success and avoid getting caught in the feature spiral of death — where you’re building and shipping but no one is buying?

Customer development. Or, verifying your insight before building your MVP. This talk is about how you do that, step by step.

Jump to a section:

The Mindset

How to Form A True Problem Hypothesis

How to Win Your First Validation Meetings

How to Extract Real Insight From Your Meetings

Tying It All Together

OMG It’s Starting to Work!


The Mindset

“Fall in love with the problem, not the solution.”

— Uri Levine, co-founder of Waze

You first have to understand that customer development is not sales. You’re not selling your product yet. You’re not trying to convince potential customers that you have the correct solution.

Customer development is anthropology. You’re studying your customers. You’re trying to answer the question — do these people actually have a problem? How do they describe it? What would it take to solve it? You’re trying to probe and get real data to confirm whether your insight about a solution is correct.

And to do that, you need to deeply understand the problem your customers have.

Prepare to spend a lot of time here, going in a circle from hypothesis to validation back to hypothesis over and over again. It might feel frustrating, but it’s far better to be stuck in this loop, learning about your problem, rather than being stuck in the product feature loop where you’re wasting time, money, and energy building things that don’t work. You want to stay in the customer development loop until you achieve repeatable sales or clear cut metrics that say that you’re onto something.

Form A True Problem Hypothesis

A problem hypothesis has these basic parts:

  • Problem: A concise, specific statement of the problem you solve
  • Audience: Focused set of people who you think desperately have this problem
  • Reasoning: What makes this problem something that people in the audience need solved?

The problem is “the what.” The two key points for a well-articulated problem statement is that it is (1) specific to something that is solvable and (2) in your customer’s language. If you don’t have either of these, you don’t actually know what the problem is.

For the audience, the most important thing is to be narrow and tight — who has the problem most acutely? Keep narrowing down your ideas until you have defined a concentrated pool of users with the most acute need.

For any amateur chefs out there, you can think of this like a reduction sauce — start with a big pot of some kind of juice and stir over the stove for many hours, slowly evaporating all the water and slowly concentrating the flavor of that juice. What’s left behind is the deep essence of the ingredients.

You want to be finding your group of customers with the deepest, most desperate need for a solution.

Finally, you need to double check yourself and make sure you have sound reasoning for your hypothesis. Do you know why your audience wants or needs that problem solved? Again, specificity is the key here.

If you don’t have a good idea of why people might need a problem solved (perhaps your reasoning is a bit circular — “this customer has this pain and they want it solved, because it’s painful”), it might not really be a problem in the first place. There are plenty of problems people have that they’re okay with tolerating, because solving them is more effort than it’s worth. Or, you’ve just made up a problem that doesn’t exist.

You’re looking for an urgent problem, or if you’re on the consumer side, you’re looking for people who are just itching for something new.

Win Your First Validation Meetings

Once you’ve got a solid hypothesis, you have to validate it. That means you need to collect data from unbiased people who don’t know you, which means you will need to lean into cold outreach.

While customer development isn’t sales, during this phase, you will need to put on your shameless salesperson hat a bit to get the meetings you need.

There’s no single answer to how you should reach out. This is actually a core part of your learning during this whole process. You will need to know the unique answer for your company: how do you reach the right people and what are you saying that activates them?

Your approach should have three key things:

  • A high response rate
  • Consists of your target audience
  • Generates a steady volume of meetings

Then, it’s really a numbers game. Aim for 10 first meetings per week, and then aim to keep increasing that number with iteration. Iterate your message. Iterate your audience. Keep reaching out.

You’re learning about your customers here and you’re also learning about your message, where your customers hang out, and what they respond to. These insights are just as valuable as the meetings themselves.

Extract Real Insight From Your Meetings

Alright! You finally get to talk to customers! But what do you say? How do you get good data from them? Nils offers this simple section structure:

  • First 10 minutes: Broad questions to learn the unexpected.
  • Middle 10 minutes: Specific questions. Learn about your problem statement.
  • Last 10 minutes: Reconcile and zoom out. Did what you hear in parts 1 and 2 match up? Why or why not?

Broad Questions Phase

During the broad questions phase, your goal is to learn context about the user and the general area of your company. Find out about the incentives and biggest problems on their mind before being influenced by your ideas.

Some example questions:

  • What do you do here?
  • Who else do you work with most closely?
  • How do you spend most of your time?
  • What’s the most important thing for you to accomplish?
  • What’s the biggest challenge you have in your job now?
  • What are the top 3 problems you face?
  • Have you bought products to help some of these problems?

Do not tell them about your product idea, or what problem you’re after in this phase. Just try to understand how your prospect thinks about their day and what they need to accomplish.

During this phase, because your questions are broad, you’ll likely get some broad answers in response that won’t be very actionable for you. Make sure to spend some time drilling down into these answers. Pick one of the problems they talk about that seem relevant to you and ask for more details, peel back the onion a bit.

Specific Questions Phase

Your goal in this phase is to gain data points specifically about your problem hypothesis. Does this person have the problem you came up with? How badly do they have that problem?

Some example questions, and what you’re really after in asking them:

  • Have you ever had <your problem hypothesis>? Tell me about that.
  • How do you deal with it now?
    → Why You’re Asking: If this is a real problem, they’re probably doing something to deal with it already. And if they’re not, it’ll be useful for you to find out why.
  • How painful is this problem for you? How often do you have it?
    → Why You’re Asking: If this doesn’t come up that often, then it’ll probably not be a priority for them to buy or find a product about it.
  • Have you ever looked for a solution to this problem? Have you bought anything?
    → Why You’re Asking: If they have this supposed problem but then haven’t thought about it enough to try doing a simple Google search for solutions, maybe they just don’t care about it all that much.
  • Would <direct competitor> solve your problem? Why haven’t you bought it?
    → Why You’re Asking: Don’t be scared of this one. Remember, you’re not trying to sell a product, and in any case, you will have to assume in the future that your customer is going to know about your competitors—so you might as well ask them about it for your own competitive intelligence.
  • If you could solve this problem, what would change?
    → Why You’re Asking: Why does solving this problem really matter to this customer? Why does it make their life 10x better to not have to deal with it? This is what your product is going to need to solve for.
  • How valuable is that change?
    → Why You’re Asking: Value is much better than talking about pricing. You’re now trying to get as close as you can to a quantified version of the answer to the previous question. Does it cost them a lot of time? Money? Does it allow them to save on not hiring extra people?

Reconcile and Zoom Out

Now you want to reconcile what the customer has said in both the broad and specific phases to double check that your data is valid. If your customer answered your specific questions in a way that makes it seem like you’re onto something, but didn’t bring the problem up on their own in the broad phase, you’ll really want to dig in and understand why. Maybe the pain isn’t as intense as you (or they) think it is, or maybe they think of the problem you came up with more as a piece towards solving those larger problems.

Finally, you’ll want to zoom out and understand how your customer buys products or solutions to their problems. Ask:

  • What would be the next step if you had a product that solves this problem today?
  • Do you actually buy these kinds of products?
  • If you tried such a product, what would you want to see to keep using it?

You want to try to make this part as concrete as possible for the customer, almost as if it really does exist. Walk through their new customer journey with this product in their life. You’re looking for that “WOW” moment, as described in Bob Tinker’s talk.

Tying It All Together

Do at least 5 user interviews with the same type of audience you outlined. If you’re not finding an acute, concentrated pain, go back to your problem hypothesis and revise either your audience, or your problem, and run through it all again.

If you are starting to find an acute pain, do 5 more user interviews and drill down to the next level of questions. Show some product mockups and see if the pattern you’ve been seeing holds up.

Ask about discrepancies between your interviews. For example, if the previous four of the five previous customers said something was extremely important, but your next five don’t mention it, just ask them about it — “These other three guys had this big issue around XYZ and that didn’t seem to come up here. Is there a reason? I’m curious about the differences between what you do and what they do.”

OMG, it’s starting to work!

The strangest thing happens when this process starts working: you’ll find yourself trying to have a customer development “anthropology” conversation, and your customer is trying to turn it into a sales conversation.

People start leading you, instead of you leading them. They want to buy this thing now, they want to know how they can try it out, they want to bring their colleagues to a meeting. It’s the WOW moment. If you can get it repeatedly with 3–5 customers, then it may be time to develop your MVP!

Two options for this phase:

  1. Create a “no-code” solution with phone / email / spreadsheets / whatever, and try selling the solution to a few.
  2. Try turning 3 of your most promising interviews into “design partners” to help co-create a solution. Try to get some written agreement in place.

In any case, we always recommend building the tiniest MVP you can, enough to go through a “build/measure/learn” loop, per Eric Ries.

We wish you luck and hope that all of you get to this magic moment! It’s our favorite part of the journey.

Life After Product-Market Fit: Go-To-Market Fit

This is an excerpt from Bob Tinker’s talk for Pear Accelerator S20.

Pear Accelerator is a small-batch program, where our partners and mentors work hands-on with exceptional founders to reach product-market fit and beyond. Learn more: pear.vc/accelerator


Early startups in Silicon Valley tend to focus so intensively on product-market that they might forget to think about what comes after. But as any startup founder knows, you’re never “in the clear” when you’re running a startup.

Once you hit product-market fit, your next challenge begins: growth. From experience, we know that this phase can feel even more vague and amorphous than product-market fit. Often it sounds something like your investors saying, “Okay, go do that sales and marketing stuff.” We don’t seem to have a good, well-known framework to talk about how to unlock growth after product market fit.

Bob Tinker believes this shows a core bug in Silicon Valley — that fundamentally, we tend toward being a product shop. Investors and mentors around here do a great job helping founders build products, but often do a terrible job of helping founders build good markets on the back of their products. It causes many startups to get stuck on being a product (stage 0.5, as we call it), and fail to make the transition to being a business.

Bob has constructed a framework that we refer to for our own companies: go-to-market or GTM fit. It is the transition from a founder-hero personally selling a beloved product to users, to building a repeatable growth machine.

The Two Common Mistakes Founders Make With GTM Fit

(1) You try to find it as the founder.

Here’s the crazy thing — founders fundamentally cannot find Go-To-Market Fit. We know you went through a lot of blood, sweat, and tears to unlock that elusive product love, but the reality is: your ability as a founder to go find and win a customer is not characteristic of the real world.

As a founder, you have something like “magic founder pixie dust,” where you can say all sorts of the things on the fly in a customer meeting, talk about the 20 different things your product does, or pivot and make as many promises as you want. That’s not a realistic representation for what a normal salesperson, or digital marketing campaign could do.

Ironically, the very things that you were doing as a founder to win those early customers for product market fit is not a real test for unlocking growth with go-to-market fit. It’s a big mindset shift to wrestle with.

(2) You try to hire a star VP of Sales.

Sometimes your board will tell you to just go hire a big time VP of sales for this stage. Unfortunately, that’s also the wrong thing to do. That’s because no amazing VP of Sales is going to be the first salesperson in the building for you.

Great VP’s of Sales are usually more like battlefield commanders. They’re not the ones that figure out the playbook, the path through the woods. They’re the one that scale it. They turn the crank and hire the army.

A better way to think about your first sales executive hire is that you want someone more like a Davy Crockett—an explorer, frontiersman, trailblazer type.

Note that this person could also be yourself, as long as you don’t think of yourself as the Founder (as discussed in mistake #1). You will need to put yourself in the shoes of an actual salesperson and sell like them.

Finding GTM Fit Is Like Surfing

There are three parts to surfing that map well to the three parts of finding GTM fit. There’s making sure you have the right surfboard, catching the wave, and riding the wave. The parallels, respectively, are: (1) picking the right sales model, (2) aligning with the urgent wave of customer need, and (3) building a repeatable playbook.

Catching the Wave of Urgency

Catching the wave requires some skill in terms of reading your market, reading your customers, and understanding where you are. Good founders and early team membershave a bit of an intuitive feel for this — it’s how you got to product-market fit, after all. It’s similar in that you are trying to get a sense for where the urgent pain is in your potential customers that gets them to want to buy your product now.

However, to be a category defining company, it’s not enough to just find one urgent pain and solve it with a product. That pain needs to be part of a larger wave of change that is strategic for your customer. Your company needs to ultimately fit into a full customer journey with a big opportunity.

The challenge for many founders when trying to find GTM fit after product-market fit is that the pain point that unlocks GTM fit is not necessarily the same as the pain point that you started your company on. As a result, it can feel like you are betraying that initial founding idea or core principles.

When Bob was CEO of MobileIron, a company that provided security management for smartphones, the wave that was happening was the shift from Blackberries to iPhones. Executives wanted to get rid of their Blackberries and get an iPhone for work. They were going to their IT teams and telling them to make iPhones secure enough for corporate work, pronto. This was the initial pain point that would turn into a long term wave of every company wanting to become a mobile enterprise.

In retrospect, it’s clear that MobileIron needed to shift their focus away from the Blackberries and Windows phones they’d previously been building for and serving. This caused many big internal fights, because of the feeling of betrayal.

Bob candidly admits that had he been the one running sales, he might have been too stubborn to actually see and catch this wave, because he was too married to his original founding idea. Luckily, his Davy Crockett sales head was out talking to customers and made the push.

Picking the Right GTM Model

There’s a spectrum of sales models between sales-led, marketing-led and product-led, and there is no one right model for everybody. You, as the founder, need to determine what’s right for your customer and right for your product.

The one key thing to pay attention to is how your customer decides to buy. Note, this is different from the logistics of how they buy. Rather, you need to pay attention to the customer’s cognitive process of deciding to buy.

As a single consumer, when you go to buy a product, you might do a search, browse different websites, learn, engage with sales reps, and then make a decision. This is product-led selling, where the buyer and decider are the same person. Your product is typically pretty easy to understand and you can reach your customers with digital marketing.

If the buyer and decider are something like two different people, perhaps the VP of Marketing and the CEO, you can do a low touch marketing-led sale, where you generate leads with digital marketing and then engage those leads with sales reps.

If the cognitive process to buy is much more of a committee decision—for example, in MobileIron, there was the security team, the apps team, the mobile team and the IT team—then you need to do a sales-led model. The sales team’s job is to coordinate the decision amongst all the stakeholders.

Here’s where you’ll need to make sure the economics of your model work. If the way customers buy your product is a committee decision, for example, and your ticket price is super low, then you might not be generating enough revenue to cover the cost of acquiring that high touch customer.

Building the Playbook

After assembling an early sales team, that team went to Bob and told him they needed to build a go-to-market playbook.

As a product and customer-centric founder, Bob’s conception of a GTM playbook was a good PowerPoint and some tactics. His team helped him to see that the GTM playbook is actually the operating system for your entire go-to-market strategy.

Bob’s playbook is a short one or two page document with three parts: the customer journey, the sales actions that correspond to each stage of the customer journey, and the resources required for those sales pitches.

The Customer Journey

Your GTM playbook should not be internal focused. The standard sales funnel of “first meeting, qualification, negotiation, etc.” is not what you are going for. You want to make sure the basis of it is the journey from your customer’s eyes.

The Sales Actions

At each step of the customer journey, there needs to be a corresponding section that outlines what your sales team will be doing and saying in each stage. This section is the key transition point from founder led selling to becoming a company that sells things.

You will need to distill your sales strategy into, at most, the three things that your team will say or do at each stage. You have to sacrifice. You can no longer talk about all the 20 amazing things you could do and ask the customer which one they want. That does not scale, that’s not repeatable. At this point, you need to figure out those two or three things that reliably get your customer to sit up and really pay attention. What Bob calls, the “WOW” moment. This is how you build a repeatable, scalable growth machine.

The Resources

Finally, for each stage of sales action plans, you’ll want to list out the resources and materials that are necessary to really deliver on that phase of the customer journey. What are the tools or collateral you need? What does the product need to do? What competitive information would be useful?

Outlining all of this will have the side effect of getting your whole team aligned. Instead of your product or engineering team viewing sales as a separate entity, or seeing requests from sales as an annoying distraction, they’ll have a better understanding of why that request is important or necessary and contributing to the value of the entire company. They’ll understand how their work fits into the GTM strategy and plan.

Another great side effect is that your GTM metrics will now come much more easily once you’ve figured out this playbook, as you can simply watch customers prospect from stage to stage to stage to stage.

How to Know You’ve Found GTM Fit

The answer here is, perhaps a bit frustratingly, the same as with product-market fit — you will just know. You will feel it.

“It feels like momentum. Like all of a sudden, you put more in and more comes out. Leads start to grow, conversions grow, sales people and marketing people are running around with their hair on fire, and they can’t keep up with all the deals. It’s a blast.”

Setting Goals to Get to Product Love

This is an excerpt from Ash Rust’s talk for Pear Accelerator S20.

Pear Accelerator is a small-batch program, where our partners and mentors work hands-on with exceptional founders through the journey to product-market fit. Learn more: pear.vc/pearx


First things first: the most important thing over and above everything else that you can do to get to product love is to launch and get live. Live, as in: people outside of your team can use this product end to end, and at least one person has done so.

Once you’ve gotten live though, you need to “Test, learn, observe and iterate,” as discussed in our Product Market Fit lesson. After all, you’re aiming to make something that customers want to rely on and use fanatically. The only way you can get there is to learn from customer engagement. To learn most efficiently, you need to set effective goals for yourself.

Here’s a systematic process for doing so, from long time startup mentor, Ash Rust.

Jump to section:

Determine your North Star metric and supporting metrics

Set numeric, specific, and achievable goals

Assign owners to each goal

Start goal setting as early as possible


Determine your North Star metric and supporting metrics (no more than 3!)

First, you’ll want to determine your North Star metric. This is the metric your team will rally around.

Some examples: if you’re a SaaS business, your metric is usually some form of revenue. If you’re a marketplace, you might think about transaction volume. If you’re a pure consumer business aiming to monetize with ads, then you will likely consider something like daily active users.

While it’s very important to pick the right metric, you’ll also have to accept that it won’t be perfect. Since one metric won’t tell the whole story, you’re allowed to go one step further — but don’t go much further than that. Three supporting metrics is more than enough, and you don’t need an expensive analytics suite to calculate them.

Ash recommends breaking your business down into three sections, with a corresponding chosen metric for each: distribution, engagement, and churn.

Set numeric, specific, and achievable goals

To get your metrics moving in the right direction, you’ll need to break them further down into their own components, and set goals around these components. Meeting these component goals should ultimately tier up to moving your metric toward the North Star goal.

To get started increasing revenue, for example, you’ll probably need to start generating some leads. To start generating some leads, you’ll need to start interviewing customers to get a sense of what they want, so you’ll need to start scheduling some initial meetings. Set your first goals around these tasks.

It’s key that all your goals are numeric, specific, and achievable.

For example, rather than having a goal such as “interview customers,” you’ll want to go a little bit further and say, “How many customers do we want to interview?” Is it 5? Is it 10–15?

Achievability is also important — if your goals are too outlandish, your team won’t take them seriously. Don’t set a goal for a $100 million contract to be signed this week. Set a goal that is much more reasonable that you can track against, perhaps something like “schedule first meeting with big wishlist client.”

However, don’t go too easy either. You still want to make sure the goal is impactful for your North Star metrics. For example, “schedule 5 meetings” is more of an impactful goal than “send 20 cold emails”, as it gets you closer to increasing that North Star metric of revenue.

Assign owners to each goal

Once you’ve set your numeric, specific, and achievable goals, it’s time to build your roadmap to achieving them. Assign owners to each goal and provide resources for them to complete it within a reasonable deadline.

At the early stage, the timeline shouldn’t be too far out, since things are changing so rapidly. Quarterly goals will not make sense. Ash recommends starting out with 3–5 goals every two weeks, but you’ll definitely need to adjust depending on your business. If you are a consumer web tool, for example, you might find you’ll need to set weekly goals, because you need lots of feedback to iterate as fast as you can. On the other hand, an enterprise company may need to use monthly goals, due to fewer customers and long sales cycles.

Every goal absolutely needs an owner. You cannot have more than one owner for a goal, because it diffuses accountability. You can’t afford to waste time playing blame games instead of understanding immediately why that goal was missed. Remember—rapid learning is this stage is everything. If you’re having disagreements about who should be the owner of a goal, then alternate between different weeks (or whatever your timeline is).

The owner of the goal should be the one responsible for coming up with a plan to achieve that goal, complete with an estimate of resources that they’ll need. The manager will be responsible for providing those resources.

All of this creates clear accountability for all parties, which is crucial to iterating efficiently.

Start goal setting as early as possible

Final point: you want to start these processes as early as possible, even if your team consists of just you and your cofounder. If you don’t hold yourself accountable, you allow it to become the cultural norm for your future team. It gives your future team members the idea that certain people or groups are subject to exceptions from the achieving goals.

Once you’re growing, the easiest way to instill a goal-setting mindset is to allow your team to set their own goals. As long as they are specific, numeric, and achievable,you shouldn’t have a problem. Even if their first goals are extremely easy or not quite impactful, that’s okay. You can help them iterate and refine their goals as time progresses. The key is to get everyone into the habit of doing it.

This goes for yourself too! While we give much advice here, the key thing in the end is to get going. In the same vein as your product, the most important thing to do is get liveBe thoughtful about your goals, but don’t get paralyzed. Take your best shot at setting some goals, and iterate from there.

A Method to Find “Product Market Fit” Before You Have A Product

This is an excerpt from partner Ajay Kamat’s talk for Pear Accelerator S20.

Pear Accelerator is a small-batch program, where our partners and mentors work hands-on with exceptional founders through the journey to product-market fit. Learn more: pear.vc/pearx


One of the challenges with product market fit is that it’s challenging to define. If you look online and read blog posts, there are dozens of different ways to describe product market fit, and each of these descriptions applies to wildly different stages of companies. Even ‘early-stage’ has a wide range of definitions.

So, let’s be clear about what stage we’re focusing on as we publish our method for finding product-market fit.

The advice here is for companies generally in the same phase as our Accelerator companies (where we give this talk) — typically ground zero, with 0.5 as your “end of summer” goal.

Jump to section:

A Few Words on the Superhuman Method

The Pear PMF Method For Ground Zero Companies

(1) Understand your insight

(2) Verify your insight

(3) Build your MVP

(4) Test, observe and iterate


A Few Words on the Superhuman Method

The seminal piece of startup advice for product-market fit is Rahul Vora’s engine to find product/market fit for Superhuman.

Howevermany of our Accelerator founders aren’t fortunate to have the same conditions as Rahul:

…in practice, because of my previous success as a founder, we didn’t have problems raising money. We could have gotten press, but we were actively avoiding it. And user growth wasn’t happening because we were deliberately choosing not to onboard more users. We were pre-launch — and we didn’t have any indicators to clearly illustrate our situation.

Moreover, while the 40% metric is a famous benchmark, what happens if your denominator is 0? What if you don’t have any product yet to ask users ‘How would you feel if you could no longer use ___?’ Rahul suggests that you only need 40 users to get directionally correct data from the exercise, but maybe you’re not even at 40 “real” users yet.

With Superhuman, Rahul knew that they were building an email product already. In many cases, at the Accelerator stage, our founders might not necessarily know what their product is going to be. They’re really a step before that, so there isn’t anything to ask about. They’re trying to find out what the ‘email product’ to build even is.

If this sounds like you, there really is one goal, and one goal only: find a product that a few customers need and love, and ultimately will pay for, and evidence that there are many more similar customers.

You don’t need to figure out if it’s possible to scale it yet. Focus on product love.

What you might see here is that this is essentially the same question that Rahul is after in the Superhuman story — he’s segmenting and drilling down his user base to find that specific group of people who really need and love Superhuman and would be disappointed if they could no longer use it.

The difference is, as a “stage 0” founder, you’re starting from scratch to find your very first version of a product that might attract enough users to begin measuring.

Our own four-step methodical process to getting to that first initial product is normally reserved for our exclusive batch of Accelerator companies.

The Pear PMF Method For Ground Zero Companies

  1. Understand your insight
  2. Verify your insight
  3. Build your MVP
  4. Test, learn, observe and iterate

Let’s walk through it.

(1) Understand your insight

Your insight is unique to you. It comes from your particular view of the world. It’s the reason you feel like your idea is possible.

Sometimes we see a founder who seems born to build the specific company that they’re pitching. We call it founder market fit, and it’s the best-case scenario.

Insight comes from four places:

  • Experience — you’ve done it, you have worked on this problem before.
  • Market knowledge — you’ve studied this problem deeply; you’ve analyzed all the competitors in the space and feel that there’s an opportunity to approach the problem differently.
  • Observation — you’ve seen this problem over and over.
  • Gut feel — you feel it.

Ideally, your insight comes from some combination of all of these. It’s critical that you feel your insight is unique, that what you bring to the table gives your company an opportunity that the other companies tackling the same problem won’t have.

(2) Verify your insight

Talk to customers, talk to customers, talk to customers. The best founders we see talk to hundreds and hundreds of customers before writing a single line of code. They listen attentively to the already existing problems that these customers have.

Of course, you should go in with your hypothesis of where you can help (your insight), but you’ll want to truly verify that it’s a real problem from actual customers.

There’s a method for doing this the right way too, called customer development. But suffice to say, there is no skipping this step. If you get too excited by your idea and insight and jump to the building, you might invest a lot of time and money to build and sell a product that customers don’t want.

(3) Build your MVP

The tenets of building a true MVP:

  • Dead simple product
  • Avoid feature creep
  • Iterate. Fast.

We know that disruptive founders think big, and we love that. But when you’re just getting started, you need to think minimal. We’ve seen founders build the first version of a product with all the things they dreamed a product should have, but we think that’s the wrong approach.

We advocate for building the product with the minimum number of features you need to test your observed insight. Then, iterate on the product.

When Ajay launched his product, Wedding Party, for example, it didn’t even have an onboarding flow. Visitors would go to a landing page and type in their email address. In the earliest days, the team would email them back. If the user wanted to sign up, the team would call the user, set up their account on the back-end, and give them a login.

“We weren’t trying to prove whether or not they would go through the signup flow. We were trying to prove that once customers got into the product, they would use it. In defining it very clearly, we realized what we had to build and what we didn’t need to build.”

Keep the features very, very tight, and the hypothesis that you’re testing very clear. Set your company up to iterate quickly.

Of course, everyone knows this, everyone’s read about minimum viable products, but we’re reminding you again because it’s insanely difficult to internalize. We’ve seen many founders go through a “failure to launch,” where there’s always something going on before they can get in the hands of customers, some reason to procrastinate because their product won’t really be proving their hypothesis.

We encourage founders to get a product that’s ugly into the hands of a few customers (the ones you’ve talked to in the previous step) and then update it very, very quickly as you learn.

We do get it — it’s tricky to find the right line between minimum viable product and bad product that won’t tell you anything. But at some point, you need to put stakes in the ground. Better to bias toward launching than to wait.

(4) Test, observe and iterate

The number one question all your metrics should be answering: Are people using the product?

Treat these metrics as your product. You don’t need to be optimizing a customer-facing front end yet. You need to be optimizing the metrics that prove your core insight or value proposition. In fact, we might argue that it’s better to have fewer customer-facing features and more developed back-end infrastructure, so you can really understand what’s going on when your customers are using the product. If you don’t have the metrics, then you don’t know what’s happening with the users, simple as that. You’re flying blind.

Because this is the critical question that your company depends on, it pays to be extremely skeptical of it and not give yourself fake gold stars.

When you see something interesting going on in the data, the first question you should be asking is why is it happening? If you see a spike in invitations, is it really because your users love it and invite their friends in a viral loop, or is there spam or a bug going on?

Along the lines of giving yourself too many fake gold stars, avoid vanity metrics, such as the number of signups. These are fun to look at, but they don’t actually tell us anything about the underlying health of the product’s usage.

The key point is to be honest with yourself and take a hard look at what’s going on in terms of the usage of your product.

If people love it, they will absolutely tell you.

The worst-case scenario is really when users are lukewarm about your product. They might say, “Yeah, it’s cool. It’s nice.” It’s very tempting to take this as proof of love, but this is not what you want. Again, if your users love it, they’ll tell you.

Think about the products you’ve bought in your life that you loved, and how you reacted. You tell other people about it — because how can they be living life without this product? That’s what you need to be looking for in your usage. Nothing less.

The A to Z of Early-Stage Sales

Armando Mann, angel investor and former Sales VP at Salesforce, Dropbox, and Google hosted a talk discussing the nitty gritty of building out your sales strategy and team on April 1st, as part of the Pear’s speaker series. This is a recap!

Watch the full talk at pear.vc/speakers, and RSVP for the next one on product management: August 18th with Nikhyl Singhal, VP of Product at Facebook.

You’ve built a product that has the potential to disrupt an entire industry, and now you need to get into the hands of customers. How can you do that strategically, and how do you build a team that can execute your strategy? Armando walks us through it all, step by step, with all the nitty gritty details you need.

Choosing Your Market
Maximizing Your Wins
Building the Machine
Set Up for Success
Key Takeaways

Choosing Your Market

Many founders think that the way to find product market fit is to distribute their product to as many people as possible and then see which groups are working out best. Armando advises against this.

“You never know who to hear or who to listen to when you’re getting feedback,” he explains.

Instead, you want to approach finding product market fit with a hypothesis of what problem you’re solving and for whom, and try to talk to the smallest, most narrow group of people that fit the bill. This might seem counterintuitive if you’re trying to build a big, category defining business, but starting small actually allows you to grow fast, if you choose carefully.

At Armando’s startup, RelateIQ, the team went looking for a market that they could win 9 out of 10 times, and that could grow and bring the company upwards. They considered their product carefully and kept narrowing and narrowing their target:

  • First, the team considered which workflows their product could support. Sales workflows were the best fit.
  • Tracking was the only feature their product had at the time (no advanced forecasting or revenue reporting). They knew this feature was valuable only to recruiting or partnership teams.
  • They didn’t want RelateIQ to be a recruiting tool. This narrowed the field to partnership focused teams.
  • The product only worked with Gmail. So, they could only serve partnership teams who worked in Gsuite. These were likely to be tech companies.
  • The product’s novelty, at the time, was the capability of extracting data from email, so customers would need to be comfortable giving access to their emails.
  • Finally, big companies would want various controls that the product could not provide. They would need to go after smaller businesses.

Taking all these factors into consideration, the RelateIQ team determined their target market: business development teams and tech startups with under 100 employees.

“That business could have been small and we would have died a small death in a niche market that was irrelevant, if that had been our only market,” Armando acknowledges.

But the RelateIQ team had a clear plan for how to grow quickly from that narrow market into the adjacent markets.

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“We knew what features we needed to go from partnerships to account management within a company. Then we also knew how to go up market from under 100 employees to under 1000 employees,” says Armando. “So, as we moved along the axes, we would unlock little pieces of the market to give us this beautiful up and to the right chart where every group was growing.”

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Focusing on narrow markets has the benefit of forcing focus and tighter referral loops. Once you’re growing in a niche, your cost of acquisition in that niche goes down, and you can afford to reinvest those savings into your next niche.

In sum: try to find your smallest possible market. It could be geographic. It could be the tech stack. It can be any dimension. Make your product incredible for that small group of people. Then, focus product marketing, sales, everybody, to go after that market.

“You have to be very clear, this is not a sales strategy, it’s a company strategy,” says Armando.

Once you have nailed that market — you’ve figured out the cost of sales, your sales cycle, all your key metrics, and they are in a healthy place, i.e. predictable and repeatable — you can seed the next one.

Note that whether you start down market and move up market or the opposite way doesn’t matter. The point is to figure out how to dominate a sub-piece of a market that can feed into adjacent markets.

“There’s not a bad market to go after first as long as these are customers that can stay with you,” Armando notes. “It depends on the strength of the entrepreneur, what you’re comfortable with and who you want to solve this problem for first.”

Maximizing Your Wins

Like many salespeople, when Armando first started in sales, he was introduced to the big myth of “Always Be Closing.” It was one of the biggest things that he had to unlearn.

“I thought you always wanted to get new customers, that was the thing. But that’s not right. In SaaS, renewals and customer success beat new business 10 to 1 every day,” says Armando.

That’s because great retention and upsells compound, so a small improvement in these metrics has a much bigger impact on ROI than a small improvement in acquisition. While the first few years of this strategy might not look too sunny, over time, if you hit your targets, you will fly past your competitors.

Armando recommends that you not worry too much about how you will raise prices over time for your first customers, and focus instead about how pricing will affect your next customers.

“Those first customers, you can always say, ‘Hey, this is the pricing. We’re new, we’re starting our business. Here’s what we aspire to charge,’ and then there’s a negotiation. You say, ‘We can do this for this year, and chat again at the end of next year at renewal time, or we can do a three year contract and lock in this price for the next three years. We’re not going to be a great company just by getting an extra 10, 20% from you every year. Wwe want to make sure that we have a long term relationship with you.’”

Make sure both your account executives and customer success managers take interest in the success of upsells.

Building the Machine

Hire a Customer Success Manager from Customer Number One

A strategy is nothing without execution, so it’s critical to think through how you will build and structure your sales team to accomplish the plan.

The first thing is to have Customer Success Managers. It may seem like a good idea for you as the founder to take on this role, but Armando advises against this, as founders usually need to be ahead of the curve and focusing on hiring, fundraising, and selling. Armando recommends you have a Customer Success Manager onboard from customer number one.

“That is the first group of customers that hits the one year renewal date. And that’s the data that VCs will look at after a year and say, ‘Show me your first customers. What happened in the last year?’ You could go and say, ‘We’re great now, cohorts are getting better and better. Those were just a bad fit, just don’t look at our data from our early customers,’” says Armando.

“It’s so much more powerful to say, ‘Look, these first customers, none of them have churned and they’ve grown to extra spending the last year and you can call any of them and see how things have gone over the last year.’ That’s a way better story. So from the beginning I would spend an enormous amount of time on my existing customers.”

A good ratio early on is one Customer Success Manager for every two Account Executives. When scaling, aim for one Customer Success Manager for every 1 or 2 million dollars of recurring revenue.

What to Look For In Your Account Executives and Customer Success Managers

For account executives in the early stage, you’ll want to be looking for athletes — “People that can build the plane as you’re taking off.” When you’re scaling, you’ll want to start looking for candidates with a track record of scaling with a company and can leverage all the structured resources that come with scale.

Let’s call the early stage account executives Jane, and the scale stage account executives Jack. Here’s what they might look like as candidates:

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The characteristics you are looking for in customer success managers as compared to account executives are actually very similar to the above. The difference comes in their respective motivations.

Armando’s uses a very simple test: say your employee gets an email from a customer at 11:00 PM at night before they go to bed, after watching something on Netflix. Both will respond to that email (though you might tell them not to and just wait until the next day!).

“The AE will do it because of the leaderboard, because of the competition. They want to close that deal.

The CSM will respond to that email because of empathy. They feel the pain of the customer. They’re like, ‘If I don’t respond to this person, they will have to wait 10 or 12 hours until I get to the office and go through my meetings and get to this email. If I respond to this email right now, I’m putting them out of their misery and just helping them out with this one problem. That one short email from me will help them unblock today.’”

Where to Find Your Early-Stage Account Executives and Customer Success Managers

Armando recommends a few sources to find the right early-stage hires, your Janes:

  • Unsatisfied large tech company sales professionals: “You’re looking at people that went to a large company because they thought they wanted to be in sales and they got the training and realized they didn’t like the structure and the constraints that came with being in a large company. They didn’t necessarily like the certainty that comes from knowing exactly what they had to deliver every few months.” Note that Jack candidates do love this.
  • Former entrepreneurs: “I don’t think there’s better sales training than being an entrepreneur, so bring those folks in who will appreciate that you have a product that you can sell and that there is traction. They were some of the most loyal sales folks I’ve hired because they understand how difficult it is, what you’re doing as an entrepreneur. They can empathize and they know what they need to deliver for you.”
  • Business development, private equity, or venture capital professionals: “They have a lot of acumen. They have to hustle to get into certain deals. They have to be creative. There’s no playbook.”

If you’re looking for Jacks, you’ll want to investigate sales candidates who have spent 3–10 years at large companies (either one, or several) developing their skills. You can also find them in lateral industries. For example, if you are a FinTech entrepreneur, you might try to look for sales professionals in commercial banking instead of in tech. These professionals will already be well-trained in the fundamental principles of successful sales, and all you’ll have to do is to teach them the technology side of it.

Don’t worry too much about industry expertise. Unless your product is in a regulated industry or a very hardcore technical product, your hire should be smart and able to learn quickly.

“I would rather bring somebody that has all the other characteristics that you want in your company — a teammate that will connect with your company really quickly and in a positive way and add to your culture.”

A great way to source for such high potential candidates is to ask for referrals from your engineers. Ask who they might have met at their prior companies in sales.

“Most would be like, ‘I never met one. Sales? I don’t know those people, they’re in different building.’ But if they met somebody, that in itself is rare enough that you would take that as a huge plus — that this salesperson was able to connect with engineers or with PMs or with other teammates.”

Moreover, if they’re hired, they also will now have a friend and built-in sponsor inside your company.

Set Up for Success

Onboarding

When you’ve got great candidates, you want to make sure that they are able to work as well as possible with your existing team. Armando goes as far to make sure that high potential candidates meet over 10 to 12 people early on in the interview process.

“It’s a massive overkill, unless you realize that what you’re building is a group of folks who are all collectively responsible for this hire. So when this person joins, they all feel a level of connection or responsibility for this person’s success, which is incredibly valuable.”

Once the candidate joins, do all you can to help them form connections as quickly as possible — scheduling breakfasts for them, assigning them lunch buddies, etc.

“At a high growth startup after months two and three, you cannot claim you’re a newbie and you want to connect with somebody because you haven’t met them before,” says Armando. “You need to build the network in the first few weeks when you don’t have a quota, you’re still learning, and meeting people is part of your job. Make that something structured in the onboarding process.”

Organization

Founder CEO’s tend to think of their sales process in a linear funnel, and thus often set up their sales teams in a straight line as well. You are probably familiar with the typical setup of having some SDRs (sales development reps) doing outbound and inbound sales and taking in calls, emails, or leads. Then the qualified leads get passed to the account executive who closes the leads. Then the sales engineers help with demos and setting up the test environments. Then the CSM handles post-sales.

While this kind of assembly line setup works for large companies that are more predictable, this will not work well for an early-stage company that hasn’t even found product-market fit yet.

Armando recommends organizing your initial hires instead into a pod consisting of a CSM, AE, SDR, and sales engineer, working together as a group flexibly and helping each other with workloads.

The first pod should then seed the next pods by each starting pods of their own, and hiring people into their new pods. This works because each of these leaders have had the same experience and understand how to run a successful pod.

Armando is also a fan of having Product Managers join sales teams and getting in front of customers as well.

“PM’s bring a lot of credibility on the roadmap. As a salesperson, many times you don’t have the credibility with the customer to talk about the roadmap because they assume that you might not have the whole picture. When a PM comes in and talks about the roadmap, then you know it’s what they’re working on,” says Armando.

Compensation

What type of employee incentive plans are practical for your first true salesperson? Should their options be tied to their sales performance? If so, what type of cash bonuses make sense at early stages in the company’s life?

“In my mind, they should be working and being motivated the same way the first support person, the first service person is, and the engineer is. They are building the company, so they should be incentivized in equity. That doesn’t mean that that’s going to be the comp plan for the rest of time at all. They should have a salary that is comparable to the rest of the team.”

For an early-stage company, tying bonus plans to sales performance might be premature.

“You’re creating a sense of predictability that you don’t yet have. So don’t lie to yourself or them saying that you know what you’re doing — because you don’t. You don’t know what this could look like. You could hit product market fit and hit it out of the park or not. Either way, you want them to pay the rent.”

At Dropbox, the first sales hires were at first compensated with sales performance bonuses, but were then switched to equity and salary compensation plans. The shift in turn led to a significant breakthrough for the company — automation of one-touch only sales.

Dropbox had a Contact Form, and many times, a customer would email through the form ready to buy and inquiring only about pricing. They would only need one follow-up email with the requested pricing information to convert.

Under the sales performance plan, sales reps were incentivized to want to claim those easy sales and get credit for them. After the switch, their mindsets were different. The measure of success was now better aligned with how much revenue the company made as whole.

The reps pointed out that those form customers were not interesting to close and were just easy money — so why not simply put up a Pricing link and other key information under the form so that customers could self-serve and buy without going through a rep?

“We did that and self-serve went up, and the leads that the reps were getting were more complicated, more interesting, and they were learning about more interesting sales processes. We could work with those customers in a more intense way, because all the easy customers would self-serve. And I could not have figured that out by myself,” says Armando.

Key Takeaways

  1. Focus on one market, dominate the market, and then expand from there. Have a vision of how you are going to do that and explain that clearly to your product team, your marketing team, your sales team, and your investors.
  2. Retention and upsells win over sales every day. Invest in customer success — bring in a CSM early. Don’t be cheap. Bring in great people. Invest in your existing customers.
  3. When hiring account executives and customer success managers, be thoughtful about the stage you’re in and what you need for your company today. A great account executive or customer success manager might be a better fit for you in the growth stage, rather than in the early stage, or vice versa.
  4. Organization matters. How you organize your teams and set them up will make things very different. You can seed politics and resentment or you can create units that behave like a Navy Seal team and work together to take over different missions.

A Scientific Method for Content Driven SEO Marketing

Mada Seghete, Co-Founder & Head of Strategy & Market Development at Branch hosted a talk on ‘Marketing With $0’ in April. This is just an excerpt! Watch Mada’s full talk for advice on viral, referral, community marketing, and more at pear.vc/speakers.

Many founders, when thinking about “doing marketing,” will immediately jump to thinking about Facebook or Google ads. Yet, organic acquisition methods such as viral, referral, or SEO are often much more effective and, even better, cost you $0.

Mada Seghete, who leads strategy and marketing at Branch, has run hundreds and hundreds of marketing experiments. Branch’s data has shown that ads are in fact, the least effective channels when compared to the more organic channels.

“It’s harder to do these things, because you don’t get the instant gratification of buying the user that is now on your website or your app, but the effort does pay off, because these people are more likely to convert and they’re more likely to stay with you for longer,” says Mada.

Mada Seghete, Co-Founder & Head of Strategy & Market Development at Branch

One of Mada’s favorite organic channels? SEO. She firmly believes that a good content driven SEO strategy can work for any kind of business. But it’s crucial to be scientific, so you don’t waste time producing content that won’t drive results.

Luckily for us, Mada was generous with sharing the scientific method her team developed at Branch.

Gathering keywords
Deciding on keywords to rank for
Producing content
On SEO “Hacks”

(1) Gather data on all the potential keywords you could be targeting.

Your first step is to compile a list of potential keywords for your company.

A good place to start is with the queries that are already leading customers to your website. You can see where your search traffic is coming from and what keywords you are currently ranked for via Google Trends.

The second place to look is your competitors’ keywords. To research this, you can use tools such as Moz or SEMrush.

From there, you can then brainstorm some keywords on your own.

For all the keywords you add to the list, you’ll want to track the search volume, keyword difficulty, and average cost per click. You can find this information using tools like Google Keyword Planner, Moz or SEMrush as well.

[To see samples of Mada’s keyword research at Branch, watch the full talk at pear.vc/speakers.]

(2) Decide which keywords you would like to rank in search results for.

Once you’ve mapped out the universe of potential keywords for your company, you’ll need to determine which words you want to work on ranking for.

At Branch, the team narrowed down their list to the top 200 keywords with the highest search volume. They then checked Branch’s current ranking for those words.

Finally, they grouped these keywords into different themes and came up with their own formula to “score” and prioritize which themes of keywords they would pursue with content.

Branch’s formula looked like this: {{Relevance score*40%}+{competitor urgency*25%}+{keyword difficulty*20%}+{avg rank*15%}}/{count of keywords}

Running through a structured decision process like this allowed the team to uncover and write about topics they might not have considered previously.

“We would’ve probably never written an article about ASA files — an app association file — but we wrote something about that because it came out in our keywords. We explained how Branch could help with that, and it drove a lot of traffic to us.”

In sum:

For a full explanation, watch Mada’s talk.

(3) Produce the content!

With a prioritized list of topics, it’s time to write.

Instead of spending money hiring a writing team, the Branch marketing team instead invited anyone in the company to write on any of the topics on the priority list. Those who wrote received a free t-shirt that said “Branch Writer.” Many team members from customer success and sales ended up writing great articles.

What About All Those SEO “Hacks”?

Now, you might be wondering about all those little algorithm hacks that you’ve heard about.

While Mada has discovered some tips and tricks from her experimentation (for example, how to strategically run paid ads to boost your SEO faster — details in the full talk), it’s important to realize that a good SEO strategy is fundamentally a long-term strategy.

It will take about 2–3 months for your content to rank (Mada tested this personally by translating all Branch’s content into different languages and measuring how long it took to get organic traffic on these pages). But if you do it right, the results are evergreen.

Hacks may work in the short term, but they won’t get you the long-term results you actually want.

Mada recalls a story:

“I remember Google changed their ranking, and I was sitting in a marketing leader group, and everyone was like, ‘Oh my god, I just had a drop of 20% of our organic traffic. What happened?’ And I was like, shit, what happened?”

Mada was in for her own surprise.

“Then I looked at our traffic, and our traffic had gone up, because the way we’ve done SEO is not by gimmicks and trying little things. We just rolled with content and if you write with content, Google won’t penalize you for that.”

Outbound Sales is *Not* Blasting Emails

Pouyan Salehi, Co-Founder & CEO at Scratchpad hosted a talk discussing effective outbound sales on May 26 as part of the Pear’s speaker series This is a recap! Watch the full talk at pear.vc/speakers.

What’s the best source for leads? How can I automate emails? What tools should I use?

If you’re putting together an outbound sales strategy and asking these questions off the bat, you’ve started off with the wrong questions, and you’re probably in the mindset of blasting emails.

Here’s what Pouyan Salehi, Co-founder and CEO at Scratchpad, has to say about that:

If you want to feel good about the number of people you’ve reached out to and say, ‘Hey, we’ve done activity top of funnel,’ then spray and pray is a great method.’ If you want good results, it’s not.

Why you shouldn’t just “spray and pray”
Strategy
Data
Execution

Why you shouldn’t just “spray and pray”

(1) Spray and pray creates operational debt.

In the early days of being a “zero” founder, the most crucial thing is learning what works and what doesn’t work. Once you know if something works, you can step on the gas and keep throwing more resources on it, you can do a lot more and automate more.

If you’re spraying and paying off the bat, you may get some responses, but because you haven’t put in the work to personalize and make the messaging relevant, you haven’t actually learned anything from the response. You still face the learning challenge, and you still need to do all the segmentation work.

(2) The results are usually just worse.

Just look at your own inbox. We’re all getting flooded with emails now, as more and more companies use automated systems.

(3) You can actually run into technical issues blasting emails.

So, let’s rewind and start with the three key components of great sales: strategy, data, and execution, in the correct order of operations.

Strategy

The most important tool: your story. Start here. Often, this comes too late or as afterthought, but slowing down and spending some time getting your story right will pay dividends down the road.

Think of this story not just as an “outbound story,” but as your foundational company story, which can help you with fundraising and recruiting later. It captures the benefits and core problems you are solving and for who, what it is you’re actually selling, and how you are different.

The key components of a story are your headline and your messaging framework (pain, priorities, and motivations).

Your Headline

This may seem counterintuitive, but your headline is not what you sell. In fact, what you sell should come in last.

Your headline should instead be the benefit of what you sell, or the customer issues you solve. This is a subtle distinction from describing what your product can do or the features it has.

For example: Scratchpad is the fastest experience for account executives to update Salesforce, take notes and manage your tasks.

This is different from something like: Scratchpad is a Chrome extension that you can access and it’s a freemium model. This comes later.

Your Messaging Framework: Pain, Priorities, Motivation (PPM)

Now is the time to think about the people you are serving and break them out into personas. For each persona, you must deeply understand that they care about.

“Usually you can think about that through: what pains are they facing? What are their priorities or what are they motivated by?” says Pouyan.

Example: if your end user is a salesperson or account executive, it could be their top priority is hitting their quota. They’re also motivated by that because if they hit their quota, their job may be on the line. Another pain they have may be logging activity. They don’t need to do it to hit their quota, but their manager needs it so that they can understand what’s going on, which is annoying.

Don’t overthink this too much. When you’re starting out, just take your best stab and write something down.

Your messaging comes from your work here.

Note: this is not the time to be asking for email templates. Write your own! It depends on who you’re contacting and what it is they care about, or there could be multiple things they care about — which you should have discovered in your thinking above.

What to do if you’re a “zero” founder and don’t know what the story is yet:

This is common in the zero stage and it’s okay — still take 30 minutes to write down your best assumptions. You can come back and modify them as you learn.

This step is absolutely critical, as Pouyan points out:

If we can’t even get them to care about the problem through words, I wonder: why would we spend all this time building the product?

At Scratchpad, Pouyan created a one pager for this, just a “nugget” of a story that he eventually built around.

“In the early days we did a lot of outbound, but we did it solely to see ‘Can we get people to even care about this problem? Does this problem resonate?’ If it does, then it’s our job to solve that problem through a product,” says Pouyan.

This can be done even before you have product!

“You’ll learn a lot about what type of users might be more interesting to solve for first, who has the problem. Or maybe there was a secondary problem you never even thought of. It gets conversations going.”

Things to keep in mind:

  • Nobody cares about how awesome your product is, or who your investors are, or that you went through this awesome accelerator, or made this killer hire, or released a new version.
  • Make your story about them — your prospects and core customers. They need to understand what they are getting out of this and why they should care.
  • The more time you spend empathizing with users, understanding their problems and crafting messaging and, ultimately, solutions for them, the better your results.

Data

You may be asking: Okay, *now* what’s the best data source? Where can I scrape leads? Where can I buy leads?

This section is short because the reality is: there is no one single best data source. It depends on who you’re going after and what industry they’re in — so use multiple sources. Then, clean the data and validate your emails.

Execution

Now is the time to combine your strategy and data to execute personalized and relevant communication at scale.

Relevance and personalization are different.

Personalization: “Oh, wow, I saw you went to this school. And we both grew up in this state and now let me talk to you about my product.”

Relevance: “Hey, I noticed your app is really popular in this country, but you haven’t localized it for this country yet.”

Personalization might involve mentioning things like first name, company name, and title in your email. Relevance is mentioning company competitors.

Relevance, in Pouyan’s view, is much more important than personalization, because it shows you’ve done your research and knows what your prospect cares about.

Keep it simple: your goal is simply to start a conversation.

At this point, you may be tempted to pack everything into one outbound email. Do not do this. Remember: you are not trying to get to all the way to close in one email. That’s way too much.

You might not even be trying to schedule that conversation on the calendar yet. Start small and figure out what works.

“The ask could simply be, ‘Hey, does this sound interesting to you?’ And all you’re hoping to get is an email response of ‘Maybe’ — just that there’s some signal on the other side that you can then use to strengthen the conversation,” says Pouyan.

Don’t ignore the neutral responses.

It almost never happens that a cold email is going to elicit something like “Oh, this sounds amazing. Please send me a calendar invite and I’m going to invite my whole team so we can talk about purchasing.”

More often than not, you will receive replies like: “No, thanks. Not ready right now.” “We’re busy. Can you please get back to me next quarter?”

Anything but a hard complete no, Pouyan considers a neutral response. These responses are signals that your messaging just didn’t land in the right area. Maybe it was close, but it didn’t quite hit the pain point.

Here, you need to be ready with objection handling. You need to have a response ready for “Hey, not right now, or we’ve already invested in a different solution,” and similar objections. Pouyan created a series of templates for these.


Unfortunately, we can’t give you the magic words that will get the results you want. That comes from hard work, and at ground zero, this work should be founder-led.

“You learn so much in terms of crafting that narrative, sending it out there, seeing what resonates. And you take that learning, not just for sales, but also in how you position your company. And how you position the product. And what you work on. So the effort has got to be there,” says Pouyan.

It’s like going to the gym. You just gotta show up, and then you’ve got a system for how you work out. You get into that flow.

“How Do I Fundraise in the Time of COVID-19?”

How active are investors?
What are you seeing at Pear?
How do you reconcile competitive rounds with lower valuation and less activity?
How do I know if I should raise now?
How can I show that I am a good company? Are investors looking at metrics and indicators differently?
How should I build a plan?
Is this a good time to *start* a company?
Bottom Line

Alongside our founders in the past few weeks, the Pear team has been figuring out how fundraising now “works” in our new world. While taking meetings over Zoom, we inevitably get urgent questions like these:

  • Are you still funding start-ups? How active are investors? Are they looking at metrics and indicators differently?
  • Are valuations lower? Any trends on where valuations are going?
  • What are you seeing at Pear in terms of seed-funding right now?
  • Is this a good time for me to fundraise? Should I wait until 2021?

Here’s what we know so far, two months into shelter-in-place in the Bay.

As with any COVID related advice, there is still a great deal of uncertainty out there and things are changing very quickly day-to-day. Our answers here are intended as extra data points to help your decision making.

How active are investors?

Early data from Q1 suggests investment activity is down (note: this only includes 2–3 weeks of US shelter-in-place).

  • Crunchbase Q1 2020 Global VC Report: dollars invested quarter over quarter dropped 27% (includes angels, pre-seed and seed deals)
  • CB-Insights Research Brief April 2020: seed deals are down 27% from Q4’19 and 43% from Q1’19, but median seed deal size is staying flat at $2.4M
  • Axios: “Investment activity is off approximately 25% from pre-pandemic levels” (according to April & May Pitchbook data)

Although the last 25% drop number seems bad, you can interpret it another way: investment activity in April 2020 was not zero. It was 75% that of April 2019 and that’s still a big number (~$2B per week). So, if you are a founder, know that venture capitalists are still investing.

Financing rounds are taking longer to close. NFX put out a survey comparing the opinions of VCs and founders on the current financing climate. A whopping 88.5% of founders reported that VCs were slower in responding or not responding at all. However, note that in early April, most of us were busy with our portfolio. We would guess that if the survey were run today, the 88.5% number would be lower.

Good companies are still raising money. Just in the last eight weeks, very large growth financings have been reported, such as Robinhood and Carta and of course, the ultra-competitive $12M seed round of Clubhouse.

What are you seeing at Pear?

  • Investments feel less rushed, though our own sample set is small, and we are still moving fairly fast.
  • Valuations are a bit lower but we still don’t have enough data around valuations. We have many investor anecdotes, but we will not have statistically significant data until the end of the Q2 when financial data companies, law firms and others publish their results.
  • Great companies are still getting multiple term sheets. Some of our portfolio companies have multiple Series A term sheets, with competitive terms and valuations similar to those of early in the year. We have also been involved in competitive Seed financings — where we’ve gotten our own taste of how hard it is to pitch yourself via Zoom!

How do you reconcile competitive rounds with lower valuation and less activity?

This is what is happening.

Investors all have a certain bar in terms of committing to an investment, but we are also all very different. One investor may absolutely care about unit economics, while the other one is more focused on team or absolute revenue.

Back in January, in the midst of the “good times,” a company with only a few of these good attributes could have had an easy time getting to a competitive financing. Today, the bar for getting to a yes from an investor has come up (we have noticed that the very best investors tend to always have a high bar).

So for you as a founder, it means the following: adjust your bar. If you are a great company you will be able to raise money at good terms.

How do I know if I should raise now?

This advice is fundamentally driven by the company’s health. We have given advice to our portfolio ranging from “raise money now” to “it would be suicide to fundraise now.” The company’s health may be affected by COVID-19 but ultimately it will go back to those “good company attributes”: positive unit economics, efficient growth, short payback times, a team that can execute, a big market opportunity…

This coming recession has not affected everyone equally. Some companies have been badly hit and some have benefitted, and some are in the middle. Depending on where you are, you may want a different strategy. Here are some scenarios:

(1) You are in a terribly hit space like travel or retail. No matter how great your business was, your business is zero now, and it will be hard to fundraise. If you have to fundraise, you should be ready to accept lower terms than your last round (e.g., Airbnb). If have cash and can weather the storm, cut costs to a bare minimum and wait for the market to come back. If you don’t think the market can come back, you need to change what you are doing.

(2) You are in a market with tailwinds and your business is blowing up, like online education or remote work. This may be exactly the right time to go out and get some capital to scale. In this situation, we believe that even if your unit economics and growth efficiency are not great, you can still fundraise easily (maybe not from the top, but there is still a lot of FOMO).

(3) You are in the middle scenario—your market is not terrible but not great. You are expecting your top line revenue to go down ~10–35%. You will need to do a bit more homework. Cut costs, focus on building your product and on improving unit economics and growth/sales engine efficiency (see this Sequoia post on targets for building a new plan). Ideally you have enough cash to make your company more efficient and show a couple of quarters of growth before you need to go out fundraising.

Remember, good companies can always fundraise, so the question can be turned into — “How can I show that I am a good company?”

How can I show that I am a good company? Are investors looking at metrics and indicators differently?

The metrics that matter don’t change: big market, strong unit economics, efficient growth. You can read more about this in Mar’s deck on the seed landscape in 2019. Good investors know that it is always a good idea to invest in these structurally good companies.

Showing some growth is still important. You will definitely get a break on not hitting your pre-COVID growth numbers, but you won’t get a free pass. It is important to show that you have quality growth (even if it is still small).

How should I build a plan?

It is absolutely crucial that you are aware of the macro-situation. If you are following the situation online, you know that nobody knows what will happen with certainty. Everything depends on how the population behaves or whether we will have new therapies or a vaccine.

You need to tell us investors that you are ready to succeed in the event of the worst-case scenario. For example, if you are a travel company counting on the market to rebound in July and you show a straight curve to the right, we will likely question it.

We want to know that you have a plan in case there is a second shelter-in-place. We want to back founders that are aware and a bit paranoid. Don’t just say “We are through with the worst” or “People will start traveling again soon, no problem.”

Is this a good time to *start* a company?

The short answer is yes.

There will be long term effects from being sheltered at home for 60 days. It has already affected all industries: consumer, industrials, retail, medicine, enterprise… It has affected all of us individually and we have become accustomed to new ways of living. We will be more open to remote work, telemedicine and home deliveries.

We see this as a great opportunity for a founder to build a company that takes advantage of this mindset and behavior change. As a seed company, you can spend the next two years plotting the ideal product that takes advantage of this new macro.

Recently a founder told us, “I can’t get a corporate job now — I need to continue to build my company. There is so much opportunity now to create new defining companies.”

This is the founder we want to back, the founder that cannot wait to build companies.

Bottom Line

Things seem to have slowed a bit, but the good companies are still raising money (competitively) and we are not seeing many changes in the valuation.

As a founder, focus on building a company with strong unit economics and efficient growth. This is true always, but it will ring even truer now.