Chris Hall, founder and CEO of Bynder, an Insight portfolio company reflects on what he has learned as Bynder has scaled. Bynder is a high-growth digital asset management platform that enables brands to maintain the integrity of their digital content in the cloud, and their brand messaging.
One of the toughest things about leading a fast-growing company is being conscious of when you need to charge ahead, and when you need to stop, think and reflect. Assessing what you’re doing wrong; what you’re doing right; what you’re actually good at; and maybe most importantly: what you want to be doing (which is often inspired by the answers to the above). The most challenging part is truly understanding and acknowledging what you really just don’t—or can’t yet—know. One of the truest and maybe most valuable things I’ve been told was “you don’t know what good looks like."
Reaching any early milestone in a fast-growing SaaS company often means having to go with your gut. Maybe it even requires some level of naivety: allowing yourself to learn lessons the hard way, and ultimately figuring out how to own up to and fix mistakes. It’s part of the start-up mantra, and it’s not everyone’s cup of tea. Continuous growth means continuous change, and continuous decision-making. The worst thing you can do is fail to acknowledge and follow up on what went wrong, effectively compounding your initial mistake. Two wrongs don’t make a right.
Transitioning from start-up to scale-up needs a pivot in this approach. It demands a completely different mentality: at scale, it’s much more costly to keep breaking things just to try and rearrange them in a better way. When you’re starting out, change is the norm and driving force. When you grow, execution and consistency, driven by data, become the key factors for success.
This changes the role of leadership in a very big way, and it’s probably why so very few companies break through the $10-20 million revenue mark. It’s human nature to be unwilling to accept that you may not have the right skillset anymore. I’ve seen it happen so many times, and it’s such a shame, as people don’t realize it’s actually a huge accomplishment—there’s no shame in admitting that you’ve grown the company outside of the scope of your own capabilities. Really, your job is to grow until the time comes when you must pass the baton.
Before it’s too late, it’s important to cultivate an awareness of your own strengths and limitations. I’ve been fortunate enough to bring on Insight Venture Partners at a relatively early stage. Being on this turbo-charged trajectory is an incredible learning experience. It allowed me to realize—in time—the importance of understanding the rules and workings of companies at scale, in order to be able to challenge them. I’m still very much driving what I feel strongly about, and where I see opportunity. That’s my unique skillset, and it’s what I need to continue doing.
I’ve been working together with a lot of my investors, whose forecasting abilities are borderline clairvoyant. Their experience just starts playing a bigger and bigger role at scale. Yet, you still need to be continuously challenging and innovating, otherwise you might get short-term gains, but mid/long-term slow down. Consider Apple; Tim Cook is arguably the best CEO from a financial perspective, but now they seem like they’re hitting a wall. When was the last time you actually got really excited about a new Apple product? The Apple Watch? Today’s Apple is just about filling niches with different screen sizes. No complaints from shareholders…yet. Apple needs a bold new category; a “wow I want one!” product.
Even the very best ideas, with insane virality, can’t succeed based just on that. At scale, you need to be playing—and winning—a much bigger financial game; understanding how to leverage debt; having an aggressive M&A strategy to multiply organic growth and value. After all, size does matter. In SaaS, size means you’re unstoppable until you allow yourself to get squashed because you don’t have product/market fit.
Understanding product/market fit is the widely misunderstood ‘holy grail’ for the SaaS industry. It requires a thorough grasp of all metrics to determine strategic product decisions. Ultimately, it’s your product that’s making the money. I didn’t even fully understand this concept until I met Shelley, my now co-CEO.
When we hashed out our product strategy during several high-octane whiteboard sessions, I finally realized: at scale, to reach product/market fit, you have to rely on metric-based decisions. It’s about understanding what R&D should prioritize and why (for example: do you fast-track an integration that wins new deals, or focus on consolidating platforms through M&A? Do you invest in more efficient onboarding, or focus on fixing performance issues to reduce support requests and churn?).
M&A adds another dimension to these already difficult and complex decisions which are not always black or white. As a growth and change-driven CEO, I realized (in time) just how out of my depth I was. In layman's terms, reaching product/market fit means you don’t have to change or adapt your product to satisfy your total addressable market (TAM); all you need to do is put the pedal to the metal and increase sales efficiency. This allows you to then make much clearer metric-driven decisions about expanding your TAM with innovate initiatives. It requires a better process that allows you to justify continued innovation with healthy growth data. It’s the only way to defend long-term investments in R&D and marketing to your board.
Yet, even the best process on paper is nothing without the right people. For that reason, I decided to ask Shelley Perry to be my co-CEO (and, luckily, she accepted!) With Shelley’s product-driven SaaS knowledge and nuanced understanding of product/market fit, and my arguably crazy vision for what Bynder can become, it’s the perfect partnership for continued growth, conquering new categories, and going public.
Finally, here are some signs that you may need a better understanding of product/market fit, and have hit a plateau:
- Increased technical debt. In the early days, it’s easy to commit to additional features to get those big deals in. Yet, those initial short-term gains can put serious pressure on retention and R&D and lose sight of what’s important. The ‘solution’ here is: sell what you have, even if it means saying no to client requests for features that are simply untenable in the long-run.
- Retention problems. With an overworked R&D team, work is already taking longer to get out the door. Customer Success has to work overtime to keep customers happy, creating frustration and putting all teams under more pressure.
- Setting unrealistic targets. Sales is incentivized to go for the biggest bottom line, not taking into consideration the feasibility of delivering on these deals (and the risk of churn). Really, it should be less about adding new logos, and more about prioritizing lifetime customer value or LCV. A good starting point is understanding your current sales sweet spot, and where any future opportunities (taking into account your roadmap and M&A strategy) lie.
- An unclear roadmap. You don’t know what the roadmap looks like anymore. There’s so much stuff going on, you can’t give an honest answer for what new features are coming out and when. R&D is spread thin and can’t decide what to focus on. They’re being pulled in every direction; everything is high-priority (have a look at your JIRA tickets: how many are urgent?)
- Decreased sales efficiency. Your sales team is growing, but at the expense of more hands-on training. You’re now seeing less reps hitting targets, also due in part to a lack of perfected processes. Customer acquisition costs are going up, and leads are getting more expensive, too. The first 100 are easy and cheap; the next 100 are more expensive, and of lower quality. So you spend exponentially more to supplement organic leads, just to keep filling the pipeline. Ultimately, selling SaaS ISN’T just a matter of extrapolating. It’s like aerodynamics in a car...0-100 mph is a lot quicker than 100-200 mph.
- Discontinuing features. You’ll likely have created features in the early days that aren’t in high demand. You still have to invest in R&D and support hours to keep these customers happy, but it’s relatively costly. Perhaps it’s time to consider discontinuing certain features if you feel like you’ve given them a fair shot to get off the ground.
Understanding when you’re hitting a plateau is a critical first step, and, crucially, the right VC can be just what you need to break through it. You could be one financial quarter off, but consider yourself warned: VCs will recognize the symptoms. It’s not a bad thing; it’s an expected part of growth. Just roll with it and get to work on fixing it rather than denying it.
Bringing the right investor on board isn’t about valuation or size—it’s just a starting point and stepping stone to get you through the next stages in one piece and as quickly as possible. In our case, Insight Venture Partners has proven to be the perfect partner, guiding us through these uncharted waters and supporting me personally through coaching and mentoring. So much so that Shelley is now formally committed as our co-CEO.
Truly understanding product/market fit is the secret sauce. It’s the only way to maintain the up-and-up, and prevent the crash and burn of your rocketship startup.