Accelerators and Guardrails in Early Stage B2B SaaS Companies
I recently had a flash of insight when a CEO of a SaaS company asked me, “How do operating partners add value to a company?” I answered, “We provide insights on accelerators and guardrails.” The CEO appreciated this metaphorical answer, and upon reflection, I realized it was a good one that needed unpacking.
According to Oxford Languages, “accelerators” are things that cause something to happen or develop more quickly, while “guardrails” are rails that prevent people from falling off or being hit by something. In the context of early stage B2B SaaS companies, accelerators drive rapid growth and market capture, yielding significant positive ROI. Guardrails, on the other hand, help avoid premature or inappropriate investments, thereby preserving capital.
My accelerator/guardrail framework evolves based on my experiences with numerous B2B SaaS companies, industry patterns, key SaaS benchmark metrics, and best practices. It focuses on six highly interdependent areas: business model, sales/marketing, people/process, product, architecture, and operations. Many of these accelerators and guardrails are common sense, yet common sense is not always common practice. Examples of guardrails and accelerators follow.?
Business Model?
Pricing is a big part of a business model. For early stage B2B SaaS companies, the delivery of 10x value to price ratio is critical. Guardrail: Is the company focused on the 10x value delivery mandate, even in cases when value may be difficult to quantify? A corollary guardrail: For companies with customer ACVs (annual contract value) in excess of $100,000, are there at least 20+ users consistently in the product? In my experience, violating either of these guardrails is a prescription for churn problems.?
Sales and Marketing?
Most B2B SaaS companies whose categories are entering the bowling alley stage of market segment specific adoption, still try to boil the ocean and do not target specific markets. Guardrail: Has the company selected one or two priority target markets and related use cases to focus on from a go to market (“GTM”) and whole product perspective? ?The goal is to rapidly win dominant market share in select target markets that offer rich adjacency to additional target markets.?
A great accelerator in sales and marketing relates to an experimental mindset. Accelerator: Has the company adopted an experimental GTM mindset to explore various GTM motions (social platforms, influencer marketing, paid search, channel partners, etc.) to focus on optimizing GTM in terms of time and cost per MQL, SQL, and Close??
People and Process
People are a major building block for every rapidly growing company. Accelerator: Does the company have SaaS native and proven talent in key positions who have played similar roles in SaaS companies at similar stages and growth aspirations and beyond? I have seen many instances where executive talent has come from much larger companies to smaller companies and is not able to make appropriate decisions in a smaller company setting or lacks the hands-on knowledge to manage a more nimble team and budget.?
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Product?
The product area is target rich for accelerators and guardrails. Guardrail: Has the company introduced its next product or expanded to a new target market before achieving initial product fit (PMF)? By PMF, I mean some function of customer adoption, usage, value realization, expansion, and advocacy of a key cohort of target market customers. The only exception to this guardrail is if the company has decided to de-emphasize or abandon the current product and/or market.?
Time and cost to first value for both the customer and the company offer another area for acceleration. Accelerator: Does the company have a customer validated understanding of first value moments and ensuring that the product delivers on these moments in a timeframe and cost that are acceptable to both the customer and the company??
Architecture?
The architecture of the product is an increasingly important area as a company scales. A company early in its life tends to have a sales-driven product culture that is short-sighted and can rapidly accumulate technical debt due to development expediency. In turn, such technical debt often manifests itself as a hindrance to future growth. Guardrail: Does the company have an ongoing plan to identify and retire technical debt and are they retiring debt at an acceptance rate to avoid product agility and scale issues??
Operations?
Based on the 5PMM Product Management Model, operations include all of the activities required to ensure the post-sale experience of the customer, business model, and customer value realization goals are met. The customer success management discipline is among the most critical operations activities in a SaaS company as it drives customer value realization, growth, and scale. Accelerator: As the company begins to scale with at least 5 CSMs, is it leveraging user telemetry/behavioral data and defined CSM processes automated via a CSM platform to gain operational efficiencies and drive up gross margin??
Hopefully, I have given you a feel for some practical guardrails and accelerators for early stage B2S SaaS companies. Executives, board members, and advisors to such companies should be mindful of such guardrails and accelerators as they advise these companies.?
Can you suggest other guardrails and accelerators??
Chief Product / Technology Officer ?Product Management ?R&D ?Multi-Functional Leadership ?M&A ?Partnerships ?IPO
2 个月great metaphor and even better breakdown to key succes factors. Very well summarized
CEO @ salestalent.com | We Recruit Top Sales & Sales Leadership Talent for SaaS, Tech, MedTech, B2B, PE & VC
2 个月Brian Nejmeh, Excellent breakdown of accelerators and guardrails across different functional areas. The guardrail about introducing new products or target markets before achieving initial PMF is spot on—it's a trap I've seen many startups fall into.?
Financial Advisor at Creative Financial Group
3 个月This is great insight, Brian. Thank you for sharing! Look forward to your next article.
Taxcellerate - Tax Technology Experts
3 个月So much wisdom packed into a short read…