The Revenue Odyssey: Lessons from the Trenches

Most founders obsess over building great products. But here's a secret: building a great product is just the beginning. The real challenge — and often, the defining factor between success and obscurity — is how you bring that product to market.

Venkat Rangan , co-founder and CTO of Clari, recently shared insights that made me rethink some fundamental assumptions about scaling SaaS companies. His journey from a mechanical engineer to a serial entrepreneur offers a masterclass in navigating the treacherous waters of go-to-market strategies.

The Market Size Mirage

One of the most counterintuitive lessons from Rangan's experience is the paramount importance of market size. It seems obvious, right? Bigger market, bigger opportunity. But here's the catch: many founders underestimate just how big the market needs to be.

Rangan's experience with Clearwell is illuminating. They built a great product, achieved profitability, and had happy customers. Sounds like a success story, doesn't it? But they hit a ceiling. The total addressable market (TAM) for their e-discovery solution was limited to about $1 billion. In the VC-fueled tech world, that's barely a rounding error.

The lesson? When you're plotting your startup's trajectory, don't just think big. Think enormous. Your TAM isn't just a number to put in pitch decks; it's the upper bound of your potential. If it's not measured in tens of billions, you might be setting yourself up for a premature plateau.

The Product-Market Fit Paradox

Here's another counterintuitive insight: finding product-market fit once isn't enough. As you scale, you need to rediscover it at each stage of growth.

Rangan's journey with Clari illustrates this perfectly. They started by selling to sales ops teams. Logical, right? These are the people who bring in tools for the sales organization. But they soon realized a crucial mistake: the sales ops people weren't the primary users or beneficiaries of their product. The real value was for the sales reps, managers, and executives.

This realization led to a pivot in their messaging and targeting. It's a reminder that product-market fit isn't a static achievement; it's a dynamic process that evolves as your company grows and your understanding of your customers deepens.

The Go-to-Market Spectrum

One of the most valuable insights from Rangan's talk is the nuanced understanding of go-to-market strategies. It's not a binary choice between product-led and sales-led growth. Instead, think of it as a spectrum with multiple models, each suited for different stages and types of products.

1. Product-Led Growth (PLG): This is the darling of the SaaS world right now. Dropbox's freemium model or Zoom's network effects are classic examples. But PLG isn't a silver bullet. It works when the product's value is immediately apparent and when individual users can adopt it without needing organizational buy-in.

2. Sales-Led: This is the traditional enterprise software model. It's high-touch, expensive, but often necessary for complex, high-value solutions. Rangan's experience shows that as you scale, you need to evolve from generalist salespeople to specialized teams targeting different market segments.

3. OEM Model: This is less discussed but can be powerful in certain contexts. Rangan's experience at Rhapsody Networks highlights both the potential and pitfalls of this approach. While it can provide rapid scale, it also risks commoditizing your product and eroding your margins.

The key is to choose the right model for your product and stage — and be prepared to evolve as you grow.

The Pricing Puzzle

Pricing is where art meets science in the SaaS world. Rangan's early experience selling network monitoring software is particularly instructive. As an engineer, he initially thought about pricing in terms of development costs. His business partner, however, understood a fundamental truth: price based on value delivered, not cost incurred.

This shift in thinking can be transformative. Instead of asking, "How much did it cost us to build this?" ask, "How much value does this create for the customer?" The delta between these two numbers is where your profit — and your growth potential — lies.

But it's not just about setting a high price. The real art is in structuring your pricing to drive the behavior you want. Freemium models, tiered pricing, consumption-based pricing — each has its place and its purpose. The goal is to align your pricing structure with your customers' value perception and your own growth strategy.

The Scaling Imperative

Perhaps the most sobering insight from Rangan's talk is the relentless nature of scaling. It's not just about hiring more people or expanding to new markets. It's about continuously reinventing your company.

This means making tough decisions. The team that got you to $10 million ARR might not be the team to get you to $100 million. The processes that worked for a 50-person company will break at 500. And the product that delighted your first customers might need a complete overhaul to satisfy the next wave.

Rangan's experience at Clari, where they've gone through multiple iterations of leadership teams, is a testament to this reality. It's a reminder that scaling isn't just about growth — it's about evolution.

The Revenue Revolution

Underlying all of these insights is a fundamental shift in how we think about revenue in B2B companies. Rangan talks about "running revenue" — the idea that revenue isn't just an outcome, but a process that needs to be actively managed and optimized.

This shift in thinking has profound implications. It means that everyone in the company, from product developers to customer support, plays a role in revenue generation. It means instrumenting every part of your go-to-market process, from lead generation to customer success, and optimizing based on data, not just intuition.

Most importantly, it means thinking about revenue not as a number to be achieved, but as a system to be perfected. In this light, your go-to-market strategy isn't just about selling what you've built — it's about building a machine that can repeatedly and predictably turn market opportunity into revenue.

The Road Ahead

The journey from startup to scale-up is fraught with challenges. But Rangan's experiences offer a roadmap for navigating this treacherous terrain. The key is to remain adaptable, to constantly question your assumptions, and to never stop evolving.

Remember, in the world of SaaS, your product is your entry ticket. But your go-to-market strategy? That's your path to dominance. Master it, and you might just find yourself not just participating in a market, but defining it.

Note: This is article #3 in a series based on my recent participation in the Amazon Web Services (AWS) and TiE Silicon Valley APJ-US SaaS Delegation. The series shares key insights for SaaS companies expanding from Asia-Pacific-Japan (APJ) to the US market