Going from $0 to $2M ARR with founder-led sales in 18 months
...trying something different with the newsletter today
Hello again.
As a reminder, I’m Chris Bakke.
It’s been a while, and I’m trying something new with today’s post. In the arena, trying things?
You signed up for funny tech memes, and I hope to still deliver on that promise from time-to-time. But, I’m also bored of writing almost-daily tech memes on X and then doing more of the same here. Time for a new plan.
So, let’s mix it up. The next few posts will be focused on go-to-market, sales, content marketing, growth hacks, and entrepreneurial stories.
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A while back, my cofounder Daniel O’Shea and I wrote this long-form piece about how we went from $0 to $2m ARR with founder-led sales in 18 months.
It went pretty viral on Hacker News, Twitter, LinkedIn, etc. but the post disappeared when our company got acquired because we took down our old blog.
Many people have emailed me one-off for the original post since we removed it, so I wanted to clean it up, expand on it, and re-share it.
This is part of the outbound playbook we’ve used twice now to grow from $0 to $2M ARR (the first time in 18 months, the second time in 12 months):
At Interviewed (acquired by Indeed in 2017)
At Laskie (acquired by X/Twitter in 2023)
Like many things - sales, marketing, pricing, and onboarding are all highly case-dependent. This isn't meant to be advice, or "go do this," but rather, "here's the playbook that worked well for us, with a specific product, at a specific moment in time."
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Questions? Feedback? Want me to help your company figure this stuff out?
Reply here or email me at chris@chrisbakke.com
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Okay, here it is:
Identifying your customer
The importance of audience focus
In our case, we knew we were building a recruiting product - to help people hire better people, faster. We could have sold it to virtually any company that was hiring, but it's often helpful to artificially constrain your target audience to help you focus.
Focus in on an industry
If you pick "insurance" as your first industry, insurance recruiters will occasionally talk to other insurance recruiters. But very few insurance recruiters and semiconductor recruiters are talking. You're trying to become well-known in one industry to begin.
We picked tech and finance largely because we already knew lots of people in tech and finance. If possible, start with industries where you have a head start.
Define which roles to target
Defining the target roles or job titles is really important. Many companies selling recruiting solutions make the mistake of only selling to "Recruiters" when they're prospecting on LinkedIn. Well, "Recruiters" are actually broken into Sourcers and Associate Sourcers, and Talent Acquisition Partners, and TA Leads, and Talent Partner, and all sorts of other titles.
We really tried to focus in here. Again, our problem space was broad, and we could have targeted anyone with a hiring budget, but only targeting recruiters and talent acquisition teams helped us focus on one audience.
... but leave room to experiment
You should also go broad with seniority in titles until you know your perfect customer: we didn't initially constrain the audience to "only VPs and above" or "only directors." You may find it much easier to sell into the manager level vs. the VP level. Or maybe the VP level tends to spend 10x more and only takes twice as long to close. Try all the things.
How to define the ideal customer
The process
Start by identifying your target market. It might be super broad. For example, Stripe's total addressable market is anything that uses online payments.
Then, narrow down to a specific type of company. This could be by size or vertical, or both.
Think about: where would we have an advantage? At Interviewed, we knew people in tech and finance, and knew how to speak their language, so we started there.
Another way to think about it: who feels this problem most acutely? In which industry/vertical/company size is this the biggest problem?
Then, think about who you can reach out to, in terms of position. Narrow to a specific type of person or a few specific types.
We like to think about both who the problem affects, and who the biggest stakeholders are. For a product like Zendesk, the problem (too many concurrent conversations with customers) is hardest for support agents, but the VP or Head of Support is the likely the primary decision maker.
The result
In the end, you should have a list of:
Companies that you want to target
Titles/roles that you want to target within those companies.
This might be a big list. You probably want to reach out to 1,000+ people over the next few months.
Questions to answer (or guess at)
Why are you reaching out to these people? What do you hope to learn? Be explicit about your assumptions.
Here's some examples of questions to start thinking about:
what their biggest problem is (hopefully, solved by your product!)
how big of a problem it is (best case, in $)
who the decision makers are (do they have a power to buy your product?)
These questions will help further clarify your list.
Your answers at this point are all theories. Theories will change. But we found it valuable to put some thought into it.
Example persona
Your ultimate goal is to come up with a hypothesis of the type of person who is experiencing the problem you want to solve.
You can put this into the following template:
"We want to talk people in [role/position] at [vertical] companies of [size], who are struggling with [problem] and want [solution]."
Here's an example from Interviewed:
"We want to talk to hiring managers and VPs at tech companies of over a hundred people who are struggling to find great candidates and want a hands-off way to vet them."
Note that this a hypothesis! At this point, we're not certain that these types of people are experiencing this problem, or that they want our solution. But we feel that they might, and we want to test that out.
Here's a fictional example for Stripe's early days:
"We want to talk to developers at small e-commerce sites who are struggling with integrating payments and want a low-effort way to implement them."
Specific, targeted, and problem-focused.
Finding leads
Finding leads is time-consuming and tedious. Understanding how to best structure your time during that process is often overlooked and under-appreciated. Some things that worked for us:
Build your lead list upfront and do prospecting in large batches - We would spend entire days only focused on lead generation. After we built up a healthy amount, we'd change focus to outreach.
Avoid doing outreach in parallel - You'll lose a lot of time context switching. Spend a day or two building a lead list. Spend a day doing outreach until you've exhausted that batch. Rinse and repeat.
Pick a tool, but don't obsess about it - You'll need some mechanism of capturing emails either from LinkedIn profiles or other services that provide company directories. You'll find a dozen tools that do the same thing. There's no silver bullet to leadgen.
Getting started
We used tools like Rapportive and Persist IQ when we were building our last company five years ago. More recently, we’ve used tools like Clearbit and Rocketreach. Tools come and go, but the general concepts remain.
Retrieve Emails from LinkedIn Profiles
Find a tool that gives you an email from a LinkedIn profile. This paired with LinkedIn search (or even better, Sales Navigator) will get you a long way.
Rocketreach, Uplead, Lusha are all possible choices and have browser extensions that allow you to lookup emails.
Search emails by company or domain
Having a tool that allows you to get known emails by a company or domain name is also very useful. Typically most tools that provide LinkedIn email lookup also have some form of this. One thing to note, you'll typically find less people in these tools than you will in LinkedIn and they are typically biased towards leadership roles.
Clearbit, Seamless AI, and RocketReach are some examples of tools we've used. I wouldn't make this your only prospecting method, but it's a good first step before moving onto LinkedIn. Sometimes you'll get lucky and will get enough useful leads out any initial search in one of these.
Get personal information from an email
Last but not least, having a tool (i.e. a Gmail/Inbox add-on) that will give you someone's full name, LinkedIn, and other personal info based off of an email is incredibly helpful in crafting personalized emails. Tailored emails win and having a tool like his is crucial.
Build a list of companies
If you don't already have a list in mind, all you need is one company to get started. Use that company to find related companies via LinkedIn or Crunchbase. Here's an example of picking Stripe as a starting point and beginning down the Linkedin rabbit hole:
Build your list of prospects
Now that you have a list of companies and a tool to capture emails from Linkedin or a company directory, you can start prospecting. Look up the company and search their employee directory for the role(s) you're targeting.
As mentioned in "Identifying your customer", if you're not finding good results, broaden your search. Look for functions that work with or are related to that role.
I recommend finding a minimum of 10 people per company. If your outreach hits the peers of a contact you get a meeting with, there's a likelihood they'll be in a meeting down the road.
Learn before you sell
It's not about sales...yet
Even if you are your target customer, and you feel that you both understand the problem perfectly and have the perfect solution... you're probably missing some information.
Sales is about trying to convince someone to buy your solution. While that can lead to learning (something we'll discuss in 'Giving demos'), it's more about their education than yours.
If you go straight to sales, you're going to miss valuable opportunities to learn more about your customers.
What you want to learn
There are three main things we try to learn from early calls:
the problem that your customers are facing (and how you might solve it)
how they're currently solving it (if they are)
how big of a problem it is
#1 will help you build the right solution. #2 will help you understand your competitors (even if your competitor is just a complicated spreadsheet) and decide on a feature set. #3 will help you decide on pricing.
For #1, the problem might be the amount of time it takes for a customer support representative to handle a ticket, in terms of tracking cross-channel communication. For #2, we might find out they're currently using spreadsheets to track how to communicate with each customer (but they're not happy with that!). For #3, we'd need to learn how much it costs the company, either in terms of having to hire additional representatives, or having lower customer satisfaction.
With a little imagination, we can see how these answers will help us position our solution once we start selling. "Tired of managing customer communication in cumbersome spreadsheets? Save an average of $300 a month on labor costs by using Our Awesome Product."
Soft ROI vs hard ROI
If your product saves people money, you can quantify the result as a number. But if your product saves people time, which they can then use to for more profitable activities, it's harder to put a number on it. This is hard ROI and soft ROI.
To learn the hard ROI of your product, you can ask "How much money would a solution to your problem save you?"
If that question is hard to answer, you can determine the soft ROI by asking, "What could you do if you didn't have to deal with this problem?"
Questions we ask
Take some time to brainstorm a list of questions, and build a customer development "deck", a consistent set of questions you ask people in your target market. The goal is to identify common patterns, and surprising answers. That's where the money is.
Here's a few examples to get you started:
what's their biggest problem?
how big of a problem is it?
can they quantify it? or, how much would they pay for it to go away?
how are they currently solving it?
have they looked for a better solution?
have they tried paying for a different solution?
if yes, how was it? if no, why not?
what 3 big things are they trying to fix or improve right now?
At the very least, you want to identify your top three most important questions, and ensure your team is asking them on every single call. At least one of those questions should be...
The question you don't want to ask (but should anyway)
We like asking the questions that make us nervous. In his book The Mom Test, Rob Fitzpatrick explains why:
"Every time you talk to someone, you should be asking at least one question which has the potential to destroy your currently imagined business."
Is there a legal hurdle that could make your solution unviable? Do your target customers not have the power to actually buy and implement your solution? Is a current solution doing the trick well enough that they don't actually want a real solution?
The answer to these questions could completely change your company's approach. At worst, they could kill it. That's why you need to ask those questions.
When to move to sales
The goal is to keep learning more about the problem and how it affects your customers until you stop hearing new information. Then, you can be confident in your solution. Then, you can start selling.
After 80-100 customer development calls over 2 months with people from all levels, all titles, and all-size companies within tech and finance, we started selling.
Cold Emails
To be great at B2B sales, you need to learn how to write cold emails. How cold? Colder than a polar bear, sleeping in the freezer. They said I couldn't sneak a Gucci Mane quote into this playbook, but here we are.
Using the previous sections, you now have a sizable list of leads, targeted to the right personas and industries, and are ready to start emailing.
There are four critical mistakes I see founders make when sending cold emails:
The emails are too long.
The emails aren't personalized.
The emails look like they were written by an enterprise marketing team.
The emails are trying to sell you something.
Let's dive into these problems, and talk about how to make them better:
Cold emails are too long.
It's a cold email. You don't need to include the company's founding story. Get to the point.
The emails aren't personalized.
When I'm selling something, I really try to personalize the message. It's so easy. You've already spent all this time and effort to get a list of the right buyers. Don't blow it by spamming people. You can learn a lot by glancing at a company's website for 60 seconds, and looking at your contact's Linkedin or Twitter or personal site for 30 seconds.
The emails look like they were written by an enterprise marketing team.
If you work at a large company, you get marketing emails from large companies all day long. Don't add a bunch of graphics and design to your email. It immediately feels like automated spam. Be friendly, but professional.
The emails are trying to sell you something.
The purpose of a cold email isn't to sell. It's to start a conversation that gets someone on a call so that you can learn more about them and see if your product or service will help them. I'm not trying to close a $1,000/mo deal on my first email, so I try to make things lighthearted, conversational, and politely ask for a meeting if there's interest in what you're building.
Remember to follow up once or twice. Some "sales experts" will tell you to follow up like 17 times to optimize for a response. I don't care what the statistically optimized path is here - don't be annoying.
It's a cold email and there should be zero expectation of a response. I send one email, wait a week or two, follow up 1-2 times, and then leave it alone.
There are also companies and teams that can help you outsource initial cold outreach - drop us a line and we can connect you with one.
Cold calls
If you're selling a B2B product or service into an industry where the buyer's phone number is easily findable (i.e. realtors, restaurants, HVAC companies, etc.), then I highly recommend cold calls as well.
Cold calls are becoming a lost-art, but that makes them highly effective. I'm an investor in a company that is making millions of ARR each year with a small team running this exact strategy of cold emails + cold calling property managers. The advice is nearly the same for calls: be nice, be brief, personalize the call, don't be too sales-y, and expect to get hung up on a lot.
Pricing
Your early pricing strategy will be more art than science. It took us a lot of iterating before we understood our different tiers of customers, how they perceived the value of our product, and how to present pricing.
Understand perceived value
I try to develop a nuanced understanding of how customers perceive the value of your product. The more you understand this, the more success you will have designing your pricing and positioning it with your customer.
Some of the ways customers will think about your pricing include:
Comparing to existing solutions
Comparing to other tools they perceive to offer similar value
The return on investment of either time or money
Budget constraints
Start by pricing to close
When you are trying to make your first few sales, the most important thing is to move fast. Pick an initial price, probably based on the most reasonable comp, and start selling.
Your pricing on day 1 won't be your pricing for long, so don't overthink it. Don't price too high out of the gate, but don't give it away for free. Optimize for getting early customers to use your product so you can start the feedback loop to improve it.
We closed our first 5 customers at $250-500/mo and quickly went up from there.
Start pushing prices up
When you've closed a few early customers to learn from, it's time to start ratcheting up prices.
You want to keep pushing until you start getting a lot of push back on price or other vague objections that could be rooted in concerns about price.
There is no perfect answer for when stop moving prices up, but you should be getting at least some customers saying no because of price. Or at least pushing back. This signal paired with your understanding of perceived value should help you find the right range.
It's also important to anchor high because it gives you room to negotiate a price that you will still be happy with. Lastly, it signals to the customer the quality of your product.
Understand your segments
After you've done enough calls, you might start to identify different types of customers with different priorities, perception of value, and budget. When these segments start to emerge you should be looking for ways to tier your pricing and product features to take advantage of it. If you don't, you will almost certainly be leaving money on the table.
I would recommend not doing this too early. Wait until you understand your segments enough to decide on the right mix of features and prices.
Giving demos
Here's the ideal demo outline we landed on:
5 minutes: Introduction, building rapport
10 minutes: Demo of the product
15 minutes: Answer their questions
Keep it short and focused. You don't need to show every feature, but do just enough to demonstrate the value. You have ten minutes to answer the question: "How does this product solve my problem?"
How to demo your product
Start with why
In the intro to the call, briefly summarize why the call is even happening in the first place: because they have a problem.
"We saw you're doing a lot of hiring, and you mentioned your recruiters are struggling to screen candidates in an efficient way, so we wanted to talk about how we can help you fix that problem."
Start with that.
You also want confirmation that your customer agrees with that problem. The perfect reaction to your intro is, "Yes, exactly."
Copy the best
I would always default to a demo on calls, but sometimes a short sales deck is helpful to set the context in a couple of minutes.
No need to re-invent the wheel here. There are many excellent "sales demo" presentations to go through and pull things that work for you and your product: https://blog.hubspot.com/sales/sales-presentation-guidelines
Show value, not features
Demoing usually isn't a race to try to show as many features as possible in 10 minutes.
The demo should be highly tailored to your audience and cover the right set of features to prove you can solve their problem.
Other than showing off the product, a good way to do this is via case studies. If you have success stories, include them in your deck. If you don't, hustle to get some. Great outcomes can move customers just as fast (if not faster) than great products.
Welcome interruptions
Let them interject with thoughts, comments, and questions. It's a conversation, not a rigid presentation.
Ask them for feedback as you go along, and make it clear that's what you're seeking.
The last thing you want is for people to say they "get it", when they actually don't. If they don't ask questions in the first 10 minutes, it's a good idea to prompt them for specific questions they have.
Personalize the demo
Make the demo about them. Add their logo to the product. Add one of their actual job titles into the product. This stuff takes 10 minutes and helps you win the personalization game.
Sell the outcome
Customers want their problem to go away. Give them a glimpse of what life will look like after they start using your solution.
"When a candidate applies for a job, just click this button to send them an assessment, and then view their results here. You can use this to filter candidates quickly and easily, and spend less time interviewing."
You're not selling a product; you're selling a vision of a solved problem.
The most compelling statements are something like, "With our product, you can save $300 a month" or "With our product, you can spend less time dealing with red tape, and more time closing the sale."
Continue the learning process
During a demo, clients may ask questions along the lines of "does your product do X?"
If your product doesn't do X, there are two ways to answer this:
"Yes, absolutely, that's actually on our roadmap!" (Narrator: "it's not.")
"Not today. How important is that to you?"
The first answer seems positive, but it ends the discussion. Also, buyers rarely care about your roadmap (unless you're literally shipping it this week).
The second answer lets you learn more about their desired solution, and helps you continue to prioritize how important certain features are to your future customers.
If the answer is "Yes, this is essential" and you haven't put a lot of work into that feature, it's a good chance to course correct.
The goal
Our objective was to convert 30% (or more) of these demos. Keep polishing your deck and presentation until you hit that target.
Sweet: you've prospected, you've demoed, and now it's time to get the customer over the line.
Always have a next step
Use small verbal commitments from the customer to keep the process going. This technique is useful throughout the entire process but is especially helpful between demo and close.
The best form of this is getting the next meeting scheduled and on the calendar with the right people. You can also ask for commitments to hold internal meetings, review proposals, talk to their lawyers, etc. Make sure the commitments include timing so you have a reason to follow up if the deadline passes.
Never leave the ball in the customer's court and always be clear about what you expect to happen next on both sides throughout the entire process.
Don't waste time with bad prospects
Time is your most valuable resource. If you are in the process with someone who isn't going to close you need to identify that and move on as fast as possible.
Specifically you should watch out for the following:
You are solving a problem that isn't important to them at this moment
No clear internal champion
No budget
If you spot these things, you should probably invest your time elsewhere. Leave things on great terms, and don't act disappointed. Thank them for their time and set a reminder to follow-up in 6 months.
Be direct and persistent (to a point)
For founders and anyone new to sales, sometimes it's hard to be direct and make a clear ask to close the deal. Don't be shy. If you've qualified the customer, this should be a mutually beneficial transaction. Treat it as such.
If you get a no or any non-committal response, don't just stop there. Dig in and ask questions until you have a deep understanding of where the disconnect is.
Be ready to address the most common objections around budget, the problem you are solving and your product. Having put some thought into how to handle these before a closing call will help you have crisper answers.
After a demo or attempt to close, follow-up weekly. Push for a yes or no answer instead of having the conversation just die out. Assume good intent from buyers, but these are very busy people so don't just follow up with a "hey, checking in" email. Try to add value by sending them relevant content, asking what additional questions they have or telling them about another customer that is having success with your product.
Move fast
Closing fast is incredibly important, especially if you are early stage. You need to move on to your next potential customer.
Some things you can do to speed up the process:
Get as many of the decision makers in a room as possible. Nothing is worse than 8 individual demos that play out over a few months.
Have the contract ready to go. It should be simple and easy for the customer to process.
When a customer needs more information to make a decision, try to get it to them same-day.
Make sure you have a lawyer set up to review your contracts. Try to nudge your lawyer to give you the shortest-form contract that gives you reasonable protections.
Conclusion
Thanks for reading. Sales is hard. There are many of these little bulleted sections that often read as a simple fix but play out as “banging your head against the wall for 12 months until you get the messaging right” in reality.
Part II of this will be “scaling from $5M ARR with founder-led content marketing” in a few weeks.
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Questions? Feedback? Need help?
Grab time on Intro (proud investor!), or email me at chris@chrisbakke.com
Until next time.