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Cockroach Mode

downturns saas sales startups May 10, 2022

I have been selling software-as-a-service products in some capacity since 1998, and have found a way to prosper through the course of every major downturn, both as an individual contributor and as a leader of sales organisations.

Here are 6 steps I take as a sales leader to ensure the company survives and ultimately prospers coming out of a downturn like this one:

- Put growth to one side, focus on survival

- Do everything to survive, but stay relevant

- Adjust targets, quotas and expectations for "cockroach mode."

- Often in startup land the winners are the ones who survive the longest.



2) Work overtime to keep your very best people

- Most startups will face staff attrition, it's the easiest way to cut burn, and survive.

- Hopefully, you've hired scrappy sales reps, if you haven't they should be the first to go alongside underperformers.

- Don't lose sleep over people that proactively choose to leave that you'd hoped to stay, this is a wartime situation, there's no room for shrinking violets.



3) Offer protection to those that you retain

- In a downturn, it gets MUCH harder to predict revenue

- This means it's harder for sales reps to predict earnings

- To keep the best be prepared to offer some security such as temporary non-recoverable draws.

- Company valuations will drop, consider repricing share options and re-upping your best people (ie: this is a good time to give your best people a larger slice of the pie, they’re going to earn it!).



4) Raise the hiring bar

- Avoid publicly announcing a total hiring freeze

Consider using language like Dara Khosrowshahi (Uber CEO) used on Sunday in an email to employees:

“We will treat hiring as a privilege and be deliberate about when and where we add headcount.”

-  If your unit economics allow, this is your opportunity to up-level your team and snag some new team members that may have been previously out of reach.

- Hiring is somewhat controversial amidst layoffs, so this requires deep troughs of empathy, but can be done effectively. It’s about timing and communication.



5) Over-communicate

- Confidence is everything in sales

- The water-cooler chat will be off-the-charts if you fail to communicate on a high frequency.

- Run All Hands, team meetings and 1:1s at least weekly, and be ultra-transparent. Have a goal of making the water-cooler chat redundant.

- Be honest about the road ahead, and leave people in no doubt that this is the time to go the extra mile and show their true grit.

- If ever there was a time to hustle this is it, be clear about that.



6) The whole C-suite must increase their time in front of customers

- Your goal should be to stave off churn in your key accounts, just turning up to customer calls can sometimes be enough. So do it!

- I'm always in the field as CRO, but much more so in times like this.

- As CRO I am nervous when I don't have my finger on the pulse of the market

- In times of turmoil things are moving so fast that there is no substitute for being in the field yourself to build POV on sentiment.



Wrapping up: Growth is difficult but not impossible

One bit of tactical advice I’d give as a follow-on to #6 is to raise the level of discussion with your clients to their C-suite where possible. Getting strategic eyes on your value exchange can directly impact your average sales price (ASP)/average contract value(ACV), which alone could be your fuel for growth in a downturn like this.
So much of what you need to do in major downturns is focused on survival, however, don’t lose sight of growth opportunities.


Sometimes the nature of the downturn presents a unique opportunity for you to grow.

In my last startup, Wonderschool Inc., at the height of the pandemic we pivoted from B2C marketplace to GovTech enterprise SaaS and went from $400k in ARR to >$2m with a >$10m pipe, and from burning significant capital to profitability all inside 12 months - despite cutting 70% of headcount!

So it is possible to grow, but you need to look hard for those opportunities and have the courage to commit to them!

For those startups that are fortunate enough to be well-capitalised going into this downturn, a Warren Buffet quote comes to mind:

”be fearful when others are greedy, and greedy when others are fearful.”

Maybe, just maybe this is your time?

Good luck out there folks! 👊🏼