Times have gotten more challenging for many technology companies of all sizes. The easy-money era of low interest rates is over, and many investors are demanding more rigor from the companies they back. No more growth at all costs—software leaders must focus on smart growth, discipline and sustainable revenue in 2024 and beyond.
Helping small startups and larger, more-mature tech companies scale to reach their potential is always tricky. Fortunately, last year, we heard and shared a lot of great company-building advice from our colleagues and the brilliant professionals in our network.
Here are 12 great pieces of advice from the Battery team to consider as we enter 2024:
1. Early-stage, B2B companies should, in addition to other metrics, focus on logo velocity.
In our 2023 State of the OpenCloud report, we recommended that growth-stage software companies focus on logo velocity, rather than just boosting revenue:
“We know that as companies mature, they rely on expansion revenue to drive growth. However, logo velocity helps to ensure that there is a large enough customer base to fuel future growth, but also aligns sales to balance new ARR and expansion ARR from day one.”
The takeaway: Make sure your sales team is pushing to sign up new customers. Getting a foot in the door with multiple enterprises might be better than making yourself dependent on one or two big customers, even if they bring in significant revenue.
2. Above all, ensure that your product is best-in-class.
In his November 2023 op-ed, originally published in The Times, our London-based Partner Zak Ewen offered some specific advice on how U.K.-based technology companies can battle American competitors on British soil and thrive.
But one of Zak’s core tips for how U.K. companies can gain a competitive edge — to “work hard, and early, to refine and perfect their product” — applies to companies of all stages and geographies.
The takeaway: There is simply no replacement for high-quality product, which naturally attracts customers and sets you apart from the competition.
3. Startups should think carefully about the compensation culture they’re creating.
In his article “The Dangers of a High Compensation Culture” for The Information, Battery partner Marcus Ryu warned that benchmarking your compensation to more-established peers to compete with the best can be a losing game. Establishing a high-compensation culture can make it harder to achieve lasting enterprise value—and can stick you with a staff who are motivated mainly by money, and are not necessarily dedicated to the mission.
Marcus suggests, instead, that leaders: “foreground the three extraordinary things a startup has to offer: (1) equity value that can grow to many multiples of present value; (2) an opportunity for profound learning and rapid growth in the service of a world-changing mission; and (3) the immense professional reward of participating in the emergence of a new market leader.”
The takeaway: Thoughtfully consider compensation and how it motivates talent. Money matters, but other cultural factors may matter more in the long run.
4. Reassess your banking relationship(s) as often as you reassess other key partnerships.
In a webinar on treasury management after Silicon Valley Bank was placed into receivership and sold, Brian Kinion, CFO of MX*, advised startups to build redundant banking relationships with institutions of various sizes, maximize their sweep strategy between accounts and rethink banking partnerships regularly. Said Kinion: “Most business partnerships undergo a new RFP periodically to realign and ensure the relationship is still mutually beneficial.”
The takeaway: Evaluate your bank(s) annually. How high are the fees you’re paying? Are you getting the best rates? Could you gain more operating leverage? Is the bank technology keeping pace with your growth?
5. Great cybersecurity protects what’s most crucial.
In a webinar on cybersecurity readiness, Daniel Schwalbe, CISO of DomainTools*, said that a company’s cybersecurity strategy should focus particularly on what he calls its “crown jewels.” He defines these as any assets that, if compromised in a breach, could potentially shut your doors. Schwalbe’s advice: “Constantly assess gaps in your program, knowing your key points of exposure–especially your company’s ‘crown jewels.’”
The takeaway: When it comes to cybersecurity, know what matters most — and constantly reassess how well your key assets are protected.
6. Don’t just sell shovels.
Battery operating partner Bill Binch shared some advice a mentor once shared with him: “No one goes to Home Depot to buy a shovel. They go to Home Depot because they need a hole in the ground.” For startups, this means your sales pitch should focus on solving the customer’s problem, not your product’s specs. As Binch explains:
“Listen to your own team’s prospecting pitch. Is it talking about what your product does or what kind of outcome your product creates? If it’s product-specific or filled with jargon, then maybe it’s time to think more clearly about the holes your customers are trying to dig. Remember, your pitch should always answer three classic questions: Why buy? Why buy now? Why buy me?”
This advice echoes timely advice offered by Battery’s business development team Scott Goering and Evan Witte. In a November 2023 Substack post on the state of generative AI, they emphasized that enterprises are focused on AI’s potential to solve business problems, not the bells and whistles. As the BD team put it: “AI startups should lead with the business problem their tool solves or the business opportunity it can unlock, not hype up the tech itself.”
The takeaway: Always focus on the customer’s problem—not your tech.
7. Enterprise marketing should be laser-focused on helping sales win deals.
On our “Sound Bites” podcast, Freshworks CMO Stacey Epstein shared that she judges the quality of marketing materials by one measure: “What does sales need to win deals? That’s the ultimate question that I think every marketer should keep with them.” She further noted you can always tell who’s doing a great job on the marketing team because of the feedback you hear from sales.
The takeaway: All parts of an enterprise software company should be focused on driving revenue—not just sales.
8. Sales-team leaders also need skin in the game.
On another “Sound Bites” episode, Michelle Benfer, the former SVP of sales at HubSpot, described her company’s unusual quota structure. While most companies build in a margin of error, so that a team leader hits their quota if their reps hit 90% of theirs, and the company makes its numbers if reps are hitting 80% of their quotas, HubSpot flips that script. When their sales reps hit 100% of their quotas, they’re hitting 90% of the company’s target for the quarter.
Benfer continued: “It is for me, the leader, to have skin in the game to get my people to overperform. As the leadership team it’s really on us to have our reps win first, and the company wins second.”
The takeaway: Set your sales reps up for success—and give your team leaders an incentive to help their teams overperform.
9. Describe your product to journalists like a human first, tech nerd second.
If you’re looking to pitch your product to the media, tech writer Joe Williams had some great advice on the Just Checking In podcast, the podcast about technology communications I co-host with Keyana Corliss, now the VP of global corporate communications at Tanium.
First, Joe noted that you shouldn’t dumb down your pitch in fear of being too technical. He added:
“The way to get me to cover your company is not to pitch me your CEO saying the same thing that every other CEO is saying. Reach out to me and introduce me to the product. Give me a demo. Introduce me to your engineers, to the people working on it. That more open approach is so much more advantageous in this industry.”
He also cautioned against writing the whole story for the journalist. The nuts and bolts of your tech can help them find the true ‘aha’ value of your product.
The takeaway: Set yourself apart with reporters by being human and giving them more access—not more of the same.
10. Keep media pitches short and ultra-relevant.
On another Just Checking In episode, Laura Batchelor, a CNBC senior field producer, noted that the first step to a successful pitch is to know your audience. Read the publication or watch the show you’re pitching, and make sure you’re targeting your pitch appropriately. She also said:
“Keep it super short. TV is so quick and snappy. I don’t need to have a full-fledged one page pitch with all the info I would ever need on it. I need to know what’s the headline, why does it matter to the broader industry. If it’s not a public company, can it be pegged to other public companies that can speak to the broader sector?”
The takeaway: Reporters and producers are busier than ever. Get to the point fast —and explain why your story is relevant to their audience.
11. Stay strategic about the decision to enter new global markets.
On our “Sound Bites” podcast, longtime international sales and business development executive Abe Smith reminded listeners to think carefully before expanding abroad. He emphasized having a strong and well-articulated ‘why’ before committing to a market expansion. He noted:
“What you really have to contemplate is, what’s the stress it’s going to put on the company? Is the company ready for it? And is the reward worth it for the vital few that you’re forsaking elsewhere?”
For more full-featured advice on entering global markets, check out Bill Binch’s guide Hop the Pond: A guide for expanding your EMEA operations to the U.S. Too much great advice in there to summarize!
The takeaway: You won’t make money in a new market right away, so make sure in advance that you’re expanding there for the right reasons.
12. In tech, sometimes different beats better.
Max Schireson, Battery operating partner and former CEO of MongoDB, penned a thought-provoking Substack post to counsel that real value in the technology industry comes from building different — not better, faster and cheaper.
Per Max, “Doing something differently is very different from doing it better. When you do something differently, your product can be worse for some people and better for others. Often opinions of “better” or “worse” are subjective, and users will be divided about which choice they prefer.”
The takeaway: Pursuing novel innovation, while vastly more challenging, can bear vastly more fruit.
As we enter the new year, we remain committed to navigating the challenges and opportunities ahead, alongside our valued portfolio companies and management teams, to continue to empower technological innovation, foster growth and champion success.
Here’s to a bright and growth-oriented 2024!
This material is provided for informational purposes, and it is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by Battery Ventures or any other Battery entity. *Denotes a Battery portfolio company. For a full list of all investments and exits, please click here.
This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and is for educational purposes. The anecdotal examples throughout are intended for an audience of entrepreneurs in their attempt to build their businesses and not recommendations or endorsements of any particular business.
Content obtained from third-party sources, although believed to be reliable, has not been independently verified as to its accuracy or completeness and cannot be guaranteed. Battery Ventures has no obligation to update, modify or amend the content of this post nor notify its readers in the event that any information, opinion, projection, forecast or estimate included, changes or subsequently becomes inaccurate.
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