This trip is very mellow.  We get up when we get up; we have a little breakfast, do a cultural event or a shopping event, have lunch, return to do a few work-related things, and then have dinner. Giving me a lot of time to think about Gotham and ignore all the white noise. Quite civilized.

As always, a stop at Mokonuts for lunch. A plate of crudo hamachi is the first dish. The second was mind-blowing. Small pieces of pancetta, plenty of butter, a soft egg at the bottom of the bowl covered with tiny chanterelles, and baby asparagus found in this area of the world.  Mix that all up and take a bite—very much an OMG dish.

The evening activity was the French Open. We have gone for the last few years. So much fun and we saw a great match. One thing to point out, everything is in English, and everybody speaks English. Even the ball kids have jackets on with a saying on the back in English. Even five years ago, that would not be the case. Perhaps we are a more global world, or France is getting ready for the Olympics.

The next day I did a bit of shopping, looking for new designers and products.  A favorite is Broken Arm; I go every time I am in town.  We also go to the Japanese spot in Marche des Enfant Rouges. We have been coming here for 15 years and perhaps boring but I always get the same thing!

There is now a Dover Street Market in the Marais.  A super gritty building that they have played around with. Clothing on one side, art on the other. Commes Des Garcon is hands down one of the most forward-thinking brands ever. 

The weather is getting warmer, but the sun is still out until 1030, which makes for delightful evening strolls home.  

The post More on Paris appeared first on Gotham Gal.

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Scaling a tech startup doesn’t come easy, and when you’ve tried all the conventional SaaS advice, it might be tempting to give up. But sometimes, the road less traveled is the path to success. 

In an eye-opening workshop, WorkRamp CEO Ted Blosser shares how to overcome setbacks, trust your customers, and defy traditional wisdom to carve out a path to growth.

SaaStr Workshop Wednesdays are LIVE every Wednesday. Sign up for free.

The Long and Winding Road to $10M ARR

WorkRamp is an LMS (learning management system) company founded in 2015. It has now secured over $67M in funding and offers a robust platform for mid-market and SMB segments. But before the years of rapid scaling, it took the company a little while to hit its stride.

Blosser describes three long, painful years before hitting the first $1M ARR. WorkRamp was plagued with a series of hurdles during these early years, including:

• Rejections from investors.
• A mass exodus of engineers limited new deployments.
• Blosser’s sudden hospitalization before Y Combinator (he’s okay now!). 

All these events underlined how precarious the situation was at the moment. But the drive and passion remained, and leadership didn’t give up. Blosser comments, “The big thing I want to share with everyone is just stick with it if you feel like you have product-market fit. Sometimes it can take longer.”

The good news is things finally turned around. After the company hit $1M ARR, they began to see a healthy, upward trend. In 2019, WorkRamp had its first $1M year, then in 2021, its first $1M quarter, followed by the $1M month shortly after. The milestones began piling up, and WorkRamp’s momentum increased.

What Did WorkRamp Do Differently to Scale?

To finally break out of slow progress, WorkRamp had to change its strategy. And they mostly did this by ignoring four pieces of traditional startup advice. Blosser explains, “If you think about WorkRamp and traditional startup advice, we ignored that. And you know what we did was say, ‘You know what? Let’s focus on what the market is telling us; let’s focus on what customers are telling us.’”  

• “You Should Always Move More Upstream”
  
  The bigger the SaaS client, the better, right? Well, not all the time. WorkRamp shifted its focus to a different segment –– the mid-market and SMB side. “What we did during this time between $1M and $10M is we actually started working more downstream, so it’s counterintuitive. Because when we looked at our data, we saw that we had much more success sub 5,000 employees,” Blosser says. 

After the shift, the sales reps stopped chasing whales and working outbound ops with more than 5K employees. Leadership introduced a high-velocity playbook and refocused the company downstream. Twelve months later, WorkRamp went from 18 new logos per quarter to 87 new logos in a quarter. A few enterprise clients continued to come in through inbound, but the company carved out a winning market segment with the under 5K employee focus. 

Customer Impact: A much better PMF for SMB & Mid-Market customers. 

• “You Should Have an 80%+ Gross Margin in SaaS.”
  
  An 80%+ gross margin is a worthy goal, especially if a company has gone public. But if you’re earlier in the startup journey, it’s okay not to reach that goal immediately.

WorkRamp invested a lot in its customer success team, contributing to the gross margin. They went from having a superstar “does-it-all” success department to breaking it out into units with specific functions:

1. Implementation
2. Instructional Design
3. Client Outcomes

So, the cost for customer success tripled upfront, but the investment proved worth it down the line. In one year, WorkRamp improved gross retention by 11%. Margins dropped to a low ~70%, but gross and net retention made up for it –– the resulting NDR was over 143%. 

Customer Impact: Customers are much happier with their post-sales experience. 

• “Stay Focused, Don’t Add a Second Product Until $100M ARR.”
  
  The conventional wisdom seems to make sense: Don’t overextend yourself or bit off more than you can chew by adding a second product too early. But WorkRamp made the unusual decision to introduce their second product at $3M ARR. Blosser explains the reasoning this way, “We added our second product at about $3M ARR, and I’ll tell you why we did this: We’re in this category where you have internal learning, that’s training your employees, and you have external learning, that’s training your customers and partners. And our second product was training customers and partners…when we introduced the second product, it really changed the whole game. It felt like we were playing chess while everyone else was playing checkers.”

After focusing downstream, WorkRamp was still fighting toe-to-toe with a similar LMS competitor. Every deal was a significant struggle. But by combining both internal and external learning, the company was able to differentiate itself and nearly double its win rate in a year.

Customer Impact: WorkRamp customers saved money through tool consolidation.

• “Great Startups Create Their Own Categories.”
  
  It’s undoubtedly true that creating a new category can propel a company to success. But category creation demands time, resources, relationships, and funding that not every company has at its disposal.
  
  Blosser believes that category redefinition can be a wiser choice than category creation. For example, category redefinition delivers a much lower CAC and reduces risk. By offering multiple training and learning products in one, WorkRamp redefined the LMS category and reaped the rewards.
  
  Customer Impact: They were able to get budget approval much more easily for well-understood categories.

Key Takeaways

• You won’t necessarily have speedy and smooth sailing –– if your product-market fit is there, then you can succeed if you’re flexible and adjust your strategy.
• When in doubt, listen to what customers and the market is telling you rather than traditional advice.
• Category redefinition can be more realistic and successful than category creation.

Every Wednesday at 10 a.m. PT, SaaStr will hold live, interactive workshops on Zoom where experts in the community share their insights. Sign up HERE!

The post Scaling Past $10M ARR: Listening to the Market and Defying Tradition with WorkRamp CEO Ted Blosser (Video) appeared first on SaaStr.

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So Twilio is perhaps the top “hero” SaaS company that has taken the biggest hit from the crunch of 2023.  Twilio dominates many of its spaces and segments.  It’s the Stripe for Communications.  But that’s also a segment of the market when customers have cut back heavily.  As a result, growth has radically slowed for the first time ever, to just 15% at $4 Billion in ARR.

5 Interesting Learnings:

#1.  From 48% growth to 15% in just 12 months.  Twilio is the same great company it was in 2022 and 2021, but it’s also been the segment where buyers have cut back perhaps the most.  Almost half of that growth is from acquisitions, though, so the “organic” deceleration is from 35% to 15%.

#2.  The Big Hit is in NRR — Down From From 127% to 106% in 1 Year.  A Risk With all Consumption-Based Services in Tougher Times.  Snowflake is seeing something similar, albeit not quite to the same extent.  But both Twilio and Snowflake sell a lot based on consumption.  That’s easier and faster in some cases to cut back than seats paid on an annual basis.  And that’s a big reason revenue growth has slowed so dramatically.  For the first time ever, Twilio isn’t getting the 120%-130%+ NRR “boost”.

#3.  Getting More Efficient — Like Almost Everyone in SaaS and Cloud.  Twilio’s non-GAAP gross profit continues to grow and non-GAAP operating margins have crossed 10%.

#4.  A Third of Revenue from International.  While that percentage isn’t growing, it’s still impressive for a communications-based company.  Go Global!

#5.  Headcount Down 25% Since September 2022, But Revenue Still Up.  Never a fun exercise, but a reminder and example of just how much more efficient SaaS and Cloud companies are now vs. the Boom Times.

These days, challenge yourself to look at the market comps.  Leaders like Monday, Asana and Atlassian have seen growth rates slowly, but remain at impressive rates.  But leaders in communications like Twilio and RingCentral have seen much bigger challenges.

Twilio’s one of our hero companies and has gotten to $4 Billion (!) in ARR in near-record time.  But the headwinds of 2023 have been a bigger challenge than anticipated.  Especially in NRR.

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