How Owner.com Grew from $3M to $20M ARR with Unreasonable SMB Go-to-Market Efficiency (Interview with CRO Kyle Norton)

Event Context and Introduction

Nathan Latka

00:00Quick context. This was recorded March twenty eighth and twenty ninth. So a couple weeks ago at my live event, saasopen.com. We had a thousand software CEOs there. If you missed it, we hope to see at the next one, September fifth and sixth in New York City. Saasopen.com. But for now, let's jump into the recording.

Kyle Norton Introduces Owner.com and His Background

Kyle Norton

00:22>> First off, I'm Kyle Norton. I'm the chief revenue officer at a vertical SaaS company called owner.com. Series b, about 20,000,000 ARR. Sales and sales leadership for a long time, post sales for most of the last five or six years.

00:39>> And previous to this, I was at Shopify where I ran a $250,000,000 go to market unit there. And so what we're gonna talk about today is building unreasonable efficiency in SMB go to market, but it's a lot of the lessons learned are are widely applicable.

Talk Overview: Efficiency, Scaling, and Operational Excellence

Kyle Norton

00:57>> Let me go back to slide.

01:00>> Oh, I'm clicking the wrong thing here. Okay. So over the next twenty minutes, we're gonna talk about building efficiency. We're gonna stay focused on three main topics. One is the importance of staying focused and how to say no to lots of stuff. We're going to talk about, as we're growing, how to stay efficient as we hit the gas while scaling headcount, ScaleSmart. And then we're going to talk about building operational excellence when you got a million

01:29>> things to do as an early stage SaaS leader, but operating with some rigor and what are the sort of Pareto principles there to get the most bang for our buck. I'm mostly speaking to companies right now that are that have product market fit, that have some repeatability in their in their motion. Your deals don't have to be massively repeatable, but they need to rhyme. You can't be winning friends of the founder deals and and think that

Owner.com Growth Story: $3M to $20M ARR

Kyle Norton

01:53>> we're gonna slam the gas on on head count and spend. So that's really the the audience here. Couple million bucks, some repeatability, and a lot of these lessons should hold. Okay. So a little bit about the owner growth story. I've been with the business for just about two years. We started at three. We're just passing 20 right now. That gives me a little bit of credibility to talk about this topic, but more of my credibility is

02:19>> because I messed it up. My first go around as a head of sales, and so I'm gonna talk about these two experiences. One is trying to really nail efficiency because I've seen it go wrong and some of the lessons I've now seen juxtaposing early, overly aggressive scale with what we're doing right today. So it's a little bit of the growth chart, but let's look at some of the journey. So I joined June 2022, and massive inefficiency

Fixing Early Churn and Rebuilding the Sales Team

Kyle Norton

02:47>> in the business, mostly driven by early churn. We were closing tons of deals. The sales number looked pretty good, but, you know, rampant misalignment of customer fit, customer quality, the handoff. And so there was upwards of like a 30% churn. We're SMB, 30% churn in the first ninety days post close. So that was job number one, was fixing early churn. I also had to let go. I inherited four reps. I fired half of them, sort of

Building the Pilot Team and Go-to-Market Fit

Kyle Norton

03:15>> a hard reset, moved the manager to be a rep eventually. So it was a it was a rebuild of the foundations. And so that was what 2023 was all about, was getting to this pilot team. This pilot team of six and then eventually 10 AEs, a group of BDRs and making sure that this group of individuals could kick out not only a growth number, but a growth number at an acquisition cost, an LTV CAC ratio, a

03:41>> burn multiple that we have felt comfortable with. And now we're scaling on top of that. So at first, it's find product market fit, find go to market fit, and then this

Key Efficiency Metrics: Burn Multiple and LTV CAC

Kyle Norton

03:53>> third phase of finding go to market fit that really pays off before you start hitting the gas and putting in head count. That's sort of the stage that we're in right now, but still managing rep efficiency by making sure that we're taking full advantage of rep productivity on a per person basis. So last year, we grew 2.5x burn multiple under one, 4.5:one LTV CAC. So that's a view of like what's sort of possible with this approach.

ICP Focus and Turning Away 40% of Deals

Kyle Norton

04:26>> And that's SMB. So usually more challenging to get those types of efficiency numbers. So that's the outcome that we're sort of all hoping for. All right. So phase one, we're going to talk about focus, we're going talk about data, then we're going talk about OpEx. The first piece here is the concept of focusing on a really narrow ICP and some of the benefits there. So we go back to 2022 when I joined just leaking deals like

04:53>> crazy. Sales team celebrating, hitting the gong. Yeah. And then the onboarding team going, like, what the hell, man? Like, these deals suck. They're all churning. They don't wanna use our product. What's going on? So this was, like, the first hard reset. Not only is it capital inefficient, it's just chaos in your business. It's just chaos to have that type of misalignment between two teams. And so that was job number one.

05:18>> And it was mostly on the sales team. So we cleaned up deal quality, number one. My first My first or my biggest takeaway from my first head of sales job was really pausing to make sure that we've got things figured out before we slam the gas, and so that's I was trying to do here. Don't start scaling until we can win really serviceable deals. And so we started saying no to just like a ton of customers.

05:48>> We basically turned away 40% of closed ones that we would have closed thirty days before I got there. That was super fun because two months in a row was worse than the month previous. In my first board meeting, I was basically presenting a declining growth number with the promise of, no, no, no, don't worry, like I'm figuring it out. The foundations are getting better. So you have to make the hard decisions, and as a revenue leader,

06:13>> I think it's on us to do the things that might not look great but are better for the business. And so that was job number one. So we focused on a really particular set of customers, then we found the data for it, and I'll talk more specifically about how we did it. So this is a chart of churn by customer cohort. So this is like our new scoring algorithm called eGMV, estimated GMV, and you can see

eGMV Scoring and Customer Quality Analysis

Kyle Norton

06:43>> there's just a complete this is a completely different business in green than it is in red. We probably 40, maybe even 50% of our deals were in here before I started, and now we're basically, like, 80% in here. We we have a little bit of that happening. But the first step was really smart analysis. So we looked. I sat down with our biz ops team. We did a thorough analysis of what made a good deal. What

07:08>> were the qualities of a customer that had low churn, there's some usage based pricing, so high GMV on our platform, which meant they were highly profitable, and we worked back from there. So we found we built this scoring mechanism called eGMV, and then the job was to figure out what digital footprint exists to match what we know makes a good customer with prospects in the world. And and we're gonna talk about the data the data work

07:36>> in a second. And so I made three different changes to our targeting and we just kept raising the floor. EGMV floor of 1,500, then 2,000, then 2,500, we've continually made it more and more stringent what the sales team is going to work on and close. And every time we do it, the model gets more efficient. And interestingly enough, we sacrifice almost nothing in terms of growth because your reps are now shifting their time and energy onto

08:03>> a different cohort of customers, which are significantly more profitable for the business. So step number one is figure out what makes a great customer and you can work with your data teams to figure all that out. The second piece, and this is equally as important, I've had a bunch of conversations on this topic, is you have to nail your prospect data. If you take one thing away from this talk, this is the slide. Before you hit

Prospect Data Enrichment and the Snowflake Model

Kyle Norton

08:27>> the gas to scale your sales teams, scale spend, whether it's performance marketing or outbound, whatever it might be, you have to figure out how you can identify high fit customers in the ecosystem and get them into your sales funnel. Harder inbound because performance marketing, you're casting a very wide net, but we've done a bunch of things. We've taken entire audiences out of Snowflake, put them into our ad platforms. If you're targeting and de queuing is really

08:59>> on point, if your reps are really careful about de queuing poorly fit leads, that feedback goes back to the ad platforms and they'll get smarter. Not 100%, but it will help. But on the outbound side, which everybody's trying to figure out, everybody's trying to figure out how to make outbound be efficient, this is where you have full control. And where we just drew a really hard line, it's always a higher threshold for outbound in terms of

09:25>> deal quality than for inbound, and we found this data in the world. And so the very quick version of this is we bought a restaurant marketing database. We scraped the so our market's, like, 300,000 mom and pop restaurants. We scraped 50,000 of the highest probability fits into our Snowflake instance and then ran a series of scrapers and enrichers on that entire database to pull in whatever information we could find online. So we would scrape their website,

09:53>> pull in data, their Google profile, their Facebook page, everything that had a digital footprint. We ran web scrapers and then we built a machine learning model internally to give us probabilistic score of that account. Once we had that account, then you need to nail your contact quality. Now I know how to get to all of the good accounts, I know what accounts we want to start with, the second piece is you need to equip your BDR

10:20>> teams with high quality data and if you look at the average BDR team, they're probably working between 4060% of their leads that are irrelevant. Wrong contact data, wrong company, not the right not quite the right profile, they're not and and so you might as well send your team home two to three days of the week, that's how inefficient it was. This is what my analysis three companies ago told me when I looked at the BDR team,

10:45>> and so it's a lesson I've had printed in my mind. And so we went from having a 40% contact quality, because we sell SMB, contact data is pretty horrible, to an 80% contact quality with this whole system enrichment system, this AI model, and then we API ed into People Data Labs to fuzzy match company, person, state, or city, state, and pull their mobile phone numbers. In The US, I'm Canadian, in The US, this data is everywhere.

BDR Contact Rate Improvement: 3% to 16%

Kyle Norton

11:14>> And so you can get mobile phone numbers. So now we went from 40% contact accuracy to 80% and every single lead that my sales reps touch has been mobile phone enriched. So the results there are sort of mind blowing. The best identifier here is call to decision maker contact rate. When I first started piling the outbound motion, 100 calls got us three conversations with the decision maker. Then we got from three to 12%, from 12 to

11:46>> 16%, so now that same 100 calls that got me three decision maker conversations and so three days of calling might get you a handful of meetings. Now, every day a rep talks to BDR talks to 16 people, they book two or three meetings a day, the economics of BDR went from unsustainable, can't scale it, you're basically losing money, to every single month, every BDR on my team kicks out over $60,000 in closed one ACV. And it

12:14>> only works because the data's good. And the great thing is there's a thousand data providers out there that are all basically doing what we had to build in house through web scraping enrichment and if you're not in SMB, it's even easier. But I would encourage everybody to do a very thorough analysis, what's the quality of data that your BDR team or your sales team is touching, get a fine tooth comb on it and then just start

12:37>> killing leads and just get them out of your system and don't let your BDRs touch it, don't let them do lead research, one of the things here is don't let your BDRs do lead research, give them the leads and make sure and if they say they need to do anything with them, it means your model is broken.

Scaling Headcount: Less Is More

Kyle Norton

12:54>> All right, that's data. We're going go a little faster here. So now let's fast forward to q one twenty twenty three. We're starting to scale the machine. And so this is when things start breaking a lot. And so you have this pilot team. It's working. Now we need to add headcount reps, we need a different type of repeatability. So there's three lessons I'm going share here. One less is more, so we're going to talk about single

13:18>> threaded ownership and the importance of good infrastructure. And so

13:25>> I'm going go really quick here. The lesson here is so in my first startup, we had one rep crushing it. We're like, great, we know how to sell now. We hired a bunch of reps. We ended up firing 25%, 30% of them because we didn't have repeatability. We just had one really good unicorn rep. We were all wearing our nice rose colored glasses. So

13:46>> so two things. Don't scale until you have, like, real evidence and ask yourself the hard question. Do you have repeatability? And then just do way less than you think you need to do. Less segments, less reps, less markets, less like different weird use cases, just do way less of it and get super, super targeted on a very, very narrow ICP, a narrow talk track and a narrow go to market motion, everything will get better. You'll get

14:12>> so much better at that so much faster because that organizational bloat is just so taxing. And if you want one rule of thumb from Sam Blonde Sam, I think you've also talked about this, the calendar test, if you want to know if you need more reps, less is more. Less reps is better than more reps. Just go look at their calendars. Unless they've got like four customer meetings, five customer meetings on their calendar, every single day

14:34>> you don't need more reps. That's not your bottleneck. It's something else.

Single-Threaded Ownership of Sales and Onboarding

Kyle Norton

14:39>> The second thing that I advocate quite strongly now is single threaded ownership. So I mentioned the onboarding the onboarding situation was a dumpster fire because my reps were closing bad the reps I inherited were closing bad deals. I tried to fix that and made a lot of progress, and then ultimately, we combined we combined the onboarding team with the sales team, and things got multiple months better in the course of weeks, like the same progress that

15:09>> it took, the same amount of time it took me to move the needle a little bit. All of sudden, everything was my problem. My sales managers were in the same channels as the launch managers. Everybody brought me their problems. I would strongly advocate that sales leaders should own onboarding.

15:25>> Not everybody can do it, and we have to help the sales leader scale up to have the business intelligence to do it. I've And got a plug for Pavilion at the end because I think that that's a big piece of it. But combining teams was was a massive game changer for us. And then once you've got this going, then you just gotta get busy on infrastructure. The only the only takeaway here is just invest in it

15:47>> earlier than you think you need to. And I get that you look at hiring ahead of rev ops, ahead of enablement, those are expensive those are expensive head count to layer over, like, four or five reps. You're like, jeez. That's, like, $400,000 in salary that I'm that I'm putting on top of these things. It's worth their weight in gold if you can make your reps more efficient on a per person basis, and then it's gonna give

16:11>> you the foundation you need. If you wanna find a little like, a middle path, then hire somebody on contract. Hire somebody on contract that has a full time job that you might want to hire later and ask them to do five hours a week with you. This is what I did with both my guys when we were really managing burns super tightly, so that's, like, a pretty good hack. All right, finally, we're starting to scale and

MBR Cadence, Performance Management, and Documentation

Kyle Norton

16:33>> this is like, you know, call it six, nine months ago and we need to operate more efficiently. So there's three really easy things we can do to, and this is like minimum effective dosage, Pareto principle. If you can do these three things, they're pretty easy and it's gonna get you a lot of the way there in terms of driving efficiency. MBR's aggressive performance management and my love of documentation. So on the MBR side, I will send

16:59>> you my template. If you're not a direct competitor of mine, I'll send you my template, I'll send you my prep doc, this is like a screenshot of some of it, so there's a structure that gets filled in a couple days before we meet, It's an asynchronous process, so all of this information is populated, charts, sales force reports, all this stuff, and then we have specific questions that I expect certain people to fill in. So they're just

17:24>> tagged on who it is, the AE manager, the BDR manager, the head of rev ops. This all gets populated. We do an async review, comments discussion happens in Notion, and then we only pull out into the actual MBR topics of conversation that we need to make decisions on. Most MBRs, it's the rev ops guy just reading slides, in my opinion, that's a waste of time. Do the reading and review ahead of time and only use your

17:52>> sixty minutes together in person to discuss the things that are unresolved, that really need a conversation. Just get in the habit of doing an MBR. Even if it sucks, even if it's like, you know, sort of thrown together, the diligence of doing it will move your business forward. Second thing, as a part of MBR, always performance manage and stack rank. And so, I move people out of the business that are like pretty close to quota. Like,

18:19>> they could be okay performers. I'll still exit them from the business if they're consistently at the bottom of the stack rank just because the bar is excellence, the cost of underperformance or the cost of mediocre performance has never been higher. And there's a lot of grumbling and griping you hear from founders and sales leaders, oh, people don't work hard enough. Oh, people like, you know, they're just like not excellent. Well, then get rid of them. Just

18:42>> Just move them on. It's your decision. And it's scary because you're you look at your growth plan, you're like, but I need eight head count. I can't move these two people out. Then I have six and I need eight. You're better off without them. It's not the reps are almost never the bottleneck. It's almost always pipeline, in my opinion, most of the time. So just, like, get into the habit of of doing this pretty aggressively. And

19:06>> finally, on the operational excellence stuff, just document like crazy and try to make it make it a part of your your every day. My favorite hack here is in the very early days where I had no support, I would sit down and do a training with a rep and I would just record it on Google Meets. I would tell them, oh, this is how you cold call. This is the framework. And I would walk them through

19:28>> it. Even if something isn't documented, I would take the transcript, pull only my part of the transcript out, pop that in ChatGPT, and just say, give me a training guide based on this call transcript. So I do a thirty minute training call, pop it in ChatGPT, now I have this pretty good framework, I would gussy it up with fifteen, twenty minutes of work, and then I'd have a pretty decent document. Is it as good as what

19:50>> I have time to do now? No. But you can just crank out documentation which keeps a level of consistency across your org that I think is really is really, really important. And I this I I estimate that I can produce content at, like, a two to four x higher rate using this GPT model. Or I like actually, I'll be on the Peloton, and I'll just dictate voice notes of, like, stuff I wanna give to the team,

20:18>> and then I'll pop that in. It's like ChatGPT is the best coauthor you could ever have. And documentation is cool, and just do more of it. I have a whole podcast episode with Ross Rich from Accord where I go on and on about it, so you can learn more there. Okay. Last thing. I don't know why that's

P and L Fluency for Revenue Leaders

Kyle Norton

20:40>> alright. Well, I have one slide that's missing. So my last this is like the but wait, there's more slide, and this is my plug for Pavilion. So I really think that one of the challenges that that scaling companies have is the revenue leader doesn't have enough p and l fluency. And our profession, as revenue leaders, we need to do better and founders need to push, push your revenue leaders hard to think beyond their close one number.

21:08>> It's irrelevant. If the deal quality sucks and it's like nightmares down funnel and they don't understand the impact of what they're doing in the rest of the business, including their economics, their LTV CAC, the burn multiple of business, like things won't get better fast enough. Your head of sales or head of revenue needs to develop P and L fluency. I have both my sales managers doing the revenue architecture school through Pavilion, Jocko's course. I was saying

21:35>> to Sam, like, overnight, my sales manager now knows how SAS works. He didn't come from SAS and it's, like, super impressive. So whatever it is, I'm a pavilion, fan myself. Whatever it is, like, get them into something where they can develop p and l fluency. There's a bunch of books, get them to read impossible to inevitable or sales acceleration formula, but, like, get the p and l fluency and things will just, like, get better. Alright. Thank

22:03>> you.

Nathan Latka

22:07Hey, folks. If we haven't met yet, my name is Nathan Latka. I launched and sold my first software company back in 2015 and went on to write a book about it, which you guys made a Wall Street Journal bestseller purchasing over 30,000 copies. Thank you so much for that. After the book, I launched this show and went on to create founderpath.com. I raised a large fund to do non dilutive deals with B2B software founders. So far,

22:34we've invested in over 400 software founders totaling $150,000,000. Here in 2024, we're doing three to four new deals per week. So if you're looking for capital and don't wanna give up equity, go sign up at founderpath.com for free to get your offer.