The Insider's Guide to Becoming a Pre-nicorn

The Insider's Guide to Becoming a Pre-nicorn

The CEO’s and founders of three pre-nicorns – Ben Uretsky of DigitalOcean, Eoghan McCabe of Intercom, and Tiago Paiva of Talkdesk – talk about the road to success. From the importance of sales and marketing, to distributed teams, and inbound versus outbound sales teams.

What’s a pre-nicorn?

A pre-nicorn is a nascent unicorn – not quite at a $1 billion valuation (unicorn status) but well on its way there. Apologies for the jargon, but a pre-nicorn is a company that’s found product-market fit, is scaling like nobody’s business, and has nailed its sales organization. In short, it’s the company that every SaaStr attendee wants to build.

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In a nutshell:

  • Define your personas and target buyers early.
  • It’s fine to go up against a huge, dominant player, as long as you have a clear edge.
  • Turn your customers into advocates.

Ben Uretsky, DigitalOcean

Ben Uretsky, founder of DigitalOcean, realized that after starting a successful managed hosting business, ServerStack, he had the chance to do founding over again – and do it even better. He decided to focus on user experience and the needs of software developers. The 800-pound gorilla in cloud infrastructure is AWS. DigitalOcean can’t hire as many engineers as Amazon. Instead, it can compete on UX and design – not superficially, but by making their product legitimately easier to use.
“UI isn’t just look and feel. It’s having an intuitive control panel, an API, and solid documentation.”
He’s turned his users into advocates: over half of customers come in through word of mouth. He, like other panelists, realized that developers are a fiercely loyal but hard to please community. By building for individual developers, he got people to sign up for individual accounts; by building a great product, he got those developers to love DigitalOcean so much that they asked their managers to use it company-wide.

Q: When did you decide you need a sales team?

A: You need a sales team to get to $1 billion in revenue – even though developers were the primary avenue of customer growth, you can’t reach unicorn status with individual accounts.

Q: What’s the biggest challenge of heading a unicorn?

A: Growing as a leader was the most challenging thing - figuring out how to act as a CEO of a 200-person company. He admits that it's still a work in progress.

Q: How did you grow so quickly?

A: The secret sauce for DigitalOcean was pretty contrarian – rather than focusing on sales initially, they created a product that sells itself.

“If our position is simplicity, who will that ring true for?”
They attacked the individual developer niche – the persona that would get the greatest use out of having something that was straightforward and easier to use. The smaller the market segment you attack, he says, the greater the probability of success.

Q: What has having lots of money done to the team?

A: Overall, DigitalOcean’s culture has stayed strong. The sales team has opened up new avenues and opportunities. Until this point, they’d gotten away with not having a VP of engineering or CTO, and the same for sales and marketing. Now, they’ll be hiring executives to round out the team.

Eoghan McCabe, co-founder and CEO of Intercom

McCabe never set about trying to make unique discrete solutions for discrete personas. Instead, he created a holistic solution for marketing, support, sales and more. He’d raised $6 million initially, then $25 million, then $35.

Q: What made Intercom so hot?

A: Selling to SaaS startups. If you sell to plumbers, he says, no one will care. Also, Intercom was a better solution compared to the previous incumbents.

Q: What have you learned?

A: He’s seeing a lot of inbound leads, which means he can invest more money in building his product. In the old days, cold calls and outbound sales were key. Now, he can be far more lightweight by focusing on an inbound-only team. (Contrast this with John Barrows' panelists, who emphasized building outbound sales into your organization early.)

Q: What percentage of your revenue goes through humans?

A: Right now, it’s around 50-50. He’s hired smart, high-EQ people who will listen to prospects’ problems. His reps are there to help people, not shove a product down their throats. At $100 million in ARR, though, he thinks that more than 50% will have to go through humans. He’ll likely make entry-level reps available for low-level questions.

"We will never force people to talk to sales. But we will always make ourselves available."

Tiago Paiva of Talkdesk

Pavia realized early on that they’d need to focus on middle-tier customers. They had an SMB team and a support team, and the focus was on mid-market. Once they cornered that segment, Pavia figured, they’d take on enterprise. And it worked.

Q: What’s changed in the last year? What are your biggest challenges?

A: The company grew from 15 employees to 200 in the past year. It started in Portugal, and now it’s distributed evenly between Portugal and the US.

Q: What was the magic that made people trust you?

A: Integrations drove everything. (Check out the panel on building a partner ecosystem – it’s really relevant to maintaining trust while offering a platform.)

Q: What was non-obvious about your market?

A: They were the first call center with everything on the web, plus integrations.

Q: How do you deal with distributed teams?

Pavia: TalkDesk’s product, sales and marketing teams are in the US, while its engineering team is in Portugal. They rely on a strong management team, and try to fly back and forth as much as possible. He admits that this isn’t the perfect solution, but it’s definitely an improvement. (See the panel on scaling globally for the pains and payoffs of going global).

McCabe: The company grew up with two offices, so distribution’s built into its DNA. They never split individual teams. He admits that it’s a pain in the ass, but the talent pool it opens up is invaluable.

Q: If you’re raising at a $500 million pre-money valuation, how do you know you can build a $5 billion company?

McCabe: Software is bigger than before; and $300 is the new $100. If you can get to $300 million in ARR, you’re going to build a very valuable business.

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