Enterprise Startup Founder Survival Guide with David Politis, Founder of BetterCloud

Nov 28, 2023
Enterprise Startup Founder Survival Guide with David Politis, Founder of BetterCloud
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We first met David Politis, Founder and former CEO of BetterCloud, over 10 years ago at our NY Enterprise Meetup. Fast forward and he took the very same stage at our recent meetup to talk through his top, hard-learned lessons during his journey building BetterCloud into a unicorn and leading SaaSOps platform. Along the way, David has achieved $100s of millions in ARR, hired thousands of people, and raised from top tier VCs, while also facing a number of macro downturns, company pivots, and existential moments of impending company failure.

This is a true testament to our Work-Bench community — where you get the opportunity to meet people who become long-time supporters, new hires, customers and even friends along this crazy startup journey. 

Check out David’s top lessons learned or what we like to call “founder therapy” below and the full recording here.

“You’re naive to the journey you’re about to go on. There’s a list of relatively easy mistakes to avoid that can save you years of work and millions of dollars. I’m here today to help you shorten that learning curve.”

- David

Sales from 0 to 5 customers: Get direct selling down first and fast

Common Mistake: Many founders aim to hire a sales team right out of the gate. Yet, scaling your sales team doesn’t always correlate with scaling sales success. In the early days, the founder knows the product, market, and pitch better than anyone, and has the most passion and credibility in sales. Finding another individual who matches that level of expertise is a challenging task. 

Lesson Learned: First and foremost, prioritize mastering the founder-led sales process. Only after you have that nailed down in a repeatable, successful motion – including messaging, pricing, ICP, etc. – can you hire additions to the sales team. At BetterCloud, David and the CTO were the primary sellers until they secured their first dozen customers and about $1M ARR. Once this milestone was achieved, they were confident enough to hire and onboard an Account Executive to support sales momentum. As their ARR grew to $2M, they continued to scale out the sales team.

Bonus Learning: Meticulously document the entire sales process and create a library of resources in order to enable a smoother transfer of knowledge as you onboard additional sales leaders.

Sales from 5 to 50 customers: Turn customers into raving fans and customer references 

Common Mistake: During the initial stages of startup life, the focus often points to winning customers quickly and then moving onto the next task. However, this approach fails to create genuine and impactful relationships that can be leveraged later down the road as customer references to help influence potential customers during their decision-making process.

Lesson Learned: When BetterCloud reached its first 50 customers, David felt this was a monumental milestone in need of celebration and documentation. The team proactively reached out to all 50 customers to personally thank them for using the platform. They went above and beyond by sending tee shirts that said “beta customer,” handwritten thank you notes, and recorded thank you video clips. Additionally, they dedicated time to meet with each individually for monthly hour-long sessions to solicit feedback. Although time consuming, this personalized approach resulted in a significant number of these initial customers remaining loyal to the platform even today. 

Bonus Learning: Avoid presenting yourself as larger or more established than your current startup status. Being transparent about your intent to scale can work in your favor as customers appreciate the chance to be part of this journey, as it allows them to have a direct influence on shaping product features and share in the successes achieved. 

Product: Survey customers

Common Mistake: In their scaling journey, many founders diverge away from a close understanding of the customers’ job – from their day-to-day work to their frustrations and motivations, and more.  

Lesson Learned: Establishing trust with customers involves creating an open feedback loop. David did this by sending out an annual survey to their entire customer base. He asked questions like: What’s happening in the industry? What do you want to see in our product? What problems do you have in your day-to-day workflow? With the last and most important question being: If you were the CEO of BetterCloud, what would you do? Customers know best when it comes to their own needs and David had a clear vision to build towards that.  

Bonus Learning: The team wrote every customer email as though it came from David’s email to add credibility and elicit more responses. Then, David read through them all to help fuel his product roadmap and his understanding of customers. 

Product: Build one thing, be great at it, then expand

Common Mistake: Companies often underestimate how much it takes to not only to build a product, but to also maintain and scale it. In this sense, David warns not to “have eyes bigger than your stomach when it comes to the product vision.” What ends up happening is that you expand the product too quickly and you’re left trying to push multiple products/features forward while still supporting and evolving the first core products. 

Lesson Learned: Find that “fast moving water, and then go with it until you can’t go any further.” What David means by this is to really challenge yourself and your team to set out to be the best at something before you move onto the next thing. Once your customer base uses the product and gets value from it, then you can expand.

Bonus Learning: There is a power in setting a single goal. This will help assign limited resources, but also rally your team behind a common challenge. For BetterCloud, David set the goal “to become the #1 application on the google apps marketplace.” The goal was not only clear and measurable, but most importantly steered Product, Marketing, Engineering, and every other team towards achieving that milestone.

Hiring: Hire for the right stage

Common Mistake: When David first set out to hire executives, he prioritized people who came from big name companies like Google, Amazon, Microsoft, and Salesforce. But that resulted in five bad hires over the years. Those leaders were used to working in different environments with unlimited budgets, large teams, and brand cachet, and playbooks for impact next year vs. tomorrow. As a result, their skill sets and experiences were not aligned with what an early-stage startup needed and resulted in overspending and cultural challenges. 

Lesson Learned: Hire talent that is ready for the startup grind. To do this effectively, David had every executive involved in the interview process go through interview training to learn how to talk to a candidate. The most important tweak the team made was reframing questions to candidates as, “When I do your reference checks (which I will), how would [Person X] answer this question?” And this can be related to their biggest weaknesses, involvement in campaigns, etc. That small reframing to the question helped get to the honest truth much faster.

Bonus Learning: Read more on hiring from our previous talks with Ryan Libster (Head of Sales at Persona) and from our own Work-Bench Playbook Library

Culture: Be transparent about what is hard

Common Mistake: As a founder, it's hard to speak openly about the challenges the company may be facing. You don't want to admit fault and you’re afraid it signifies you’re not doing a good job. For David, 2016 was “the worst year of [his] life.” The team was heads down building a new product with the goal of reaching 100 new customers. During that time, almost every quota-carrying person quit because they didn’t believe in the vision of the product, which was taking longer than expected to deliver. 

Lesson Learned: Start to share company challenges with the team – it can be extremely powerful. Teams will want to be part of the solution, and you may find solutions from people and places you never even thought of. In 2017, the team eventually launched the product and hit their 100 customer goal. This was a real turning point to the business, moving the product ceiling from $10M ARR to potentially $100s of millions in ARR.  

Bonus Learning: Make sure to communicate the good, the bad, and the ugly. It's helpful to give a disclaimer so that people are prepared to receive this information. Also you’re speaking to an audience of different seniority, experience, areas of expertise, etc. Know your audience and ensure that your delivery and content is aimed at the right level. 

Fundraising: Don’t optimize for minimal dilution 

Common Mistake: Many founders set out on their fundraising journey only caring about the hard numbers baked into their term sheets - funding, valuation, and dilution. This is a dangerous game to play. 

Lesson Learned: While all important, what is most critical is finding the right partner for your business – someone who understands your specific scaling needs and will be there to help you get there. David ultimately brought on a partner at a lower valuation, but higher impact value and wouldn’t change his decision if could turn back time.

Bonus Learning: Read Jon’s TechCrunch post about why choosing the right Seed investor can make a massive difference.

While we couldn’t get to all 50 of the founder survival tactics that David plans to publish in an upcoming book, he regularly posts insights, stories, and tactics on LinkedIn - so follow David on LinkedIn in the meantime! 

‍‍If you’re an early-stage enterprise founder or operator — connect with us directly to chat about anything GTM or check out our events page to stay in the loop on all things happening in the Work-Bench community.