Office Hours: I'm a GP at Greylock focusing on enterprise investments. I'm Sarah Guo.
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Office Hours: I'm a GP at Greylock focusing on enterprise investments. I'm Sarah Guo.Featured
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Hi everyone! Iโm Sarah Guo, general partner at Greylock. I invest (venture and growth stage) in the SaaS, infrastructure and security spaces. I help founders build great ideas into market-leading companies. I have a special affinity for product-led adoption models.I am currently on the board at Clubhouse, Utmost, Sqreen, Cleo, Obsidian, Coda, Awake Security and others still in stealth. I was previously on the boards at Demisto, Skyhigh Networks, and Avi Networks.Prior to Greylock, I worked at Goldman Sachs, and have four degrees from the University of Pennsylvania. Ask me anything about fundraising, VC, early stage marketing and sales, working with boards, team building, product strategy, and more!
ElphaStaff·Aug 16, 2020ElphaStaff·Aug 16, 2020Thanks so much for joining us @guo!Elphas โ please ask @guo your questions before Friday, August 21st. @guo may not have time to answer every questions, so emoji upvote your favorites ๐ฅ๐๐พโ
Hi Sarah,I'd like to know what sort of SaaS pricing models & strategies you've seen work best. In particular, strategies for value-based pricing as it relates to adoption and retention. Thanks so much!
Hi Brittany -SaaS pricing is a really complex subject, a big lever for companies, and worth a book! Yet most SaaS companies spend a ton of time on product, positioning, demand gen, sales, and very little on pricing. Figuring out pricing is terrifying! Startups are worried about hurting conversion, or finding out customers are not willing to pay. I'm glad you asked. Here are some quick questions I always think about:1. What is the quantified value I'm delivering to my customer? What is their willingness to pay? (Google "VanWestendorpโs Price Sensitivity Meter")2. Am I hitting specific personas and does my packaging target those personas? Do I understand the relative value those customers assign to different capabilities?3. Does my pricing make sense to my customer? Can they predict what they'll pay? What alternatives will they compare to? Does more value = higher price?4. Does my pricing support strong unit economics (both COGS - support, infra, APIs, etc. and S&M)?5. Will customers game it? Does it encourage bad behavior? 6. Does the pricing encourage good behavior? Does it encourage a unique adoption path? I'm personally a big fan of free trials, smaller insertion points, and land-and-expand models, but they won't make sense for every business. Most startups just copy their competitors, unwilling to charge significantly more -- but I've been lucky enough to be a part of companies such as AppDynamics where in some cases, we were able to charge 5X+ our (very credible!) competitors' prices -- because the product was differentiated, and we were able to tell an authentic (quantified) story about broader value to the business. Build the best product and have pricing courage!The most common types of value metrics are:- seat based (w/buckets of features targeted to specific buyer personas)- transaction/volume based (API calls, videos, messages, docs, tickets, GMV, etc.)- outcomes (what is the customer trying to achieve?)Most companies go with seat-based pricing, but not every product actually scales value significantly with seats!In terms of how these models of pricing "affect adoption and retention" -- my view is that the more pricing is aligned with customer value, the better adoption/retention should be. In practice, changing pricing can drive some set of customers away -- because your product is not delivering significant value to them!Finally - startups are a game of rapid experimentation, and most startups with product-market fit have not increased their prices so much that they've lost customers/reduced conversion significantly. But if you're trying to maximize value capture (as some portion of the value you create) then in theory you should charge as much as your customers are willing to bear that they are still happy, retained and advocating for you -- or you're leaving revenue on the table.
This is so helpful, comprehensive and yet concise! Thank you so much for sharing your insight.
Hi Sarah, Thank you so much for your time today. I was very eager to understand what it takes to be on a board of a tech (SaaS) startup and what are things I should be aware of as a board member. Thanks!
Hi Shamma! This is a big topic. ๐งTL;DR, I'd think about what your goals are as a board member. Mine are broadly to be the best business partner to my companies, and help move the needle on their success, without managing the business (that's what the management team is for)!What's the point of board meetings, specifically?- cadence and bar-setting- energy and support for the CEO/team- input on strategy and issue areas- seeing around corners, identifying blind spots- governance and operating disciplineWithin each of those buckets, I think about value -- what can I be world class at? What does the CEO likely not know? How can I weaponize my knowledge, Greylock's tribal knowledge, market context, and network for this company? I'd encourage anyone becoming a board member to think about what they want to contribute to the company, and begin by carving a niche of expertise or network -- rather than learning broadly about "being a board member." Focus on outcomes, not process.Most of the value a board member brings (IMO) manifests outside the board meeting -- recruiting people the company doesn't *quite* deserve yet, advocating for the company to customers, investors and partners, providing outside perspectives on hires, working sessions on tricky issues/new ground for entrepreneurs, or phone calls direct to the entrepreneurs.If you're not yet on/invited to be on a board, then I'd create a thesis for yourself as to *why* a company is going to want you on the board -- we usually recruit functional expertise (e.g. "GTM in a SaaS co from $5M to 50M," "audit committee chair that has done an IPO," "extraordinary engineering leader for scaling teams,"), domain expertise ("AI leader" or "health benefits expert"), and founders/CEOs.Finally -- a mistake I've seen from first-time board members (investors and operators) is to feel the need to weigh in on everything. Nope, no need.
Thank you so much! Appreciate it! Great advice!
What are the elements of the best pitches youโve ever heard? Especially for early stage and/or female founders.
I've responded to this elsewhere (see: https://www.quora.com/What-are-the-factors-to-take-into-account-before-investing-in-a-startup/answer/Sarah-Guohttps://greylock.com/from-seed-to-series-a/https://news.greylock.com/what-do-i-look-for-in-a-pitch-866355bddb3But I'll add one thing: figure out how to explain the core of your idea/company in 90 seconds, and start with that. Businesses are incredibly complicated -- but being able to concisely communicate your essential value and larger vision is an undervalued asset. It's very compelling when founders can do this!
What resources would you recommend to folks from non-finance backgrounds who want to get into angel investing / seed investing?
Angel/tech investing is still investing! I'd start with some fundamentals -- e.g. "The Intelligent Investor," "A Random Walk Down Wall Street" and "One Up on Wall Street." I'd then look to build some understanding of what makes *tech* companies in particular worth a lot or a little -- one place to start here is by reading the equity research on your favorite public technology companies.From there, it's not well-codified knowledge, and mostly tribal.I would likely then begin by looking for your tribe -- are there angel investors in your ecosystem you admire?Do they blog or speak? How can you learn from others who are more experienced? Angel investors work in groups/networks, and joining a community is the best "resource."
Hello Sarah, Thank you for taking the time. I am about to start a small pilot customer. We are a b2b technology solution businesses use to meet consumer privacy regulations for data sharing. I wanted to know what are the meaningful data points / information for investors want to know about a pilot? Thanks!
Hi Aimee! Congrats on the pilot.1. What problem is the customer trying to solve?2. How does the customer define success?3. How did you find the customer?4. How long did it take the customer to engage?5. What alternatives did the customer consider?6. What do they think of the pricing?7. What was involved in deployment?8. How do they use the product?9. What's their impression of the product quality and team?10. Can I picture other customers like this one?
Hi Sarah! What are a few signals that make you really excited about an entrepreneur/ company?
hi, @guo - great to hear from you!I'm interested in becoming an advisor to a startup, with a focus on helping with product strategy (i'm a sr product manager with startup exp). How do you go about becoming an official advisor to a startup? I've started helping a founder casually, and really enjoying it. How would you recommend that I propose it to her?
Hi Rachel,That's great! I'd start by asking her what kind of ongoing help she'd want from you, what kind of advisors she has around the copmany and what expertise gaps she feels there are, and based on that, if you see the potential for a long-term relationship you can support, say so! Then I'd come up with some parameters on how you'd be engaged (e.g. meeting 1x/2 weeks for the next 2 years, taking phone calls, interviewing candidates, working sessions with the team 1x/month etc.) and suggest an official advisory position with some equity compensation.
Hi Sarah! Many SaaS, infrastructure, and security investors seem to shy away from healthcare investments. Since you do not - how do you evaluate healthcare investments in relation to infrastructure/SaaS/security investments? Do you evaluate them with the same criteria? Are there key differences? And on a related note, do you have any tips for people looking to join health startups that come from a more 'traditional' tech background (such as infrastructure/SaaS/security)? Are there points of successful company building that apply to both traditional tech and health tech? Are there special considerations to be had when joining a health tech company? Thanks!
Hi Rebecca!Our investments in health technology, such as hicleo.com, lyrahealth.com, grandrounds.com, solvhealth.com and notablehealth.com -- are not "pure healthcare" investments, in that they are at their hearts platforms that in some way use technology to improve cost, experience, outcomes and access to healthcare services (and address related problems, such as childcare!). We fundamentally look at all startups as businesses from first principles, and then within healthcare we study the business model nuances (e.g. "employer-sponsored benefits") and customers (more complicated than in tech generally -- often some mix of payers, providers, consumers, employers). Pricing is often much more complicated than in pure software companies. Another key difference is many of the most effective models within health tech are "blended" models. They're not purely software solutions. Delivery of the member/patient experience requires a combination of a network of providers/clinicians and technology -- and thus the gross margin profile is different than for SaaS/infra/security companies.Our health tech companies absolutely employ a combination of people from "traditional" tech backgrounds and healthcare domain experts.
Does Greylock invest in pre-revenue company in a seed round? and if so, is it with only entrepreneurs who have had a successful exit.
Yes, we invest actively at the seed stage, and in first-time entrepreneurs.
Hi Sarah, Thanks for taking the time to answer questions! Really appreciate it. I am wondering what questions would you ask yourself before committing to a startup/job opportunity?
1. Do I believe in the vision? Does that vision matter to me?2. Do I believe in the leadership? Do I believe in the company values?3. How will I feel if this company is not executing perfectly in a year?4. What can I learn in this job?5. What signals do I have that they can succeed? High quality investors, domain experts as advisors, customer/user traction, other great hires etc.?
How do you strategize around where to focus in the enterprise space when looking for new investments to have the best chance of choosing winners, while also balancing portfolio diversification? Is it more about choosing great markets or choosing great companies?
I have several markets (problem areas, really) where if a deeply compelling team appeared, I'd fund them in a heartbeat. See https://sarahguo.com/request-for-startups. Of course, we are in the business of picking and helping to build emerging market leaders, so it's both picking markets and companies in those markets.That being said, we also regularly encounter entrepreneurs who teach us to think about a market differently -- or create a market where we didn't see one previously. Beyond the markets I've proactively chosen, I always keep an open mind for talented founders.
Hi Tara,Tough question! I've always been an extremely direct person, and mine is still in development.My three favorite books on this topic are: "The 7 Habits of Highly Effective People," "Nonviolent Communication" and "Never Split the Difference."That is sometimes useful, but insufficient! It helps me always to go through a four step process in conflict:1. assume good intent from the other person, until given evidence otherwise2. to imagine the emotional state and goals of the other person3. to think about what "resolution" or "progress" would be for me4. to play through in my mind whether what I'm saying could feasibly lead to that resolution and5. to brainstorm how I can make the other person more open to what I'm about to say.On #5 tactically, I'm convinced much conflict is due to miscommunication, people not feeling heard and people feeling defensive. I think many working relationships would be improved if people more consistently used phrases such as:"My aim was..." or "I know we share the aim of...""I think I heard you sayโฆ""When you..., it landed on me as...and that caused me to..."
Thanks @guo! Would love to learn about transitioning to VC from banking, and how you found your home at Greylock.
Hi Sarah! Thank you for sharing.My question to you is what are the top 3 most important things you've taken away from getting your MBA?
What are the top three things successful vs. unsuccessful companies do?
Thx for doing OH! Do you ever help women non-tech founders w/ a track record find technical co-founders? (This is a growing issue for Entrepreneurs not in SV or Austin networks) Thx!
@guo Hello! Thank you so much for your time today! Under-recognized professionals hire me set up and maintain their relationship-building efforts. I found that many of my clients are challenged with understanding and navigating the healthcare buying system. Do you have a resource to recommend to start to learn about the healthcare ecosystem? Right now I am sharing my own personal experience and making introductions to people who know more than me, yet this is not scalable. Is there anything that can serve a " cliff notes" for decision making in healthcare that I could give as a reference to my clients?
Hi Sarah,I am working on an enterprise data management system for COVID-19 globally. I have been involved in developing, managing and implementing these systems for over 10 years with the United Nations and the USG. I need some seed capital to hire a few engineers to build out my system. Do you have a few minutes to speak.Thank you for your time.Rani Dutt
Hiya Sarah!Itโs great to see you here and thanks so much for taking the time!โจYou clearly have an incredible ability for spotting potential and steering companies toward success. How did you hone those skills? Are there any particular qualities you've developed or experiences you've had that directly contributed to growing that expertise?
Very interesting profile Sarah, thanks for sharing!I don't have a finance/investment background but particularly interested in helping companies build great ideas into market-leading brands, what would you say are the top 3 skills needed?
Hey Sarah, excited to hear your responses on this question and more of the others asked. We're currently wireframing a new SaaS product that's aimed at helping SMBs navigate/improve their financial health. Do you think a beta product (with at least 6 months of usage data) is better to develop first before pitching or it should be a hard launched product with at least 12-18 months of usage data/analytics?
As an advisor & funder, I'm seeing some founders struggle with wellbeing right now (and it's either worse or more apparent for women) - how do you nudge & support founders to take care of themselves and avoid burnout?
I lead a 12-person team at SaaS company: we fuel digital transformation in insurance through personalized health services and data (www.pillcheck.com). Our service first gains traction in the most costly area in insurance (e.g.disability/workmen's comp), and later proliferates into other insurance products. Given how slowly insurance things change in insurance, that "later" could mean 24 months. Do you recommend pricing it the same way for all use cases?
Hi, How many pitch decks do you recommend? We create AR for education and I was recently told I should have at least 5 different decks.
Hi Sarah,Thank you so much for taking the time to do these Office Hours! I had heard about you a couple of years ago when you became the youngest GP at Greylock (congrats on that!) so super cool to be talking to you here!Some quick questions for you:1) How have you cultivated your strategic thinking skills โ both for identifying industry trends/emerging markets and thinking about company/product strategy? I would love to build this skill myself!2) What go-to-market strategies have you seen be successful in the enterprise healthcare space? Is there a way to generate internal excitement about a product in healthcare the way companies with a product-led adoption model do? (For context, I am cofounding a digital health startup with a B2B offering to help pharma companies collect real-world and accurate clinical trial data. We're launching soon so would love advice on go-to-market or anything else!).Thanks so much for your help! :)
Tips for negotiating during COVID term sheets?
Hi Sarah,I'm a startup attorney based in Miami (also focused on early stage and growth ventures), and would love to connect to share experience, insight, and generally get to know another leading lady in the field. Feel free to reach me via message on Elpha or private at [email protected]. looking forward to it,jessica.
Thank you for investing in my brother, Andrew's, company, Clubhouse! Have used it at every company, with every client, since they launched. Love love love it - and that's not family bias. ;)
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