The First Million: David Lynch of Klir

"Challenges any company faces as a result of having too much ARR can always be resolved, whereas the problems that come from having too little ARR are more often than not, fatal. ARR forgives everything so as uncomfortable and painful as the relentless rejection is, it really is the only job that should be on an early founders mind."

What are the 3-4 key things that you did (product, sales, marketing) to go from zero to one?

• No shame, intense focus and a lot of planning.
• On planning, the key is to segment the market. What I learned is you think you have it segmented, but really it's just stage one of filtration. With each level of segmentation, I formed a hypothesis of how one segment would lead to the next and that was basically my GTM.
• Once we got to four accounts we then thought, ‘if we win one of these then that opens the next segment, and so on.’ It is amazing what you can achieve when there is a myopic target that is must-win and that’s where the focus comes in. We did everything to get that account, whatever it took. Even now we shudder at how cringe some of the tactics were - but it worked!
• In enterprise selling it is so much about perseverance balanced with being considerate and respectful. It takes an incredible amount of brain calories and time to get this right, and even then it see-saws between too much and too little.

Did you do founder led selling from the outset? How did you orient your day to day so that you could really focus on pipeline generation and working deals?

• Yes it was founder-led selling. I don’t think there is any other way to sell to be honest. Even now, founders and senior leadership are involved in our deals, it just happens at a later stage.
• I hear founders hiding behind the ‘lots of hats’ excuse quite a bit and I think it's born out of fear. It's easier to write some code, design a logo or spend months on the website. None of that matters and it is remarkably simple what works.
• Talking to users, customers and potential buyers almost exclusively as the core job. To help focus and put it simply; challenges any company faces as a result of having too much ARR can always be resolved, whereas the problems that come from having too little ARR are more often than not, fatal. ARR forgives everything so as uncomfortable and painful as the relentless rejection is, it really is the only job that should be on an early founders mind.

What were some of your assumptions going in that you thought “this is definitely going to work” that ended up totally flopping?

• We really pushed ourselves during YC to follow the herd in our cohort and chase rapid growth through a low-price user-based model. It seemed to be working for a lot of the companies in our group and the growth numbers they were posting were staggering. We thought – this is easy! Let’s just follow the PlanGrid model and use the ‘box of donuts’ sales approach to drive to our customers and get sales. Needless to say, we were wrong, enterprise and in particular, government, does not buy like that.

You and the Klir team operate in a pretty unique area of the market. Can you talk to founders about some of the trends and themes that were going on around IT purchasing when you started selling. How did you overcome them?

• The most important thing to know before selling in any enterprise SaaS space (and this is what we faced too) is what is the market trend, namely is it bundling or unbundling.
• In the last decade it was all unbundling. For example, teams happily paid extra for Slack even though they already had MS Teams included in their bundle.
• Today, we are absolutely in the bundling trend which is driven by two key elements, cybersecurity and operational efficiency.
• IT departments are often forced to maintain hundreds, if not thousands of systems/apps in an enterprise landscape. This was the result of individual users or teams being giving buying power over software without having to consult with IT. These IT teams are being pressed now to clean-up the support or integration or data governance or security mess, so there is a real push to bundle now. If you are a single-use system that can't drive these core value props for IT as a critical stakeholder, you may need to rethink your plan.
• In terms of efficiency, we all know profit margins are the altar companies now worship versus the ‘growth at all costs’ cult. When your customers don’t explicitly understand the value your service brings regularly, you face the guillotine in the next budget review.
• This is the major trend we are seeing and building for as it relates to our business. The need to bundle and be a large-scale system because the category necessitates it.

Talk to us about the top of the funnel. Any insight there on what you did?

• For us, it was specificity and nuance that had the biggest impact on our top of funnel.
• We have really started to get a handle on what makes a lead high-quality. We've dug deep into the data and learned what indicators and traits separate the good leads from the not-so-great ones. This newfound knowledge has been a game-changer for us.
• We've been able to fine-tune our lead generation strategies and focus our efforts on the leads that are most likely to convert into loyal customers.
• We started maximizing our resources and getting the most bang for our buck. This has been a real game-changer for our sales and marketing efforts and in terms of controlling the inputs (which is the most important thing to focus on), has led to sustainable pipeline growth and velocity.

Talk to us about the bottom of the funnel. It is always so tough to close these deals. How were you able to get stuff over the line?

• We came to realize that utilizing the consulting expertise we had developed in our previous careers was highly beneficial to our bottom of funnel and getting things over the line. I proudly share with anyone who will listen that I am a recovering consultant, over 3000 days sober.
• Through this journey, I have learned not to underestimate the skills and knowledge taught there. Everything in that world is driven by some sort of plan with milestones and dates.
• The key to closing any enterprise deal is a relentless focus on the documented step-by-step plan for every deal, from start to close. This needs to be mutually agreed with your customer and you need to identify every stakeholder and step involved in the process.
• This holds you as a founder accountable but also serves as playbooks for when Sales reps are hired. When we get to that stage it is all about relentless inspection and verification of those plans almost daily.
• Over time we learned the obstacles in deals almost always come down to administration at the close-out-a cyber security review from a never-heard-of group, a business form that needs a lawyer to sign, etc. This is never malicious in my experience, just a lack of buying journey experience on the champions' part. Identifying these potential roadblocks early on allows you to incorporate probing questions in the discovery process so you get less surprises as you get more deals.