Overheard At Jurassic (Q4 ‘23)
This quarter’s Operating Advisor (OA) Call marked the kickoff of “Season 2” of our OA Program, and we’re so excited to welcome new, and many returning, faces to the team to enhance our capabilities in guiding our portfolio companies from their $1M to $10M journey.
In our Q4 2023 Call, we engaged in a nuanced discussion on software sales market developments & dynamics, workforce stability, and the current state of investment and M&A activity. Check out some key highlights below!
Top 10 Takeaways from Jurassic’s Q4 ‘23 Operating Advisor Town Hall
What we’re seeing in the market…
1. Software Sales: Despite consistent purchasing volumes, software buyers have shifted their focus on what they invest in due to economic concerns. The emphasis is on gaining a clear return on investment (ROI), affecting how software is sold and the sales cycle.
2. Workforce Stability: There’s been a notable decrease in employee turnover, suggesting a power shift back to employers. Many startups are seeing lower than usual regrettable employee departures.
3. Investment Challenges: Raising funds is currently difficult for investors and companies alike, attributed to a lack of liquidity in the market, high-interest rates, and elusive returns. This climate has made growth investors very cautious.
4. M&A: There's an uptick in M&A activities, with private equity firms that accumulated funds in recent years feeling compelled to invest - expected to continue into 2024.
On fractional sales leadership…
5. Exercise caution in selecting fractional leaders, ensuring alignment with the company's direction and that their contributions are measurable. This is especially crucial when shifting strategies, like from lead generation to demand generation. While fractional roles can be valuable in advisory or coaching capacities, for hands-on execution (particularly in sales) the need for a committed, full-time presence may be more pressing to ensure success.
On integrating a new COO...
6. Clearly delineate the roles and responsibilities between the CEO and COO. Focus on creating structures for strategic division of labor and delegation of tasks.
7. Don’t rush to over-title. Consider this role initially as a Director of Operations, providing a pathway to grow into the COO position and a "trial period" to confirm the individual's suitability for the role and the compatibility between the CEO and future COO.
On surfacing near-term professional services opportunities…
8. It is important to approach professional services (PS) with the same strategic mindset as product sales. If you can profitably “productize” services, focus on marketing and creating leads specifically for the services team and equipping them with the tools and strategies to close deals efficiently.
8. Structure professional services payments in a way that aligns with the length and type of the service agreement. Flexibility can help manage the risk of late payments and potential customer churn. It is also essential to clearly define the purpose of professional services, whether for initial setup, ongoing optimization, or to complement the product's execution.
On migration-dependent sales…
10. When selling software that requires migration, it's effective to position the effort as a revenue driver vs. a cost burden. To overcome this inertia that may affect long-term value and cost of customer acquisition (LTV:CAC ratio), companies may need to absorb some migration costs, such as covering the remainder of existing contracts (contract buy-outs), overlapping contracts during migration, or forgoing short-term subscription revenue, to incentivize the migration process.
