SaaStr 213: Redpoint's Tom Tunguz on What Makes The Most Effective Free Trial, What Makes Good vs Great When It Comes To Benchmarks for Assisted vs Unassisted Conversion & Why Scoring Leads May Actually Be Dangerous

Tom Tunguz is General Partner @ Redpoint Ventures, the venture fund with a portfolio including the likes of Stripe, Netflix, Zuora, Hashicorp and Juniper Networks just to name a few. As for Tom, he joined Redpoint in 2008 and has since led investments in Kustomer, Looker, Expensify and Gremlin all prior guests on the show I hasten to add. He is also the co-author of Winning with Data: exploring the cultural changes big data brings to business. Tom has also been named on the Forbes Midas Brink list. Before joining Redpoint, Tomasz was the product manager for Google’s AdSense social-media products and AdSense internationalization.

In Today’s Episode We Discuss:

• How Tom made his way from creating software with his father in Brazil to being GP and forefront figure in the SaaS investment community as a GP at Redpoint today?
• Annual contracts: To what extent do annual contracts dominate today? How does this differ when comparing enterprise to SMB? Why does Tom think in the early days one should be wary of signing too many multi-year contracts? What are the dangers there? How does Tom think about calculating churn when it comes to multi-year contracts?
• What were the findings on what good looks like when it comes to logo retention? How does this differ when comparing SMB to enterprise? What were the commonalities of leading indicators of churn? Is it fair to always surmise that when serving SMB one will always have a higher rate of churn? What is the right way to conduct a churn analysis?
• Assisted vs unassisted: What does Tom believe are the leading benchmarks for both? How does this differ when comparing SMB to enterprise? How does the impact of a salesperson change the conversion rate? What time frame from SAL to closed lead suggests product market fit? What one question must all founders be asking in the sales process?
• How does Tom think about constructing comp plans the right way today? How should comp plans differ when comparing AEs to customer success? Where should the responsibility for upsell lie, customer success or sales? Should sales commission be paid on renewals?  

Tom’s 60 Second SaaStr:

1. What does Tom know now that he wishes he had known at the beginning?
2. What is Tom’s favourite book and why?
3. What is Tom’s most recent investment and why did he say yes?

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Jason Lemkin

Harry Stebbings

SaaStr

Tom Tunguz