Nuffsaid’s Paranomos Covers How to Start a Company Using Customer-Led Growth
I had the pleasure of interviewing Nick Paranomos, Cofounder & COO of Nuffsaid.
What motivated you to launch your startup?
Have you ever met a company that actually knows why their customers churn, renew, or grow, and most importantly, how to get ahead of it? I bet the answer is no. I spent a decade consulting for Fortune 500’s with massive customer data sets — data like NPS and CSAT scores, health scores, detailed product usage data, and even “predictive” churn models. None of it works. Every company wants to improve customer experience, but they don’t really understand what their customers’ experience is and how to take action on it.
That’s why we started Nuffsaid. We help companies measure the value they deliver to customers by asking the right questions, to the right customers, at the right time along their journey. Responses to those questions automate risks, growth opportunities, and playbooks that companies can take action on to deliver more value to their customers.
If you had to share “words of wisdom” with a Founder who’s about to start their own startup, what would they be?
Most of my experience is in B2B SaaS, so this advice is tailored to founders in a similar space:
#1 Hire an experienced leadership team to define the culture and vision
A brand new startup only has one asset — the people in the room. Take your time, and focus on hiring a “10” level leader in design and engineering. These are your two most critical functions until customers are begging for your product, at which point you’ll also want to add a “10” marketing, sales, and customer success leader.
A “10” leader is someone that:
- Is brilliant, and can solve new complex problems
- Can communicate their ideas clearly and succinctly
- Has best-in-the-world skills for their functional area
- Has built a high-performing team in their functional area
- Has something something left to prove in their career
Keep in mind that this leadership team needs to collaborate in real-time when solving problems for the company. It’s critical that each leader (and their teams) are hired in similar time zones to make that collaboration as easy as possible. Once the company has the right leaders in place, decide on the company values that matter to the group. Write them down and review them regularly. Define all decisions that need to be made at the company, and write them down. Then assign one owner to each decision, define and rank the data needed to make each decision, and align on how you’ll handle disagreements.
Here’s the key to hiring “10” leaders — give them what they want. Some leaders want cash, others want equity, and others care most about having complete control of their function. Find out what motivates each leader you want to hire and give it to them. If “10” leaders are still unwilling to join, you may benefit from building out your own experience, skills, network, and personal brand before starting a company.
#2 Assume you know nothing about your buyers
You think you have a great idea for a business, but how do you know? Do you know what companies you’re targeting, and who your buyer is within those companies? Are those buyers throwing money at you to solve their problems? If not, you probably don’t have enough data to build a must-have product.
Luckily, potential buyers will tell you what they need if you listen closely enough. LinkedIn and Twitter are your friends here. Read the problems that your potential buyers are posting about, comment on those posts, offer solutions, and the holy grail — get on calls with your buyers to understand their needs.
Here are some interview questions you can ask your buyers to understand what problems they care about most. Those are the problems they’re most likely to pay you to solve:
- What is the biggest priority or challenge your board is discussing?
- Who is your customer and what’s the biggest challenge they need you to solve?
- Out of your entire job description, what’s the most important thing your company needs you to get done?
- What absolutely has to be off your whiteboard in the next 90 days?
- What’s the one thing you and your team need to get better at this year?
- What’s the hardest part of your job?
- What request or call do you most dread getting?
- If I gave you a magic wand, what problem would you make disappear first?
- If I took away all your tools, resources, and assets, which one would you beg me to have back first?
The key to all these questions is that they’re focused on the customer problem. Buyers don’t care about you, your startup, or your product. They care about themselves and solving their own problems. When you ask people to give you feedback on what you’re working on they glaze over. Instead play the doctor role — ask them to tell you where it hurts and they’ll talk your ear off.
#3 Pick a problem with a “must-have” solution for a big market
Write down all the problems you’ve heard from buyers, then rate each problem from 1–10 for each bullet below:
- Solving this problem will increase revenue or profit for the buyer’s company
- The buyer’s board is willing to allocate budget to solve this problem now
- Our customers will pay us enough to generate $1M ARR for our company in year one, and $100M ARR by year eight
Use these ratings to rank each problem. Pick the most promising problem for your company to solve, design a prototype, and try selling it to your buyers before you build anything. If customers aren’t eager to try or buy it, then you’ll know that you aren’t addressing the right problem. Rinse and repeat the process above. If customers are ready to buy, deliver the most manual solution possible that will keep customers engaged. Then hire the team you need to deliver on customer requests, starting with engineering.
#4 Hire senior engineering talent
You’re going to need a senior engineering team that can deliver high-quality code quickly for your product and business to survive. Unfortunately outside dev shops and junior engineers just don’t have the experience and ownership to deliver at the level your company needs in the early days.
Instead, hire an in-house technical recruiter and task that recruiter with finding the five most senior engineers in the tech stack you’re developing. Add LinkedIn Recruiter to your engineering leader’s LinkedIn profile, then have your in-house technical recruiter use that profile to reach out directly to candidates and set up technical interviews. You’ll likely do 20+ interviews for every 1 candidate that passes your technical bar. If your ratio is less than 20:1, you probably need to tighten your technical requirements.
Once your engineering leader signs off on candidates technically, you as the founder need to validate that each candidate matches your company’s values. This cultural interview is critical. Ask candidates to respond to common work situations, and see if their instincts fit the behavioral values you have in place. Keep in mind that you’re hiring for strengths, not lack of weakness. It’s okay if a candidate doesn’t fit 100% to your values, no candidate will. You’re using this interview to disqualify candidates with huge red flags that will kill your team’s ability to collaborate and deliver the product.
For each new hire, set the expectation that they’ll have performance checkpoints at 30, 60, 90, and 180 days. In each of those checkpoints, the company should look for proof that the new hire has delivered excellent results for customers. You can use these checkpoints to understand if you’ve hired the right team, and to quickly replace people that would fit better at a company with different performance expectations. If you have to let someone go, it’s critical you do everything in your power to help them land on their feet in their next role. It maintains the relationship with that person, and it shows the rest of your team that you’ll have their back in any scenario.
#5 Build your brand as early as possible
Inexperienced founders often discount “brand” as something that the marketing team can develop down the line. That kind of thinking will kill your company. Your brand is the one sentence that customers can use to explain what you do, and why your product is important. A strong brand is critical. It’s what opens doors to large customers that will pay you for your product and keep your company alive. As soon as you understand why buyers are paying for your product, that’s the time to invest heavily in your brand.
Start by hiring a content marketer to work with your marketing and design leaders. Launch a website that defines your product’s value, and addresses customer objections. Launch a blog on your website, and interview buyers from your industry to publish content that features opinions other buyers will care about. Have featured contributors from your industry post your blog content on their social profiles. Once contributors build enough awareness around your brand, use that momentum to launch webinars with the most influential buyers in your space. Launch a podcast series with those influential buyers, and repurpose blog, webinar, and podcast content across social channels where your buyers live. Have your buyers sign up for “premium” content like a magazine or newsletter, then deliver value to those buyers over email.
All of this brand awareness builds trust with your buyers, and generates leads for your sales leader to grow revenue for your company.
#6 Target $1M ARR in year one
In order to be considered a great B2B SaaS company you need to hit $1M ARR in year one. That’s the benchmark that most Tier 1 investors will use to give you the best possible valuation for your Series A raise. Very few companies can hit that revenue target with a great product and marketing alone. Most need to hire a sales leader that knows how to implement a tested sales motion for the company. For the sales motion to work, the company’s other teams need to first lay the groundwork:
- Legal — write terms, privacy, and data policies for customers’ legal teams
- Finance — set up a system to invoice customers and accept payments
- Engineering — ensure data is SOC2 compliant to pass security for big customers
- Design — minimize integrations and setup needed for customers to try the product
- Marketing — create an inbound lead funnel that results in demos booked
Once that groundwork is laid, the sales team can go to work:
- Create an outbound campaign on social and email to target buyers
- Hire an SDR manager and individual SDRs to run outbound and schedule demos
- Hire AEs to handle product demos, legal, security, and contract issues
- Create on-target-earning (OTE) incentives for the sales team to hit quarterly goals
- Measure each stage of the sales funnel, iterate, and increase conversion
Great sales teams are hunters. They have strong personalities, and they use emotion to get customers to buy. Those same skills almost always create friction with other teams in a company, and that’s okay. It’s your job as a founder to help other teams understand how great sales teams operate, and how the rest of the company can work with sales effectively to drive overall growth for the company.
#7 Prioritize Customer-Led Growth
Traditionally there have been two ways to think about company growth, sales-led or product-led. Sales-led is what I described above. It can be really effective at taking a company from $0 to $10M ARR, but it gets incredibly expensive to scale from $10M to $30M to $100M ARR and beyond. The company needs a huge sales team and budget to make that happen, which eats into company profits.
Product-led means your product is so good that it alone drives customer acquisition, retention, and referrals. The reality is almost no product in the world is that good. Most products, especially B2B products, are expensive and relatively complex. Buyers pay companies a lot of money to solve their business problems, and expect those companies to make it easy to use their products through value-added services and support.
That’s why Customer Success is so critical. It’s the bridge between sales and product that delivers what customers actually want — a holistic solution to their business problem. I have a strong belief that every company should hire an experienced Chief Customer Officer that oversees a unified customer strategy across marketing, sales, success, support and services. It’s only then that a company can optimize the experience of their customers, maximize net dollar retention, growth, and organic referrals, and truly leverage Customer-Led Growth.
How can our readers follow you on social media?
You can connect with me and follow Nuffsaid on LinkedIn, or check out what we’re up to at nuffsaid.com.
