Merci Victoria Grace is a partner at Lightspeed Venture Partners, and she has extensive experience building software that people love. As Head of Growth at Slack, she helped grow the product from 500,000 Daily Active Users to over 5 Million in just two years.
This AMA took place on February 25, 2020.
What are some under rated but effective user acquisition methods?
(It really matters who your customer is, so keep in mind that the below advice only applies to SaaS tools used by knowledge workers.)
Earned media is still underrated. Getting tech press attention works especially well for collaboration apps. Earned media surfaces your product to your exact target users when they’re in a frame of mind to check out something new – they’re literally looking for new tech and news about tech.
Also keep in mind that tech journalists are knowledge workers too. Get them on your side early and thoughtfully, which starts by reading their work, following them on Twitter, and understanding what they care about. If relevant, build the product with them in mind as important early adopters and invite them to your beta. A handful of real relationships are much better than emailing dozens of reporters when you’ve decided you want to do a PR launch.
In a similar vein, getting the popular kids to use your product is also underrated, though maybe not for long. Approach other founders, CEOs, visible operators, and angel investors about giving you feedback, and maybe investing in your company. Get access to their teams and get their logos on your website.
How do you think the SaaS ecosystem will change over the next 5 years?
By 2025 we’ll have seen some notable acquisitions of today’s leading SaaS startups by the larger suite players like Microsoft and Google. There will also be a “next Slack” by then, meaning a new tool that becomes super popular and grows quickly into a new normal. But this time it will be Voice & Video rather than Messaging.
A huge new marketplace empowered by the no-code/yes-code/low-code tools we’re seeing today, like Webflow and Glitch, will have emerged. Developers/designers and other creatives will earn money helping tons of Millennials and Gen Z folks (what do we call Gen Zs?) run their side hustles & small businesses.
More new SaaS businesses will be bootstrapped, and new financial products that help fund SaaS, DTC, and online marketplace businesses will help them make ends meet.
How do you think SaaS vendors should approach pricing transparency?
A/B testing is hard (on its own) for bottoms-up SaaS pricing just because you won’t have the volume you want to make quick, informed decisions. Always start with user research. Ask free customers for feedback on pricing pages over Zoom, have non-customers give feedback on checkout flows, etc. Narrow down your options before thoughtfully deploying A/B tests.
I'm primarily interested in bottoms-up SaaS, which relies on transparent pricing to function. But something people often miss is this: high quality product writing is the packaging. This applies to all parts of the product, but is especially important that your customers be able to understand what they are buying and how to buy it. Even companies with great traction are always leaving money on the table with unclear writing. Hire writers who have good design taste.
Re: cancellation policies et al. Not quite sure what your question refers to, but you should always be good to your customers. Give them the benefit of the doubt, be nice, treat them with respect, answer their emails, and let them cancel without calling someone on the phone.
What's the playbook for starting a growth team for an established company?
What was the story for selling Slack to entreprises?
"Did you know that you already have 43 paid teams at your company using Slack? No?"
What do you look for in SaaS companies you're considering investing in?
If it's really early: A 2+ person founding team that includes a customer-obsessed CEO with great product taste and storytelling ability and a strong CTO or CMO. Basically the founders need to be people I would work for.
A strong plan and/or lots of interesting thoughts for what go-to-market looks like. It doesn't matter what you build if no one uses it.
If there's traction: All of the above and 60%+ DAU/MAU or equivalent, net revenue retention over 120%.
What advice do you often give when mentoring women and people of color?
It's the same advice that I give to white men, typically. Everyone (who seeks advice in the first place) wants to get better at their jobs, earn a promotion, and find professional fulfillment. Everyone is told to purchase Never Split the Difference, for one. :-)
Often I think the most helpful thing I do when mentoring women and people of color is to actually listen to their story about the terrible manager or shitty situation. I will give my take and advice, but I think a lot of it is the opportunity to be heard by someone who understands what it's like to work at a tech company. It's a... whole thing. Sometimes just acknowledging that can unblock someone's motivation.
What sort of advice would you give to a young woman who is a PM but wants to end up in the VC world later on?
Getting a venture job is about timing and your network. If you have the opportunity to join a venture firm, it's worth a try to see if you like it. There are a few times in your career when the door may be open to you:
- You went to business school for a career change post-product roles. In this case you can join a firm as an associate or principal.
- You started & exited your own company, in which case you can join as a partner.
- You were in an early leadership role at a hyper growth company, in which case you can join as a partner.
Age is also important, and an uncomfortable truth about timing that many people gloss over. It's easier to get a venture role when you're younger. Firms want to know that after 3-5 years you're good to generate returns for the next 15 years. The less of a risk you are, eg you had a huge outcome and are a draw for other founders, the older you can be when you start.
For the network, start meeting VCs, angel investors, and founders now. Help people out. Be good to the people you work with, it's not obvious who is going to start a successful company early in their career.
What do you think Slack could do better?
A big part of the early culture at Slack was being critical about the state of the product, so I'm happy to share. I don't know what their current priorities are and would be guessing from external signals like anyone else.
My favorite unpopular product idea while I worked at Slack (that I still believe in) would be a "deskless workers" account that would be much cheaper and integrate with tools like Toast to help food service/logistics/manufacturing companies go all-in on Slack.
I actually disagreed with the design of our mobile apps entirely, which I still think should be designed around the "drop in for 5 minutes to check messages or find something" use case rather than be smaller versions of the desktop tool.
What were the top 3 most effective growth strategies to go from 500k to 5M DAUs?