26 | GTM Practices for SaaS Growth & Exit Outcomes (with Ryan Allis, SaasRise)

Welcome to the Path to Exit, a podcast to help software and internet founders understand the process to raise capital or sell their business. Hello and welcome everyone, I'm Mike Lyon, Founder and Managing Director at Vista Point Advisors and this is the Path to Exit. This show is dedicated to helping founders of software and internet businesses understand what it takes to raise capital or sell their business and how to do it well. My guess today is Ryan Allis, Ryan was the Founder and CEO of iContact, he grew the business and ultimately exited for $169 million to focus. Since then Ryan has founded the SaaS rise community and has been a CEO coach to many high-profile high growth B2B SaaS firms helping them to scale revenue and achieve nine figure exits. In today's episode we'll discuss some common question SaaS founders have regarding their go-to-market strategy and ultimately how it can impact your exit strategy. Ryan welcome to the podcast, thank you I'm so excited to be here today, yeah we're excited to have you. One of the most common topics we talk to founders about is they're timing for an exit. So there's lots of things that go into that but I would say the thing they underestimate the most is this concern about growth plateauing and the relationship between the multiple you get at exit and the growth rate and you want to sell during your growth phase where your growth is really high. I thought you'd be a great person to talk about a how to delay that plateau so how can you get the business even bigger which obviously means a bigger exit price while maintaining that growth rate really high which is the key correlation and maybe even running some of the private equity playbooks that they tend to put into play once they acquire a business to kick that growth rate back up. How do they even start thinking about this go-to-market strategy so most founder led businesses great on product market fit they kind of win because they have the right product but they're not as sophisticated on sales and marketing how should they think about spending that first sales and marketing dollar and where should they even start. We work primarily with B2B software as a service company and so what I always like to say is if you're ACV or annual contract value is at least $1,000 and if you're making $5,000, $10, $15, $20,000 a year or more do what I'm about to tell you and you basically start by building a comprehensive EVM list of everybody in your target market, ABM stands for a kelp based marketing and this is back in the 90s you go get a phone book you'd find the people in the category and start dialing for dollars now it's 2025 and there's a whole new way of using digital tools to actually be able to make sure your brand is omnipresent in front of your target market so step one is build a comprehensive list of everybody in your target market, break it down by job title, geography, industry, keywords, you can use intent data, you can bring in LinkedIn profiles and so we like to recommend using tools like poly.io, instantly, list cat, zoom info, there's many dozens of these lead prospecting platforms where for only a few thousand dollars you can go out and build a list of everybody in your ICP and once you've done that you want to take that list and you want to do two things with it, you want to send outbound messaging via email and LinkedIn to those people and then you also want to use that list as a matched audience on the ad networks, on meta, on LinkedIn, on Google, on AdRoll and you want to upload that CSV file of your target audience and you want to show ads to those people, you'll layer on retargeting ads, paid search ads, look alike ads, etc. we can go into lots of granular detail but the essence is if you start with who you want to influence and then build a list of all of them and then start sending messaging that is AI personalized, you could use clay.com to AI personalize all your messages so instead of the same message to 30,000 people, it's 30,000 unique messages written by chat GPT or Claude Sonnet, one for every person based on their LinkedIn profile on their website, hyper targeted, hyper personalized, you're going to get a much higher response rate. So that's what we teach it, that's what we call the SaaS growth system, why wait to sell your company until after maybe your growth has come down under 30% when you can simply put in place the same tactics that 50 million, 100 million, 150 million AR companies are currently using to scale up their SDRs and their BDRs and their go to market teams and then be able to benefit from that multiple expansion rather than selling to a private equity firm and letting them run that playbook. I think you made some great points there while there's a lot obviously to doing all those things, they're not what I would call crazy expensive to go execute on particularly because you can put a budget against most of these. I think the biggest mistake we see founders make in B2B sales is their product folks and techs folks. So they go out and hire a really expensive head of sales that may be worked at like a Fortune 500 company and obviously that go to market is really different and the budgets are a lot higher and I feel like they generally struggle when they do that, they ultimately have to let that person go and they feel trapped, they don't know what to do next. Of all the strategies you laid out there, which was very concise and you even gave some of the product names they could use, where do you find founders struggle the most in that? I think you're right. I think the old model, the way to scale in 2010 was go higher 50 SDRs and 20 AEs and you just scale through people and every AE would do their own prospecting or every SDR would do his or her own prospecting. I think these days you have to realize that revenue needs to be the function and that revenue department needs to be broken up into marketing sales and customer success and you need to have not just a head of marketing and a head of sales that are in silos but you need to have a chief revenue officer or if you don't, you as the founder need to act plate the chief revenue officer and you need to have accountability not to anything other than revenue growth. That's the only thing you as the CEO or CRO need to be accountable too and the way you generate revenue growth in a B2B SaaS company is you build your target market, you find your messaging and then you reach out to these people, you do it repeatedly, you make your brand nominee present with retargeting ads, match audience ads, outbound email and outbound LinkedIn and then you deliver qualified leads that have been warmed up for many months to the sales team to then go close, you close those leads and to customers and then you have an entire expansion and success team that lands and expands them and allows you to go get 125% net revenue retention. So that is the new model but companies that have silos between sales and marketing are going to grow at 100% a year. Companies that break down that old wall between those two departments put it under the same head person whether it's the CEO or CRO and then create processes and instead of hiring no offense but instead of hiring someone who's out of touch with digital marketing and AI, you actually make sure that your head of growth is very proficient in the latest outbound driven AI personalized go to market rev options and it's less about building the 70 person sales team these days and it's more about making sure that it is centralized marketing level, rev Ox level, you've got your entire total addressable market being messaged to through outbound email up on LinkedIn and ads every single quarter and if you achieve that, I think you'll have enough pipeline to go close and then go build up your sales team. Yep, I think that's great and I think you've kind of already answered one of the questions we hear a lot which is what comes first, marketing or sales, it sounds like in your answer it was yes and it's the same group of people right, they're focused on both as opposed to being too siloed where you spin up, marketing, build enough inbound leads or qualified leads and then turn those over to sales, sounds like that's together now is what you're saying. Yes, obviously you're going to have product first, what comes first to chicken or the egg, it has to be the product but once you have a product that's good, good UI UX provides value, then if you're going to go into that mid market and enterprise, you need to have a coordinated non siloed sales and marketing system that looks at your entire market and just thinks about it in terms of who am I trying to influence and how can I provide a lot of value? How can I write a cold email sequence that is so valuable that people would pay me to send it to them? Not just these generic AI notice that you do this, would you get on a demo but actually provide valuable quality content written by true founder level or sea level experts that deeply understand the customer problem set that you're solving and then deliver that content through a weekly newsletter, through cold up on campaigns, through ads and not just do it the old way which is disconnected but in a new connected AI driven B2B marketing and sales system integrated. That's great. And as you think about maybe a founder who's going to experiment with this, how should they think about their budget allocation to maybe these different channels and how should they allocate between LinkedIn or some of the ad networks or retargeting networks? Is there a formula that typically works or is it all over the place given the type of business in the product? That's what's beautiful today and when you're going back 10, 15 years ago, just to get the data to do ABM marketing properly, you could be in $40,000, $50,000 before you even have a proper ABM list. These days, the cost per thousand leads is like $2 whereas it used to be $50. The CPMs per thousand lead, and I'm talking about leads with verified emails, sometimes even with verified mobile numbers and verified corporate phone numbers in case you'd be signed off to do a call calling is $2 to $3 per thousand leads. And so you can go out and in most beat of these SaaS instances, you tend to have a target address of a market somewhere between maybe 5,000 companies and 100,000 companies, usually at that order of magnitude in terms of your total addressable market globally. And then if you're trending full and say five people based on their job title or the department at these 5,000 or 100,000 companies, you're going to have about 25,000 people up to maybe 500,000 people that are human beings in your TAM and your total addressable market that are ideal clients for you. And so all you got to do is build a list of that 25K to 500K humans and then enrich those with their LinkedIn profiles. You can do that on clay and many other tools that do that. And then use any of these Gen AI tools to automatically write messages based on the headline, the description of that person, based on news about the company, based on their website. And the effectiveness of these outbound messaging campaigns are three acts. If you don't do the AI personalization and then you just reach out and then the same people that you're reaching out to via email and LinkedIn are the same people that you're showing ads to. And so you build your whole 25,000 or 500,000 people list and then you show ads to them and then you do outbound AI personalized. I'm saying the same thing over and over again, but it used to be that cost $50,000 to accomplish. These days, you can do everything I just said for maybe $5,000 such that even the smallest companies that maybe only half a million of AR can easily afford that. And as you start scheduling that spend and executing on it, what are some of the key metrics you should be attracting to either adjust, maybe spend more here, spend more there? What are the metrics that tell you're doing that right? Doing that efficiently or where there's room for improvement. I like to break it down in the buckets of data cost, outbound cost and ad cost. Those are the three buckets of cost. The data cost to get your whole target market, maybe $5,000, $15,000 total to get everybody in your target market with all the information, really inexpensive these days. Then you've got your outbound email LinkedIn tools. You could use instantly for outbound email. You could use HeyReach for outbound LinkedIn and we're not talking about a lot of money. $400, $500 a month for these tools. Not a lot. It used to be you'd have to sign 12-month contracts. These are all month-to-month options now. You don't have to make big commitments until you actually know that it works. The third thing is the bucket of ad costs. I think about $5,000 a month is a suitable initial budget to test cost per lead for B2B marketing and customer acquisition and SaaS. What you do is you just start with your retargeting because that's the best performing lowest cost because you're just getting people who are already in your buying cycle to come back and buy more faster. The second is you want to do mashed audience ads, take your exact audience. You can use a tool called SavePrior.com to do this really well and get really high match rates. If not, you can just upload the CSVs and show ads to the people that are getting your outbound. Then the third you do look alike ads and you could also do paid search and review site ads. Those are the buckets and about $5,000 a month is enough to get started. What you do is once a month, you just look at your costs per lead and you could do that in any attribution tool. You could do that in HubSpod, you could do that in Comitly, which we like to use. You could do that in HockeyStack, DataDream, there's probably five other really good quality attribution tools. You could even do it in Google Analytics and you basically calculate your cost per qualified lead and cost per sale will take you three to six months to figure out because you got to go through the whole sales cycle and do it in enough volume to actually get statistically significant numbers, but you can always find your cost per lead in about 60 days of these campaigns. Then what you do is you just do a round of conversion rate optimization, landing pages, ads, obvious stuff, and then you look at what your cost per lead is and you increase the budget up on the channels that have the lowest cost per qualified lead and you decrease the budget on the channels that have the highest cost per qualified lead. Obviously, you got to make sure that your payback windows are within what we say is the proper LGBT CAQ ratio, which is anywhere from six to one to eight to one. You want to make sure you're getting $6 to $8 for every dollar over time, for every dollar in sales and marketing you're putting in. But as long as your LGBT CAQ is at least six to one, ideally eight to one, you are going to make a great return and then you look at your payback windows back months and if you're bootstrapped, you want to get it six to 12 months of payback and that's how many months it takes a revenue to get back your initial sales and marketing investment. And if your churns low enough, say two, three percent a month or lower, then in your upsell process is good enough that you can expand away the current customers to overtake the lost revenue in your NRs over a hundred, then you can really invest in customer acquisition. And at that point, you might even, if your venture back to be able to spend 12, 18 months front revenue on your sales and marketing costs, and if you can do that, then you can outcompete everybody else at your really grow your top line. Absolutely. Great advice. You've been involved with your own exit. Obviously, you're coaching a lot of founders who have been through exits or going through them right now. How big of a role does this kind of predictable revenue growth? And I've heard you say before, obviously, paid spend is the way to really scale the business, right? If you just wait for SEO traffic, you can't really scale that. How big of a role does this predictable growth play in the ability to get a transaction done at all? And then obviously the most important question, how it impacts valuation. How have you seen that play out selling your business and other founders selling their businesses? Well, there's a big difference in selling your business for three X revenue versus 10 X revenue. You're saying obvious things, but what happens when you increase your revenue growth rate? Let's just say from 30% a year to 60% a year. Not only is your actual top line revenue higher, of course, by definition, but your multiple is going to be seven X instead of three X. It's as simple as that. If you can get to that magic rule of 40, which is just adding together your revenue growth plus your net profit level and make sure that together equals at least 40, well, then you've probably got a sellable company. If you've got to that at least three to five million a year in ARR and it's still growing at 34% or higher. And if you can get to that sort of 50% annual revenue growth rate and be great even or profitable, I think you've got an opportunity to get into those seven eight nine 10 X multiples in the right competitive spaces. And if you do that, then you're going to have a great outcome. The company we work with, I won't say their name, but we started working with them when they were at five million in ARR. Now it's a little over a year later and they're at 10 million in ARR. All we did for them was install the SaaS growth system, which is outbound email, outbound LinkedIn plus ads and we doubled their rate of customer acquisition. So now instead of growing at 30% a year top line, now they're growing at 60% top line, now they're going out and they might end up having an outcome that could be seven eight X revenue. So instead of what might have happened before three times five, they might assault for 15 a year ago. Now they're going to sell potentially, happy at least the opportunity to sell for seven times 10, which is 70 million X it is a whole lot better, heck a lot better than a 15 million dollar exit. That's for sure. And so it's worth it to take this playbook and implement it inside your company. Yeah, I think you touched on a really interesting point, which is when we talked to founders about exit and valuation and timing, a lot of times we were talking about what it would call linear increases in valuation. So that means you're growing at the same rate, maybe you're worth eight to 12 times ARR. And next year you'll probably be worth the same multiple if the growth rate and all the metrics remain the same. So that's kind of a linear increase. You get a higher multiple or you get the same multiple off a higher revenue base. But where things get really interesting are these non-linear increases in valuations, which is what you describe. So you kick the growth rate up, obviously the base number is bigger, but also the multiple is much bigger because of that higher growth rate. So anytime you can implement some of these, what I would call non-linear impacts on valuation. It's just really key for driving outcome and it may cause you to actually wait to go to market because if you can go implement that you're really paid for that risk, if you will, to execute on that. We talked about a lot, anything else you want founders to know in terms of evaluating their old sales and marketing channels or the way they should be doing it. I think just that traditional SEO is dying. I think a lot of the ways that companies like HubSpot built their business was through what they termed as inbound marketing, which is putting a lot of good content out on the web, waiting for the search engines to index it and then sending them a bunch of low-cost, organic leads. That worked really well in 2010 and it worked okay now, but if you look at SCM Rush, which helps track organic traffic, the actual traffic website visitors to HubSpot.com, the inventors of the term inbound marketing 15 years ago, is declined by 65% in the last six months because a lot of consumers, whether they're B2B professionals or end consumers, are just using chat GPT or Gemini AI summaries and they're getting their answer from AI summaries rather than the end website source. What that means is in a world where you're not going to get 60, 70% of your traffic from organic search engines anymore, you're going to be needing to replace that traffic that's going away by actually distributing your high-quality content to your audience and that's where building this target list, sending out your content, and then building brand nominee presence through retargeting plus match audience ads, that's where that comes in. If you can get that science right, the science of digital ads properly managed, properly optimized for CRL combined with outbound, that's where mid-market and enterprise B2B SaaS companies can re-accelerate their growth and go from that 20, 30, 40% range to that 60, 70, 80, 90% range. They create the magic opportunity for folks like yourself to go get an 8, 9, 10, X AR multiple. I think that's a great point. If you need any other proof of that, just go look at a Google search result. 10 years ago, maybe there was one paid ad on top and then a lot of SEO results, and when the past, the top two or three SEO results would get like 70% of the traffic, because people don't really scroll below the fold or certainly to the second or third page. If you look at the page layout now, you have more paid ads generally on top, and then you have some AI results. The SEO results are just getting crammed further and further down the page, and that's one reason why you just see a lot less traffic, but totally agree with that. In terms of SEO used to be the go-to strategy, but now it's just part of the strategy that needs to be much more outbound. Brian, thanks for joining us. In today's episode, we talked a lot about what's kind of the optimal go-to-market strategy, some tools to execute on that, and even how small the budgets can be to go have some early success. But really appreciate you talking us through this topic. Thanks a lot. I'm really excited to be here and just an invitation for any SaaS company out there. Check us out at SaaSRise.com. This support and advisors is a founder-focused investment bank that advises software and internet founders through M&A and capital-raised transactions. We are a fully-unconflicted investment bank who only works for founders on the sell side, so you know that we're always representing your best interests. Securities offered through this support and advisors, member FINRA, SIPIC. This has been provided for informational purposes only. It is not intended to address all circumstances that might arise. Customonials from past clients may not be representative of the experience of other clients, and there is no guarantee a future performance or success. Clients are not compensated for their comments. If you have any questions about the process of selling your business or raising capital, reach out to a member of our team or check out the four founders section of our site by visiting fourfounders.guide.