Episode 2. Prepare Your B2B SaaS Company for Its Next Stage of Revenue Growth: John Stopper
It’s important for leaders of
Timing is everything. If companies wrong, their revenue growth can stall. And bad things happen when revenue stalls. Owners can lose a company.
Here John Stopper explains the stage of growth and how to be ready for them when they occur.
Prepare Your B2B SaaS Company for Its Next Stage of Revenue Growth
Show notes, highlights, and resources
About the guest
John Stopper is chief revenue officer of
John is also founder and CEO of NorthStar8, a consultancy that helps B2B
John has decades of experience in the B2B software industry. He’s
His experience has been in companies ranging from startups to mature companies.
“The most common mistake I see is skipping the stage where you develop your brand strategy—making sure you have tight messaging, that your segmentation strategy is tight—and going right to scale mode.”
“Another mistake is, we sometimes hire sales or develop it ahead of proper development and marketing.”
C-level executives, board members, and investors can
If leaders understand what their company will need to thrive in its next stage of growth, they can move through the transition points more smoothly and with less risk of stalling.
The five stages of growth are:
- Emerging Growth
- High Growth
- Industry Leading
Links and resources
Email address for John Stopper: email@example.com.
Software companies grow in
What a software company needs to thrive at one stage
To grow your company effectively, you must manage it in the
Anyone who has raised a child from infancy
I’m Dave Vranicar.
My guest today is John Stopper, chief revenue officer at
John’s here to talk about the stages of revenue growth in
He also shares insights on how to manage sales and marketing during those stages.
John has decades of experience in the software industry.
He’s worked in jobs ranging from
And he’s worked in companies at every stage of maturity.
Until recently, John focused his energy on Northstar8, a consultancy he founded.
The tough and risky part of managing growth, John says, is the
The key is to be ready for it when it arrives. If you get the timing wrong, you may face big setbacks. Your revenue growth can stall.
You can even lose your company.
John acknowledges his ideas about the stages of growth aren’t unique.
He’s learned from Steve Blank, Eric Ries, Ash Maurya, David Skok, and many others.
John builds on their work and carries it further. He does so by addressing all stages of a
Well, thanks so much for being here. I’m thrilled to have you among the early guests for the show.
John’s background and experience
Sure. What I do and my focus today is to help the next generation of B2B sales leaders, sales professionals and their companies be successful.
And what I’ve done over the years is
John, how did you come to be doing this?
If you look at my career, and it’s scary to say, hey, I spent 40 years doing anything. Maybe when I was 15.
But I’ve been in the technology industry for 40 years. I started off in grad school writing code, went to Wall Street.
I wrote code for five years for Wall Street firms. I was terrible at it. And somebody said,
Banks, brokerage houses, moved up through the ranks, sales, marketing management.
Had my first CEO job in my
And then eight years ago, I started my
So I think it’s having that early systems, that development programming approach.
I’ve always taken a systematic view sales success.
So John, let’s talk a
So what I’ve done
You need to shift how your revenue generation strategies appropriate to that stage.
If you look at the business, for example, a startup, they’re taking a product from
Stage 1: Traction
The first stage is, your focus is on traction. And you’re taking a product from concept to reality.
And so you need to get your first
But your enemy is time because you have limited capital typically.
And the market driver, what your focus is all that your product, that’s what you talk about.
And you have a single… your sales model, distribution model is a single channel.
And your profile
That sounds like the Geoffrey Moore thing about Crossing the Chasm. This is the first stage before you hit the chasm.
Exactly. Now, what’s different from Moore’s Crossing the Chasm is that you’re always facing this.
It’s not as well defined. He had this very linear in your growth.
I would say instead, it’s almost like an M shape. It’s spiky.
But he revolutionized my thinking. And by
Okay. I interrupted you, I’m sorry, I didn’t mean to take your emphasis off that. So we’re talking about this early stage of growth, the first stage where you’re trying to get traction.
Is that consistent with your experience?
It depends on… some, yes.
Now, some founders and CEOs are
So sometimes they’ll go out and hire their first salesperson to help them. But
Okay. And now when they hire that salesperson, a mistake I’ve sometimes seen is that they will hire the best salesperson they’ve seen or the
Yeah, that’s a great point, Dave.
Think about a
They like to work without structure because there is none.
They’re good without a net below them to catch them.
They have a high tolerance for risk.
They like being out and being the first to talk about things.
So the startup sales profile is
And they have to be total hunters, right?
They have to be good at connecting with people, picking up the phone, talking about it, facing ambiguous situations, talking about a product that
Yeah, I think if that, that they, you know, you’re calling to introduce people to a unique concept they haven’t heard before, typically.
And your marketing budget and investment is probably
There hasn’t been a lot of education done to educate your target market about what your offering is about.
So, yes, the salesperson has to be very comfortable with uncertainty and really enjoy introducing people to unique concepts and solutions.
Stage 2: Emerging Growth
Okay. Let’s go on to the next phase if you’re ready for that, what’s the next stage of growth?
I call that the emerging growth stage. And the transition is from startup to emerging growth.
This is a very tricky stage because some companies, they get that initial success and go great, let’s scale.
That’s where companies really get into trouble because at this stage, you need to focus on your brands.
The enemy here is the lack of clarity or focus.
So think about this. You get your first 10, 20, 50 customers. And typically, your early customers who are innovators, hey, can you have the product, can you tweak it to do this or tweak it to do that?
Or I’ll give you a deal if you develop this capability of the product.
And if you don’
Your market driver has shifted from your product. So in the startup, you’re talking about your product all the time.
It shifts to… the driver is the customer because you’re beginning just to get scale there.
So you need
And typically, your distribution model
It might go to a dual channel or a
So what I mean by that is, you might have an inside sales approach, you might
You might have an enterprise team
Your customer profile is shifting from the innovators, early adopters, into that more pragmatic mainstream buyer.
Okay. Sorry. A couple things I want to return to.
Something you said about brand a moment ago.
And also, before I forget it, the other topic is about what’s happened to your sales organization now.
You started out with a person who is very comfortable with ambiguity, maybe one person who was doing everything.
And now you’re transitioning to a point where you’ve got a different
Can you talk about that?
Sure. So your profile’s
So if you’re in today’s B2B
You’re putting together repeatable sales process, adopt a sales
So think about that startup salesperson who’s not used to structure, doesn’t like structure.
This is where, they were here
And you’re saying, hey, you got to follow a sales process and keep Salesforce up to date.
You really have to look out for the stress of that and is it time to transition maybe then out.
Some people can shift and adapt to the new model.
But this is where I find a lot of difficulty in leading sales organization, making that change from the startup sales profile to the emerging growth profile.
John, what’s happening on the marketing side? Do we have marketing at this stage? You mentioned building a brand.
Let me first explain the reason behind my asking this question.
I was a sales leader in a small
And they were probably more in the startup phase than they were in this emerging growth phase.
The big mistake I made
So how do you reconcile that issue?
Well, let’s be clear about what I meant by brand.
Brand is, What’s your name?
What’s your mission statement?
What do you stand for?
What’s your target market?
Who’s your customer?
Who’s not your customer?
That’s what I mean by brand. It’s more than just your name, your logo, your colors.
It’s your messaging.
Before you can scale your business,
Probably the most important thing to establish as part of your brand strategy.
What is my unique value prop? How am I different? Why should you pay attention
Okay. I’m glad for the clarification.
Because I think when
What am I going to look like? What is my web page going to look like?
Which are all,,,
They’re important at later stages. They may even have been important at early stages.
But they’re not nearly as important as the fundamentals at this stage
That’s correct. I include those in brands because marketing and the executives have a big impact on what, say, your sales organization’s communicating to the marketplace.
So marketing’s doing market research to say, “Hey, here’s your segmentation strategy.”
You can’t go after everybody. So what segments of your total addressable market are you going to go after?
What’s the business problem?
And what’s your messaging and your unique value prop? That’s what I mean.
Okay. Are we ready to go on to the next stage?
Stage 3: High Growth
Where does that put us?
That’s a high-growth company, right?
You’re transitioning, so your revenue growth is on track.
You have predictability in your forecast.
So in the earlier two stages, forecasting revenue is
But here you’re
Your focus is on scaling the business, right?
Because your enemy at this point is running out of capacity.
So you’ve hit it, right? You’re really growing.
Do I have enough sales people?
Am I generating enough leads?
Am I helping implement my product if that’s an issue, right?
Is your support organization up to scale to handle all the new customers coming?
The market driver shifts.
So you’ve gone from startup, which you’re focused on your product to emerging growth, you’re focused on a customer.
Here, you’re focused on the market
So if you look at
And your customer profile’s now shifting. You’re firmly embedded in mainstream buyers.
So all these shifts change. Just to be consistent, your salesperson profile shifts, right?
So you’re hiring more junior people, you need to have better training program in place to get them up to speed because you can’t hire all senior people.
So, a lot of things as you move to this stage. You need to shift your investments into those type of items.
John, if we were to link these stages of growth
The startup, it’s seed investment.
You’re getting high-net-worth individuals to pump money in. You could
One of my customers just did. It was a
So, with your predictable… If you have
Then when you get into B… You might
As you get into this high growth where you’re scaling, this is where a lot of venture firms focus because they have predictability.
Right. Less risk, way less risk I would think.
Yes. And raising the capital’s cheaper because you have predictability.
So here you’re doing your B, your C, D rounds.
So you’ll see companies stay in the
They’re in a high-growth stage. So everybody wants to pump money and because they got the engine going.
So have we said enough about high growth I wonder?
Is there anything you’d like to add to that before we move on to the next stages?
I think that’s
Yeah, okay. So, next stage after this?
Stage 4: Industry leading
I call this industry leading, right? So, think of Salesforce, right?
But here, your focus
Because your enemy is stagnation.
You own the market, and you can get
But the danger is you get stagnant.
Your market driver has shifted now from the product to the customer to the market to the industry.
Salesforce is a great example.
They define the CRM industry. They have multiple distribution models.
Their customer profile is all over, but now they’re
They’ve got a lot of little ankle biters nipping at their legs.
These are the guys that are maybe more agile or more disruptive or something of the kind.
So not only do the big guys have to think about how to perpetuate their growth, but they’ve also got to figure out how to protect themselves against an assault from a lot of other little guys that want a piece of their growth.
It’s interesting, Dave.
I think I’ve spent my career been an ankle biter.
You know, the early software companies I worked for in the 80s, we were competing against IBM, DEC, HP, you know, because they have so much obligation to their existing customers. they can’t be as nimble.
We can commit to innovating our products, our offerings to meet the unique requirements of customers.
And there’s a lot of business you can pick up there.
So ankle biters, you know, like in the Salesforce ecosystem, to continue with that comparison, they
The ankle-biter market is worth, it’s probably 25% of that. So you’re looking at $5 billion market for ankle biters. Which is
Now, Salesforce has smartened up.
IBM tried to compete and block the ankle biters, to use that analogy, and ended up losing.
They’ve created a partner ecosystem where they embrace the ankle biters.
They are letting them feed off the
Yeah, sounds like the old Godfather strategy. “Keep your friends close, keep your enemies even closer.”
I think was how it went.
Another strategy that occurs
So very, very different mindset for where you’ve been in an earlier stage of growth.
Yeah, you know, that’s where the innovation comes from, right?
You can’t develop it all in
So your acquisition strategy…
They get to that industry-leading stage of growth, and they become very acquisitive.
That’s a great strategy, it seems.
Rather than going public, they may just let it
People always say, you know, like in my current company, “Do you want to
What I’ve learned is you never know who you’ll get
You’ve got to focus on your knitting.
And if you focus on trying to get
So focus on doing your job. Yeah, doing a good job for your customers.
Getting your business metrics, your KPIs in good shape. Not so much with an idea to
You’ll get tapped on the shoulder. Companies will want to…
I mean, look, there’s a way of making yourself attractive without being overt.
You want to
But just to shift quickly, to be consistent…
Also, look at the sales profile.
I could never work in an industry-leading company.
I mean, it’s very rigid, right?
It’s great for young
Because you get good training. You get good mentorship and management. You work in a well-defined process.
The profile, the
And then as they become more senior, very comfortable in a well-defined, regulated environment.
So, as you get to that size, you got to look at, “Hey, my profile of my sales professionals has shifted.”
So I’ve been in that situation before as a salesperson.
And so, again, in my experience, chances are, you
They have enough experience, and so on, that other companies
Is that consistent with what you’ve seen?
Yes. What happens is, with your top players…
I’ll give you a specific example. A woman who worked for me through a five-year period. Every year, her territory shrunk in half.
I’d say, “Hey, your territory…”
In fact, the last year she worked for me, she had one account, and screamed, kicked, yelled, threatened. This and that.
But every year, her W2 doubled.
And that year when she had one account
People will kick and scream, but less is more. And what you do is you set your top players up, I mean, you give them challenging accounts, territories.
They can make some serious money. And that’s the other way you keep those top performers.
Right. I was just going to say, if they’re making that kind of money, they
Without a doubt.
And that’s what you’ll see, I mean, if you look at, pick a top company today, Oracle is a great example.
Oracle reps, the top reps, I don’t know about this year, but you’re making three, five, seven, top people, there’s probably a couple million dollar W2s in the sales ranks.
Yeah, you can make great money.
You give up… You got to act a certain way. That’s how you keep that great sales talent.
Let’s move on to the next stage of growth.
We’re just talking about market leaders, companies that are maybe what you’d call the 800-pound gorillas, the guys that are
What comes after that?
Stage 5: Mature company
Yeah, the last stage is what I call the mature company. So think IBM, Computer Associates, even Oracle today.
Yeah, right? Their focus just has to be on reinvention. What happens here is these
And so, their focus is on their stock price. And that’s the danger because they have a declining valuation.
And what you’ll see in these companies, if it’s a tech company, the employees have stock options but they’re probably underwater or could be underwater.
Which creates a
They’re afraid to leave because they have equity, but they’re pissed off because their options are underwater.
And that drives executive thinking.
Because the higher up you are, the more stock you have.
And that valuation thing is driving you out of your mind, which causes you, and that becomes the market driver.
You go from focused on your products to focusing on
Here, it’s valuation. And it drives everything that goes on in the boardroom. How do we increase that
And so, the way to do that is to reinvent yourselves.
You’ll see companies taking on new names, like Computer Associates went to CA.
They tried to hide their sins and
So they’ll try to
Like IBM reinvented, they moved away from a mainframe company to an AI Watson company, a consulting firm.
And increasingly from hardware to services, right?
So the way they sell Watson is primarily services, not hardware, right?
So, you know, there’s a classic example of a mature company declining valuation
And their customer profile shifts, right?
They’re focused on
They got to go back and act like that.
Their big concern is when they
Great point, Dave.
And, you know, that goes again, to stay consistent the salesperson profile, right? You
Can I make money here?
What’s exciting about this place?
How am I changing the world?
You need to be innovative to keep your sales engine up and running and to
Another aspect of sale, I’m sorry, John, I didn’t mean to interrupt.
Another challenge of larger companies in
I was thinking about this as you were talking about how to manage the sales force, a lot of larger companies figure
Could you comment on that?
Sometimes the merging of sales forces doesn’t go nearly
What are the risks and dangers there?
I’ve been through
I was with a company… we did 16 mergers and acquisitions in five years.
And initially, our approach was “mergers of equals.” We were trying to be nice.
And so, it was all about integrating both sales organizations.
It sort of worked.
But, we eventually got to
We would go cherry pick out the good sales people by doing research, looking at the top performers, offering them a special package, and then just killing the rest.
And the reason was all about speed and focus.
A merger of equals and integrating everybody and finding the right chair took way too long, costs way too much.
We became a
John, is there another stage of growth beyond these large companies that are trying to reinvent themselves?
Growth stages are cyclical
Well, it’s a big circle, right?
You don’t fall off the cliff at the end, if you
Even a company like Salesforce, I mean, they’re trying to incubate new businesses.
So they have to look at some part of their business as, like, take Einstein.
They’re trying to bring that out to market, that’s a startup.
So within large organizations, the trick is, you need to
Where do companies often go wrong in managing their growth by phases?
So you started off by saying that this idea of phases of revenue growth is
But the focus on what you do differently to achieve revenue from phase to phase is what you feel you bring to the table.
Can you talk a
Well, it’s interesting. It’s actually very predictable.
If you look at the data closely, it is possible to forecast when those transition points occur.
So it’s like driving a five-speed manual transmission car, right?
So if you’re still in
You’re not going as fast, but you seem to
You’ve probably got to push the clutch in and shift.
Now what happens if you go from first to third gear? The car could stall out, right?
So companies that go from startup and they try to scale, say they raise
You could stall out and burn through that cash
And I’ve been through that in companies I’ve worked for. That’s
You’re looking at possibly a fire sale of the company, you’re looking at maybe letting go of some of your key people
You’re cutting back on customer service to your clients. So you’re irritating your big customers.
You have the risk of damaging your brand, on and on and on. It’s a horrible thing when that goes wrong.
Have you seen that happen in companies?
Oh, I have. I think the biggest
So, over the past eight years, I’ve worked with 25 plus companies.
I think the most common mistake is the one I
Skipping that brand strategy, making sure you have tight messaging, that your segmentation strategy is tight
It is possible. But just be careful.
You could burn through capital
Differences in business processes and skills from one growth stage to the next
In discussions we’ve had in the past, you have mentioned that the tendency in some companies is that when they’re having trouble with revenue growth, they often blame individuals.
So they look to replace a sales rep, or they look to replace their sales VP or something of the kind.
When in fact, often the issue is that the company hasn’t taken the time or the effort it needs to develop better processes, systems, skills, and so
Can you elaborate on that, please?
What are the stages of your sales
And your sales
The pressure on sales leaders and
You’re pressured into making mistakes by ignoring that and just going out and grabbing deals.
So what happens is you try to pull deals forward… Maybe you give big discounts or something like
But then you’re robbing the future to pay the present and never really staying true to those.
So, I really, where I add value and have worked with customers is making sure they have those components in place.
Your sales model
Hey, it’d be great to have a direct sales force.
But can you do it with inside
Talking about looking and focusing on customer acquisition costs and keeping that in line with revenue.
Well said, Dave.
Yes. And your sales process, is it meaningful?
The only reason you have sales process defined in the stages is to look for barriers and constraints into your revenue generation strategy.
What’s my cost of sale to convert one to the next?
That’s why you have those in place. And then your sales profiles need to
Now, when you talk about sales profile, you’re talking about the profile you
Yes. And the sales leaders, right? Think about that. That’s an even more important profile to have correct.
Because you’ve finally handed over responsibility for sales growth to other people.
Your sales people are
Mistake: Hiring a high-profile sales leader with experience in the wrong stages of growth
So that makes me think of another mistake
And that is, sometimes a startup company will decide that they want to do the
So they hire a sales leader from, let’s say, a much bigger company who has a lot of experience, maybe they hire a big gun from, I don’t know, IBM or SAP or something like that.
What are the risks of doing that?
Yeah, it’s interesting because I’ve been in that position. Working with an
My hope is, I can’t wait to get this business scale back into my comfort zone because it’s
Say, you come from an industry-leading company and the company’s converting and transitioning from a
Your forecast isn’t predictable.
A lot of uncertainty still, and people are looking to you for answers and you’re like, holy shit, this is
Now, when it gets
So that’s the danger.
They can bring
Well, the other thing
They have staff for that. Maybe they have an administrative assistant.
Does anybody have administrative assistants in sales anymore?
They’re still doing…
So anyway, they’re accustomed to having all this infrastructure in place, and now they’re in a smaller company that has little or no infrastructure in place, and they find they’ve got to do everything themselves.
I’ve been in this situation myself, where I haven’t been able to provide the value I thought I
The need to have other business functions in place,
John, just one more thought I’d like to return to.
A few minutes ago, you were talking about focusing on what sales capabilities, what sales people and infrastructure and
What we haven’t talked about it that to ensure smooth revenue growth through these different phases
There are many gears that make this machine work. One
We talked a
Another one is
There are all these different elements. There’s HR and recruiting.
What advice do you have for CEOs as they think about having all the other right gears in place, tuned to the right level of performance for their current and next stage of growth?
Great question, Dave.
And they have to interlock and
So the way I look at it is I always start, my first
It’s like your scout. You need to know what’s going on in
Then you look at your
Is my product aligned with what’s going on in the market?
The third gear would be your corporate strategy. Am I able to fund and manage that product growth and development to map that market research?
And behind that is your market strategy gear.
Is my investment in marketing appropriate?
Then the next is your sales gear.
If you hire salespeople ahead of good marketing, you’re not getting leads.
Your brand isn’t tight, your messaging is poor.
So I think another mistake is, we sometimes hire sales or develop it ahead of proper development and marketing.
And then after that, you have your services.
With my offering, I sell it, am I supporting them?
Are they getting good customer service, is appropriate with my growth?
And then you have your talent gear.
Am I developing, you know—you call it HR—but am I developing and
And then your last one’s your operational gear.
Do I have the facilities, the technology in place, the systems in place to facilitate all those gears moving smoothly?
I guess, to return to the key point, it is
It’s that you need to have the right level of sophistication and the right capabilities for your current and next stage of growth.
And to know what that is.
What is appropriate for your current stage and where you
That’s the key thing.
Importance of market research early in a company’s growth
Yes. Yeah. And sort of the order.
I need visibility. What’s going on in the market? I don’t want to
If you think about Gettysburg and [Robert E. Lee], Jeb Stuart ran off.
He [Lee] lost his ears and eyes.
What I counsel my clients, the board members, the investors is, man, get your market-research type first.
Have good optics in what’s going on.
Interesting. Again, in my experience, that’s a step that a lot of companies overlook because they figure, I don’t know, we can’t afford market research.
Or maybe the founders
Or you have your own reality distortion field, right? And you think
We build a product that no one wants.
Or maybe like
That’s right. We’re not all Steve Jobs, right?
Well, John, is there anything
No. I think we’ve covered a lot, Dave.
I think you noticed I left it out.
I hope you noticed I left it out for your benefit.
I don’t think things are complex. I think they’re uncertain.
So I think growing your business is really about having good research, having good analytics, looking at data, and making your decisions based on that.
Follow those processes and those steps, look at those stages of growth, because you can forecast them when you have to shift gears with good data and analytics.
John’s work with
Well, John, I’m familiar with
Would you care to talk about them, to share some of that?
Sure. So, after eight years of my own consulting firm, working with technology companies and helping them through the stages of growth, I’ve joined a company by the name of
So the CEO and I bonded over our vision for the future of sales.
So what we’re looking to do is build into a software tool the capability to pull information from sources like a CRM, Salesforce, LinkedIn, other data sources…
If you think about it, a sales person today could be on 10 to 15 different systems.
They’re in CRM, they’re in LinkedIn, they’re in email, they’re calendar. But they’re not, they’re required today to just update the beast, give it data.
Because management needs the analytics out of these systems.
But it’s not giving back.
So our vision is to give back to sales professionals to give them actionable insight into what to do next in their sales process. And their deal strategy.
John, we’re coming to the end of our time here.
I’d like to thank you so much for sharing your insights with our listeners today.
If anyone wants to follow up with you, what would you suggest?
You can find me on LinkedIn, John Stopper, or send me an email at
Those probably are the best ways.
And how do you spell
Great. John, thanks so much. Take care.
Dave, thank you.