In The Room with Ash Rust
In this week’s episode of The Room Podcast, Madison and Claudia welcome Ash Rust, Managing Partner at Sterling Road, a pre-seed venture fund focused on founder coaching. In 2011, Rust founded SendHub, which would eventually be acquired by Cameo Global, a fully-fledged out-of-the-box SMS business solution. At the point of acquisition in 2015, SendHub’s biggest customers included Lyft and Wag. After Rust sold the company in 2015, he took a job with Trinity Ventures but realized that he didn’t like the classic VC approach of big checks after minimum time. With Sterling Road now, he is taking a different approach with focusing on establishing relationships before writing checks.
This episode’s key themes include validating early problem spaces and getting effective feedback from customers, frameworks around building an early sales org, and early-stage GTM strategies, such as how to think about pricing. Let’s open the door.
…
Key Theme 1: Validating early problem spaces and getting effective feedback from customers
In Rust’s opinion, getting feedback is essential in figuring out and validating early problem spaces. Many founders will lack the existing industry knowledge of their products, so Rust advises founders to reach out to people for advice. Rust commonly sees founders assuming that their hypotheses are correct, but feedback helps validate if the idea is indeed viable.
“Over and over again, during that first feedback customer discovery section, you see a lot of startups where they really invest the time there and pivoting to a slightly different idea because there’s demand elsewhere than from where they thought it might be.”
While it’s good to have confidence in your ideas, feedback will ultimately point out problem areas early on in the building process.
Key Theme 2: Frameworks around building an early sales org, and early-stage GTM strategies
Rust likes to think about this framework in the form of a sales playbook and firmly believes in founder-led sales and taking notes. As you close your first few sales, Rust emphasizes the importance of taking detailed notes of what is and isn’t working, and this process should be repeated at every stage, from outreach to invoiching. These notes should be a living document that is the basis of your sales model and can explain easily to any new team member how to sell a product. Rust gives the example that the outreach chapter of the playbook should include everything from what channels you’ve tried, what’s working best right now, expected response rates, email templates, call scripts, and more.
Key Theme 3: Early-stage GTM strategies
When navigating early-stage GTM strategies, Rust’s first piece of advice is to start with high pricing then negotiate down. In finding this early reasonable price, Rust says that founders should look at a price 10x of the cost of goods sold. Once that price is set, Rust says to triple it. He’s also speaking from personal experience as he originally charged $10 a month for unlimited text messaging on the enterprise service of SendHub, and within 18 months, that price was 16x and only for a thousand text messages a month. Software tracking data is also making a huge difference in early stage strategies, and Rust says if you can find one star sales person, the AI analysis of the business can help you understand a whole lot about the business model and what’s working or isn’t working.
…
Thank you for joining us in the Room! We will be back with a new episode next Tuesday at 7AM PST/10AM ST. Until then, check out our full playlist of episodes here.
