SaaStr 609: SaaStr CRO Confidential Presents How to Survive in a Competitive Market with Divvy CRO Sterling Snow. Hosted by Founders Fund Partner Sam Blond. - The Official SaaStr Podcast: SaaS | Founders | Investors Recap

Podcast: The Official SaaStr Podcast: SaaS | Founders | Investors

Published: 2022-11-18

Duration: 1917

Guests: Sterling Snow

What Happened

Sterling Snow, CRO at Divvy, and Sam Blond, Founders Fund Partner and former CRO at Brex, examine their companies' fierce competition in the corporate card space. They agree that overestimating or underestimating competitors can lead to strategic missteps. Snow emphasizes the importance of expertise in fintech, a lesson he learned through early mistakes.

Divvy differentiated itself by targeting mainstream businesses like HVAC companies and plumbers, unlike Brex, which focused on startups. This strategic positioning helped Divvy carve out a unique niche. Snow also highlights the effectiveness of creative marketing strategies, such as using billboards and wrapping cars with Divvy branding.

The discussion includes various low-cost marketing initiatives. For example, Divvy reduced its customer acquisition cost by 75% during COVID by improving onboarding processes and partnering with a business newsletter to generate 900 demo requests.

Blond shares Brex's guerrilla marketing tactics, like distributing burritos at conferences, which cost $3,000 for 1,000 burritos but significantly increased brand recognition. Both leaders agree that while competition is intense, it can drive better business practices.

Snow advises against relying on price or rebate-related value propositions and instead focuses on product differentiation. Divvy's budgeting tool is highlighted as a key differentiator, whereas Brex positioned itself as a simpler option, demonstrating different competitive strategies.

Both Snow and Blond stress the importance of adapting sales and marketing strategies to current economic conditions. Snow also notes the challenge of maintaining efficiency during hypergrowth and cautions against assuming that more salespeople will automatically generate more revenue.

Key Insights

• Sterling Snow learned that being either too confident or too dismissive of competitors leads to strategic errors. Recognizing competitors' strengths and weaknesses is crucial for effective positioning.
• Divvy's marketing strategy involved targeting mainstream America, contrasting Brex's focus on startups. This unique approach allowed Divvy to attract a different segment of the market, leading to its acquisition by Bill.com for $2.5 billion.
• Divvy's creative marketing initiatives, like partnering with newsletters for exposure, significantly reduced customer acquisition costs. During COVID, Divvy improved its onboarding process, reducing CAC by 75%.
• Sam Blond and Sterling Snow agree that competition fosters better business practices. Brex's and Divvy's distinct strategies reflect how companies can capitalize on their strengths to differentiate in competitive markets.