Oct 8, 2024 · 49m · saastr
The Secrets to Selling and Scaling in Vertical SaaS with Slice's CRO
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this SaaStr session, Slice CRO Loren Padelford joins Jason Lemkin to discuss go-to-market strategies, sales leadership, and the operational blueprint for building full-stack vertical SaaS platforms that dominate fragmented SMB markets.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Jason holds 22.2% of the talking time here. How this is scored →
Jason as informed peer 4.6 Guest teaching 4.8 Guest disagreement 2.1 Jason pushing back 1.1
speaking balance: gold is Jason, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 29:20 Rejection of the 'product savant' sales narrative
Loren directly counters Jason's premise that top sales reps are intuitive product savants, insisting their dominance comes strictly from outworking others.
Hardest push from Jason ▶ 18:11 Jason challenges the 100% market share ambitionJason pushes back on Loren's 100% market share target, pointing out that even dominant players like Salesforce do not control their entire core markets.
Biggest teaching moment ▶ 44:45 The flaw of using average rep performanceLoren explains why relying on average performance metrics is a major red flag for CROs, detailing how averages mask rep inequality and ruin quota planning compared to medians.
Jason holds their own ▶ 15:12 Jason applies Klaviyo's vertical market share doctrineJason leverages Andrew Bialecki's Klaviyo keynote insights to push Loren on vertical SaaS TAM capture and question conventional multi-unicorn market share splits.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Jason as informed peer | Guest teaching | Guest disagreement | Jason pushing back | Why |
|---|---|---|---|---|---|---|
| Slice's Model: Full-Stack Platform for Independent Pizzerias | 6 | 3 | 1 | 1 | Jason draws on industry context, citing Bessemer's initial hesitation to back Toast, while Loren details Slice's $50B TAM and supply chain services like pizza box aggregation. | |
| The Economics and Trust Dynamics of Vertical SaaS | 6 | 4 | 2 | 2 | Jason points out the $10k ACV threshold needed for SMB vertical SaaS viability and Toast's loss-leading hardware; Loren explains how commoditization collapsed the traditional PLG model. | |
| Capturing Full Market Share in Specific Verticals | 6 | 5 | 3 | 2 | Jason introduces Klaviyo's 50% market share thesis; Loren contrarily targets 100% market share, drawing on Shopify's strategy of undercutting enterprise e-commerce competitors. | |
| Balancing Startup Growth Margins and North Star Metrics | 5 | 4 | 2 | 1 | Jason compares gross margin benchmarks between Toast and Shopify; Loren reframes margin as a secondary metric behind total order flow capture. | |
| Recession Resilience and the Sales Power Law | 6 | 4 | 2 | 1 | Jason compares B2B macro headwinds with consumer-facing software durability, while Loren rejects macroeconomic downturn excuses by citing sales performance power laws. | |
| Demystifying Top Sales Reps: Work Ethic Over Savant Status | 4 | 6 | 4 | 2 | Jason suggests top sales reps succeed because they are product savants; Loren rejects this framing, asserting top performers simply outwork peers through relentless practice. | |
| The CRO as a Go-to-Market Process Engineer | 2 | 5 | 1 | 0 | Jason asks for an overview of the CRO role at Slice, prompting Loren to explain his engineering approach to sales inputs, conversion steps, and process levers. | |
| Engaging Time-Constrained SMB Entrepreneurs | 5 | 5 | 1 | 1 | Jason highlights why automated SDR email cadences fail with SMB owners; Loren agrees and outlines outside sales tactics rooted in upfront value and interruption science. | |
| Q&A: Expectations, Levers, and Red Flags for New CROs | 1 | 7 | 3 | 0 | In the audience Q&A, Loren delivers a masterclass on new CRO evaluation, urging founders to look at median performance rather than distorted averages. |
Statements from this episode (26)
Padelford: US independent pizzerias outnumber major pizza chains 2 to 1
“There are somewhere between 30 and 40,000 independent pizza shops in the United States. If you combine Domino's, Pizza Hut, Papa John's together, there's about 20,000 shops. So independent pizza is a larger market than like big pizza.”
Padelford: US independent pizzerias generate $50B in annual order flow
“In those pizzerias is fifty billion dollars a year worth of order flow and spend. So when people are like, oh, pizza can't be that big of a market, that's fifty billion dollars worth of TAM in a single vertical in the United States alone.”
Padelford: Slice exceeds $100M revenue across tens of thousands of pizzerias
“We're over a hundred million dollars in revenue. We're growing. We've got tens of thousands of customers in the platform and we're extremely early.”
Padelford: Domino's is a vertical SaaS company masquerading as a pizza shop
“Domino's is vertical SaaS. It is a tech company masquerading as a pizza shop, right? It has given their owners, the franchisees, a massive technology stack and a complete unfair advantage. And as a result, Domino's is the most dominant pizza shop in the world.”
Lemkin: Vertical SMB SaaS requires $10K in annual revenue per customer
“I think if you do the math, you almost have to earn at least 10 K a year from these very small businesses to make the math work.”
Padelford: Single-feature SMB products cannot build billion-dollar businesses
“No single thread, especially in SMB is probably high value enough to be alone for you to do alone and create billions of dollars of return.”
Padelford: Standalone POS software is commoditizing to zero value
“No single, like if you're POS only, like POS will get commoditized to zero and basically already is. Most POS companies alone are making all of their money on the rake of the transaction and not no one's like the hardware is now zero that you have to start.”
Padelford: Domino's generates $6B in revenue from 9,000 stores
“Domino's is a six billion dollar revenue company off 9000 stores.”
Padelford: Early Shopify won $50K deals against $900K Salesforce enterprise contracts
“The average enterprise deal in e-com at that time in history, you had Salesforce doing deals at eight, 900,000 dollars a year that we could do at 50.”
Padelford: At $100M revenue, Slice prioritizes growth over gross margin optimization
“We're too early to run the business on a margin profile. When there's so much growth opportunity.”
Padelford: Last year set a record for pizza shop openings
“Last year as a fun fact was the top year for pizza shops growing sorry, pizza shops opening ever.”
Padelford: The pizza industry is essentially recession-proof
“Macroeconomically, it is somewhat quote unquote, recession proof, downturn proof, because like when things are bad, you order pizza. When things are good, you order pizza, right? Funerals, pizza, weddings, pizza.”
Padelford: Sales teams follow power laws; companies mistakenly just add headcount
“Most businesses that I've seen and most sales orgs that I've seen Almost always fall under a power law. Which is most of the business is being driven by a small number of people. And yet the company continues to add headcount and spread it out. And it's just s…”
Padelford: Sales success is driven by extreme work ethic, not innate talent
“The barrier to entry to success has always in sales has always been the same thing. Work. Right. That's the barrier. The barrier is you got to work your butt off.”
Padelford: The internet removed brutal work as the greatest filter in sales
“Sales's greatest filter is brutal work, right? It is the greatest filter. It's been removed in the last 15 years from most orgs that filter because of the internet.”
Padelford: Salespeople are fundamentally part of the product itself
“There isn't the product and the salesperson. This is all the product. And so how you talk about it, how much you know about the industry, how much you know about the other customers is part of being a great sales rep.”
Padelford: Revenue is an output metric, not an actionable direct activity
“I fundamentally believe no one wakes up and does revenue. That's not their job. Revenue is an output of what people do.”
Padelford: The CRO's true role is systematic process engineering
“That's the job of a CRO is your process engineer is like breaking all the things down to their component pieces, understanding the math and the metric, understanding the leverage, and then like Better. Better. How do we do it better? How do we do it list incre…”
Padelford: Slice deploys outside sales reps walking directly into pizzerias
“So we have outside sales reps who are just walking into shops.”
Padelford: Enterprises build evaluation processes while small entrepreneurs have none
“The enterprise has set up entire organizations and processes to evaluate stuff. They're always evaluating stuff. The average entrepreneur has zero processes to evaluate anything. They're literally just trying to keep it going every day.”
Padelford: Sales is fundamentally an interruption science
“Sales is at best interruption science, no one woke up and was like, you know what? I hope happens today. Sales reps call me.”
Padelford: Many companies searching for a CRO actually just need a VP of Sales
“The number of companies that say they want one, but what they actually want is a VP of sales is wild.”
Padelford: A new CRO not digging into front-line details immediately is a red flag
“If your CROs are not deep inside the org very quickly, like just asking questions, learning, looking at spreadsheets, understanding the motion and with the cut and talking to customers, like talking to customers, listening to calls, all that kind of stuff, lik…”
Padelford: Sales leaders should ignore average rep performance and use medians
“The other thing is immediately kill anyone who talks about averages. If they're showing up, they're like the average performance. Oh, the average performance. That's pulled both directions by your worst rep and your best rep. So if you have a rep who's 10,000 …”
Padelford: Vertical SaaS must sequence products by customer problems over short-term revenue
“We are led by the customer's problem set is the kind of only way I've ever seen it really work. You can lead by what makes you money. I think the challenge with that sometimes is that can run out on you. It's like eventually It's if it's not a valuable enough …”
Padelford: Early SaaS products must target customer-acknowledged problems to drive willingness to pay
“Your early products should solve a very obvious problem for that customer. That customer agrees is a problem that they want to solve because usually those are also the things they're willing to pay you for.”