Squeezing Out That Last 10%-20% Growth

Once you have something in SaaS, somewhere on the path from $1m to $10m where you’re either on your way to Initial Scale or getting past it, you’ll often end up with a subtle choice: Should you go for the extra 10%-20% of growth a year? After a few years, a few management team mistakes, and a few cycles, finally it will be repeatable.  Net negative churn and renewals will kick in.  Your mini-brand will start drive in a regular stream of leads (more on that here).  You’ll be a known vendor, have a decent sales team, a proven product, a steady stream of leads.  You’ll more or less know how you’ll do next quarter and maybe even this year, within a wide variance at least. You’ll finally, sort of, have some of it dialed in and figured out.  Folks will start to get Continue reading "Squeezing Out That Last 10%-20% Growth"

Corporate VC Investments: Limited, But Real, Pros. And Cons.

2018 is the Best of Times for venture capital.  200+ new seed funds, and a record number of unicorns and decacorns.  And as part of this, more and more big corporations are adding and expanding their venture arms.

For the most part, this is a great thing.  More options are almost always better for founders. Let me share a quick list of Pros, Cons, and Not Big Deals.

Cons:

  • Usually won’t carry the company or write many “second checks”. This is the biggest issue. Traditional VCs usually reserve another 1x-2x of their first check for later investments. Corporate VCs don’t. They also generally don’t want to “carry” a company and write another check if no one else will. VCs don’t like this either, but they’ll often do it.
  • Aren’t usually great at bringing in next round investors. Top seed investors are good at brining in Series A
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The More Enterprise You Are, the More Visible the CEO Should Be

Many of us founders would secretly like to sit in front of the iMac half the day, and spend the rest of the day planning on making the product even better.  Versus getting on jets, getting on TV, going to events, doing customer steak dinners, etc.

Yes you can win in many cases by remaining “hidden” as CEO — but the more enterprise your customer base is, the more important getting out there and being out there is.

Let’s contrast Box and Dropbox. Both grew into huge wins and highly successful public companies. But Box became 95%+ enterprise by revenue over time, and Dropbox is still 95% SMB and smaller and consumer.

As Box went/tilted from a consumer to an enterprise app, Aaron Levie became highly visible. He stopped sitting in front of a computer all day with the dev team, and put on suits, and spoke everywhere. Box Continue reading "The More Enterprise You Are, the More Visible the CEO Should Be"

The Hardest Part About SaaS Companies, At Each Stage

The hardest part changes every 12–24 months.

But a few thoughts on “the hardest part” for the first few stages:

  • From $1-$100k in ARR, the hardest part is often how little revenue you get from each customer. Most SaaS products are inexpensive. You work so, so hard to close 100 customers … at $10/mo/customer … and that’s only $1,000 a month! Not enough to pay even a single salary. So much work, so little revenue.
  • From $100k-$1m in ARR, the hardest part is how slow it is. It seems to take too long to get anywhere. Yes, you now know how to make customers successful and happy now. But it is so slow. You have 2,000 customers now. But at $10/mo, that’s still just $20,000 a month. Enough to pay some salaries and AWS bills, but it’s not that much. And each month, you barely add enough new revenue to
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5 Ways to Enter a Crowded Market. And 3+ Ways Not To.

In SaaS, usually one of 5 things enable a new vendor to break-out in a crowded space:
  • 10x better at One Important Thing. In the early days, you will be buggy and feature-poor. Maybe even in the not-so-early days ? But if you are 10x better at (x) One Important Thing that (y) customers value and will pay for, that’s enough. Many founders get this wrong however, and build a key feature that is indeed 10x better — but not one important enough to pick a raw new vendor to get. It’s only a subset of critical functionality that customers will pay to have implemented 10x better than an existing, trusted vendor. Usually, the part that is close to the money they make, manage, process, or collect.  A little more here.
  • Dramatically Cheaper. This one’s tough to play. Because businesses trust and value brands they can rely on. But often,
    ?
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Why We’re All Ready for a CRO or COO Earlier These Days

I used to think CROs and COOs were made up titles until “Late Stage” or so, and in startups, a bit of a sign of weakness.  Giving away a fancy title to someone that wasn’t really willing to do the work.  I used to think there’s no way a SaaS startup needs a “CRO” or “COO” or other C-level Officers Without a Clear, Single Functional Area to Own Until $40m-50m+ in ARR.

But … like many things … my views have evolved ?

Three trends have fueled the rise of hiring COOs and CROs closer to $10m ARR than $50M ARR:

Come Visit the New SaaStr CoSelling Space in the Heart of SOMA (303 2nd Street)!

We’ve unpacked, we’ve settled in, the Internet works and we’ve got Wednesday lunches worked out. Now come tour and check out the new 2.0 SaaStr CoSelling Space! It’s bigger (18,000 sq ft) and for most folks, more centrally located (heart of SOMA) than the first CSS.  We have in-building parking and a half dozen restaurants on site, and it’s just a block to Salesforce, LinkedIn, Algolia, South Park VCs, Blue Bottle, and everything else. Want a Day Pass or a tour?  Click here and the team will make it happen! We’ll also have a formal open house and first event there soon.  All of Team SaaStr works out of here, too.  It’s fun and everyone here is a post-revenue SaaS company.  Learning to scale together. The post Come Visit the New SaaStr CoSelling Space in the Heart of SOMA (303 2nd Street)! appeared first on SaaStr.

When to Add a European (or Other International) Office

SaaS has been global from the earliest days, although how and when you go global can vary.  Salesforce went very early into Japan (it takes a lot longer to add a lot of Japanese customers for most of us), which quickly accounted for almost 10% of their revenue in the early days.  I had 15% of my revenue in the U.K. in Year 1. And these days, the opposite is just as common.  European and Indian SaaS startups in particular start selling in the U.S. early in their lifecycles. The mistake most U.S. SaaS companies make however — that most European and Asian SaaS startups don’t — is they wait too long in setting up other offices.  You’ve got to be near your customers and partners, at least, if the customers are larger.  You leave too much money on the table, in
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Can You Scale Sales in the Bay Area? $30k ACV is Probably The Cut-Off

Silicon Valley / SF has gotten incredibly expensive. Rents, salaries, and perhaps most importantly, turnover. I’ve invested in 5 French start-ups. SF costs 2x Paris, fully burdened. It’s crazy.

And sales teams have gotten particularly expensive, because they don’t quite scale the same way engineers do.  You can pay great engineers a ton, eventually, because 1000s of folks can use the same software.  But you really do need Y reps for every $X00K of new bookings.  Sales gets more expensive as you add customers.  Engineering generally goes the other way, if you are doing it right. Why have sales teams gotten so exepnsive in SF?  It’s not just salaries and bonuses.  Those actually haven’t grown 2x in the past 5 years.  But the fully burdened cost probably has grown 2x, because:

15+ of The Top Sales & Marketing Mistakes SaaS Startups Make

Recently I assembled my “Top 15” list of Sales & Marketing mistakes SaaS startups make as things start to take-off.  We’ve touched on quite a few of these before on SaaStr (will link to them), but I thought this might be a helpful checklist to challenge your thinking at a minimum. We’ve all made many of these mistakes ourselves, myself included ?  I’m even making a few myself again.  But if you see yourself making any of the mistakes below, it’s fairly easy to make a course correction.  Just do it!  It will help. Sales: