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.
- 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 Continue reading "Corporate VC Investments: Limited, But Real, Pros. And Cons."
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 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 Continue reading "The Hardest Part About SaaS Companies, At Each Stage"
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:
- Faster Growth. If you are growing 40% at $10m in ARR, a COO may be a luxury. If you are growing 150%, it may be a necessity to get help in ASAP to run a material part of the business.
- Specialization. As we’ve all gotten more experienced in Continue reading "Why We’re All Ready for a CRO or COO Earlier These Days"
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:
- Effective Quota Attainment is falling. As the competition for reps Continue reading "Can You Scale Sales in the Bay Area? $30k ACV is Probably The Cut-Off"