Why do some startups choose not to sell to other companies, and instead they go for an IPO?

I was just with a founder who owns 40% of his startup. He just turned down an offer for $500,000,000 to sell his startup to a public company. He is 33. I do not believe he has any life savings. I do not believe his parents have any savings, and he did not come from any money. He has never sold a share. 40% of $500,000,000 is just about $200,000,000. Turning that down is nuts. Why? Because he must think those shares are worth at least $1b (5x) to risk-adjust. And maybe, he’s just not done. Also — he is a much better CEO than I was. I was a good founder, but not nearly as good as he is. Who do you want to be? What do you want to do? What future do you see? We’re all different here. Selling often is logical, the highest return on time, Continue reading "Why do some startups choose not to sell to other companies, and instead they go for an IPO?"

Why do some startups choose not to sell to other companies, and instead they go for an IPO?

I was just with a founder who owns 40% of his startup. He just turned down an offer for $500,000,000 to sell his startup to a public company. He is 33. I do not believe he has any life savings. I do not believe his parents have any savings, and he did not come from any money. He has never sold a share. 40% of $500,000,000 is just about $200,000,000. Turning that down is nuts. Why? Because he must think those shares are worth at least $1b (5x) to risk-adjust. And maybe, he’s just not done. Also — he is a much better CEO than I was. I was a good founder, but not nearly as good as he is. Who do you want to be? What do you want to do? What future do you see? We’re all different here. Selling often is logical, the highest return on time, Continue reading "Why do some startups choose not to sell to other companies, and instead they go for an IPO?"

At a $20B valuation, is WeWork overvalued?

Well, goodness since this question was asked WeWork is now worth $20 billion! + WeWork’s $20 Billion Office Party: The Crazy Bet That Could Change How The World Does Business Does this even make sense? WeWork is losing money, its margins are murky and it is crafting brand new financial metrics like “community adjusted EBITDA” we’ve never heard of! WeWork’s staggering growth has run up an $18 billion rent bill Still … maybe it does make sense. First, there’s a $3b public company comp in Regus/IWG. Regus is a slow-growing, but well established player in the market. And WeWork is growing much, much faster. So you can clearly see your way to a much higher valuation than $3b: Secondly, the market itself is very large ($200b+) and is clearly changing. Office space is a huge market and Regus/IWC only carved out a very small space of it. WeWork by contrast
Continue reading "At a $20B valuation, is WeWork overvalued?"

At a $20B valuation, is WeWork overvalued?

Well, goodness since this question was asked WeWork is now worth $20 billion! + WeWork’s $20 Billion Office Party: The Crazy Bet That Could Change How The World Does Business Does this even make sense? WeWork is losing money, its margins are murky and it is crafting brand new financial metrics like “community adjusted EBITDA” we’ve never heard of! WeWork’s staggering growth has run up an $18 billion rent bill Still … maybe it does make sense. First, there’s a $3b public company comp in Regus/IWG. Regus is a slow-growing, but well established player in the market. And WeWork is growing much, much faster. So you can clearly see your way to a much higher valuation than $3b: Secondly, the market itself is very large ($200b+) and is clearly changing. Office space is a huge market and Regus/IWC only carved out a very small space of it. WeWork by contrast
Continue reading "At a $20B valuation, is WeWork overvalued?"

In software sales, which is better: account executive (new business, fewer accounts, and outbound) or account management (existing account growth and revenue analysis)?

“Better” is hard to say but what is clear is that the Account Management role in SaaS is a much more fluid, in transition role. In recurring revenue, the sale is just the start of a multi-year journey. How do you approach upsell and account growth after the “sale”? Boy it varies:
  • Some SaaS companies just do this through Customer Success. There is no sales component at all. This can work well, but it often leaves money on the table.
  • Some SaaS companies partner sales and account management through a long tail, e.g. 1 year. Many API/B2D companies do this in particular. Any revenue through Day 365 after a deal signed is managed by both Sales and Account Management, and then just Account Management after.
  • Many experienced SaaS companies are using much more sophisticated analyses on Account Management. The job is become much more data-driven.
What has certainly changed Continue reading "In software sales, which is better: account executive (new business, fewer accounts, and outbound) or account management (existing account growth and revenue analysis)?"

In software sales, which is better: account executive (new business, fewer accounts, and outbound) or account management (existing account growth and revenue analysis)?

“Better” is hard to say but what is clear is that the Account Management role in SaaS is a much more fluid, in transition role. In recurring revenue, the sale is just the start of a multi-year journey. How do you approach upsell and account growth after the “sale”? Boy it varies:
  • Some SaaS companies just do this through Customer Success. There is no sales component at all. This can work well, but it often leaves money on the table.
  • Some SaaS companies partner sales and account management through a long tail, e.g. 1 year. Many API/B2D companies do this in particular. Any revenue through Day 365 after a deal signed is managed by both Sales and Account Management, and then just Account Management after.
  • Many experienced SaaS companies are using much more sophisticated analyses on Account Management. The job is become much more data-driven.
What has certainly changed Continue reading "In software sales, which is better: account executive (new business, fewer accounts, and outbound) or account management (existing account growth and revenue analysis)?"

What is the biggest failure you’ve had in your career? What steps have you taken to make sure something like that doesn’t happen again?

I’ve had many almost failures and the #1 thing I’ve learned from them is never quit. The others will quit. They will give up when it’s hard. They will give up when you finally have customers, but not enough of them. They will give up when the market size looks too small. They will give up when it’s Month 12 and no one has a paycheck. Giving up after a certain amount of time is rational. But don’t give up, ever, if you have something. __ My failures are more subtle but painful. The first “failure” was my first start-up job, where we sold to a recently IPO’d startup instead of Amazon “just” for a higher price. But the quality of that compensation was lower. I lost that $12m in paper money just a few months later. We should have sold to Amazon for all cash. While that’s only somewhat Continue reading "What is the biggest failure you’ve had in your career? What steps have you taken to make sure something like that doesn’t happen again?"

What is the average ratio of support staff to customer counts in a SaaS model?

Typically support consumes about perhaps 5%-7% of your revenue at scale (excluding customer success) in most SaaS models. It could be more or less, but that’s a rough way to think about it. So at $100m in ARR, you might be spending $5m-$7m on your support team. As you can see, that puts a lot of pressure on costs. But spend a lot more in the early days for sure. Happy customers beget more happy customers. Make sure the phone is picked up by ring #3. Make sure every Intercom chat is answered in 60 seconds of less. Have instant support while you can. It’s your top marketing and customer retention investment. View original question on quora The post What is the average ratio of support staff to customer counts in a SaaS model? appeared first on SaaStr.

Do you think Elon Musk takes up too many new ventures simultaneously preventing effective execution of the current ones?

I think he, like many successful founders, see things almost getting done that could be great … and at some point feels he no choice but to intervene or a company or initiative will fail. So he takes them over himself, reluctantly. And the better a founder you are, the more often you can do this, and it’s easy to take on way too much. Elon Musk did not plan to be CEO of Tesla. He just wanted to be its largest early investor. But after burning through most of the cash, and cycling through several CEOs, and with a product that looked like it might never get to market … he decided he had to jump in as CEO to make it work. The Solarcity story is different, but again perhaps there is a similar thread. He did not want to be CEO or run it, he just wanted
Continue reading "Do you think Elon Musk takes up too many new ventures simultaneously preventing effective execution of the current ones?"

What are some good questions for the first sales person you are going to hire for your B2B SaaS startup?

The #1 most important criterion for your first 2 reps is: would you buy from her? Leads are too precious in the early days, your brand is non-existent, and everything is quirky and undocumented. Later, this is the wrong criterion. Later, you’ll need all sort of reps, and beyond that, you’ll have so many customers and so many different types of customers that what you would buy isn’t representative of the sales process anymore. But in the early days, it is. So forget the perfect LinkedIn. You do want at least 18–24 months of on-point selling experience at close to your price point. Not having that is very risky. Because those 18–24 months train them in a way you can’t. Beyond that, the best question is a little role playing. Pretend you are the rep, and ask the candidate, “How can I help you improve your business with [our product]? Continue reading "What are some good questions for the first sales person you are going to hire for your B2B SaaS startup?"