Recently on LinkedIn and Twitter I put together a list of things that later, once you are successful, even very successful, you’ll regret. It got a lot of engagement from the SaaS veterans out there, so I thought it would be worth digging in more on each point:
Regrets are different than mistakes. You will make so many mistakes. We all do. You learn, you move on.
No regrets are things that especially in recurring revenue companies, you’ll look back and say … well, I knew I should have done that at the time, and it wasn’t crazy hard, and it would have helped a lot … but I still didn’t do it. The flip side of recurring revenue is you will later regret things that you could have done earlier to help, that were sort of obvious, that would have helped more of it recur. Because later you’ll see just having gotten on one more jet, made one more key hire, and then a few years down the road, you might be $1m, $2m, $5m further along in ARR. It Compounds.
So what’s my list of SaaS regrets? Let me dig into them more here. So that maybe by challenging you here, you do just one more thing in SaaS you could have done, you know you should have done … that pays off 1-5 years down the road. Maybe pays off big.
#1. Not Paying Up for Top Hires, and #2. Under-Hiring. These have to be close to the biggest regrets you’ll have later. Yes, a true VP, or even a stretch VP, will cost a lot more than a manager or individual contributor. But you won’t save money that way. You need someone that can own a number. Not just help here and there. Hiring a junior content marketer may be much cheaper in direct comp than hiring a VP of Demand Gen. But a VP of Demand Gen that brings in $1m in pipeline her first year is going to be far cheaper overall than a Content Marketing Manager that doesn’t directly bring in any pipeline. Don’t underhire for any key position. Go for the VPs. Or at least, the seasoned Directors. Even if that means paying 50% more. It’s almost always worth it. They should all be accretive, done right.
#3. Waiting To Hire That Key VP. This is related to, but different, than the prior point. There is indeed probably an optimal time to hire each VP. But hiring a great VP a bit early is much, much better than hiring a great VP late. This is again a terrible place to save money. Wait to hire your VP of Eng to save a few nickels … and that technical debt just never gets solved. Or that key six figure deal is lost, because you can’t ship that extra feature. Wait to hire your VP of Customer Success … and watch a key account just leave to a competitor. Even though everyone thought they were super-happy. Etc. etc. Waiting to hire a VP is just another Under-Hiring fail. You really almost need them all by $1m in ARR, if you can find them. At least, hire any great VP you can find for any of the key roles as soon as you can even cover her base salary. That you will never reget. The best ones are always accretive in SaaS.
#4. Unnecessary Dilution. These are the Best of Times in SaaS, and by all means, if you are able to raise venture capital, and need it, raise it. But I see two big regrets in venture capital, and they are somewhat confusingly at different ends of the fundraising spectrum. One regret I see these days is raising a round you didn’t need to. Today, there are so many more sources of capital out there, at least for the right SaaS start-ups. It is great to raise an extra seed round if you need the money. But if you don’t need it, and the price isn’t super high, you’ll likely regret the dilution later. Think of the hires you could have made with that equity.
#5. But, Also Not Raising An Extra 25% In The Last Round is the confusing flip side of #4 –– being too cheap when you raise VC capital — because times are good. Too many founders raise too little because they think they can raise more, at a higher price, later. Well, maybe. But I’d say 66% of the SaaS companies I work with always end up needing about 25% more than they planned. Just raise it. Maybe even put that 25% at a different bank, and don’t touch it. Then, you have your security blanket. Almost everyone ends up needing an extra 3-9 months of runway. Almost everyone. I needed it.
#6. Not Being Physically Closer to Key Customers — and Partners. This is a mistake I see so many first-time founders make. They don’t get on jets. They don’t go meet prospects in person, which is bad enough … because the competitor that does wins the deal. But even worse, they don’t visit their key customers in person even after the deal closes. You gotta be there. At least once a quarter. They even call these meetings QBRs — Quarterly Business Reviews — for a reason 🙂 And if you have a huge account, a whale — set up a field office there. Right next door. If you close a $500k ACV deal in London, put a country manager, or GM, or CS exec there. Same in Seoul, or Chicago, or New York, or L.A. If you can walk over to visit your customers and partners, you will get more out of them. More account growth. More referrals. More upsell. Better retention. And less churn. The vendor that is the closest to the key customer or partner, all things being equal, wins. It’s still all personal in bigger deals. Maybe even more than ever.
#7. Not Having Had More Folks in Customer Success. You’ll likely look back and realize you put too many folks into sales roles versus customer success. You’ll see this helped you maybe make the quarter, but maybe, also miss the big picture. For any SaaS vendor with net negative churn, the sale is just the start of a decade-long journey. You’ll never look back and regret not having more CS coverage. You’ll never look back and regret segmenting your CS team too early. Or adding an EMEA CS team too early. Etc. etc. Try to get 1 CS pro per $500k in ARR. Maybe even more, if you have a few nickels. If they are good, you’ll never regret it.
#8. Losing a Few Top Logo Accounts You Could Have Kept If You’d Gone There, or More Often. Very related to the prior point, but worth digging in on Logos in particular. You will regret any top logo you lose that you could have saved. If Google or Salesforce or Shopify leaves you to go to a competitor, that’s a triple blow. You lose the revenue. You lose the logo. AND you lose all the referrals for the next decade that would have come from that logo. You just can’t lost the key logos. They are just too hard to win, too value, too accretive to your brand. So first, overstaff them. If need be, assign a Total Potential Value to them if the deals start small, and staff them per TPV, not current ACV. Second, consider a VIP CS rep just assigned to logos, especially smaller ones that still have high value. And finally, you have to go there. Yes, you the CEO. If you go, ideally at least twice a year, they will likely stay.
#9. Not Leaning In On Biz Dev, Partners & Ecosystems — Hard. Partner marketing and partners-as-a-channel can seem super frustrating at first. You spend months building an Appexchange integration, or Slack integration, or Shopify integration and then … nothing. No leads at all! Or maybe just a couple. And it seems like so much work, for so little gain. But the winners go long here. They know that ultimately, there are just a few winners and tons of non-winners on and in every platform. The #1 key is getting help once you have even a hint of success on a platform. Hire a head of business development early. As soon as you have any traction with a key partner or on a platform. Your competition will. You need to box the competition out, and box your wins in, in any ecosystem you can. It may take 2 years for it to feel worth it. But ultimately, winners align with winners. You want that to be you. Learn in with biz dev and partner marketing dedicated hires as soon as you have any traction in an ecosystem or a platform. Even if it doesn’t really seem profitable yet. If you don’t, you’ll look back in a few years and see this as a huge missed opportunity. When the other guy pulled ahead there, somehow.
#10. Founder Conflict. Founder conflict is common, and a little of it may even be good. But later, you’ll look back and see that keeping a toxic founder around even a month longer than necessary inflicts substantial damage. Toxic employees are bad enough. Toxic founders threaten your entire mission, and everyone’s confidence. The simple fact is, many times not all the founders are equally committed. It is what it is. But solve founder conflict, or at least, resolve it. Now. Stamp it out early by talking and meeting more. Get a 3d party to help you work through it. And if it crosses the line to un-fixable, then it’s time. Time for one of you to move on. The missed opportunities to scale, build, compete and ship are just too large in SaaS. You’ll look back on founder conflict as just a lost era, a whole phase when you couldn’t move the ball forward. And when the competition did.
#11. Raising Money From Any Investors That Didn’t Help. This is subtle one, but one you will regret later. The cap table unfortunately only adds up to 100% 🙂 That means that any investor that doesn’t truly add value is … a waste. A waste of a slot om your cap table. No matter how cool their offices, great their brand, or clever their tweets. Each % on the cap table has to add value, or it’s simply wasted space. So if you do have options when you raise money, really ask how they can help. It doesn’t have to be epic. But most investors don’t really help. Not really. And you’ll look back, and wish for that % on the cap table, you’d gotten some help.
#12. Excessive Fear About Competition and Big Cos Crushing You. Worrying about the competition is healthy. But what I find is that most founders read too many tweets and press releases from the competition, and don’t focus enough on what really matters. What does? Agility. If there are multiple competitors in a space, each past Initial Traction, the most agile one often wins these days. Brand is #1 in winning a market, no doubt. Most later adopters just want to pick the default choice. But Agility is probably #2. If you can push out 100 features a year, and they can only push out 20, and you focus, focus, focus … you can pull ahead. Maybe not in a week. But definitely over time. And at least, you can stay even. So if you are worried about the competition, figure out how to get more agile. How to push out more story points, more integrations, more key features for your top customers and prospects. And figure out in which segments of the customer base agility lets you win. If they can’t do the same, that’s a strategic weapon.
Maybe this list helps you get out of the office, off the Mac, and pushes you to do just 1 more thing now that can make a difference. So you’ll look back, and no matter what comes later, and you’ll have fewer regrets. Because you didn’t not do something that 1-5 years later, would have really made a difference.