Dear SaaStr: What Are Some Ways to Reduce Stress in a SaaS Startup?
So I sold my last company in 2011
Most days, I think I'm fully recovered. Done some amazing things since. Built some cool stuff. Made some amazing investments.
But then once is a while, I still feel it
How much your brain just gets rewired as a founder always at the edge
— Jason ✨Be Kind✨ Lemkin (@jasonlk) July 6, 2023
For me, at least, I’ve seen five things make the biggest difference in reducing stress as you scale from $1m to $10m ARR … and beyond …
1. Add an “ex-post facto co-founder” and/or upgrade the management team.
In my first start-up, my co-founder and I met for 20 minutes at the end of every single day, and had lunch as often as we could. 50% of this was just dealing with stress and unscripted issues. It helped each of us so much.
The second time around, I didn’t have this. But I found this help more in my management team. Find at least one person on the team, later, that can share at least some of the burden with you. That cares so much about the company, that she can carry some of the stress as well. Find two like this — then they’ll really help carry you to the next level.
And sometimes, one of these additions to your management team can take on so much of the burden, she becomes like an after-the-fact co-founder.
2. Get to cash-flow positive.
At Adobe Sign / EchoSign, we hit cash flow positive around $6m in ARR. One could argue if it was the “right” play or not — by staying that way, arguably, we underinvested in the business. But. It way de-stressed my life, to not have to worry about raising money ever again.
At least having the option here, at least being “cash flow break never”, can dramatically de-stress things.
3. Don’t look to your family to help you deal with stress, after the early days. This will lead to more stress. This may sound counterintuitive, but it isn’t.
Your family can only deal with so much. You can lean on them a lot in the first 6 months. Share all your fears, your worries, your stress. But after that, share what’s happening. But. Let them off the hook on the Stress. Don’t burden them with your near-death experiences, the terrible lows, after the initial starting-up period. They won’t be able to handle it forever — no one can — and if you try to use them to help you, it will create a negative feedback loop. The lows are just too low. Your co-founders, and the best of your management team, can share this with you. But after you get things going … don’t bring it home.
The stress will never end. The key is distributing a bit of the ownership, and migrating stress to things you can control (product, customer success) from things you often can’t (timing of venture capital).
#4. Drive down churn, and drive up NRR.
Ok, this may sound obvious, but too many founders ignore elevated churn for too long on the path to $10 ARR. Especially if growth is strong. It always catches up to you on the other side of $10m ARR. And your unit economics begin to collapse. Better saner growth, with higher GRR and NRR, and lower churn.
#5. Move on from the toxic and the clear underperformers.
This always reduces stress. That one Director or VP that isn’t delivering, at all? Move on. That Manager that doesn’t do most of what you ask them to do? Move on. And clean up your larger teams a bit. Just transferring leads from an underperforming rep to a top-performing rep can often increase bookings 5%-10% right there. In one step.