The list of problems is endless (this is the hardest part of the job), but let me try to order a few of the biggest challenges roughly based on stage:
- Pre-Revenue: Finding a Great Co-Founder. Some of us can go the distance as solo founders, and others of us can find a great co-founder, or perhaps a COO … later. But most of us can’t really get it off the ground without a strong co-founder. Wait too long, you’ll never get there. But settle, and you’ll never really build a competitive product and it will all have been a waste. More here: If You’re Going to Do a SaaS Start-Up … You Have to Give it 24 Months – SaaStr
- Post-Revenue: Staying the Course When Revenues Are Trivial. It’s hard enough to get 2, 5, 10 customers. Then their collective revenues often only add up to Cappuccino money. Many will want to quit when you finally have revenues, just not enough to hire anyone else or pay anyone a decent salary.
- After Even $1m in ARR, and Then Forever After: Recruiting Great VPs. This challenge never ends. In the early days, convincing even one strong stretch VP to join you is tough. Later, once you have a brand, you’ll be competing with Hot Startups nipping at your heals for top VPs. It never ends. You need to learn to become great at recruiting. And tenacious at it. And to always be doing it. Not just sometimes.
- From $1m-$10m in ARR: Not Enough Bodies. As you finally begin to scale, you’ll have enough revenue to hire some great folks, but not enough to build very redundant teams. There will be too much to do and simply not enough people to do it. Later, people will also think this is true, but it’s less so than in this stage. With only say 30–40 employees to service $4m-$6m in revenue, even the loss of one key hire can seem almost fatal to the business. Everyone starts to get a bit burnt out in this phase. More here: From Initial Traction to Initial Scale (~$10M in ARR): The Hardest Phase. But — The Cavalry is Coming. – SaaStr
- From $10m ARR on: Capital Inefficiency. This will drive many of you nuts. Why do I need 50 engineers to do what 3 engineers use to do? Why is my sales team less efficient at $20m ARR than at $2m in ARR? Why does my marketing team need 15 people? What do they even do? The simple fact is that to scale after $10m-$20m, you’ll need a lot of people. Many functions simply need more bodies to keep up with larger bookings goals, and inefficiencies come from that, especially in sales-driven models. You can raise ever more venture capital to fund it, or you can try to stay more capital efficient but often trade off some growth just when it’s getting going. And just when the competition starts to catch up. The trade-offs here, especially when you include dilution, are complicated.
Published on April 11, 2018