Dear SaaStr: What Are The Top Things to Know Before Starting a B2B Startup?
A lot of founders ask this question hoping to hear something they don’t already know. The honest answer is the opposite. The hard truths about starting a B2B company are mostly things you already suspect but haven’t fully accepted yet. Accept them now, and you’ll save yourself 12-24 months of pain.
Top of my list:
1. Picking a mediocre co-founder just doesn’t work. You can’t settle here.
You have to find someone at least as good as you, ideally better. And importantly, at least as committed. A mediocre “coder” CTO because you can’t code won’t really work out. A mediocre “business guy” who can’t actually run marketing and sales won’t get you those critical first customers. The math is simple: a mediocre co-founder doesn’t add 50% of a great one. They subtract. Because the real cost isn’t just their output, it’s the equity they hold, the decisions they slow down, and the talent they fail to attract. It’s always better to wait. More here.
2. Raising venture capital is really, really hard. And only available to a small subset of founders.
You can’t get mad or frustrated that you can’t raise VC. Expect it. Venture capital is a niche type of funding. 99% of startups will never be able to raise it, and shouldn’t try. The 1% that can are the ones with either strong early growth, an incredible team, or a market so large investors will fund the team and bet on them figuring out the rest. If you’re not in that 1% yet, your job isn’t to raise. It’s to get to the point where you’re fundable. Or build a great bootstrapped company instead. There’s nothing wrong with the latter. Many of the best SaaS outcomes were never venture-funded.
3. You need to know your 10x feature.
That one feature customers will pay for that they aren’t getting today. This is how you break into a market 95 times out of 100. Not “we’re 20% better.” Not “we have a nicer UI.” Something an order of magnitude better at one specific thing customers actually care about. What’s yours? Be honest. If you can’t name it in one sentence, you don’t have one yet, and you need to keep working on the product before you start selling. More here.
4. It often takes at least 24 months to get anywhere. Yes, even today.
Replit just turned 10. It didn’t really click until about 15 months ago with the latest LLMs. Now it’s at $400m+ ARR 🙂
The first version of your product is rarely good enough. The second version may be just good enough to win a few customers. It often takes 24 months to get to $1M in ARR. Sometimes longer. Yes, the AI era has compressed some of this, and a few breakout AI-native companies are hitting $1M in 6-9 months. But those are the exceptions. For most B2B founders, the timeline hasn’t changed as much as the hype suggests. Are you all in for 24 months minimum, with no real income, no real validation, and no real certainty it will work? If not, don’t start. More here.
5. There’s always competition.
Even if you don’t have direct competition, you have indirect competition. Or at minimum, you’re competing for budget. There’s only so much spend to go around. So why will you win? Be honest. The “no competition” pitch is a red flag, not a feature. It usually means either you haven’t looked hard enough, or the market doesn’t actually want what you’re building. The right answer isn’t “no competition.” It’s “here’s exactly who we beat, here’s exactly why, and here’s what they can’t easily copy.” More here.
6. Most quit. Most aren’t committed enough.
Most can’t take it when there isn’t enough money to make payroll, even after a year. Most can’t take the withering pressure of better-funded competitors shipping faster than them. Most can’t take the loneliness, the personal financial stress, the constant rejection, or the slow realization that the company they’re building isn’t the company they pitched. Can you? If you can genuinely go the distance, that’s a huge competitive advantage right there. Most of your competition will wash out long before the finish line. Related post here.
7. You need a big vision. But it’s OK if you don’t know 100% how to get there on Day 1. Or even Day 500.
You need to believe you can win in a reasonably sized, important market. But it’s OK if you don’t know how to get to $1B in ARR from where you sit today. The best founders grow their markets and their TAMs over time. Slack started as a gaming company. Shopify started as a snowboard store. Figma was a design tool that became a collaboration platform. What you do need is a credible path to $100M in revenue in 7-10 years if everything goes right. If you can’t even sketch that path, the market is probably too small, the wedge is probably too narrow, or the vision isn’t big enough yet. More here.
The founders who go on to build great B2B + AI companies aren’t the ones who avoided these realities. They’re the ones who walked in with their eyes open and decided to do it anyway.
That’s the only real prerequisite. Everything else, you can learn on the way.
