I think my learning is usually you don’t.
Founders have highly unique insights into their product, their customers, and most importantly, the changing dynamics in their markets — before almost anyone else can see the changes and the impacts of those changes.
The problem I’ve seen (and with myself) is you almost know too much as a founder. You see markets change, competitive dynamics evolve, white spaces collapse, etc. It’s too easy to be critical, to see the downsides, to worry if it will all finally change under you once it finally gets good. It’s also too easy to overstate the capabilities of the competition, especially Big Companies entering a market they aren’t even really in yet.
What founders don’t often do is give themselves enough credit for being able to continually evolve faster than the markets do. Especially in SaaS, this isn’t that hard if you have a strong team and at least some traction. Most B2B markets do not change overnight. It’s not easy, of course. But the best founders seem to always find a way to keep ahead of changes in their markets.
And of course … recurring revenue recurs.
- Now if your customers are unhappy, your team is weak compared to others, and/or a market has changed so much your value proposition has truly decayed … then sell if you can. If someone will / still buy you.
- And if you get a price 2–5 years ahead of where you are today, it may make rational sense to sell. But even then, the power of compounding revenue suggest at least think about it before you sell.
But generally in SaaS, if someone wants to buy you, you have something good. Generally, default IMHO to Push On. That $10m in revenue will be $20m in a year or two. And then $40m sometime after that. And so on.
To paraphrase Aaron Levie from Box — Selling Box for $600m was the entirely thoughtful, rational thing to do. But then what else would you do? Could you build something else, bigger and better?