The Journey

The Best SaaS Founders Are (Somehow) Indefatigable'

Jason Lemkin

There’s now a whole group of companies I’ve invested in, and/or been an advisor/board member or other close relationship with … that are hitting or have recently crossed 4 Years Old.

Interestingly, only a few have more ARR than I did 4 years in.  But — almost all of them are growing much faster.  So within 12-18 months, they will quickly eclipse where I was at their stage.  The difference?  Often, they had little to no revenues in the first year or two.  So they often took longer to get to product-market fit.  I had my own challenges, but we had good customers and real revenues 6-9 months into our first year.  Our challenges were otherwise, with hindsight.

And I think there are two reasons these SaaS companies are growing faster at Year 4 than I ever did.  One is simply that the SaaS markets are so much bigger today.  So even if it takes you 2 years to get to true product-market fit, if you really achieve it … you should be able to grow faster.  The markets are 10x larger than 5 years ago and 100x+ larger than 10 years ago.  So even if there is more competition, unless it approaches perfect competition, you should be able to grow faster.

But Key factor #2 why they are growing faster at Year 4 than I did is that these founders are Indefatigable.  They may be tired, they may struggle to hit their lofty goals for the month and the quarter.  But they simply cannot be stopped.  At Year 4, they are Just Getting Good.  Versus really, most of us start to approach potential burn-out in Year 4.

I see burn-out much more commonly in “fairly successful” entrepreneurs — the ones growing, just not that quickly.  Much more often than burn-out among the failed ones. And usually starting around Year 3. Building in Year 4. And then it hits >hard< in Year 5.

First, it’s hard(er) to fail slowly. It definitely happens all the time, but true failure more often happens quickly. You never get out of WeWork. The angel money is gone, and you have no customers. Etc. etc. This usually happens in the first year, or the second.

Great founders that fail fairly quickly seem to bounce back. With a lot of scar tissue sometimes, yes. But with less true burnout. They tend to be ready to do the next one. Like. Now.

The Slow Success is different. There, I find it’s around Year 4 that true burnout sets in. And boils over in Year 5:

  • Year 1: excitement. near death every day, but excitement. no true fatigue.
  • Year 2: (if you make it): paranoia, terror. you don’t have enough revenue / customers / users to really succeed. but you did get to Year 2.
  • Year 3: the slugfest starts. you won’t fail. you got to Year 3. but man … it’s gonna take a loooong time to get to $10m ARR. Or $5m. Or wherever. It took you 3 years to figure this out. Burnout just begins now.
  • Year 4: slugfest, part II. Burnout sets in.
  • Year 5: slugfest, part III. Now you’re really burnt 3 years into the slugfest.

So what you see, which is often a shame, is founders leaving successful companies in Year 5. Often. All the time.

Make sure this doesn’t happen.  You can’t 100% control your absolute growth rate, not always.  You can inflect the curve.  But you can’t will your start-up into the Next Twilio.  As much as we’d like to think we can.  But there is one thing you can do to avoid hitting a wall.

The key is just one thing, really. Recruiting a strong enough management team (often two teams) to carry a lot of the load.

It’s the lack of enough help that really burns us out.

And I think I’ve learned from an investment perspective, in SaaS, you have to invest in indefatigable founders.

Published on September 20, 2016
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