Dear SaaStr: What’s the #1 Mistake New Sales Leaders Make? Let me just summarize my #1 observation here: the top mistake first-time sales managers make is recruiting. In that — they can’t do it. It is incredibly hard to figure out how to replicate the magic of the first 1 or 2 sales reps that…
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A founder gave away too much equity in the early rounds and will become a minority holder in the company before series A. How can this be tackled? Don’t raise venture capital. Venture capital is not a gift. Your VC investors are looking for 10x returns. Venture capital is not an accomplishment. It’s a means…
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Dear SaaStr: When Should I Expect New Sales Hires to Be On Target? At least by 1.5 sales cycles. And yes, that’s true today, too. You should know well before that if you are managing her or him — you’ll usually know by half a sales cycle. But if you have say a 60-day average…
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Dear SaaStr: How do I make my sales team more effective? The best way to drive sales team performance is to have 1–2 folks on the team just making lots of money from closing lots of deals. An oldie but a goodie here: Your #1 Sales Rep Should Be Driving an M6 Convertible By Month…
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Dear SaaStr: What’s The #1 Thing An Entrepreneur Should Look Out For In a VC Term Sheet? One simple thing: complexity. 99% of terms and term sheet should be simple and straightforward: price the amount invested (and % ownership for investors / cap table) pool for stock options and employees board construction and seats that…
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Dear SaaStr: What Is The Optimal Structure of an Initial SaaS B2B Sales Team? “Simple”. The optimal structure is one that is accretive. Where, roughly speaking, each sales rep brings in at least 4x-5x the total compensation they take out. If the average sales rep produces >5x the comp she takes home, then: a SaaS…
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Dear SaaStr: What Do You Do When You Lose a Deal? #1: Put the company right back into your drip market campaign. But a special one for Lost Deals You Want to Win Back Later. Because you’ll have at least 3 more chances to close them — if you go long: 10 months out (Renewal…
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Dear SaaStr: What Do VCs Do When They Leave Their Position? It depends on if they own the place. A true “Managing General Partner” usually doesn’t so much leave as wind down, step down, slowly retire, etc. Why not? Because VC funds typically last 13–14 years each, and often 20 years to full distribution. And…
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Dear SaaStr: As a Founder, When Did You Realize You Were Limiting Your Company’s Growth and Success? As we approached $10m ARR, we were doing very well: growing 100%, cash-flow positive, with 100%+ NRR. But I did see that certain of my weaknesses still were impacting how well we could do: I didn’t get on…
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Dear SaaStr: What’s The Most Influential Piece of Feedback You’ve Received From a Boss or Coworker? My list: “You need to start managing people.” My second boss was generous enough to give me a small team to manage a few months into my job. I didn’t ask for it, and it wasn’t a group I…
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Dear SaaStr: What Risks Do Limited Partners in VC Funds Face That General Partners Do Not? Limited Partners or “LPs” are the folks that give the VC partners (the “General Partners”) the actual money to invest. There are many types of LPs, but the vast majority of the money comes from large endowments, non-profits, and…
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Dear SaaStr: If You Just Received a $10m-$15m Funding Round, What Should You Actually Use it For? If you’ve raised $10m-$15m, I’m assuming you are somewhere between $2m and $10m in ARR (revenue). The most important thing you can do at a high level is to go hire Great VPs. A great VP of Sales…
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Dear SaaStr: How Hard is it For a Startup founder/CEO to Settle Into a non-CEO Role After an Acquisition? It is tough for most of us. We get that the bureaucracy and frictional taxes are going to go up. But it’s seeing the organization make decisions that are the “right” ones for the larger organization,…
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Dear SaaStr: What Are Some Things That Make a Founder Look Naive? A few in my experience: Mocking the competition, especially successful competition. The best founders do win, but they also profoundly respect the competition — and understand and learn from them. Hiding core issues during fundraising. Hiding that they don’t really have a CTO,…
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Dear SaaStr: Should I Call Myself a Owner, Founder, or CEO? CEO. Although, perhaps say it in a neutral tone, with no bravado. I always thought the title was a bit silly when running tiny start-ups. But I missed an important point: Customers, Prospects, Recruits and Media like to talk to “the CEO”. Customers Love…
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Dear SaaStr: Why Do Great Employees Get Fired? I’ve hired a lot. Lost a bunch, but fired very, very few. But I’ve watched some tough ones, some truly potentially epic talent get fired. This seemed to happen for two different (though related) reasons in the BigCo vs. The Start-Up: 1. In a Big Co. It’s…
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Dear SaaStr: What is The Best Way to Hire Your First Sales Rep? I’ll tell you the trick. It’s going to sound simple, but it isn’t, because almost everyone gets it wrong. For at least your first few reps: hire someone >>you<< would buy >>your product<< from. Period. I.e., Do not hire someone just because…
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Dear SaaStr: I sold my company five years ago and have built a net worth of ~$10 million, but compared to my friends I feel like a loser and still keep trying hard at startups that stress me out and make me miserable. What should I do? It’s crazy, but … you’re not alone. And…
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Dear SaaStr: What are some best practices for selling a new product/service to your existing SaaS clients? First, make sure your NPS is high. And drive it even higher. Here’s the bottom line: if your NPS is say > 40 or so, a significant portion of your customers love you. If your NPS is say…
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Dear SaaStr: Why Are So Many CEOs Former Engineers, or At Least Have Technical Backgrounds? I’ve come to almost exclusively invest in founder-CEOs that are engineers. Or at least where the co-founder CTO is a true equal partner to the CEO. Why? Well to get something off the ground, You need to build it. If…
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Dear SaaStr: Should We Drop Customers That Complain Too Much? Sometimes, yes. But just as often, the ones that complain are the ones that care. And oftentimes, their complaints help focus you on the gaps you really do need to fix. One thing most SaaS companies get wrong in customer success is they don’t spend…
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Dear SaaStr: What’s The #1 Way to Motivate a Sales Team to Sell More? The best motivation for salespeople is seeing other salespeople at the same company making a ton of money. This: Proves (x) it can be done — even when sales feels hard, and Challenges everyone in the right way, and Takes the…
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Dear SaaStr: What Has Been Your Biggest Career Mistake? Maybe not slowing down just a little bit. The week in my first real professional job when I realized I’d been there long enough and had nothing left to learn … I walked in and quit that day on the spot. I had no idea what…
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Dear SaaStr: Do Salespeople on Commission Really Sell More Than Salary-only Salespeople? 1000000000000.00% in SaaS. Commissioned salespeople sell more. Lots of us try to run this experiment. At least, those of us who haven’t done software sales before, and have a low-ish price point and run an all in-bound model. Why can’t someone just answer…
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  Dear SaaStr: What are the most effective ways of increasing SaaS activation rates? In the early and middle days in customer success, we tend to talk about several core goals and KPIs: Driving up NPS. This always works. More here. Logo retention. Important. Drive it up. Net revenue retention. This is the mathematical magic…
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