Dear SaaStr: Do angel investors or seed venture capitalists normally ask for detailed budgets including cash flow analysis before investing, even though most of the numbers will be pure speculation? Many do. Why? Even if you are very early stage, It’s really one of the best ways to learn. To learn what in the founders’…
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Dear SaaStr: As a VC, if you could go back to your operational experience (as part of a hyper-growth startup), then what would you remind yourself to take note of? My top list: Slow down big decisions — when you aren’t sure. You have to move fast and break things, but if the pit in…
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Dear SaaStr: When Will VCs Push You To Bring On an Outside / Professional CEO? I think 99% of successful VCs, especially “traditional”, experience Silicon Valley-type VCs have now seen you want to back the founder-CEO forever if you can. You sometimes get a short-term boost from a Professional CEO, especially as they often are…
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Dear SaaStr: Is a Strong Social Media Presence Important as a CEO? Onestream is the latest SaaS IPO. Bootstrapped to $100m ARR. The CEO has never posted on LinkedIn. Not once. And he’s a 2x successful founder. Selling to CFOs and finance. On the other hand, if I were selling sales and marketing tools, I’d…
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Dear SaaStr: Should I Publish My Pricing? If you aren’t sure — then yes. Transparent pricing has many advantages: It makes the sales process simpler. It allows prospects and leads to do more discovery work on their own. And it places your app in pricing context with other apps. It makes the sales process faster. …
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Dear SaaStr: Is Underpricing a Good Strategy to Gain Traction? Yes, to some extent — once a category is well established and there is a subset of functionality that is commoditized. But it’s not a marketing strategy. It’s more a tactic to win deals vs. an establish. brand, once you have the prospect in your…
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Dear SaaStr: In B2B Startups, How Useful is Cold Calling? Look, I hate getting those calls. Especially the really pushy, dumb ones from SDRs that barely know their own products. Do those work? I don’t know. However … cold calling, done by folks who have done it well before, always works a bit. Especially if…
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When should you use testimonials in the sales cycle? Testimonials are nice, you need them. But most prospects these days have already seen the generic ones on your website and in your collateral. What really moves the needle in sales is very similar companies using, and loving, your product. So arm your sales team with…
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Dear SaaStr: How Can I Get The Attention of Software VCs? #1: Get Out There: Get in TechCrunch. Get on Hackernews. Get on stage at any B tier or A tier event. Get warm intros from any successful founders or seed investors you know. Rent a cheap booth at an event lots of VCs attend….
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Dear SaaStr: What is Your Best Advice for Maintaining Healthy Co-founder Relationships? Talk. Dysfunctional co-founders don’t talk. Not for real. They stew. They get passive-aggressive. They email. They Slack. But they don’t talk. I don’t mean talk in group settings, or at staff meetings, or in scrum. I mean the two of you. My best…
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Dear SaaStr: If a Startup Raises $40 Million and Fails to Sell The Company, Do Founders Typically Exit With a Severance Package? Very rarely in a failed start-up, irrespective of the amount raised, will the founders end up with anything. If the start-up has raised a lot, e.g. here $40m, a small carve-out may be…
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Dear SaaStr: What are The Pros and Cons of Raising VC Money from a Corporate VC? The pros, and the cons, are both limited. The issues here are smaller than they used to be. Cons: Usually won’t carry the company or write many “second checks”. So not an ideal lead investor. This is the biggest…
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Dear SaaStr: What Are The Downsides of Being a Venture Capitalist? Perhaps the biggest downside, for folks with some success under their belt … is your likely inability to truly be in control of things in a bigger firm. Most great founders are good at being CEO but don’t actually need to be CEO, per se….
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Dear SaaStr: When My Startup Raises $10m, Would It Be Appropriate to Take a $170k Salary (no co founders)? Yes, not a problem. You should take a “market correct” salary as soon as it’s economically immaterial to the company. I don’t write $10m checks. I write, typically, $1m-$5m checks, the stage before that. But. As…
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Dear SaaStr: Should You Always Ask a Co-founder to Invest Their Own Money? No. Especially if they haven’t really made any money yet, and you have more. In both my start-ups, I was the only founder to contribute cash. It didn’t matter. Yes, you need money one way or another to startup. But writing code,…
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Dear SaaStr: What Were The First Five Hires You Made After Product-Market Fit? My first 5 hires at Adobe Sign / EchoSign, beyond the core founding+ team, once we had paying customers and first, if early, product-marketing fit: #1: Full-time sales rep at $8k-ish MRR. I Should have hired two. Should have hired him even…
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Dear SaaStr: Is it a Red Flag if The CEO is Only Interested in Selling the Company? It is. Or at least — it’s a Yellow Flag. The company will never be great if the CEO is thinking this way. There are so many start-ups, so many products, so much competition. You can build something…
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Dear SaaStr: I Launched My SaaS And Have Zero Customers. What Do I Do? I’m from a software engineering background and I’m very comfortable in that space. I thought building my own SaaS would be super easy. I write code every day, it’s just another project: build it, launch it, boom. Can’t believe how stupid…
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Dear SaaStr: What three things would take a VC from ‘maybe’ to ‘yes’? 95%+ of “Maybes” from a VC typically in the end are just a No. Here’s Why: A typical VC meets 100-300 start-ups a year himself, plus all the others he has to meet that other partners bring in. Funds 1-3. Gets excited…
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Dear SaaStr: I Just Sent a Email to a VC with Two Typos. Should I Resend It? No, no, no and no. First, VCs want to see strength. Not arrogance usually, but strength. Some whimpy email apologizing for some typos isn’t strength. Second, it shows poor prioritization. This is really a good use of your…
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Dear SaaStr: How Do I Take Over Customers From My Biggest Competitor? You can do it, it happens all the time. But you gotta put in the work. 95% of vendors and folks and sales reps don’t actually put in the world. You gotta do the 3 P’s: Patience. Persistence. Pounce. First, you have to…
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Dear SaaStr: When should I pay the commission for SaaS sales? All of our trial signups will get an automatic email from an account executive. How do we decide if the AE was responsible for the sale versus the sale just happened organically? Every company with a self-serve component and a sales-driven component frets a…
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Dear SaaStr: How Do Enterprise SaaS Companies Deal With Late Payments? Yes, in the end, you have to be willing to switch off the platform. But do it gracefully, with respect. Do it the same exact way you’d want to be treated if you were a customer. The key is to provide a series of…
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Dear SaaStr: Growth Has Slowed and My VP of Sales is Pushing Me To Hire More Reps. Is That The Right Way to Go? No. Not 9+ times out of 10. In fact, the #1 sign your VP of Sales is really struggling is when their best answer to slowing sales is to hire even…
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Dear SaaStr: What Was The Best Advice You Ever Got From an Angel Investor The best advice I ever got from one of my angel investors: Stop feeling sorry for yourself. I went to meet with one of my angels and mentors when things were probably toughest at my last start-up. My co-founder had walked…
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