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SaaStr Q&A
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Q&AWhy are SaaS companies so hot right now?
It just took Wall Street a while to fall in love with recurring revenue for business software. You can see Aaron Levie, CEO of Box, sharing how Wall Street viewed…
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Early, Q&AThe 5 “Secrets” to Closing a $6,000,000 Deal in Year 1, At Least For Me, Once
The biggest deal I ever closed myself was for $6,000,000. It was about 4 months after we founded my first start-up, and I’d never sold in the industry before or…
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Q&AIs it the entrepreneur who drafts the term sheet, the VC or both? Who should initiate the process?
It depends who is selling and who is buying. In the old days, term sheets only came from VCs. Founders were almost always selling. Well, almost always. But even in…
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Q&AIs it possible to sell a SaaS product without a well established brand?
Well of course it is 🙂 The question is, how do you get past the brands? Brands are incredibly powerful because they are the default choice. But there’s good news:…
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Q&AHow/why does a CEO get fired?
Let me answer the question from a venture perspective. Most seed and early-stage investors, the very last thing they want to do is fire a CEO. Even in a struggling…
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Do you know the customer acquisition costs of Slack & Dropbox?
Dropbox is public so we have a general sense — it spends ~28% of each dollar that comes in on sales and marketing: But … averages are misleading. A huge…
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Why has Salesforce become such an indelible CRM?
It solves a lot of problems. There are plenty of ways to track Leads, Contacts and Opportunities. Maybe even better ways, especially if your business isn’t that complicated. But Salesforce…
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Q&AWhat is the average rate of closed deals for a SaaS product?
Don’t get confused by averages. Instead, just measure a core funnel metric, keep the funnel relatively constant — and then drive the metric up. Why? You can stuff any funnel…
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Q&AHow would you structure a sales team to get you from $10s to $100 millions in revenue?
Don’t. This is too complicated. You need to hire an experienced VP+ of Sales to do this for you. By $10m+ in ARR, it all does start to become a…
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Q&AHow much would you pay an affiliate to your SaaS product and for how long?
A rough rule of thumb is it’s a good deal for both sides if you pay an affiliate what it would cost you to acquire that lead on your own….
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Blog Posts, Early, Q&A10 Things Maybe Not to Do In The Earlyish Days
A lot of rules are just that — guidelines. You can blaze your own path. 1 founder, 5 founders. Bootstrapped, overfunded. There are many ways to get there. But here’s…
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Customer Success, Early, Q&AWhat do you think about designing compensation plans/OTE for a customer success team for an early stage startup ($1M-$2M ARR)?
In early days, you basically have 2 decisions to make on comp plans for Customer Success: First, do you want: a variable component (often 85/15 or 80/20 or so), or…
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Q&A, SalesWhat would be a fair OTE for a VP Sales that has a $1M quota (20k ACV)?
$0 or {null} Let me step back. I don’t think it makes any sense for a VP of Sales to have a $1m quota. Why? A “real” VP of Sales…
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Q&AHow, if at all, does acquiring your first 10 paying customers inform finding your first scalable customer acquisition channel?
It probably doesn’t — directly. Whatever hackey way you get your first 10 customers probably won’t be the same way you get to 1,000. Because that way probably won’t scale….
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Q&AWhat should a bootstrapped startup focus on during the initial stages of revenue growth, getting more customers or making few customers really happy?
Yes. You must close every customer you can, and treat every customer like they are the King/Queen. Even the tiniest customer must get every hour of attention they need, want,…
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Q&ADo startups have more trouble scaling SaaS from a technical or business perspective?
The problem is they tend to bite you at alternating times. Getting the first 50-100 or so customers rarely breaks a hack. But even just after that, downtime, data issues,…
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Q&AWhat are the bottlenecks SaaS companies normally run into at $4M-$6M in ARR?
The biggest one is not having the VPs in place. If you don’t have all the core VPs in place by $4m-$5m in ARR, then hiring and scaling slows way…
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Q&AWhat’s a good timeframe for reaching profitability?
Of course, this assumes you have options to not be profitable 🙂 Not everyone cash raise the capital to have the option to delay profitability. But assuming you do, putting…
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Q&AHow early on should I be able to detect scalability problems in a SAAS business?
Pretty early. Even today, with much more elastic systems than just a few years ago, I see resource contention, downtime, and other issues start to pop up constantly with hacked…
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Q&AMark Cuban said that if founders have an exit strategy that means they ‘ain’t’ passionate about what they do. What type of VC will NOT fund these founders?
I won’t. The thing is, it’s just so hard to make money investing. Even from a relatively small fund — say $60m — even a $1b IPO may be barely…
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Q&AHow do I protect a business startup idea which would be easy to imitate/steal?
Do it. Get started. Build it, launch it, and most importantly — sell the product. Start selling. 1000 teams can build whatever your little team can. 100 can probably figure…
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Q&AThe One “Small” Mistake That Almost Kills Start-Ups From $10k to $100k in MRR
“As a VC, have you ever seen a promising startup destroyed by a small mistake?” I haven’t. However, multiple times I’ve seen them almost destroyed by a “simple” mistake —…
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Q&AWhat is the least amount of money required to be a venture capitalist?
Probably about a $10m fund. This is quite small still, but a realistic line between super duper angel and VC. Why? A $250k check is probably what it takes to…
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Q&AWhat does a salesperson need to do to “earn your business”?
Solve my problem. The beauty to sales in SaaS is as sales professionals, for the most part, you aren’t selling a commodity or a fungible product. You can’t just go…
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What went wrong at Domo?
Domo made mistakes, but it is worth $500m+ today, at $140m+ in ARR — and it’s still early. Over the next decade, Domo could grow far, far bigger. They have…
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Popular Q&A
What is the best piece of advice on closing deals for a new, inexperienced salesman?
Add value. Most new salespeople focus a lot on the transaction. What’s your budget? Do you need a discount? How big a discount? Can I give you a bigger discount? What questions do you have? If I give you an even bigger discount, can you sign right now? Your discount...
What is the difference between running a 10 person startup and a 100 person startup?
The biggest structural difference is you have to hire all the VPs by employee 50–100. You won’t be able to scale this far without a full management team — VPs of Sales, Marketing, Product, Engineering, Customer Success at least. But the toughest personal challenge for...
What were aspects of your startup that were easier than you anticipated?
The part I didn’t originally get was how relatively easy is it to grow exising accounts and account size if your customers are happy. We segmented customer retention by Small, Medium and Large accounts after about 24 months and saw a pattern that I now know is fairly...
What should B2B SaaS companies do to ensure the success of their customers and reduce churn?
I know this sounds overly simple, but the answer is: Measure it. Set goals to improve it. Pay people to improve it. Too many start-ups don’t even know their CSAT and NPS. Too many start-ups don’t even visit their customers in person. Too many start-ups don’t know why...
What are some rookie mistakes founders make during VC meetings?
A few that are easy to fix: Not standing (when you present to > 2–3 folks). When you stand, you present better. Period. Standing turns you into the center of the audience, into the owner, the presenter. Sitting is great for a small convo, but sucks all the energy out...
How should I design sales reps compensation plans at $10k MRR?
Figuring out your very first sales comp plan when you don’t have a repeatable process or much revenue is confusing. I was exactly in the place you were (first rep at $10k MRR) and everyone faces some similar challenges: There’s no way this early you can expect a rep...
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