Dear SaaStr: What Does A Salesperson Need To Do To “Earn Your Business”? Solve my problem. Just truly 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 down the street, or to another website,…
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Dear SaaStr: Which Way Should I Go, VC or Angel Investors or Customer Funding? The reality is, few folks have all 3 options available to them: Most startups cannot attract venture capital, at least not in the early days. Most startups can find some angels to invest, but not always enough. Many startups cannot find…
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Dear SaaStr: What Happens if One Founder Wants to Quit When the Startup Has Just Raised VC Funding? This, unfortunately, is more common that you might think. First, be completely upfront with your investors immediately. As horrible as this is, it’s not the first time. Let them know, and let them know you are working on…
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Dear SaaStr: We Don’t Need It. Should We Go After Venture Capital, and When? There are only two reasons to raise Venture Capital: You need it. If the only way you can get to the next level is to raise capital, then do it. I needed to for both my start-ups, up to a point,…
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Dear SaaStr: What is the best sales advice you can give to be a top sales rep? I’m actually not that good at sales myself. But — I have observed a lot of successful sales folks and leaders. What I’ve learned is that sales is never easy. It’s hard. But if you are gonna do it, it’s…
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Dear SaaStr: Is It Ridiculous To Call Yourself the CEO When Your Startup is Tiny? I used to feel that way, at least a bit. I used to look at tiny little startups and wince when a founder went around talking about himself as “CEO”. But then I had to learn how to Sell to…
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Dear SaaStr: What is the highest % equity that a departed / non-working co-founder can own that VCs are comfortable with? Single digits. VCs will be worried about a founder that has left with more than 6–8% of the company or so: At a minimum, VCs will at least try to get an agreement the…
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Dear SaaStr: What Are The Biggest Problems You Face as a Startup Founder? The list of problems is endless (this is one of the hardest parts of the job), but let me try to order a few of the biggest challenges roughly based on stage: Pre-Revenue: Finding a Truly Great Co-Founder That is Just as…
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Dear SaaStr: What is The Biggest 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…
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Dear SaaStr: What Are You Supposed To Say — And Not Say — During a VC Intro Call? Be wary of some of the advice you hear. The goal is not to get a “coffee”, or just to “learn”. A VC intro call is a sales call. Your job — if you want funding now,…
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Dear SaaStr: What Percentage of Shares Should Be Set Aside for Employee Equity? Nuanced answer: A lot. But, the precise number today doesn’t matter. At a practical level, if you are growing quickly, you’ll typically grant 6-8% a year in additional grants (and dilution) — and maybe get half back as folks leave. VC answer:…
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Dear SaaStr: Is it a good idea to give the first customers of a new SaaS startup a discount to get them on board? First, it is a good idea to give the first customers a fair price so that price isn’t an issue. So you close them, get the reference account, get the learnings,…
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Dear SaaStr: Can A SaaS Startup Really Scale With 2 Co-CEOs? Many will tell you it’s a bad idea, and it probably is — in most cases. I sort of tried this myself, and it didn’t quite work. We had all the classic problems of unclear authority, especially as times got tough. But here’s the…
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Dear SaaStr: What Are the Danger Signs a Startup Isn’t Going to Work Out? Let me share my list. It’s more about things I worry about after investing, as sometimes they’re hard to see before: Founders’ understanding of market doesn’t get deeper. I really worry when 9–12 months later, the founders do not understand their…
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Dear SaaStr: How Do You Respond to a VC Who Says They Don’t Invest in Your Space? You move on. They almost certainly don’t invest in your space, at least not as your stage, with your risk profile, etc. -> At a higher level, you basically can’t convince a VC to invest in a space,…
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Dear SaaStr: What Are The Best Ways to Retain Your Customers in SaaS? A few things that always work to drive down churn in the early days — and later: Make sure you have a strong Head of Customer Success … whose #1 goal is reducing churn. Too many early-stage VPs of Sales don’t have…
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Dear SaaStr: When Should The CEO Step Away From Sales? Never. It’s just, as you scale, what you do in the sales process as CEO evolves and changes. I remember when we closed Groupon as one of our Ten (or so) Largest customers, back in the day. They’d brought us on shortly after they’d deployed…
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Dear SaaStr: What’s It Really Like to Be CEO of a Startup? Let me just throw out a few things I’ve learned that being a CEO of start-up isn’t, or isn’t as you’d expect: It isn’t glamorous until you are At Scale and Hot, at the very minimum. At $10m-$20m+ in revenues, maybe. Maybe not even until pre-IPO….
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Dear SaaStr: How does a First Time Founder Identify 10x Hires? How do you hire a great CTO, a great VP of Product, a great VP of Sales … if you’ve never worked with one? It’s hard. There’s a reason almost every founder you talk to had a mis-hire for their first head of sales. …
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Dear SaaStr: What Do VCs Do When They Aren’t Sourcing or Closing New Deals? VCs don’t spend most of their time working on new deals. They spend most of their time on existing investments. Imagine you are a VC on 9 boards of directors: Board meetings alone can take 20% or more of your time….
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Dear SaaStr: At what stage should SaaS founders fully stop being individual contributors? I’ve come up with 2 rough rules here to avoid stalling out: Try to have a complete 1.0 management team by $4m ARR at least. Earlier is better, of course. And try to hire at least 1 strong VP by $1m ARR. …
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Dear SaaStr: As An Employee, As an acquired employee, How Do I Negotiate My Compensation in an Acquisition? Unfortunately, as a non-CEO, non-founder of an acquired start-up … you have almost no ability to really negotiate. Especially below the VP level. Overall, your ability to negotiate in M&A in any context, in any job, is…
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Dear SaaStr: When should a CEO walk away from an acquisition? I’ve thought about this a lot. I’ve walked from acquisitions where I, to be honest, did want the money but still walked. And I’ve taken several offers, too, sometimes when it turned out to be the wrong choice. You have (at least) 4 constituencies…
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Dear SaaStr: How Do You Price a SaaS Product in a New B2B Market? I’ve lived it. It’s not as complicated or as hard as it sounds. The simplest answer is usually to copy the pricing from the closest public company or other break-out leader you can find that is vaguely similar. It’s OK you…
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It took us 2 years just to figure out our ultimate business model. What you think you do on day 1 may look very different by day 365. https://t.co/gmg2HH1MS8 — Aaron Levie (@levie) September 11, 2020 My Top 5 Things to Remember When Starting a Company:: #1. Fixing the Founding Team is Very, Very Painful….
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