The Top 5 Challenges in Starting a Successful SaaS Company. And 5 Things That Don’t Matter As Much As Many Think.

Dear: What are the challenges that a B2B business owner must overcome to be successful?

My list:

1. Finding a truly great co-founder. Yes, some can do it on their own. Eric Yuan, CEO of Zoom did. But he also did it before as SVP of Engineering at WebEx — and brought a ton of his team with him. Almost all of us don’t need just a co-founder, but a truly great one. Are you sure you have this? A bit more here: What are the qualities of a good co-founder?  At least be honest if your co-founder and especially if you aren’t technical, your CTO, are truly great.  The world is just too competitive now to win otherwise.
2. Funding the first 24 months — not just 6 or so. Yes, as CEO your job will always be to keep the company funded. But the first 24 months are particularly tricky. Folks can’t work on smiles and promises for 2 years. Maybe a few months, but not 2 years. Yet, in SaaS it generally takes 2 years to iterate, iterate, iterate and get to a true MSP — a Minimum Sellable Product. Can you fund it? How? Yes, it’s hard. More here: If You’re Going to Do a SaaS Start-Up … You Have to Give it 24 Months | SaaStr
3. Finding and executing in a real, truly monetizable white space. It’s not enough to build a product that is useful, or even needed. It must be one customers are willing to pay for in general, and in lieu of other proven solutions. Why do you have that? Are you sure? A bit more here: Planning to Do a SaaS Startup? Don’t Forget the 20 Interview Rule. | SaaStr
4. Having at least one 10x feature vs. the competition. Your product is new, bug-ridden, and feature poor. Why will someone pick you? Being cheaper or even free is rarely enough on its own. You need one killer feature than is 10x better than the competition — that at least some small segment of the customer base really needs and will pay for.   In the age of AI, this is often even harder.  There are so many more competitors doing so many more powerful things.  More here: The 10x Feature is Real. At Least, for a While. What’s Yours? | SaaStr
5. Getting great folks to follow you, and your vision. A great co-founder is critical, per point #1. But you’ll need then to go even further. And get a small group to follow you. A few engineers. Some partners in the ecosystem. Some vendors that shouldn’t take the risk on you. Can you do that? What you’ll need to be able to do: What Your First 100 Hires Will Look Like | SaaStr

Without these 5 … it’s tough to get to the first $1m ARR in B2B and SaaS.

Now … a list of a few things that in the end aren’t as big a hurdle as you might think:

1. Entering a very crowded space.  Yes, this is harder in some ways.  But also, most that enter crowded spaces in the end find a niche, a segment of it that’s both less crowded and where they have a killer 10x feature.  At least don’t let “crowded” on its own stop you.  70%+ of B2B companies that IPO are just new versions of existing categories.
2. You didn’t go to the right schools, etc.  No one will care in the end, if they care at all in the beginning.  I’ve never even asked a single founder I’ve invested in via SaaStr Fund where they went to school.
3. You aren’t in the SF Bay.  I’m a huge proponent of coming here.  The ecosystem, the energy, the network is incomparable.  But 3 out of the 4 last SaaS IPO’d weren’t HQ’d in the Bay Area.
4. You can’t raise venture capital.  Too bad.  Many of the best struggled to raise any capital at all in the early days.  No one said it was easy.  But go find some customers instead.  They also have cash.
5. You’re late to a space.  Yes, sometimes this can be a big issue.  But every category is constantly being remade.  This is rarely as big of a deal as founders think.  It certainly doesn’t worry most VCs too much.  They know every year, new disruption comes.  In fact, it’s their business model.