Dear SaaStr: What Are The Biggest Mistakes First-Time Founders Make, and How Can They Be Avoided?

Here’s my list in SaaS:

  • Being reluctant to go up-market. Not everyone should go up-market. But if you have a bunch of $5 a month customers, and then a few offer to pay you $500 a month, at least seriously consider it. Even if you don’t like sales, or big companies, or whatever. A bit more here and here: Why There Is a 50/50 Chance You’ll Tilt Upmarket in SaaS | SaaStr
  • Not hiring a good enough CTO. SaaS is so competitive these days. The most agile teams win. If you don’t have a strong enough technical co-founder, it’s really hard to win.
  • Not managing the cash burn with extreme precision. Even great CEOs get this wrong. If your cash needs to last 24 months, then scrutinize every bank statement and every expense. So many times, that 24 months ends up being 16 months or even just 20 months, even with no one taking a high salary or buying fancy snacks. Because the CEO just assumes cash is collected, allows a few expenses to grow without paying attention, etc. And the burn rate just compounds, often without the CEO fully realizing it.  More here: Zoom Had a Burn Rate Budget. So Should You. | SaaStr
  • Not learning to love the customers they end up having. A variant of the first point. But if you hoped to sell to cool tech companies, and you end up selling to government somehow — embrace it. If you never thought you’d sell to sales reps, and even sort of hate sales, but that’s your core customer — embrace it. You have to love the customers your product serves. More here: In SaaS, You Have to Love the One You’re With | SaaStr
  • Not getting on jets and visiting prospects and customers in person. At least your biggest customers. If you show up, you build far deeper relationships than otherwise. And you have time in the early days, especially. At least visit every customer and prospect that is local that will take the meeting. More here: I Never Lost a Customer I Actually Visited | SaaStr
  • Not investing deeply in partner and channel strategies if they work at all.  Half of HubSpot’s revenue is from its channel partners, and a big piece of Shopify’s as well.  What if they’d only sold direct?  If business development, partner development, etc. work even a little bit for you, lean in there.  It almost always starts off more slowly than direct sales, because of course it does.  But it can become highly defensible.  More on the magic for HubSpot here in our deep dive with Chairman Brian Halligan below.
  • Expecting magic growth hacking solutions. Yes, some B2C and even some B2B products do experience magic virality and magic growth hacking. Product-led growth is all the rage today.  But for most of us, it will be a painful, gradual experience to build up leads, brand, word-of-mouth, credibility, etc. Growth hacking is real, and has become a science. But in B2B, even when it works, it takes months at best, and years to perfect. A bit more here: 15+ of The Top Sales & Marketing Mistakes SaaS Startups Make | SaaStr

(note: an updated SaaStr Classic answer)

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