What Everyone Should Know Before Starting a SaaS Company
Recently we did a great AMA-style “Quora Session”. You can see the whole list of questions and answers here.
One fundamental question asked was What Everyone Should Know Before Starting a SaaS Company. I think we’ve hit the core things on SaaStr over the years, and we’ve added more structure in the new SaaStr Academy … but this was a good chance to pull together perhaps the 5 most key things to know IMHO/IME.
The top 5, with links to the related posts:
- It may well take 24 months to get to true product-market fit and Initial Traction. If you budget any less, you probably will fail. This isn’t B2C and virality won’t accelerate the process. More here: If You’re Going to Do a SaaS Start-Up … You Have to Give it 24 Months
- You will almost die somewhere between $2m-$10m ARR because there is too much to do and not enough people to do it. You will have a Year From Hell here. Finally you have great customers and traction — but you can’t afford to hire all the people you need to meet their needs. This is actually the most exhausting phase. More here: From Initial Traction to Initial Scale (~$10M in ARR): The Hardest Phase. But — The Cavalry is Coming and here: The SaaS Year of Hell. And Then — Reignition.
- It takes 7–10 Years in SaaS to Get Anywhere. Even outliers like Slack, really, started much earlier. And 99% of SaaS companies will need 7–10 years to get to $100m ARR and beyond. If you can’t do the time, don’t do the startup. More here: TAM is Great. But What Really Matters is That You Believe You Can Hit $100m ARR in 7 Years.
- You have to love, or at least commit to, recruiting constantly. You have to hire so many functions in SaaS — VPS, VPM, VPP, VPCS, VPE, etc. If you’re not willing to constantly recruit cross-functionality … you’ll never attract the talent. True in B2C too of course. But the founders and CEOs need to attract even more types of managers, earlier, in SaaS. More here: Post-Traction, You Need to Spend 20% of Your Time Recruiting
- It actually never gets easier. Every month, the Net New Revenue dial goes back to $0. But. You do get better. Much better. You may not be great at all that much at $500k in MRR. You’ll be great at so much at $20m ARR. More here:SaaS Start-Ups: Buck Up — It Really Does Get Easier.