SaaS Startups

What You Have to Get Right in a Start-Up

echojason@gmail.com'

Jason Lemkin

So many folks I meet want to start a start-up.  They have an idea they are passionate about.  They’ve worked under a great CEO and they’re ready — they think — to do it on their own this time.

What does it take?  Well …

Let’s talk about what you don’t have to get right:

  • Rockstar Founders? Not required. Yes, to build the next Slack, the next Amazon, the next Tesla, whatever, you probably need to be the next Elon Musk. But many founders at very successful start-ups are smart and driven, but no Elon Musk. I’m not / wasn’t.
  • Amazing Technology? Nope. See Airbnb and 100s of others.  So many apps start as hacks.  It’s OK.
  • First to Market? Of course not. See Google, Jet, etc. etc. Definitely can help. But not really necessary.  Timing matters.  But even if you are late to market, that can still work if you ride changes in the market.  Markets don’t stay static.
  • Dominating the market.  Helps, but … Marketo, Eloqua, Hubspot, ExactTarget, Pardot, Silverpop, and so many others had great exits in marketing automation.  No, you don’t always have to dominate a market.  Dominating a niche in a market does help, however.
  • 10x Better than Incumbents. Only sort of required. Yes, your new product does have to be better than the existing guys. But sometimes only in just 1 small, but important, way. And sometimes just Cheaper and Best Service also work without any real different features.
  • Domain expertise. Not required. Helps, yes. But you can learn a lot if you are 100% committed.
  • Work 100 Hours a Week? It helps. But it doesn’t make the business. But time in the office is not as important as time spent thinking about the business.

What you do have to get right:

  • Total commitment. It will take you most likely 24+ months just to get to real paying customers. And 7–10 years to build something of any scale. Most so-called “founders” are not this committed. You’re already ahead of 98% of the folks at WeWork and Galvanize if you are 100% committed to doing the time.
  • Product-market fit. You do have to eventually get to a minimum sellable product. You have to find a product the market wants to buy.
  • A Minimum Viable Team. You can outsource development. You can do a single co-founder startup. But. Many folks start something without a truly Minimum Viable Team. No chance without it. You have to be able to build, ship, market, and sell your product.  Building a prototype alone is not enough.  One engineer working part time never works.  You have to make a 100% full-time, 100% available, 100% committed team that can build the business.
  • Commitment to Excellence and Constant Iteration. You can’t build it once, put it on a shelf, and wait. You may need 100 releases before you have a sellable product. And then 200 more to get to $1m in ARR.
  • Obsession. And you need to obsess about your business. Constantly. In the shower. On a run. You may only “work” 40 hours a week. But you need to be thinking about your business 140 hours a week.

Unicorns are usually built one way.

But more broadly, Successful Startups can be built a lot of ways.  Insane commitment for 7-10 years, including the first 1-2 without pay potentially … the ability to recruit the Minimum Viable Team … and obsessive commitment … are what most matter.

Published on August 9, 2016
  • Nick Franklin

    Love this…an article on SaaStr where I can honestly say we tick all the “What you do have to get right” points and doesn’t leave me feeling like we’re not pushing hard enough 🙂

    • Glenn Rogers

      +1 Anyone considering a SaaS startup ought to read this. Can’t underestimate the ability to recruit a team early on in the longer term success.

  • Takes a long time to scale to revenue. 24 months sounds about right.

  • Louis Camassa

    Love it! Big question, what’s the consensus on product-market fit? 100 paying customers, 500, 2k? Perhaps enough to support min viable team?

  • rahul singh

    Great article on Saas. I represent Promatics. Promatics Technologies a
    well known saas development
    company
    has been helping startups, entrepreneurs and companies
    get their ideas built out into exciting saas products since a decade
    now. We will recommend our clients to read this blog to enhance their
    knowledge.

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