Too Many Founders Hide From Bad News; Plus the Top News and Content of the Week

Hey SaaStr Community,

'Tis the season! And we're getting into the Holiday Cheer with the SaaStr Holiday Party 2022!

Friday December 2nd, 4-7PM in Downtown Palo Alto at Tacolicious

To kick-off the Holiday Season, we decided to take over our favorite food spot in the SF Bay Area, and bring together some of the Bay Area SaaS community of Founders, Revenue Leaders, CEOs, Investors, and Speakers for a fun-filled evening of holiday cheer.

It'll be an evening of tacos, margaritas, SaaS and Holiday Cheer.

Join us as we get together the SaaS community for the Holidays.

Ok, hopefully you’ve built a careful, thoughtful financial plan for the year.  You have your base plan, your stretch plan, a thoughtful approach to spending and burn rates, and more.

And yet … I know many of you haven’t started, or have only done a cursory job of financial planning.  That’s a mistake for several reasons. 

First, without a strong, data-driven model, your goals for next year will be much harder to hit. 

Second, even small amounts of mis-spend and over-spend can compound over the course of the year to a much higher burn rate.

And third, and most importantly, you need to know how far to stretch.  Without a strong plan, doing even better is just … a hope.

This edition of the SaaStr weekly is sponsored in part by Payhawk

In the Boom Times of late 2020-early 2022, many startups … really never had board meetings.  Or barely had them.  Or had 1 or 2, but would sort of never schedule the next one.

They didn’t take them seriously.  The money kept coming, and in many cases, the VCs didn’t care.  They were on enough boards anyway.

See, e.g., FTX.  

No board meetings, and no one cared.  

The money and times were just too good, and founders had all the power in hot deals anyway.

So there’s a lot of angst in VC today. 

And a lot of it is around bridge rounds.  What’s a bridge round?  It’s extra money solely from the existing investors.  And bridge rounds are … stressful. 

Almost always.  No one really wants to do them.  They want a top VC to come in and do the next round at 2x, 3x, 10x the last round price.  Not the existing investors having to reach deep into their own pockets.

Now here’s the confusing thing, that founders don’t understand as well as they should.  Every bigger VC fund carries “reserves”.  Extra money used for second checks and third checks.  With bigger funds, it’s often 50% or more of the fund.

We're continuing our super-popular series, Workshop Wednesday this week!

If you've missed the last few Workshops, this has quickly become a SaaStr-fan favorite, as it lets our global SaaStr community interact with an expert in SaaS, in a live Workshop format. 

This Wednesday, November 30th at 10AM PT we'll be hosting Building for Builders: Creating Enterprise Platforms with Airtable Product Manager, Helen Zang. 

And if you missed any of the past workshops with Snowflake, Battery Ventures, or GitLab - catch up on them here. 

So one thing that’s back now is customers asking for longer payment terms.  Not all of them, and not in every industry.  And if your customers pay on credit card, for the most part, this won’t matter.

But customers you invoice in many cases are again asking for much longer than classic Net 30 terms. 

This isn’t new, we see it every time an industry comes under stress.  It’s one of the classic ways a Procurement and/or Finance department manages cash.

And it’s super stressful on startups, especially earlier-stage ones.  Hooray, you closed a big annual or even 2 year deal!  That’s great.  But … they want Net 90 to pay.  And then … they pay late.

So with so much change and tumult, how can we get a handle on how SaaS startups are really doing?

Hiring is a great proxy.

It cuts through the baloney, the 100x ARR rounds, and the pretending.

And how we’re all doing in hiring pretty much reflects what I’m seeing in SaaS startups overall:

28% of you are hiring as fast as ever.   43% of you are still hiring, but have slowed the pace.  Like Monday and other SaaS and Cloud leaders.  And 29% of you aren’t hiring anymore.  A hiring freeze (or reduction).

This edition of the SaaStr weekly is sponsored in part by BlueSnap

Scale-ups are exciting. They demonstrate spectacular growth and expansion while revolutionizing and disrupting industries with new business models. Scaling to satisfy customers’ demands depends on innovation and foresight combined with enterprise-ready technology and the right partners.

On top of considerable dedication, creating a scale-up requires a functional edge—a unique and unreplicable capability compared to the players in the industry. Atlassian’s Chief Revenue Officer, Cameron Deatsch, walks us through how Atlassian grew over the course of 20 years and became one of the most successful startups today.

• Akamai is looking for a Strategic Sales Executive to develop

  a strategic sales plan, encompassing market development, partnerships, and product development, and accelerating the adoption of Akamai's Cloud Computing Portfolio in the US Market.

   

• TripActions is seeking a Commercial Account Executive who can 

  manage their full sales-cycle from prospecting to contract generation, red lining and other deliverables for closing. They will build and maintain strong relationships with  TripActions clients post-sale.

• SaaStr 609: SaaStr CRO Confidential Presents How to Survive in a Competitive Market with Divvy CRO Sterling Snow. Hosted by Founders Fund Partner Sam Blond.

• SaaStr 610: The Playbook to Achieving CEO/CRO Harmony with Algolia CEO Bernadette Nixon and CRO Michelle Adams
  
• SaaStr 611: How to Scale a Platform and Ecosystem to $10B with Atlassian CRO Cameron Deatsch

Listen on Apple Podcast, Google Podcasts or Spotify

One serious way to help mitigate fraud as a VC:

Always

Talk

To

The

CTO

Yes, CTOs can mislead, too

But they tend to be worse at it. And often are brutally direct.

Every VC talks to the CEO.

So few talk to the CTO.

A really, really rough rule in SaaS is you need a second product firmly in place by 10,000 customers, or $100m ARR, whichever comes first

That probably means launching it by the time you have 5,000 customers

If your ACV is low, that could be as early as $10m ARR

So far, the only startups I’ve lost money investing in had one thing in common: they had high churn in the early days

Some fought through it

But a lot never doly show

The reality is startups that can iterate the fastest -- win

Slow startups just get dusted by the competition

But working until 3am in the office is not the only way to be a highly agile, productive team

© SaaStr 2022

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