The Latest from SaaStr: Ode to the $100M Exit

So in the Boom Times of late 2020 through early 2022, all we talked about was Unicorns.  1,000+ Unicorns bloomed, hundreds of them in SaaS.

Ignored a bit was the cap table.

To sustain those $1B+ valuations, startups often sold $100m+ of shares, as well as very large stakes in their startups. And realistically, cut off any potential M&A acquisition deals for even hundreds of millions of dollars.

And that’s just fine if you build the next Slack, Figma, Zoom, Databricks, Monday, Bill, etc.

But one thing no one talked about was how the power and magic in recurring revenue can make a $100,000,000 exit magical if you are capital efficient.

If you’ve ever had to file an expense claim after a business event, you understand how inconvenient and time-consuming it can be.

Pleo has been around for seven years and has developed distinctive ways to make the expense reporting process more manageable and efficient. 

Pleo’s VP of Product Growth, Haresh Baraj, and Commercial Director, Aiyana Scully Moorhead, share their stories on breaking down barriers to build trust and empathy that enable collaboration and push.

This edition of the SaaStr Daily is sponsored in part by MERGE

Merge’s Unified API allows you to access 150+ integrations across HR, payroll, ATS, accounting, CRM, and ticketing systems.

A few thoughts if you haven’t raised venture capital before:

1. Remember you have to prove yourself, still.  (Fair or not). Yes, you got the $$$, and they really can’t get it back, and probably they can’t fire you if they don’t control the board. But remember your VCs barelyknow you, and they just wrote a big check (for them) most likely. You still have to prove yourself as (x) a great visionary, (y) someone able to recruit and retain a great team, and (z) a careful custodian of the investors’ funds. It will probably take you 6 months or so to truly prove yourself, longer if there are bumps along the way.  So continue to build trust.  (They have to as well, of course.)

2. Remember the Board meetings are as much or more about your team as they are about you. If your Board just wanted to hear your thoughts, they could just meet with you 1-on-1. Make sure each VP/functional head presents at the board meeting, give them time, and don’t talk over them. And help them prep. Your VCs will learn a lot about the company, and about you as a leader, listening to them, not you.  And also, have board meetings.  Don’t skip them.  And even if you don’t have a board, do them instead as “investor meetings”.  They build trust, create accountability for your team, and deepen relationships.

Vendor Viability. 

The question for bigger customers especially on if a vendor will actually stay around if they you buy.

This remains a large risk with start-ups.  But it’s been mitigated to some extent in the minds of customers. With 100+ public Cloud companies, it’s now a bit clearer that at least after a certain point in time, SaaS vendors have a lot of stability.

But vendor viability is still a real issue, of course. And large companies know that. A few thoughts on how customers think about it, and how to approach questions around it:

First, large customers have distinct criteria for evaluating and working with “emerging vendors”. They rarely put a small start-up at the true center of a mission-critical operation. They’ll often limit risk by using the start-up first just in one division, or perhaps across the company but in a less-critical segment of operations.

This edition of the SaaStr Daily is sponsored in part by SAP

Revenue has always been at the top of list of "Things Businesses Want More Of."

But not like this.

A global SAP survey shows companies are seeing beyond traditional growth tactics and are shifting focus on sustainability as a critical way to boost revenue, increase efficiency, and mitigate risk.

In a perfect world, you’d learn something about marketing first before you hire someone to take it over. I.e., you’d experiment and at least make some progress in:

• Content Marketing. Can you get even 1 or 2 customers from blogging and writing?
• Growth Hacking. Can you get even a couple of customers by emailing to a small list you’ve built?
• Event Marketing. Can you get any good leads by going to an industry event?  Some founders end up very good at this.  Many are terrible.
• Drip Marketing. Can you set up HubSpot or Mailchimp or Activecampaign or something similar to reach out programmatically to your leads, and see them convert at a higher rate?
• PR. Can you get some great PR for your company that leads to customers — any customers?
• Adwords and paid media. Can you prove this works at all, even just to get a few customers?

When you are finally ready to hire your VP of Sales, oftentimes, there’s often a bit of a quiet panic around time. 

About getting the hire done. 

Because there’s a window.   Even if you are growing like a weed up to $1m, $2m, $4m ARR, or beyond … you can see growth is going to slow down without help.  You can’t hire more reps yourself.  You don’t know the rest of the playbook and don’t have the rest of the toolkit.  You can see that even with great sales rep efficiency with, say, 1-3 reps, it is going to slow down unless you bring in that VP in time.

And indeed, it often does.  If you don’t hire the management you need for each stage, you’ll almost always at least slow down at each phase transition.

But then, so often, I see startups still able to hire a great VP of Sales even after sales slow down a bit.  Often, to much less than outlier rates.

It's time!

SaaStr APAC is beginning in Singapore. 1,000 SaaS CEOs, Founders, Revenue Leaders and Investors will be at Suntec Singapore to learn and share.

Final tickets are available here.

You can also head to SaaStrAPAC.com on Feb 23 to tune into the livestream.

It’s just for most of us, it’s harder.

If you look at Aileen Lee’s seminal TechCrunch post on the first general of Unicorns, you can see only a handful of them had a single founder.

But a handful is a lot more than none:

Welcome To The Unicorn Club: Learning From Billion-Dollar Startups

Eric Yuan of rocketship Zoom has also written a lot about the power of a solo founder. E.g., Do You Need A Cofounder? Zoom CEO Eric Yuan Says Maybe

Just a few thoughts if you are thinking of going solo.

How can a new start-up possibly take on a successful big market leader?

The main advantage is you can pursue a market or opportunity that is not worth their time. Yet.

Big, established tech companies aren’t stupid, or ignorant. Not at all. They are better aware of tech trends than you are, usually. After all, they have all the customer data.

But so many things just aren’t worth their time … yet.

As a rough rule, anything < 10% isn’t material or worth their time. I.e.:

• Anything that today doesn’t seem like it can be > 10% of the business/revenues overall; or at least,
• Anything that today doesn’t seem like it can be > 10% of a division’s business/revenues overall.

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