Ok my top list of advice to get a SaaS startup going and off the ground:

1. Take your time to find a great co-founder. It may seem like you are in a hurry, but in the end, anything less than a great co-founder will set you back. 
2. Find a co-founder complementary to your skills, ideally. Someone great at something core you aren’t: Sales, Engineering, Marketing. Great at sales. Great at engineering. Great at marketing. 
3. Do at least 20–30 customer interviews before you start writing too much code. Otherwise, you often are building for an imaginary customer. 
4. Somehow, find enough cash to make it 24 months to first real revenue. It just takes that long in SaaS and B2B, nine times out of ten. 

We’re SUPER excited to announced that Expensify has returned as a second-time SaaStr Annual sponsor for 2023 Annual on September 6-8, this time as a Unicorn Sponsor!

We’ve used Expensify ourselves at SaaStr for years to manage our team’s expense reports, and we’re excited to have Expensify back even bigger and better this year, and to partner with Expensify on their Chat app as well.  It’s free to get going!

We’ll see you, Expensify, and 12,000+ of the Best in SaaS and Cloud at 2023 SaaStr Annual in the SF Bay Area, Sep 6-8!!

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

Notion combines project management with your docs and knowledge base, so you can stop jumping between tools, and stop paying too much for them too.

Hiring your VPs as a founder is tough.  Wait too long, and the business stalls out.  Underhire, and you don’t get an owner.  Overhire, all the money is gone.   And simply getting it wrong?  Well, that can set you back a year — if you wait to take action.

So how do you know? 

How do you know, quickly, if you’ve hired a “good enough” VP?  Or if you hired someone that talked the talk, but isn’t the right fit for your startup?

Let’s break it down to 4 simple criteria.  Then, I want you to be honest about them.

In the early days of SaaS, we all focused on Customer Lifetime Value. In B2C and high-churn environments, it’s indeed a critical metric.  You do need to know how long your customers last.

But in SaaS, in the earlier days, we inherited a lot of our lingo and metrics from B2C web services. They were earlier to mass-scale recurring revenue services on the web than B2B was. 

So we used their core metrics like “Churn” and “Lifetime value”.

These terms do matter in B2B SaaS, too. But they need to be repurposed, because our B2C friends assume a lot higher churn and turnover, and much lower revenue per customer, than most B2B applications.

We’ve moved on in SaaS from CLTV on its own being quite as magical a metric as we all thought We’ve learned.

Generally, if the issues are around:

• harassment or any inappropriate conduct, or
• fraud or misleading financials, etc, or
• something else that is wrong legally, ethically, morally, financially, etc.

Then I definitely need and want to have the meeting. I absolutely want to hear about it, immediately.

All of these things do happen, unfortunately. I wish they did not. They are horrible and destroy lives and companies. These things shouldn’t happen. And maybe even especially not in start-ups … where we are doing it to be part of something better.

But otherwise — maybe it’s better not to reach out to the investors as a departing executive.  Especially if, being honest, you are merely disgruntled.  If you felt like it wasn’t your fault the company isn’t doing better.

In general, startups are tough. As an investor, you are backing the founders in general, and really, the CEO in particular. It’s unfortunate, but you do expect some sour grapes from some ex-employees. And more relevantly, CEOs aren’t perfect. Most of us grow as managers. I expect issues, unforced errors, challenging meetings, and mistakes. It’s a bummer, but I expect a few ex-employee who think the CEO is bad, or their boss was terrible, or the company is pointed in the wrong direction. It’s not as helpful as you’d think.

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

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For the last few years, SaaS has felt less like a service than it used to.  2023 has become the year of not just the aggressive price increase, but the threatening renewal conversation. In turn, customers are trying to cut back on variable costs and vendors they don’t strictly need.

We’ve gotten into a bit of an arms race, where vendors that can raise prices, do … and those they can’t often are seeing cutbacks by customers looking to shrink the number of SaaS vendors they use.

Lost in all of this is the basic tenant of delivering more value if you charge more.

• Did you add a few truly compelling, new features when you raised prices?
• Does your app do radically more than it did 12 months ago?
• Maybe add features for new stakeholders, like analytics, dashboards, reporting, etc?
• Did you build a much larger ecosystem for customers in the past 12 months?
• Did you close a few key feature gaps your existing customers will really begging for?
• Is your service and services much better?

Sort of.

Generally speaking, there is no legal or contractual way to make a VC sell / exit. There can be some exceptions, but usually there are no “drag along” or forced put rights in standard terms and conditions.

But …unless (x) the VCs control the company (own > 50%+) AND (y) are willing to step in and put a CEO in, or be the CEO … the founders have a lot of de facto power here. 

Most VCs can’t run a startup on their own. 

Sure, once you are at scale, bringing in an outside CEO they may know can work.  But rarely does it work well until the growth stages.

So founders can explicitly or implicitly can give the VCs a choice — take the keys, or let us sell.

So most VCs that have been around for a while generally adopt 1 of 2 attitudes here.

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