Hey SaaStr Community,

Burnout is a real risk in SaaS.

Not usually in the early days. But as time marches on — It’s a huge risk.  

One piece of “evidence” — a lot of fairly successful SaaS startups all sell at about the same point in time … about 5 years in. 

Because the founders get just too burnt out around Year 4 … and as Year 5 rolls in, they’re running a bit on fumes, and … they sell.

Or take a bad venture deal.

Or just plain start to give up a little.

Often, as it’s just finally getting good.

So here are our Top 10 suggestions to avoid long-term burn-out.

So a vertical SaaS player many have heard of but rarely talk about as a business is LegalZoom.  You’ve seen the commercials for years.  LegalZoom was founded way back in 1999.  But you probably didn’t know they IPO’d not all that long ago.

Today, the self-service legal services giant is worth an impressive $3.4 Billion at $660m in ARR and is fairly mature.

They’re only growing revenue 7-8%, but they are relatively efficient, with 13% adjusted EBIDTA margins.

So while no longer a rocketship, LegalZoom is still growing and working on becoming even more profitable, guiding to $100m+ in adjusted EBIDTA for this year.

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Why are things in SaaS so different in 2023 than in 2022?

And extremely different than 2021?

“I think for most of us during the crazy lockdown era, it was just nuts,” Lemkin explains. “And this is, I know this sounds obvious, or maybe it doesn’t, but as someone’s been doing, SaaS since 2005, this is the first time in the last 10 years that SaaS has gotten harder.”

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.

So Carta recently put together some data on a topic I’ve wondered about: just how many startups allow option exercises beyond the traditional 90 day window?

The answer:  the general trend is just over 10% of startups have extended windows beyond the traditional 90 days for departing employees to exercise stock options.  But that is extended in tougher times, like just after lockdown in 2020 … and in 2023.  In Q1’23, 20% of startups allowed longer exercise windows, twice the normal average, tied to in large part a local maximum in terms of layoffs.

“The fastest company will always win,” says Daniel Dines, CEO and Founder of UiPath, one of the fastest-growing software companies in the world. 

Ten years ago, no one would have guessed Europe would generate the largest software IPO globally, yet UiPath has done it, and net retention is 144%.

At SaaStr Europa, UiPath’s Dines shared five insights from growing a company from nothing, so other founders can learn what it takes to scale a SaaS startup to $1B+ ARR.

“When you have the courage to be bold, people will take you seriously.”

Join us as we uncover lessons from UiPath’s success in creating a new category within RPA Enterprise Automation – Robotic Process Automation – while navigating the challenges inherent in digital transformation powered by artificial intelligence and machine learning technologies.

• SaaStr 667: The 2023 Mid-Year State of the Markets: Why Efficient Growth is Key with SaaStr CEO & Founder Jason Lemkin
  
• SaaStr 666: Scaling a SaaS Startup to $1B+ ARR: Insights from UiPath CEO and Founder Daniel Dines

• SaaStr 665: CRO Confidential: Principles that Drove Wiz’s $0 to $100M Journey with Wiz CRO Colin Jones

Listen on Apple Podcast, Google Podcasts or Spotify

I too used to celebrate a “unicorn” round

Now I groan when I see one at < $50m-$100m ARR

Good for them, but:

- Better not spend it all

- Need exit for $3B+ for math to work

- Founders still see it as a right of passage

Almost everyone I talk to at scale doing well right now wants to do a small acquisition or two

They just think everything is too expensive

Such is the way

© SaaStr 2023

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