So we’ve been writing about the power of a strong, funded, dedicated customer success organization since the beginning of SaaStr way back in 2012.  

While now mainstream, our early thinking on the power of Second Order Revenue, in many ways, informed a generation of SaaS entrepreneurs and the whole CS space.

But … things have changed in the past 24 months or so.

I now dread calls and Zooms with Customer Success — and I’m not alone.

Just a few of the recent emails and calls we’ve gotten:

• A random person in CS emailed us they are increasing our pricing more than 10x.  Thank you much.
• A VP of CS sending us an NPS survey for a flawed product, getting a low grade, and only sending an automated response days later.
• A Director of CS we’ve never heard before telling us they’d shut off access to our product early if we didn’t agree to a 20% higher renewal price.

So SaaStr itself had no revenue at all for the first few years, and still, almost everything we do is free.

But we have enough revenue now (tens of millions) to think of it as a bootstrapped startup  

And the #1 thing I’ve learned is … how different bootstrapping really is.

#1: It’s Harder to Set and Enforce Firm Goals When Bootstrapping

I mean, you can set them, but a certain amount of urgency is lost when you aren’t depending on outside investors, VCs, a board, etc. The consequences to missing a month just aren’t >that< high … unfortunately. 

#2. Most folks that have come from a venture-backed environment don’t really want to work somewhere bootstrapped

The focus on cash flow and profits over just revenue alone just isn’t interesting to them. Not at all.  Folks that have worked in a venture-backed environment generally should stay in that environment.  They spend, think, and deploy capital and do hiring differently.

#3. The folks not pulling their weight are much more obvious when bootstrapping

Because they are such an obvious cost center, versus the rest who are accretive.  When you’re venture-backed, yes, you monitor the burn rate carefully.  But you aren’t quite as sensitive when the bottom 10%-30% isn’t really making any money.  You see it, but you aren’t quite as sensitive to it.

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

Free trials and freemiums can be a powerful sales strategy. But it’s not a one-size fits all! Learn how to increase conversion by leveraging other PLG modules, such as sandbox product experiences, and show prospects how your product can solve their challenges. 

Up Next: Wednesday, June 21st @ 10AM PT 

Topic: Building a Healthy VC/Entrepreneur Relationship 

Speaker: Itamar Novick, Founder & Managing Director@ Recursive Ventures

Workshop Wednesdays is new series where we’ll be bringing some of the best SaaStr speakers to you LIVE, every Wednesday. 

Each workshop will be hosted in a live, interactive 30-minute format at 10am Pacific each and every Wednesday. This workshop will be 100% LIVE, not pre-recorded, and will be hosted in an, interactive 30-minute format, including Q&A.

My list of top advice founders never hear:

Slow it down if you don’t have a great co-founder. We all get excited to “get going” with a start-up. But if your co-founder isn’t great, if they don’t have the right skills to complement yours, and/or if they aren’t committed enough … it won’t work out.
The mentors and investors that give you the best advice often don’t sugarcoat it. You have to develop a thicker skin as a founder. Investors and “advisors” that want something from you will often tell you what you want to hear, or sugarcoat their advice. But successful advisors, mentors, and investors that just want you to succeed often don’t sugarcoat their advice. It can hurt a bit, but listen more to that advice.
How badly do you want it? Committing for 10 years with a great co-founder is key. It’s not enough to see it. To want to “do a start-up”. To have a great idea. You have to want it so badly you will it into existence. And then stay the course to grow it into something real.

Find a segment of the market to win in.

Where you can build a 10x feature, and then a 10x solution, that solves a niche problem that customers will pay for.

Most SaaS markets are crowded today.

But the thing is:

As Bigger SaaS companies cross $100m in ARR, and then $1B in ARR, they stop focusing on smaller niches. They might give up on SMBs, or freemium, or higher churn segments. But you might be able to do well there.

Many Bigger Cos aren’t vertical-specific. There can be room for a vendor focused just on e-commerce, or healthcare, or contact centers, or other large markets. For example, Mailchimp is very strong in general email but Klaviyyo is worth almost $10B doing email for e-commerce.

Most Bigger Cos are 10+ years old. Do something important they don’t do well. Maybe they don’t integrate with newer vendors. Maybe they don’t do mobile as well, or social as well, or whatever. 10+ year old platforms are powerful. But they were architected for a different age.

Answer: The percent that want to.

Annual billing is a wonderful thing, done right:

But the thing is, there is a natural and organic pattern to this:

Very small businesses generally prefer to pay monthly. As much as 70%–80% of the time, small businesses buying a product <= $299 a month will want to pay monthly, period.

Large enterprises almost always want to pay annually. There is no way they want to get 12 invoices a year through procurement. Way too much hassle, especially for a purchase that is budgeted. 

Even if they ask for this at first, they’ll likely switch to annual billing later once it’s budgeted for next year.

And in the middle? It depends.

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

Learn how to earn more revenue by embedding payments into your solution, without doing it all yourself.

IMHO and experience, most SaaS CEOs/founders aren’t Killers.

They’re Builders.

In fact, the two jobs of a founder/CEO are antithetically opposed to zero-sum and attack thinking. First, at a strategic level, the founder/CEO has to see the future, a positive future, that is 100x bigger than today.  Focused on putting the internal pieces together it takes to get there.  

Second, at a tactical level, the founder/CEO has to be super win-win at heart and, in practice, to build a team, to manage a team, to drag the squad and the platoon through the war.

So most founder/CEOs want to take the hill, be good to their customers, and protect the team.  Killing the competition isn’t the primary goal.

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