Hey SaaStr Community,

So today, everyone has a side hustle, or so it seems.

But is that a good thing?

Almost everyone in sales seems to be into real estate, either “multi-family” real-estate or getting their broker’s license. Or other so-called “passive” income streams that really often take many hours to manage.

And so many folks are coaches, selling courses, and more.  Others are very hands-on advisors, spending many hours per month at startups other than the one they work at.

And many founders and CEOs don’t like it.

They may tacitly support it, but I don’t know too many that like it. 

Aren’t they already being paid to do a full-time job?  Isn’t it inherently a distraction, if it’s anything more than an hour or two here?  Don’t they seem to be working on their side hustle on LinkedIn with even more enthusiasm than their day job? 

Well, maybe. 

But the new generation in tech seems to have normalized the side hustle.  I don’t see things going back to the way they were. 

Everyone wants “multiple revenue streams”, even if that means doing none of them as well as they could if they focused.  And really, side hustles got even easier once we all became distributed and worked on Zoom.

Who will really know? You don’t have to constantly duck into a conference room or phone booth to take a call for your other gig anymore

And with anxiety over job losses at a recent high, many will get some comfort in having a second income stream.

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.

This edition of the SaaStr Weekly is sponsored in part by Linode

Cut your monthly cloud bills in half with the Rise Startup Program. Receive between $500 and $120,000 in cloud credits during your first year. Apply Now

So my LinkedIn feed is full of sales execs complaining how unfair startups are:

• VPs get fired seemingly without cause (it’s never that simple, though. No sane CEO wants to move on from a VP that’s performing).
• Startups not even hitting 40% quota attainment (more common these days, and brutal indeed).
• Layoffs continuing and in some cases accelerating, and going deep enough to really hit some of the best.

Are expectations for VPs of Sales, CROs, and CMOs too high?

Probably.

Is this fair? Perhaps not.

But here’s the thing that I think many miss. VC-backed startups can be an incredible journey. I’ve founded several and invested in 25+, including 6 true unicorns. We’ve done incredible things.

There’s a contract in venture-backed startups, and it’s not an easy one to meet. It’s to do everything humanly possible to achieve hyper-growth.

This isn’t for everybody, and in fact, it isn’t for most. Don’t sign up for this contract and journey if it’s not for you.

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.

Let’s break it down a bit.

General Partners at VC firms have to:

Raise capital. Yes, VCs themselves have to raise the money they invest. If you are top tier firm, with a long track record, this often can be done easily. If you aren’t though, it can take years. And so this can consume anywhere from 5%-50% of your time.  And these days, it’s harder than ever.

Manage their LPs. 

This doesn’t take a massive amount of time, but it does take time.

VCs have to manage their own investors, the “LPs” or Limited Partners. This includes an Annual Meeting (which can take a lot of prep), quarterly reporting, audits, and more. 

Manage existing investments. This can take a lot of time, especially if you are on a lot of boards. Many VCs end up spending 40%-50% on 15+ boards, and sort of become professional board members. In addition, in some cases VCs spend a material amount of time interviewing executives and others for portfolio companies. And startups that fail often take a fair amount of time and drama to wind down. And then there are founder issues.  All together, this can take 50% of your time or more.

Networking (sourcing) and marketing.  One way or another you have to source deals.  This can be by meeting with earlier-stage investors.  Or frequent co-investors.  Or talking with top angels and CEOs they know.  Or attending demo days.  Or doing marketing — blog posts, digital events, etc. etc.  One way or another, it’s sales.  So you have to find a way to source the best deals.

$100M ARR doesn’t happen overnight. Founders are responsible for ensuring a startup always has enough money, setting the vision for the company, and driving things forward. 

It seems simple enough, but it’s not always easy, as founding CEO and co-founder of LaunchDarkly, Edith Harbaugh, learned firsthand as she took the company from zero to over $100M. 

Harbaugh shares the top 10 lessons she learned going from $1M to $100M (0-$1M is an entirely different phase) in the hopes that founders will be able to recognize pitfalls they’re about to make or for those who have already made them to know they aren’t alone. 

• SaaStr 669: From 2 Weeks of Runway to a $1.5B Valuation: The Founder Playbook with Loom Co-Founder and CEO Joe Thomas        
  
• SaaStr 668: Top 10 Mistakes Getting to $100M ARR with LaunchDarkly Co-founder and Executive Chair Edith Harbaugh         

• SaaStr 667: The 2023 Mid-Year State of the Markets: Why Efficient Growth is Key with SaaStr CEO & Founder Jason Lemkin

Listen on Apple Podcast, Google Podcasts or Spotify

Brand Marketing:

$1m ARR: Makes Little Sense

$10m ARR: Ok Let’s Do Some

$100m ARR: Most of Marketing

$1B ARR: All of Marketing

A lot of investors never talk to the CTO

They are also half the bet, though

© SaaStr 2023

644 Emerson St. Suite 200, Palo Alto, CA 94301

If you'd like to stop receiving the SaaStr Weekly, click here