Inc - 2024 Will be Tougher Than We Thought

So Gartner is cutting back its growth projections for 2024 a bit.  It was previously projecting a 13.8% spend in software spend in 2024 to over $1 Trillion.

It’s now cutting that back a bit to 12.7% growth in 2024, basically flat with 2023.

But that’s still a lot of growth. 

To over $1 Trillion in software spend worldwide — for the first time ever.

So Auren Hoffman did a SaaStr workshop a few years back that was one of my favorites, I’ve embedded it below.

He made many great leadership points, but one in particular rattles around my head a lot and I think deserves its own post:

You usually won’t know if you’ve made a 10x hire … when you make the hire.  They more often rise up.

This has been my experience as well.  A good / great employee can become 10x in a new environment was part of Auren’s point.

I saw this live in my first start-up.  My co-founder and our CTO were both wicked smart.  But neither had worked on the right projects at their last company.  I was able to get them into their zone and lane, and they didn’t just excel.  They truly did the impossible.  We took a technology that was worthless, bought it, and sold it for $50 million just 12.5 months later.

Since them, I’ve seen it again and again. 

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

1. Remember you have to prove yourself, still.

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 your VCs barely know you. You still have to prove yourself as (x) a great visionary, (y) able to recruit and retain a great team, and (z) a careful custodian of the investors’ funds. It will probably take you 6-9 months to prove yourself, longer if there are bumps along the way.

2. Remember the Board meetings are as much or more about your team as 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, and 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.

3. Be extremely transparent and data-driven.

And get them detailed Board packs and metrics at least 3 days before each Board meeting. Initially, your VCs won’t really know how transparent you are — or if you are hiding things. Share everything, at least, share all metrics and data. And provide very clear zero-cash data projections

4. But don’t share all your fears.

Highlight risks for your VCs, but even with them, don’t let them see you sweat. If they see you sweat, they’ll get scared/nervous too, and it will spiral downward.

SaaStr is the largest community of SaaS executives, founders, and entrepreneurs in the world and we bring them together each year at our flagship event—SaaStr Annual.

If you want leads, you want brand exposure, and/or you want to connect with your customers -- the SaaStr Annual is the #1 non-vendor event in the world.  Period. 

And importantly, we understand how much work "doing a show" is. We have designed the event so you will not just be exhibiting at the #1 event in the industry, but just as importantly, will have constant traffic. 

Want to partner with SaaStr? Click here to Sponsor our events, podcasts, newsletters and more.

I’ve been on every side of the table, and had challenging experiences with my investors.

I think what founders get wrong is not understanding incentives. VCs really do want you to be a big success. They can’t make money otherwise.

No one is out to get you.

So really, the ‘worst’ things VCs do are simply around incentive dis-alignments. And VCs at different stages have different incentives:

• Big Silicon Valley firms can only make money off Unicorns and Decacorns. If you want to do anything else, you get misaligned, at least partially. If you raise money from a Big Fund and don’t really want to build a Unicorn, you’ll always be looking over your shoulder.
• Small funds and especially those outside of “Silicon Valley” often won’t want you to raise very much. This isn’t always true, but small funds have very limited resources.  You may get advice like “Just raise a million or two now” when you could raise far more.  Sometimes, that’s good advice.  Sometimes, it’s self-serving to fit their fund size.
• Funds may push you to raise more rounds than you want. Because they get big personal ROI from “mark-ups” (i.e., higher prices in the next round). That’s OK just understand incentives.  In today’s more challenging times, this is a bit less true than in the crazy days of 2021, but it’s still true.
• Smaller funds may also tell you not to raise more because they are more dilution-sensitive. Some small funds want mark-ups, but others are more ownership-focused. They know they don’t have enough money to put a lot into subsequent rounds, so they’ll advise you to raise less. Don’t raise, Big Funds are bad, Try to Get Profitable With No More Money. They will give you this advice. Not necessarily wrong. Just biased 

© SaaStr 2024

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

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