Inc - The Biggest Issue for SaaS Startups

When I look across my investment portfolio for past 11 years, the #1 issue I think isn’t pricing, or TAM, or making a terrible mishire, or competition.

Those all matter, but the best founders fight through them.

No the #1 issue ends up being waiting too long to truly go multi-product.

No matter what you do, if you are too slow here, growth stalls. I’m seeing all across my investments that are 5, 8, 10, 12+ years out. That’s the one that ends up slowing growth. They’re not truly multi-product. They don’t truly have 2 or more products that are each large, and each sell ideally to different buyers or at least sell into very different, distinct budgets. Otherwise, you often end up with just add-ons, which are great but not truly second products. Add-ons don’t on their own expand the number of customers you serve, not really.

Parker Conrad, founder CEO at Rippling, has done a great job including at SaaStr Europa talking about building compound startups.

TODAY'S THE DAY

Grab a last minute ticket if you're in town, or catch the live stream later this afternoon on the SaaStr YouTube Channel.

#1:  Get Out There:

• Get in TechCrunch.
• Get on Hackernews.
• Get on stage at any B tier or A tier event.
• Get warm intros from any successful founders or seed investors you know.
• Rent a cheap booth at an event lots of VCs attend. Don’t blow the bank, but this does work.
• Go to industry parties where VCs are and introduce yourself without being a stalker.
• Enter a top-tier accelerator. YC, EF, etc. They work. VCs flock to them.
• Move to the SF Bay Area and network everywhere VCs and founders are.  This works.

I hear story after story of startups that were funded after meeting VCs at SaaStr Annual.

Bottom line: hustle to be where VCs are, either literally or virtually.

#2. Cold Email Does Work. But it Has to Be Great.

This is easier once you have a little bit of traction to share. Just asking for coffee doesn’t. But here are two cold emails I funded for millions. A third founder I funded at Owner, copied this format and I invested as well

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

Join us for the official Chief Finance Officer (CFO) Summit at SaaStr Annual.

This is an invite-only Brunch and meet-up within SaaStr's 13,000-person industry-leading event, the SaaStr Annual.

The CFO Summit at SaaStr Annual will feature an afternoon of invite-only content and networking for leaders and executives in Finance only.

When: Wednesday, September 11, 2024 from 12 noon - 3:00 pm

Where: Within SaaStr Annual, at the 40+ acre San Mateo County Events Center

Who: Top CFOs and executives in Finance

There are a limited number of spots and tickets for the leading CFOs to attend.

Apply to be considered for one of the last spots. 

Talk.

Dysfunctional co-founders don’t talk. Not for real. They stew. They get passive-aggressive. They email. They Slack. But they don’t talk.

I don’t mean talk in group settings, or at staff meetings, or in scrum. I mean the two of you.

My best co-founder relationship, in my first start-up, we got together every single day. Every day at 6pm. For 10, 15, 20 minutes. With no agenda. Just to talk. About our day, our challenges, our worries. In fact, it was always a highlight of my day.

And one lunch each week, with no agenda. Just to talk. We ate lunch at a gas station nearby. The where part didn’t matter. 

My dysfunctional co-founder relationships … we didn’t talk. Or we did for a while, and then it fell apart.

Once this happens, it’s unrecoverable. The relationship is forever broken.

But until then, you can fix it.

At least try.

So one of SaaStr Fund’s latest investments is Mangomint, a vertical SaaS platform for spas and salons.

Now … that sounds niche, and it sounds crowded. And it is. There are multiple vendors in different segments, including Mindbody which IPO’d a SaaS generation ago and then taken private in a $2B Vista acquisition.

And yet, today Mangomint is at eight figures in ARR, growing 100%+, with 110% NRR from SMBs. That’s the trifecta.

So what are the learnings, and how do they do it? And why is Vertical SaaS thriving today? 

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

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So SaaStr Annual 2024 will be even bigger than last year, which is fun.  Maybe not super important in the grand scheme of things, but I think great given how many cornerstone events are down (Burning Man, Coachella, etc.).

About 106% of Last Year.

But … but … it wasn’t easy.  To pull this off, we had to do much, much more:

• Add a 250+ person CMO Brunch
• Add a 200+ person CCO Summit
• Add a 200+ person CRO-CEO Poker Night
• Add a 400+ person CEO-VC Brunch
• Add an entire SaaStr.ai event-within-an-event

That’s like 5 more mini-events this year.  Real work, real value.

Very rarely in a failed start-up, irrespective of the amount raised, will the founders end up with anything.

If the start-up has raised a lot, e.g. here $40m, a small carve-out may be set aside to help wind down the company.  But it will be relatively small.

Now … a slightly different question is if a startup raises $40m and sells … but for less than $40m … do the founders make any money?

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