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SaaStr Q&A
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Dear SaaStr: Should Founders Start Their Vesting at Date Of Incorporation So They Have Vesting Prior to Raising VC Capital?
Dear SaaStr: Should Founders Start Their Vesting at the point of incorporation so they have shares vested prior to signing a deal with investors? No. At least, don’t do too much of this. I got this backwards, as do most founders. We think “being vested” protects us from VCs. Yes, there can be some corner…
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Dear SaaStr: My Co-Founder is Threatening to Quit Unless I Give Him More Equity
Dear SaaStr: My Co-Founder is Threatening to Quit Unless I Give Him More Equity; what should I do? Generally, this is the last, best chance to fix things. Founder equity splits are a tough thing. What seems fair on Day 0 may seem less fair on Day 720. The one that seemed the weaker of…
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Dear SaaStr: Is It Common To Have a VC Fund a Seed Round in Milestones?
Dear SaaStr: Is It Common To Have a VC Fund a Seed Round in Milestones? It’s not common with typical Silicon Valley investors. But outside of that? It’s a little old school, but it’s not that uncommon. And run from a milestone-based “second check”. Because really, it’s just a one-way option for the investor. If…
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Dear SaaStr: As a SaaS Founder, Can You Tell Us The Story of How You Found Product-Market Fit?
Dear SaaStr: As a SaaS Founder, Can You Tell Us The Story of How You Found Product-Market Fit? I had to brute force it, at least the second time at EchoSign / Adobe Sign. When we launched we had a small but decent number of sign-ups, and once we had a paid product in a…
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Dear SaaStr: What Was Your Very First Sales Story? How Did It Go?
Dear SaaStr: What Was Your Very First Sales Story? How Did It Go? My very first sales deal was for $6,000,000. In my first start-up, I was mostly hunting whales — seven-figure and eight-figure deals. I had no experience doing any of this. For our First Big Customer, we’d been negotiating a $6m/year contract for…
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The #1 Thing Your VP of Marketing, VP of Sales and CEO All Have to Agree On
Dear SaaStr: How do I drive alignment between my new VP of Marketing and my VP of Sales? The simplest forcing function to help your first VP of Sales and Marketing work well together is for you all to agree on what the #1 core metric in the funnel is. And then what the core…
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Dear SaaStr: How Many Of Our Prospects and Customers Should I Meet Face-to-Face?
Dear SaaStr: Should an early- stage B2B startup meet every customer face-to-face to receive feedback? March 2020 changed everything in SaaS, albeit we’re still working through all the changes on many levels. And it’s now a long time ago. In many ways, it’s just a different world. We’ve gotten used to closing bigger and bigger…
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Dear SaaStr: How Many Hours a Week and On The Weekends Did You Work as a Founder?
Dear SaaStr: How Many Hours a Week and On The Weekends Did You Work as a Founder? The first time I worked at a start-up, I was confused. I came in that first Saturday to the office to work, and no one was there. Right before that first start-up job, I had been a young…
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AMA: Hot Takes on SaaS Metrics with SaaStr Founder Jason Lemkin
SaaStr Founder, Jason Lemkin, answers community questions and shares hot takes on SaaS metrics, growth, and efficiency.
Dear SaaStr: Why Do So Many Start-ups Concentrate on Getting Investors?
Dear SaaStr: Why Do So Many Start-ups Concentrate on Getting Investors? Many of them shouldn’t. Selling stock is dilutive, and carries economic, social and legal obligations. Investors will expect 3x-100x returns on the capital, depending on the stage. They’ll want board seats, and consultation, and will often push your company to expand and grow in…
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Dear SaaStr: What’s a Resonable Discount for an Annual Contract? How About a 3 Year Contract?
Dear SaaStr: What’s a Resonable Discount for an Annual Contract? How About a 3 Year Contract? First — you don’t want a true net discount at all. What I mean what you want is a pricing structure that anticipates discounts so the net effect is revenue positive. Later, when you implement a CPQ and other…
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Dear SaaStr: What Should Founders Do To Get Noticed By An Established Company’s M&A Team?
Dear SaaStr: What Should Founders Do To Get Noticed By An Established Company’s M&A Team? Don’t bother too much with trying to get “corporate development” or the M&A team’s attention. That’s not their job. Probably the most important thing to understand is that in 95%+ of tech companies, the “M&A team” does not drive M&A….
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Why You Usually Don’t Want Your Sales Team Handling Renewals
Dear SaaStr: what are your thoughts on incentivizing reps to handle repeat business vs focusing solely on new business with an account management team for repeats (when you are still under $10m)? At the end of the day if your product is SUPER sticky and doesn’t need a big procurement battle to renew, then just…
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Dear SaaStr: How Do I Motivate a Sales Team Working Commission Only?
Dear SaaStr: How Do I Motivate a Sales Team Working Commission Only? It is really, really tough. While I am sure there are examples of “1099 reps” that have done extremely well, I haven’t seen it work in SaaS. Pay the reps at least a small base salary, with a large commission. It’s what folks…
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The Many Types of Angel Investors
Dear SaaStr: Are there different types of angel investors that should be sold differently when trying to raise money to start a business? There are several key types. Let’s break them into several categories: Professional vs. non-professional. Professional angels generally have very specific criteria in terms of valuations, team make-up, check size, etc. You do…
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Dear SaaStr: What Was Your #1 Hack to Increase Trial Conversions to Paid?
Dear SaaStr: What Was Your #1 Hack to Increase Trial Conversions to Paid? The quickest hack I did was answer all calls and chats immediately. I opened up a remote phone bank / set of agents just to answer trial users’ questions; and I made sure every chat that was in a trial was answered…
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Dear SaaStr: How Can I Remove a Troublesome Investor from my Cap Table?
Assume you can’t kick out investors. And plan accordingly. There are some limited exceptions, especially if you do nonstandard types of convertible debt or only raise a very small amount of capital. But for the most part, you are stuck with your investors forever. In the U.S. and Delaware and California, and under standard VC…
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7 Things That Separate The Best Founders From the Less Successful Ones
Dear SaaStr: What Are Some Common Mistakes Made by Less Successful Entrepreneurs? Mistakes less successful (but not total failure) entrepreneurs make: They can’t control the burn rate. You can slow down time if you raise a bunch of VC money, but you can’t stop it. They hide from tougher metrics. High churn, lower-than-hoped margins, low NRR,…
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Dear SaaStr: How Much Should I Talk About the Competition in a Pitch Deck?
Dear SaaStr: How Much Should I Talk About the Competition in a Pitch Deck? The best startup pitch decks almost all have great competition slides. Why? Because the best CEOs: Respect the competition. Even if they plan to destroy them. Know the space cold. Even in the early-ish days. See and can explain the whitespace they…
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Why Founders Leave After Acquisitions
Why do founders leave after their companies are acquired? There are many nuanced answers, but in the short and medium term, it’s incentives. Acquirers use 3 incentives to get founders to stay: Sticks. If you leave, you lose X% of the consideration. Acquirers try to put 30%-40% of the founders’ consideration at risk, if they…
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Dear SaaStr: How Do I Actually Start a Successful SaaS Company?
Dear SaaStr: How Do I Start a Successful SaaS Company? I think there are approximately 2 ways to get a new SaaS app off the ground: Option 1: Hustle into The Enterprise. In almost every category of software, there are gaps. Painful gaps. Generally, several gaps that any buyer has and would pay, say, $5k…
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Dear SaaStr: When Do VCs Try To Replace Founders as CEOs?
Dear SaaStr: When Do VCs Try To Replace Founders as CEOs? You’re worried about a bunch of VCs replacing you. That’s fair. You should be. It happens. Regularly — but not usually. A few high-level things to think about. First, if you really screw up, shouldn’t you be replaced? Second, if you don’t end up…
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Dear SaaStr: What Happens if a VC Loses All Their Money on an Investment?
Dear SaaStr: What Happens if a VC Loses All Their Money on an Investment? It’s OK — if it’s not too much. As long as the founders did everything they possibly could to make it work. Everything. And were honest. There are two types of losses for VCs and professional investors: losses than fit into…
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Dear SaaStr: As a CEO New to Sales, How Can I Get Better at Closing Deals?
Dear SaaStr: How Can I Get Better at Closing Deals? If it’s very early, hire 1 or ideally 2 sales reps who you’d personally buy from. You’ll all learn from each other how to close better, and faster. The #1 trick to making sure your first sales reps work out? Only hire sales reps you'd…
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Dear SaaStr: How Do I Craft a Winning Investor Deck for an Early-Stage Startup?
Dear SaaStr: How Do I Craft a Winning Investor Deck for an Early-Stage Startup? Here’s my #1 piece of advice: Get it all down to One Slide. "How to Create a Compelling Investor Deck: The Power of the First Slide" pic.twitter.com/AyyS7lHATz — SaaStr (@saastr) March 22, 2024 With 6-7 points on that slide. Not more. …
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Popular Q&A
How To Reverse-Engineer a $100M Exit: SaaStr on My First Million Pod
How do you reverse-engineer your first million as a SaaS startup founder? SaaStr founder and CEO Jason Lemkin chats with Sam Parr on the popular YouTube channel and podcast My First Million about what’s required to make it on the map for a $100M exit and then reverse engineers the steps to get there.
Rule 1: New minimum is $400K per employee
Rule 2: Go multi-product
Rule 3: Your second product must be bigger than your first product
Cheat code: Double your prices
Rule 4: 30% of your revenue is international
Rule 5: Localize your product
Cheat code: Remove friction
Rule 6: 100% net revenue retention
Rule 7: Don’t raise double digit millions
Dear SaaStr: What Was the Toughest Rejection You Ever Had in Sales?
Dear SaaStr: What Was the Toughest Rejection You Ever Had in Sales? The hardest rejection I’ve had in sales was around renewals. Especially ones I thought we really had earned. But still lost. In particular, in the early days of EchoSign / Adobe Sign, we had a...
Why the Future of Customer Success, Sales and Marketing Has Changed For Good: Ask-Me-Anything Part 2 with SaaStr CEO and Founder Jason Lemkin
In part one of this week’s Ask-Me-Anything (AMA) with SaaStr founder and CEO Jason Lemkin, he answered the community’s questions about whether all anyone cares about is AI anymore, investor appetites going into 2024, vertical SaaS, and thriving as a solo founder....
Is AI the Only Thing in SaaS that Anyone Cares About Anymore? Ask-Me-Anything Part 1 with SaaStr CEO and Founder Jason Lemkin
In the first part of this open Ask-Me-Anything (AMA), Jason shares his thoughts on the current state of sales and marketing, if anyone really cares about anything other than AI anymore, how to hire great partners, and breaking out of a crowded ecosystem.
Doubling Down: Jay Levy Managing Partner at Zelkova Ventures
"Doubling Down" is a new series where we hear from top B2B SaaS investors on their most recent activities and takes on the current market. Kicking us off is Jay Levy, Managing Partner at Zelkova Ventures. #1. What’s your most recent disclosed investment? Why did you...
Dear SaaStr: Can an Entrepreneur Back Out of a Signed Term Sheet Without Damaging Their Reputation?
Dear SaaStr: Can an entrepreneur back out of a signed term sheet without damaging their reputation? In my experience — Yes, probably. As a founder, you can back out of a term sheet if something is off, or even if you just get another offer you prefer. There is a lot...