Want to start your own SaaS company?
Do it. It is hard, harder than you can imagine. But if you do it right, and for real — it can last 30+ years.
If you haven’t done it before, though, here’s my list of the top 9 things founders get wrong before they start:
- It almost always takes at least 24 months to get really off the ground from Day 1. Almost no one budgets enough time, and founders quit before it even really has a chance to get off the ground. More here:
- VCs do not fund very many companies. Fundraising is a complex, nichey, weird art and science. The #1 thing most founders don’t get is most VCs don’t actually fund very many companies. At medium-sized funds, each partner often does 2 investments a year. And often just 1 a year at bigger funds. Even in seed funds, each partner often just does 3–4 investments a year. Why will you be that 1? If you don’t know — you won’t get funded. A bit more here.
- You can’t hire some magic salesperson to “get you more sales”. You have to figure it out first yourself. The answer to your problems is not a magic salesperson. Once you have 10, 15, 20 customers … you can hire someone to help. But the magic will be implementing the playbook you already figured out, just full-time.
- Freemium is not a marketing strategy. Just because your product is free, or has a free category, does not mean anyone will find it. Freemium is a funnel management strategy and done right, later it can accelerate viral acquisition. But putting up a new, free product on its own will get you zero customers.
- If your co-founder is not as committed as you, he/she will leave, and before it really takes off. It’s not worth it, or at least it’s almost never worth it.
- Slow growth after a certain point is a sign of a lack of product-market fit. If after say $8k-$10k in MRR you are still growing slowly, you don’t have true product-market fit … even if the customers you do have are happy. You need to iterate more. You may be close, but you don’t really have a product the market is demanding. Not yet.
- First-to-market matters, but so do many other things. Focus instead on being first to do something important 10x better. Mailchimp was not the first email tool. Qualtrics was not the first survey tool. Asana was not the first project management tool. You need to be 10x better at something important. Be first-to-market on that. More here:
- VCs are not out to get you. I’ve had some rough experiences with VCs, but VCs are not out to fire you, steal your company, etc. They are out to invest $1 and make $10 or more … by your growing like a weed. When that doesn’t happen, issues prop up. But VCs do not want to take over your company or fire you. They want to go skiing and do triathalons and see their capital grow with little work. Ideally.
- You don’t have to spend 100 hours a week in the office. But … Work-life balance is a myth. I’m sorry. You don’t have to work in the office 100 hours a week to make your start-up a success. Not at all. But you will need to obsess about it 24×7. The best CEOs and founders all do. On vacation. In the shower. On a run. When you are playing with your kids. Obsession about making it better will always be on your mind. This is stimulating, validating, and interesting. It also changes you. Forever.
(Cross-posted @ SaaStr)