Book of the Week: The SaaS Startup Founder's Guide

26 Mar 2016

This week I read The SaaS Startup Founder’s Guide from Salesforce (CRM). It’s free and Salesforce has almost a $50B market cap, so I figured it was worth a read. I was worried it was full of Salesforce propaganda, but it was good since it covered something I know very little about, how to build a sales team. Many companies are portrayed as overnight successes in the media, but that is usually far from the truth. Slack was actually founded in 2008. It usually takes at least 7 years to get to an IPO. Consumer internet companies can become huge in 2 years. 2 years is the amount of time to just get a SaaS company off the ground. Should I Start a Saas Company? Here are three questions to ask yourself.

  1. Are you prepared to give your company a full two-year commitment to hit initial traction?
  2. Are you able to commit to 8,760 hours a year?
  3. Will you take the leap?

If you’re not willing to invest 2 years into the company, you’ll quit before you get traction. Building a company is going to consume your mind. There won’t be a moment where you aren’t thinking about it. You need to be ready to leap in, because the company will require your entire focus. You need to believe you’ll become successful.

You absolutely should not start a tech startup and try to raise money unless it’s 100% clear to you that this is the best thing in the world to do.

Here are some reasons that you need to be 100% clear.

  1. startup will most likely fail
  2. risk-adjusted economics suck
  3. better off joining a rocketship
  4. startups are hard

Your startup will likely fail. When it fails nobody will care. If you want to get rich, doing a startup isn’t the best path. You’ll make more money on a risk-adjusted basis working for Google or Facebook. If you join a rocketship, the rising tide will float all boats. Startups are hard. Ridiculously hard. Elon Musk describes starting a company like eating glass. Reoccurring Revenue Before you made things and people bought them. That was the end of the relationship. Now people subscribe to your service. Things changes how businesses operate. You need to look at annual reoccurring revenue (ARR). This changes how the company is valued. Valuations are typically 5x revenue. Target + Pain + Solution You need to be a vital part of addressing painful areas for your customer. You want to be the pain killer, like Vicodin. You don’t want something that would be nice to have, because it will not give you any priority inside the company. Content Marketing The traditional in your face ads don’t really work that well anymore. What you want to do is produce content that gets users at the top of the funnel. Then slowly work on the messaging until they are ready to become customers. This builds trust and shows that your company is interested in helping its clients succeed. Some companies are known to use Pulitzer Prize winning writers to generate content. Content marketing can become unwieldy, so you need to make sure your goals and objectives are S.M.A.R.T.