The top 13 actionable learnings to sail smoothly through this startup crisis
This week I attended Saastr Europa, the biggest SaaS event in Europe. Of course, everybody talked about the current SaaS "situation".
If you couldn't attend, don't worry. I got you covered.
Here are the top 13 actionable learnings to sail smoothly through this crisis.
1. The crash is real for public companies, not so real for early stage.
SaaS as a category is growing.
But none of that matters. Uncertainty and doubt trickles down. VCs are going to be very cautious for the next months.
Plan for that.
2. Bessemer benchmarked SaaS companies YoY growth
- $1-10M, average 200%. Top 230%+
- $10-25M, average 115%. Top 135%+
- $25-50M, average 95%. Top 110%+
Where are you located?
3. Increase runway!
- Promote yearly upfront payments with an attractive discount
- Improve collections and renegotiate with vendors
- Reduce paid mkt spend. Acquisition for the bottom 20% customers is inefficient, quit those
4. On international expansion
Don't think it's a silver bullet to improve your metrics.
Similar to an unhappy couple having a baby. You will not find PMF in country 2 if you haven't found it in country 1.
Do a lot of research with your early customers.
5. On providing professional services
The true value is not in software but in a solution.
Solution = SaaS + PS
Make PS recurring and pay attention to Gross Margin.
6. Logo retention > ARR Churn
Keeping big logos is important, not only strategically but also because it means you have stickiness and are doing things right.
A VP Sales should be obsessive about logo retention.
7. Transitioning from founder-led sales to a sales team is difficult
Early people are hungry and curious.
Later people are focused on results and process.
Move early people to "builder" projects even outside sales to keep them active or they will leave.
8. Measure Customer Success using an honest metric:
- Slack: messages sent
- Dropbox: files added
- Hubspot: features used
CS is the perimeter of your company. Pay close attention to it and you will see the future.
9. Increase your prices!
40% of companies have already done it.
Avg increase by ticket size:
- $11-25: 18%
- $500+: 34%
Increases in between follow a linear gradient.
10. Don't try to optimise your tech organisation too early.
Technical debt can kill your company after 10 years. But obsessing about practices and optimising processes too early will kill it BEFORE you make it to 10.
Focus on PMF and iterate fast.
11. Let go of bottom 10% performers
If somebody is a clear underperformer it's a great time to let go of them.
Your team knows who's good and who's not. It will improve overall team morale.
12. Net New ARR > ARR
ARR is too big of a metric and can make slight deviations from the plan seem insignificant
NN ARR allows you to discover future cashflow problems much earlier.
13. USA ≠ EU
You cannot open the USA as "just another country". Reserve around $5M to start operations there.
"Looking too European" is a mistake, so is taking American resumes at face value.
Tags: startups