SaaS Interviews with CEOs, Startups, Founders
Don't do these 68 things in your SaaS company
21 Jul 2023
Chapter 1: What are the common mistakes to avoid in a SaaS company?
I'm very excited to share this recording with you guys, which happened at our conference, sasopen.com, with over 100 speakers, all founders of B2B SaaS companies. We have a very high bar for what speakers share on stage, so you're going to enjoy this episode where we dive deep into revenue graphs, real tactics, and real growth metrics.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com.
All right. Good morning, everybody. All right, good. We're doing good. I got 110 slides. I got 20 minutes, so we're going to go. It's 97 things not to do in your SaaS company, so I'm not going to talk about startup valuations. I'm not going to talk about venture funding, anything of that sort. I'm coming off a cold, so apologies if I have to grab some water at times. Let's jump in.
A little bit about me. I won't read this all to you. My prior startup experience of interest was a company called Cosmo.com. If any of you were in the first .com of New York, we had a revolutionary business model where we would buy things for $2 and sell them for $1, and we tried to make it up in volume, and that didn't work. So that's that.
If you don't know CB Insights, thanks for the kind words earlier. We're building a technology marketplace. Our goal is to connect technology companies with advisors, investors, acquirers, and customers. And we do that by just assimilating a gargantuan amount of qualitative and quantitative information, basically trying to make sense of the technology economy. So... I'll jump in.
A disclaimer, right? So there's going to be things I'm going to say here that some of you may disagree with, you'll be offended by, and that's okay. These are not laws. These are just my learnings of building a SaaS company over many years. This will be useless for these folks. You can just read it. How many of you are bootstrapped in this room? All right. Nice.
You know, if you care about your personal brand and you really if that's what you know, like all that shit is nonsense. So it won't be good for you all. All right. This is the general thesis of this presentation. I love this Charlie Munger quote. My goal is to try to share with you the stupid things we've done so you avoid doing stupid things. And some of them, again, won't be relevant to you.
Hopefully, some of them will be. So let's jump in. And I'm going to go quickly since I've got a lot of slides. Why did you say slides? All right. Don't take advice from non-customers. Talk to people who have to live with the consequences of the feedback they give you. Don't tolerate high-performing assholes. You're on a team. We had some remarkable salespeople from a performance perspective.
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Chapter 2: How can high-performing employees negatively impact company culture?
And the whole conversation kind of sounded ridiculous, right? And nobody's buying you because of your cute pricing. I think before this, we had Doberman, Pitbull, Chihuahua. It was all just kind of stupid. And we spent so much time thinking about what dogs to put on the pricing page. And all of that energy could have been reallocated to something that was actually useful.
You've got to talk to customers. You've got to ask them point blank. You've got to give them a lane in which to give you honest feedback. Most people actually are nice and they want to see you succeed, but they also are reluctant to give you really hard feedback. If you ask hard questions of them, meaning where you say, I want honest feedback, where you just say, what makes our product suck?
They're like, okay, this is that type of conversation. But you've got to be willing to listen and not be defensive. and not be defensive in those moments. Don't respond to trolls. I do it. I shouldn't. Don't worry about perfecting your tech too early. So again, this one changes with scale. But in the beginning, I remember we used to have conversations about, oh, we got tech debt.
We got tech debt. And I was like, hey, we don't have any fucking revenue. I don't care about tech debt. Let's go get some revenue, and then we can solve all this tech debt nonsense we keep talking about. Over time, as you get revenue and stuff, you do have to pay that down. So again, as companies evolve, this will change. I guess most of you are B2B. Anybody not B2B? Okay, very few.
In B2B, the beauty of B2B marketing is the bar is so ridiculously low. Your competition's marketing is probably unbelievably forgettable. They put out stuff that... When people sell to B2B, they're like, I have to talk in this ridiculous way that nobody ever in the real world talks like that. So just try to be human. You ultimately are selling to a business which is made up of humans.
If you just keep that in mind, you'll be better than 95% of B2B marketers out there. PLG, ABM, whatever, you know. You have to eventually train your biz dev and CS teams. In the beginning, they can sit next to the founder and learn through osmosis, but eventually you're going to need to have some sort of regimented way of building habits. Habits build systems. Systems build expertise.
Expertise is what helps you win. Again, you don't want to prematurely optimize for this, but eventually you'll need to get there. I'm really behind on time. All right, hire customer success early. We didn't do that. This one's big. You know, something's not right. Oh, this function's not going well. Hey, we're just going to hire somebody and they're going to fix it. There's no one hire messiah.
It doesn't work out. You have to have a fundamental understanding of the problem before you can just go hire somebody. Rarely does somebody just kind of work out that way. do hardcore reference checks on your execs. If you don't get effusive reference checks, don't hire that person.
If somebody that you're hiring at the senior level especially can't put together five people who are going to say they're the best things in sliced bread, that's a problem. If you're going to meet with VCs, you are pitching. Whether you think you're pitching or not, you're pitching. VCs, private equity, whatnot, there's no coffee chats.
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Chapter 3: What onboarding practices are crucial for new team members?
They're making an evaluation of you down the road or now as to whether they're going to do something with you. So if you're going to meet with them, Be ready for pitching. Don't price based on competition. Channel partnerships. I think it depends on stage. Early days, channel partnerships aren't great. When you talk to customers, how many of you are founders who are selling still?
So a big thing I had to learn was I used to think, oh, if I go and talk a lot during the conversation, that's a good conversation. And actually, in a 30-minute conversation, if they're talking 20 to 25 minutes, that actually means I'm asking questions. I'm actually getting insights from them. So don't dominate. In the beginning, the founding team and the engineers are the product management team.
I think, folks, if you try to outsource product management too early, bad recipe. You've got to ask for the sale. I'm by no means a natural salesperson. I sold the first couple million of CBI subscriptions. And one of the things that was really hard for me was just, are you going to buy? Do you want to buy? I was like, hey, they'll tell me when they're ready.
Like, no, no, no, you've got to go and push the pace. And if they say no, that's great. Cut them off your list and go to the next one. If you sell into enterprise, you'll get a lot of these jokers who come around who are like, I want a partner. Just run away from these people if they have no money.
They are time wasters and tourists, and they're trying to look smart in front of their boss, and they generally are going to do nothing for your business. So just run the hell away from these people. Don't worry about scalability of everything. Elegant systems are nice, and they're intellectually interesting. Sometimes you've just got to put it in an Excel spreadsheet and grind it out.
Read this stuff by Jeff Bezos on competition. We spent so much time trying to get number one on Hacker News. Unless you sell developer tools, totally useless. We did get there a couple of times. Our Google Analytics traffic spiked. And then we just got a bunch of people who said our product sucks in the comments. So that was fun. Don't try to innovate in HR.
So your focus is to build a product and your innovation should be in the product. So I see companies who are like, oh, we're doing a three-day work week and your dog gets pedicures and all this other crap.
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Chapter 4: Why should you be cautious about raising venture capital?
It's like, nobody cares. Like the people who actually care about that stuff are not the people you want as teammates in your business. You want people who are there to do the work that helps customers. And if like dog pedicures and other sabbaticals after your second week or whatever are the thing, like you gotta not do that. You've got to be able to sell it yourself.
Again, just like product management, you can't outsource early. You have to kind of be able to do it on your own. You're going to see good leads. You're going to see bad leads. Focus on the good ones. Don't worry about, don't try to convert people, right? Try to tell people who are already of your religion, just try to get them over the finish line.
Converting people who aren't your religion, that's a lot of work. It's really painful. You know, Don't build product by committee is probably the best way to say this one. I see this a lot. I'm probably in the opposite, like, you know, this personal brand thing. Like, if you're trying to build a business, build the business, right?
Like, you know, your personal brand, if it's additive to the company, sure.
Chapter 5: How does effective PR contribute to customer acquisition?
But I see founders who, like, the stuff they do on Twitter especially is completely unrelated to their business. And it's like, if I'm a teammate looking at what you're doing, I'm like, what are you... here for the business or are you just here to like, you know, be an influencer? So I think that's something to be, it's important. Don't try to act like a salesperson. There's no one way to sell.
Have conversations. VC nonsense. The big thing here is that in startup land, Google and Facebook are extreme, extreme outliers. I hope CBI becomes one. I hope many of your companies become one of them. But they are, by definition, outliers. Most exits of technology companies are sub $200 million. So you read all of this VC survivorship bias in the media.
Most of us are not building those two companies, unfortunately. So just play the odds a bit. um, We have a newsletter, which is pretty successful. But we spend a lot of time thinking about, should we do video? Should we have a Clubhouse channel? All this. Instead of planting new seeds, what are the seed that you've already planted? If something's working, lean into that.
And then when you exhaust that, which takes a while, then move on. Pointless networking. Yeah, I mean, just self-explanatory. This is, I guess, related to pointless networking. I say generally it's a waste of time. I really like Nathan. I really like SaaS founders, so this was a good one to do. But your reach online is just so much more significant.
I think I've seen one panel discussion in probably a thousand that's actually good. Panel discussions, by definition, are garbage because everybody agrees with each other, so don't participate in them. They're useless for the speakers. They're useless for the audience. It's just mutually self-assured destruction. Focus on the essential few. Ruthless prioritization is really important.
Man, I've got a minute. If you haven't seen this post, Christoph Johns has this post about how to make a $100 million business. And it's really clarifying because it just tells you how to think about your business. I'd recommend finding that. I think this is another thing. I feel like failure is okay. Failure is okay is this whole mantra now. Yeah. Yes, it happens, but don't make it okay.
Don't make it okay within your team. Chubby Brain is the CB in CB Insights. So we started off as this. This was our first logo, so it's never going to get worse than this. And so don't worry about it, and we've done okay. Clients will not tell you what to build. We talked about this. People care about what's in it for them. And so they don't care about you. They don't care about your product.
They don't care about your story. They care about the problem you're going to help them solve. And you always have to keep that front and center. When you're hiring somebody, if you're ever doing a pros and cons list, that means you shouldn't hire them. immediately. If it's like, well, they're OK at this and they're bad at this, it's like, no, no, it's over. It's not a hell yes.
Your culture becoming shit brown. So this is an important one. If you ask everybody what their favorite color is, you're going to say red, you're going to say blue, you're going to say purple, somebody's going to say green.
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