My Top 10 Year One SaaS Mistakes. Save Yourself Some Pain & Just Don’t Make Them Yourself.

Screen Shot 2013-06-12 at 4.03.22 PMI try to focus on positive things here on SaaStr.  I’ll leave negative to the critics.  It’s easy to be a critic.  It’s much harder to help and see the good in things.  The goal as SaaStr is to point out some things that work and save you some pain.

However, I answered a question on Quora about mistakes made starting a company.  I thought this list was a useful checklist for things not to do in SaaS, since they are all avoidable.
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We survived them, obviously — and ultimately thrived.  But I could have done even better knowing what I know now.
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So just don’t do the following 10 things in your first 12-24 months or so ;)
 
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My Top 10 Mistakes Starting An (Ultimately Successful) SaaS Company
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  • Launching Too Early.  This paid off with press, PR, partners, etc.  But we should have made the product better and waited 3-5 more months before public launch.
  • Insufficient Diligence.  While I thought I understood the market we were attempting to create and attack, with time, I realized I didn’t fully research comps as deeply or successfully as I could have.  If I had, I would have better understood the likely end point vis-a-vis freemium vs. enterprise.  And then, I would have invested more wisely in Year 1 especially.
  • Turning Down Extra Series A Funds That Were Offered and That We Ended Up Needing.  I ran it probably too lean, not so much to avoid dilution, but I guess, to maintain control in some fashion.  Or really, just not to lose control.  But that wasn’t necessary.  We ended up needing another $500k in our Series A to get to the B.  Not the end of the world, but it could have been.  We should have taken more money when initially offered.  In fact, I made this mistake twice.  We also turned down $2-$4m extra in the Series B.  We should have taken $2m more.
  • Not Hiring 2-3 Sales Reps to Start.  I started with one.  I thought this was a better way to learn.  I should have hired 2-3 as soon as we were ready for 1.  You can learn a lot more if you see how 2-3 reps perform than just one.  More on that here.
  • Not Realizing Your First Customer May be / Likely will be the Same as Your 1000th.  Our first ‘enterprise’ customer seemed like an outlier.  But in fact, the use case, the profile, was the same as our 1,000th.   We made this customer happy and successful.  I should have “listened” to why that enterprise customer took such an early risk on us.  Instead, we wondered if they were just part of a nichey vertical.
  • Confusing MVP and MSP.  A minimal viable product isn’t interesting in SaaS.  A minimal sellable product is.  It wasn’t clear which we were building for our 1.0.
  • Scaling Too Slowly — and Too Quickly.  I should have invested a little more in sales reps, more quickly, one we had some initial traction (see above).  But I also tried to scale up too quickly after our Series B.  Money has to chase opportunity at this phase.  Instead, I tried things I strongly suspected wouldn’t work in the hopes of growing even faster.  That was a mistake.  I should have told my investors I was taking a pause after our Series B, and invested another 3-6 months in processes and people, instead of rushing to ‘Scale Up’.
  • In Year 1, Not Fully Seeing What Was Working, Stuck in the Fog of “The Plan”.  I should have gotten more, better advisors in the early days.  We accomplished so many great things in our first year.  But I couldn’t see it, because we came up about 50% short on our revenue plan.  But we hit everything else.  So, really, that delta was irrelevant from a long term perspective.  I wish someone had been there to show me just how well we actually somehow did in Year 1.
  • Should Have Spent Even More Time Recruiting & Upgrading the Team.  I spent a ton of time here.  But I should have spent even more.  You just can’t settle or hire a B player.  Time is the real reason we settle.  Thank goodness I hired a rockstar VP Marketing in Year 1.  But I should have added more rockstar execs post-launch and pre-traction.
  • Not Going Long All the Time.  I believed in the big market, and the big opportunity — always.  But the endless operational challenges pre- and then post-Initial Traction buried me a little too much.  Instead of just focusing on hitting the number for this year, and working on the next — a full time job already — I should have found a way to also focus on hitting the numbers for 4 and 10 years out.  That can seem hard to do, even a luxury.  But it’s not.

My 10, FWIW.

Don’t make any of these mistakes yourself.  They are 100% avoidable.  Make other mistakes instead.  :)

4 comments

  1. This is rapidly becoming my favorite blog. I’m in the middle of “year one” and this is incredibly useful information. Thanks!

  2. Pingback: Software Marketing Tweetables – 24 June 2013 | Smart Software Marketing

  3. Great post Jason – keep them coming!

  4. Great list. You survived #5, #8 and eventually flourished. That’s inspirational by itself.

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