{"id":2007923,"date":"2023-03-11T10:20:06","date_gmt":"2023-03-11T14:20:06","guid":{"rendered":"https:\/\/wordpress-1016567-4521551.cloudwaysapps.com\/plato-data\/the-top-10-worst-pieces-of-saas-advice-updated\/"},"modified":"2023-03-11T10:20:06","modified_gmt":"2023-03-11T14:20:06","slug":"the-top-10-worst-pieces-of-saas-advice-updated","status":"publish","type":"station","link":"https:\/\/platodata.io\/plato-data\/the-top-10-worst-pieces-of-saas-advice-updated\/","title":{"rendered":"The Top 10 Worst Pieces of SaaS Advice (Updated)"},"content":{"rendered":"

Advice is very context-sensitive, so take this post with a grain of salt.<\/p>\n

But I thought I\u2019d take a stab at the Top 10 Pieces of Classic SaaS Advice \u2026 that, in my experience at least, are usually Just Plain Wrong.  Not always, but usually.<\/p>\n

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The advice and thinking that leads you to make important mistakes there really is no need to make:<\/p>\n

    \n
  1.  \u201cAsk VCs for Advice When You Want Money, Money When You Want Advice\u201d<\/strong><\/span>. I don\u2019t know who started this, but they must be smarter and more perceptive than me.  I get asked for advice a lot.  I get asked for money a lot.  I have 60 hours a week.  Please help me really know which you want.  Especially the money part.  I probably will pass on investing in you if I don\u2019t know you want money.  We recently did a New New in Venture event and I asked the question of many top VCs including David Sacks, Keith Rabois, Aileen Lee and more<\/a>.  Most say the same \u2014 just send us the pitch when you are ready.  We move quickly.  Catch up on those sessions here<\/strong><\/span><\/a>.<\/li>\n
  2. \u201cJust Give the VP of Sales More Time\u201d<\/strong>.<\/span>  This is always terrible advice.  If a VP of Sales can\u2019t improve things in one sales cycle or less, or at least just a smidge longer \u2014 they never will.  And you are better off without them.  This doesn\u2019t mean the improvement has to be magical.  But it does have to be there, quantitatively.  In one sales cycle, or less.  It\u2019s your fault for making the wrong hire, but more time won\u2019t fix it.  More on that here<\/a>.<\/li>\n
  3. \u201cWe Can\u2019t Afford It\u201d<\/strong>.<\/span>  Bear with me, here.  If something is accretive \u2014 you can<\/em> afford it.  As CEO, you need to find a way.  That\u2019s your job.  If a great VP of Marketing can double your inbound leads \u2014 of course you can afford her salary.  If an outbound sales team really can generate more revenue than it costs \u2026 if an event can generate more customer revenue than it costs to put on \u2026 if an engineer can build more features, that close more customer revenue than her salary \u2026 etc. etc.  You can\u2019t afford stuff that doesn\u2019t make you money until you are relatively big.  But after just $1m-$2m in ARR, you can afford everything that makes you money.  Find a way.  More on this here<\/a>.<\/li>\n
  4. \u201cLet\u2019s add a Freemium Edition.\u201d  \u201cLet\u2019s Add a Super Cheap Edition.\u201d<\/strong> <\/span> This rarely works unless it\u2019s truly a Top 3 corporate initiative \u2026 and even then it\u2019s tough.  If you were going to have a successful freemium edition \u2026 you\u2019d already have a freemium edition.  It doesn\u2019t work because freemium is rarely a go-to-market and marketing strategy.  Free almost never generates enough users to be worth it.  Nor does a Cheap Edition.  The effort here almost always is extremely dilutive of your time and resources.<\/li>\n
  5. \u201cI don\u2019t need a real VP of Marketing \u2026 Yet<\/em>.\u201d<\/strong><\/span>  Of course you do \u2014 if you have any sort of repeating business.  Don\u2019t hire some junior marketing person that can\u2019t really get you more leads.  Hire someone that can get it done.  That can own it.  That can get you more leads, more opportunities, more top-of-the-funnel stuff going.  Hiring a junior person after even $20k in MRR is a waste of time.  You need an owner.  An owner will add more net new revenue than her salary.  A non-owner won\u2019t.  So an owner is cheaper.  At twice the price.  More here<\/a>.<\/li>\n
  6. \u201cThey\u2019re Not a Significant Competitor.  We Beat Them in Every Deal.\u201d<\/strong><\/span>  Hooray.  Glad you are winning.  But what about the deals they win and you aren\u2019t even in?  Don\u2019t underestimate any competitor growing as quickly as you with even $1m in ARR.  SaaS compounds.  Track your loss rate, not your win rate.  Discuss the deals you\u2019ve lost, not the ones you won.  You know how to win the ones you won.  There\u2019s not that<\/em> much to learn there.  What you really don\u2019t know is how to win the ones you weren\u2019t even in.  Talk a lot more about those ones.<\/li>\n
  7. \u201cRFPs are Too Much Work, and We Lose Them All Anyway.\u201d<\/strong><\/span>  Well, then just quit. \ud83d\ude42  RFPs are part and parcel of real enterprise deals.  So don\u2019t get frustrated with RFPs.  Get better at them.  Hire someone to help you fill them out.  Force people to do their part.  Allow no complaints here.  The first 5 may be brutal and feel like a total waste.  But after you win 1, you\u2019ll win 2.  And then 10.  And then you\u2019ll get them written to favor you.  RFPs aren\u2019t for losers.  They\u2019re for Enterprise Winners.  Worst case, it\u2019s good practice.<\/li>\n
  8. \u201cThe Leads are There, the Problem is the Sales Team.\u201d<\/strong><\/span>  No.  This may technically be true, but if the leads really were there, good leads \u2026 some would<\/em> close.  And more would close last quarter and certainly last year.  A \u201csoft miss\u201d may be due to sales, but marketing is without question to blame too if there is a \u201chard miss.\u201d (More on this difference here<\/a>).  Marketing is almost always failing too if new bookings drop<\/em>.  Be honest here and fix both issues.  A mediocre but consistent sales team paired with better leads = same or better revenue per lead.  That\u2019s just SaaS math.<\/li>\n
  9. \u201cOur Market is Too Small.\u201d<\/strong><\/span>  No.  Sure, your current market, the addressable and focused piece, may be small.  But if you found 500 customers to buy your little old SaaS product \u2026 you really don\u2019t think there are another 500 out there?  Of course there are.  So there\u2019s no excuse not to double this year due to market size, folks.  And after that \u2026 redefine the market.  Expand it, grow it.  But that\u2019s not an acceptable excuse for this year.  Boo hoo.  You have not maxed out your market, my friends.  Not if you grew > 50% last year, you didn\u2019t.   And a corollary of this is the \u201cLaw of Large Numbers\u201d is just an excuse.  Until you are much, much bigger.<\/li>\n
  10. \u201cWe Don\u2019t Need a VP of Engineering or VP of Product\u201d<\/strong><\/span>.  Well, then, hooray.  But I can almost guarantee you\u2019ll hit a wall before $10m in ARR if you don\u2019t add true veterans in product and engineering management.  Hacking is great.  Hacking just does not scale.  Making up a roadmap each week does not scale after 100, 200, 400, 4000 customers.  Every SaaS company needs a VPE and VPP by $8m-$10m ARR at the latest, ideally before.  These are management, recruiting, and planning positions.  Hackers rarely can pull this off once the complexity grows another order of magnitude.  Which it does just from $1m-$4m ARR generally.  More here<\/a><\/strong>.<\/li>\n<\/ol>\n

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    If you see a little of yourself in these 10 \u2026 make a change.  At least one change.<\/p>\n

    The results will be rapid, positive, and material.<\/p>\n

    (note: an updated SaaStr Classic post)<\/p>\n

    <\/span> <\/p>\n

    Published on March 11, 2023<\/div>\n