Top 10 Avoidable Mistakes SaaS Startups Make

in this video i'm going to cover the top 10 mistakes that sas startups should avoid i'm going to walk through the most common mistakes i see from both new and experienced sas founders i'm rob walling i'm a startup founder with multiple exits author of three books about building startups and an investor in more than a hundred companies mistake number one is building something that no one cares about cannot count the number of times i've seen a sas founder go off into their basement for six months and build something they think the world wants without any external validation without any idea if anyone will pay them money for it and maybe they want it maybe it's for them and they're scratching their own itch but they've done no validation that anyone else in the world will be willing to use this or anyone else will be willing to pay for it and there's no validation that they can reach those people in any kind of a sustainable way it's perhaps the most common mistake that i see and it's one you should avoid mistake number two is under pricing your product pricing is the biggest leverage in sas recurring revenue is this amazing cheat code that we get for free because sas is a subscription business but the issue that i see as many founders will undervalue not only what their product does but they undervalue the time they've invested and they look around at the rest of the competitive landscape and think to themselves if i basically clone a product and i under price by 10 20 30 that will be enough to get customers and usually that's not the case most businesses factor price into their decision making but it's not the sole factor and i think oftentimes we bring this consumer price sensitive mindset to a business context and in business price is just one of many factors and in fact if a business can ensure that they will get better results by paying more money they will a lot of consumers will not do that and oftentimes being as expensive or even more expensive than your competitors can offer up an advantage in terms of the signal that it sends about the quality of your brand mistake number three is trying to be a little too innovative there are so many opportunities in b2b sas that are basically a simple twist on an existing product or a refresh of an old clunky competitor that people are tired of that hasn't been refreshed in 10 years and has an old user interface tons of opportunity in these spaces but many sas founders look at the silicon valley model of needing to be this massively innovative disruptive force that's going to be worth a billion or 10 billion dollars and if that's your goal to get there then yeah it's the likelihood is you're going to have to do something that didn't exist before you think about facebook as a social network there were other social networks around but facebook was the one that that you know gained the traction and uber was for the most part it wasn't the first ride sharing app but it you know it was the one that was the winner take all well in sas it isn't winner take all in almost all spaces you can have amazingly profitable and fast growing sas companies that are the second or the third or even the fourth player in a space if the space is big enough so don't feel like you have to reinvent the wheel or build something amazing if a business is using excel to solve a problem today that's an opportunity and if your sas app is going to replace that it doesn't need to be super complex and fancy it probably just needs to be you know a bit better than that excel spreadsheet and you know enable communication and enable people to get it done a little faster the fourth mistake is expecting that a good product will sell itself so many founders think that their idea is so innovative or that it is so much better than the current examples pen and paper excel or a competitor that it's just gonna market itself right that it it's not going to need anyone to go out and a let people know it exists and then b convince people that it is actually a better option and so just keep in mind if you're going to start a sas app it requires marketing and it requires sales don't use companies like apple or basecamp as examples of these companies that they just built it and people came right they built it and suddenly they had customers there are so many reasons why those are exceptions to the rule that you will have to market and sell your product that's the way 99.9 of products are sold today and in fact if you think apple doesn't do marketing it's because their marketing is so good it doesn't look like marketing mistake number five within the business it's working on the easy things so if you're a designer why not just keep continually redesigning your homepage to make it better if you're good on a microphone why not start a podcast that builds an audience that maybe you can sell your sas to if you're a developer build more features these are the easy things these are the things that are your comfort zone and it's where you want to live in that business hard things are things like grinding on a new marketing approach analyzing testing and improving your marketing funnel doing sales demos asking for the sale things that make you uncomfortable that actually grow the business are the things that you should be working on and i do see a lot of founders working on the easy slash fun things and that is not a great way to grow a business in a startup every week is like a month and every month is like a quarter mistake number six is moving slowly the cadence of shipping features and getting marketing approaches out the door and getting new blog posts written and getting content marketing and seo and ad campaigns and optimizing your funnel these things have to be so much faster than probably any day job you've had at you know if you've worked for the government or at a fortune 1000 company these entities move pretty slowly and in a startup you can't move slowly because your competition is not moving slowly and one of the main advantages you have as an early stage sas startup is that you can move so much faster than that competition you cannot beat them head to head they have more resources more money more developers but if you have big incumbents one of your chief advantages is moving quickly so don't squander it by making this mistake of moving too slow mistake number seven is waiting too long to hire i get it i'm a bootstrapper i bootstrapped all the sas companies that i launched but even then i hired out support within a few months of launching them and then i hired out development even though i was a developer within six months after that waiting too long to hire straps you to the business so that it not only does it become a job but you can't move as quickly as you'd like see mistake six that i just mentioned i find that some founders are resistant to giving up i guess it's control or they think that no one can do a particular job as good as they can and maybe they're right but if you hang on to everything for the life of your company you're going to be constraining the growth dramatically you're going to work too many hours you're going to burn out and frankly it's more fun to do as a team there was a time when i really wanted i thought i wanted to start startups as a solo person and i did and in fact i got pretty lonely got pretty boring and i got tired of grinding on support tickets and doing things that frankly are below your pay grade as a founder so as a founder think about how soon can i hire support out even if it requires being a developer or being more technical you can find people who are technical enough to do support and even if you think it's being close to the customer which it is you can find people who will pass along those notes and who will communicate to you the important things so that you can stay in close contact with your customers mistake number eight is fundraising too early you'll hear me say build your business instead of your slide deck the best slide deck is traction it's mrr and i see folks coming out with an idea and a sketch on a sheet of paper and they're looking to raise funds and the the hard part is if you are able to raise funds at that point you are very likely to burn through those funds before you have any type of traction and be able to raise at a higher valuation so if you decide that you are not going to bootstrap long term bootstrap it as long as you can and maybe raise some friends and family but think about the fact that in the early days your company is worth so much less the less traction you have so you have to actually sell more of it for the same dollar amount in addition we have seen founders apply to tinyseed which is the startup accelerator for sas bootstrappers that i run and we see folks applying with two or three thousand dollars of mrr who have burned through two or three hundred thousand dollars of funding because they raised it and they felt like they needed to spend it having money can be this amazing resource but it's also easy to waste it and to spend it too fast in an early stage product because you don't know if product market fit is going to take you three months or 27 months more people should think about bootstrapping longer than do today funding is not a panacea it does not solve all the problems that we think it does you still have to grind it out and get the product market fit mistake number nine is not vesting founder equity this is just a basic startup mistake i've seen folks where two founders get together maybe three each own the 50 or 33 percent of that company they don't invest their equity meaning they get all the equity up front and they don't have to work in order to earn that equity and then one founder leaves six months in 50 of the equity or two founders left with 33 each and there's just someone not working on the business who owns a third of your company this is pretty much 101 startup advice but if you're not vesting your equity with your co-founders you're making a big mistake i'm going to get to the 10th mistake i see sas founders making in just a second but if you're enjoying this video i'd love it if you'd hit the like button below and subscribe to the channel we have amazing content coming out on this channel almost every week and it's from videos like this that are topical and tactical to conference talks live streams all things aimed at sas founders and with that the 10th mistake is thinking in terms of months not years sas takes a long time the cheat code that we get with recurring revenue also brings with it the opposite of a cheat code which i don't know the word for that but it's basically that you can't charge a thousand dollars up front for your software maybe you can charge 30 a month and you get that thousand dollars over the course of many many months and that makes it hard to grow revenue right it's a lot harder than when you could back in the day you did downloadable software and you sold it for thousands tens of thousands of dollars sas takes a long time to build up takes a long time to find product market fit and you need a lot of customers to get to substantial mrr and so if you think that you're going to get product market fit in a few months you're going to get to 10k a month in a few months you're going to have the success that you want from your sas startup in a few months it's not going to happen very very rare it's the cinderella stories where that happens and frankly my i've been known to say there are no cinderella stories expect to invest years into building your sass so thanks so much for joining me i hope you enjoyed this video covering the top 10 mistakes that sas startup should avoid i'll see you in the next video [Music] you

Channel: MicroConf

Views: 55,225

Keywords: MicroConf, Saas, SaaS startups, software as a service, bootstrapping, bootstrapping startup, bootstrapping business, tech startups, how to compete in saas, saas growth strategy, gtm strategy, saas go to market strategy, saas marketing tips, saas product tips, saas growth, saas startup, saas mistakes, saas startups 2022, startup company, startup community, startup stories, startup interview, startup mistakes, startup mistakes to avoid

Id: 8Jjb7fPV6PQ

Length: 10min 54sec (654 seconds)

Published: Mon Jun 20 2022