In Episode 582, Rob Walling is joined by Einar Vollset to answer listener questions about enterprise sales, crowdfunding, replacing yourself, and things that every B2B SaaS founder should know.
The topics we cover
[1:26] Investing with Reg CF
[6:20] Enterprise plans and pricing
[13:31] Finding your replacement
[19:29] Best way to give software demos
[21:55] What fundamental things should startup founders should know
Links from the show
- Sales Funnel Optimization for Bootstrapped Founders – Steli Efti – MicroConf Europe 2019
- Einar Vollset (@einarvollset) | Twitter
If you have questions about starting or scaling a software business that you’d like for us to cover, please submit your question for an upcoming episode. We’d love to hear from you!
Rob: You guessed it, it’s Startups For the Rest of Us episode 582, where I answer listener questions about enterprise sales, crowdfunding, replacing yourself, and things that every B2B SaaS founder should know. Today, Einar Vollset joins me. He’s my co-founder with TinySeed. He joins me because there’s a question specifically about TinySeed and he knows a lot about enterprise sales. I was just a good fit to bring him on the show today.
I hope you’re enjoying yourself on this festive time of year and that you are able to take a little bit of time away from your business, not because we don’t love our businesses and enjoy what we do, but I think this is a good time of year to take a couple days and be with friends and family. Take that little break, that mental break that can help bring you back recharged with renewed energy wanting to invest in your business as we enter the new year. I hope you enjoy today’s episode. Thanks for joining me as always.
Einar Vollset, thanks for joining me back on the show. We got some good questions that I think are right up your alley today.
Einar: Glad to be here.
Rob: Let’s dive into our first question from Stuart at Growth Method.
Stuart: Hey, Rob. Stuart here calling from a wet and windy UK. Hope you’re well. I’ve been a listener for many years. Thanks so much for the podcast. I actually have a question about TinySeed. I recently invested a relatively small amount, $5000 in a couple of startups by Republic for the first time through the Reg CF crowdfunding offering.
I’m not an accredited investor, but obviously can invest under Reg CF. I wondered whether you’d ever considered or would consider enabling people within your community network and Startups For the Rest of Us listeners, the ability to invest in a future TinySeed fund under Reg CF. I thought it’d be a really nice way of bringing together people with very similar attitudes to bootstrapping, self-funded businesses, and sustainable profitable businesses, and enable them to invest $1000, $5000, $10,000 into a TinySeed fund. I’m really interested to get your thoughts. Thanks so much.
Rob: That’s a good question, Stuart. Einar, what are your thoughts?
Einar: Honestly, I’ve been thinking about this for a long time. There were recent regulations and the CF thing that changed. We’re still doing a million max crowdfunding campaigns. You could do $5 million max. This is all good.
As far as I’m concerned, there are some new requirements around the financials you need to release and things prior to doing a crowdfunding round. But we were originally quite excited about it, particularly when we started to see funds starting to raise in this way. The problem is—in the US, at least—you’re not actually allowed to raise crowdfunding for a fund. That’s actually illegal, which most people don’t know.
Rob: Such a bummer.
Einar: It is. It doesn’t make any sense to me, but you can do crowdfunding for an individual business. What some people have done, and I think probably most famously, is like backstage capital. They did a big crowdfunding round. They raised (I want to say) $5 million or something like that.
Rob: I believe it was that, yup.
Einar: Yeah, but that went into the actual partnership itself. They sold a piece of the whatever partnership that’s behind that. Legally, they aren’t allowed to go in and take that $5 million, put it in a fund as investment money, and invest that money. That’s actually not legal. I wish it was, but it isn’t. That’s where we are with that. Unfortunately, we can’t do it.
One of the things we’ve thought about is do we do some sort of a parallel vehicle where we come in and our fund, TinySeed invest in this company, and then alongside that the crowdfunding whatever can come in alongside into that business. Candidly, it became too much of a gray area legally, and honestly the ball ache and the compliance stuff just meant that we wouldn’t do. I think if we were to do a crowdfunding-type play, it would need to be us selling part of TinySeed, the partnership, which we haven’t actually discussed. Maybe we should do that, I don’t know.
Rob: And it’s such a bummer that regulation tends to be a real hampering to fundraising. We’ve talked about the 99 investor rule being a big pain that we’re literally lobbying congress with a bunch of other folks who run funds, and who run into this same problem in the US, and then there’s this one. There’s often tax implications of just trying to set up funds, like we’re setting up our EEMEA fund right now in Europe, Middle East, and Africa. That’s been like a month or two of your time. I forgot how to even set this up and it’s like, if this was all simpler, if this was Stripified or if it was AngelListified, but none of it is, and it’s a lot of money.
Einar: None of it is. There’s so much stuff in compliance and there’s different percentages. The cost and compliance are domicile and say TinySeed, EEMEA in Europe are just out of control compared to the US or even the Caymans. We were like, oh, let’s set up in the Caymans. But then you go to the Caymans, then you talk to European investors, and they’re like, oh, Cayman Islands, I don’t know. So there’s compliance and then this perception of it, too.
Actually, one of the things that I just started paying strong attention to, even beyond the whole investment side of things is this. Have you heard about the Platform Competition and Opportunity Act that’s making its way through?
Einar: It’s got nothing to do actually what was asked, but it shows and tells you that kind of thing. There’s now a new piece of regulation coming through or going through Congress, where basically they’re trying to almost ban big companies from buying smaller competitors, which could have a pretty devastating effect on entrepreneurship in the US in general.
It showcases like, is it good that you can crowdfund into a fund? I don’t personally think so. Obviously, this is a selfish view, but is it good that apparently we’re going to ban large companies from buying smaller ones? I also don’t think that’s a good idea, so I don’t know.
Rob: It’s tough. Thanks for the question. It’s super interesting. Obviously, it’s something we can’t do.
Einar: I wish we could.
Rob: Yeah, wish we could is the answer. Our next question is from Simon Thompson.
Simon: Hi, Rob. My name is Simon. I’m the founder of podseeker.co. My question is around enterprise plans and pricing. If I have a standard SaaS product that I’m charging a monthly subscription for, approaching small to medium businesses who buy the product in a fairly standard way with a credit card, but now I’d like to offer that same product to enterprise-level companies. What are some of the things that I need to start thinking about in order to approach those companies?
For example, I know that deal breakers sometimes can be things like a single sign-on capability or the ability to buy with a purchase order. I’m wondering if you could expand on what some of those other deal breakers might be and if there’s anything else I just need to be aware of before I start to approach enterprise companies with this product.
The second part of the question is around pricing. How would you price the enterprise product differently to the standard plan, assuming it’s more or less the same product but with some of these potential deal breaker features like single sign-on, for example? Thanks very much.
Rob: Enterprise sales, sir. This is why I have you on this episode. Do you want to roll with this one? And I’ll say what he said when you’re done.
Einar: That actually often comes up in TinySeed companies. Often, people come along and they say, oh, I have this big contract and they’re stoked to have the logo or whatever. But now they’re asking for redlining my terms of service, or they’re asking for custom contracts, or all this stuff. They’re sending me a security questionnaire, what do I do? My standard answer is, you get them on the enterprise plan, you make them pay a ton more.
My rule of thumb is almost like—and it shocks people—if you have a public pricing, you should probably 20X it as your base price for the, we’ll call this enterprise-type plan. My general view also on enterprise planning is like a binary search to try to find the trade-off in terms of pain points and value and it’s probably higher than you think. The kind of things that we often see for enterprise type triggers, where basically what it boils down to is, if you want this, then you need to be on our enterprise plan.
Like I said, any kind of custom contract, if you have $100 a month SaaS business and people start sending you (like) Word docs of your terms of service, redlined by their legal, definitely this is an enterprise plan. You’re not going to want to do that. If your lawyer’s cheap, he’s $300–$400 an hour, you’re going to burn through (like) two years worth of SaaS income just having him review the red lines. So that’s a definite one for me.
Also, there’s some random stuff in there you want to be quite careful. If you don’t want to just say like, okay, fair enough, yeah, sure, redline, done, I want the big contract or in some cases, the medium-sized contract, because you end up in some scenarios where they’re putting in identification clauses, where if they get sued using your software, you’ll cover all expenses. You definitely want to avoid that.
Other things are common like payment methods. A lot of the time, people, big contracts, want to run it through procurement and then once it goes through procurement, it’ll be negotiated again because that’s what procurement does. They get paid, basically, to negotiate contracts. Any kind of like, we need to go through a different kind of payment system or you sign up for this service that we use to handle invoicing, that to me, is an enterprise trigger.
Like I said, very often, you get security questionnaires, and that’s less of a trigger. It suggests that the business is quite large. I guess it could be a trigger. Those kinds of things, I would say, I wouldn’t fill out a 300 security questionnaire if you’re selling something for $29 a month. But I think what you’ll end up with if you’re wanting to do enterprise sales, you need to come up with some sort of a solution for that. We see that over and over again. It just becomes a must-have part of enterprise customers.
You can get away around that or bypass most of the pain that comes from that with something like an SOC 2 certification or there was one in Europe they prefer as an ISO or something, but it’s basically a variation on SOC 2.
Or there are certifications like HIPAA compliance stuff. You might actually be asked to basically become “HIPAA compliant” just by saying, hey, sign this. It’s part of the HIPAA process. You have to have all your providers sign a certain agreement. Often, people won’t even ask like, hey, are you HIPAA compliant? I just say, hey, just sign this agreement. HIPAA is another one that’s common.
Some of the more esoteric stuff that you’ll see, particularly for very large clients and very large things is they want the code in escrow. It’s not unusual. They’re like, you’re a small company, most likely. They’re an enormous company. If they’re going to use you in some kind of mission-critical way, if you go under, they want to be able to get to the software and you do that stuff. The key thing there is to make sure they pay for it. If they want to pay to put your code in escrow with a third-party, then that costs money, so they should pay for it.
Then some of the other stuff that comes in is custom development work, which can be triggers for enterprise, but also can be a good way to subsidize future app development, basically. Just make sure that you get the IP and the right to resell and things that are in the changes. Then there’s some stuff that I would almost never do. In some cases, you get like, yeah, we want to do a big contract, but as part of this contract, we get a right of first refusal if you get acquired so we can buy you.
There are certain things that they might put in enterprise-type contracts, where basically you’re snickering yourself at future acquisitions that you don’t want to do almost no matter what. That’s the high-level view of that.
Rob: I’ll add a few of those. I think you may have mentioned single sign-on custom contracts, for sure. The other one, I remember back in the Drip days, is the moment someone said, all right, we want to use Drip, but we want to integrate it with Salesforce. I was like, ding. If you’re paying for Salesforce or any big expensive piece of software, that’s a trigger. Then an export or an integration with a data lake, I guess that’s just expensive software, but is it Redshift to the Amazon equivalent?
Einar: Redshift, yeah. Segment face is famous for this. Segment, we used to be like, it’s $9 a month, except if you want to hook up your data to Redshift, in which case it’s $150,000.
Rob: Right. That’s the thing. If I were a SaaS app and most of my plans were $100 a month or $200 a month, if one of these triggers happens, one or more of them, you want to learn them early when it comes about, suddenly, the price has to be $20,000, $25,000 a year or it’s not worth doing this. It’s not worth doing the process.
The moment I hear procurement, figure dozens and dozens of your hours to get through it, and a huge hassle in months potentially. We had this expression in electrical contracting when we’d bid on a job. There are no bad jobs, there are just jobs without enough money in them. There’s no procurement process is bad. There’s just procurement process where you didn’t charge enough money to make it worth your while. Or the SSL, or the redline, POS, or whatever. All that back and forth, you just have to.
That’s why enterprise software is so expensive because it’s not the software. The software’s pretty much the same as the one you charge $50 for, but it’s this. So excellent. It’s a good question. I hope that was a helpful answer, Simon.
All right, I had a tweet from Amar Ghose. It’s @itsjustamar on Twitter. He said, “If you had a company making $1–$1.5 million annually and you want to step away for your business,” then he has a few questions, “how would you go about finding a replacement? Where would you search? How would you structure an offer? What questions would you ask?”
I don’t recall specifically if he was saying it was like a SaaS company, but let’s assume it’s a startup. It’s a tech company. This is not a dry cleaner. Maybe he sells info products or maybe it’s SaaS, but I actually chimed in and responded with some tweets about it. I did like 280 characters and this deserves way more than that because it’s a complicated question.
Let’s start with the first one. Where would you look? How would you go about finding someone? I guess how would you structure and how would you evaluate them?
Einar: I’m really about structure more than anything else, like where are you fine, because I’m not a hiring genius exactly, which is effectively what you’re trying to do in many ways, shapes, or forms. The way that I think about it is, there are basically three different variations in this. One of them is just trying to find someone to hire, someone to replace you like a CEO type.
The problem with just saying, I’m going to pay this guy or girl like $150,000–$180,000 a year, is that you might not actually find anyone very good, just for the base salary. You have to figure out some way to incentivize them in some way, shape, or form. I think you could obviously do the whole standard stock options nature. For something like this, you’d probably have to give the person 10% or 15% of the company if they’re going to run it full time and you’re truly going to step back.
I think the very minimum for someone good would be that kind of equity option. Then the problem comes like, okay, what happens if this doesn’t work out, if this person is not very good at what they do? These are clawbacks, like how do you get them off the cap table if that doesn’t make sense.
Actually, one of the things to look at is how they do it with search funds. Do you know the structure that these guys use? Basically, a search fund is like, okay, if someone goes out, they look to acquire a business, they don’t have any money but they have some investors, and then they go out, they acquire the business, the investors bring in the money, and then the operator or whatever goes along. The way that that works is because obviously the operator who’s buying the business doesn’t have any capital most of the time. They can’t technically help buy the business.
The way that works usually is that there’s some sort of a preferred return to the investors, 4% 6%, 10%, whatever. Then after that, when the company sells or some sort of liquidity event, then there’s a profit split between the investors and the founder. The nice thing about that structure is basically what it says is, if you’re a terrible operator, you’re not able to grow the business, you don’t really get anything because you got a salary and that was it, but the investors get most of the return because of the preferred return hurdle.
If you’re amazing at it and you triple this business, then as the operator, you get rewarded quite handsomely because you get a good chunk of the profit at the end. That’s one way to do it. Honestly, it’s hard, particularly in this size, 1–1½ . It’s valuable enough, but is it really a big-enough opportunity for somebody? Someone who can come in and run a $1–$1½ million ARR business can also probably come in and run a $5–$10 million ARR business where the upside is much bigger. It’s a very tricky question.
Honestly, one of the things you should ask yourself if you want to step back is, why not just sell it? You could sell it and roll some equity. That means basically keeping a piece of the equity still, so you get some upside if things go well, but you get some chips off the table. I think it’s very hard, almost impossible to just base just on salary alone, find someone super competent to just take over the reins and run it because the incentives aren’t quite aligned there. I’m a great believer in incentives.
Rob: That’s how I think about it too, is incentives. I think that if someone’s going to run this business, I was thinking along the lines of, if it’s already growing at X dollars per month, then if someone does nothing that will continue—it’ll eventually plateau and go down—if someone doesn’t improve the business, it’ll keep doing that. That was going to be my mental baseline of looking back six months and saying, what’s been the average new MRR added each month? That’s the baseline.
If it does that, there’s no bonus for this person. I think they should still get equity in case of an exit, but there’s no annual or quarterly payout to them. Then I think they should get a salary and then some type of performance bonus based on how much they’re able to grow it.
Einar: I think one of the interesting things, I know that one of the people that do this actually from what I hear, they’re pretty secretive, is Constellation Software. This is a big firm out of Canada that buys a lot of businesses. They have operators in-house, they take it over. The way they do it is, I think, they do something like set very aggressive goals for growth or for top-line revenue. If you get to those top line revenues, you get a hefty chunk of that payout like, I think, 30%–40% of whatever comes in or something like that.
Rob: That makes sense. Then I think about what questions I would ask—back to your point—it’s going to be really hard to find someone to do this because the questions you want to ask are, have you done exactly this before? Almost, no one’s going to say yes because if they have, why are they working for you? It’s like an unusual size.
You’re going to have to have someone who is like, is it software that’s mostly built? Is it a SaaS that’s just one feature and you don’t need a bunch of product management, and it’s really just a growth exercise? Well, then you need to find someone who’s a good strategist and implementer there. Or does it need to be truly like a SaaS CEO? Again, I don’t know if this is a SaaS company. Yeah, so there’s a challenge there. When I heard it, I was like, I don’t know, man, take your millions off the table. I like the idea you had, though, that I wouldn’t have thought of, which is to keep a piece of it. You keep 10%–20% so that you could feasibly have some of the upside.
Awesome. Thanks for the question. Amar just asked it on Twitter, so it wasn’t like he sent it into the show. He did note at the end, he said he was asking for a friend, winky face, so I thought that was kind of fun.
Next question is from Luke Embrey. He’s the founder and CEO of bakup.io. He has a couple questions that I think I’ll just jump to his question about software demos. “What is the best way to give a demo for a SaaS product?” He gives two options, “Present a 10–15 minute PowerPoint, or go straight in with a shared screen demo of the actual product?” What do you think?
Einar: I have an opinion on what you shouldn’t be doing.
Rob: You shouldn’t be showing every feature?
Einar: Yeah. Don’t confuse a sales call or a sales demo with the training session. That’s my number one mistake I see people make. Deep in their software, they know all the stuff. They may have even done research on all the potential things that the buyer could possibly want to do with this based on their particular scenario and things, and that’s great. But if you spend half an hour, 45 minutes, an hour, just training on every possible thing the software could ever possibly do, a lot of the time, what you end up is just overwhelming the buyer who’s going to be like, you know what, I had pain that I thought this software might help me solve. Given how complicated this software is, I think this might be more painful, so maybe I don’t buy at all. That’s probably my main piece of advice there.
Rob: Yeah, and I’ve seen demos done both ways with presentations or with demos of the actual product. I think the way to make a demo, the actual product really well is it should obviously be populated with data, you should be touching on just a couple of pain points, and you should be listening more than you talk. You want to find out what the prospect’s goals are. Especially if you have a software that’s a lot of features, they may only want to use one quarter of it, and then you don’t really need to go through all of it.
You ask them, what’s your use case? What’s your job to be done? What do you need this software to do? Then answer that question throughout the demo and pause to let them ask questions. There’s some really good information on close.com’s blog. Steli Efti, he and his staff have written several ebooks on giving demos to do really well.
Also, frankly, youtube.com/microconf. We have a sales playlist. You can go through there and it is videos of talks, MicroConf talks from Steli and a few other folks who have talked about exactly this. These are literally world experts on this topic of how to do a demo.
Personally, I like to see software demoed because I’m a product person. If you show me PowerPoints, I have the thing of, well, if the product was good, you would probably show me the product, but everyone doesn’t feel that way. Everyone doesn’t feel that way. I don’t want to make my opinion the gold standard of it because I do know folks who run successful sales processes with PowerPoint demos.
All right, for our last question of the day, I actually went to Quora. We still have a couple of questions in the queue, but I don’t feel like we’re going to have a lot of back and forth on it, so I might do it solo at some time in the future. You know what’s super annoying to me, is that I typed in startups in Quora and the first 8 or 10 results are all about, how do I raise funding? What does an angel investor need to know in order to invest in me? Should I raise angel?
Why isn’t anyone talking about building businesses? This is my annoyance with the whole narrative. People want to build a slide deck instead of building a damn business. Seriously, this pisses me off. I invest in startups and this pisses me off.
Einar: And now is a good time to mention the TinySeed syndicate, Rob. New ways for bootstrap founders at a later stage to get funding.
Rob: There it is, tinyseed.com/syndicate if you want to know more. But also, tune into this podcast, and everything around MicroConf and all of our education about how to actually build a real business that sells real products to real customers for real money instead of sitting there flapping your gums all the time like these people do. It’s just like, go build a business, seriously.
Einar: I know for a fact like having a real business launch some things and then going out to raise money sometimes can be hard because then you have actual metrics to show and things.
Rob: That’s only in the Bay Area. That’s in Silicon Valley.
Einar: I think a lot of the time, people are better off just hiding their numbers or certainly don’t do projections. Like, here’s my thing about projections. I don’t know how we ended up in fundraising talk, but if you’re going to have to put a deck together and do fundraising, don’t put future pro forma financials, like future financial projections in there, because the only thing you’re going to do is disappoint your most optimistic investors.
Most people will think you’re full of […] and won’t hit it, and some people—a small number—will think you’re going to be much bigger than this and when you tell them the number, they’re just going to be disappointed on the downside.
Rob: Yeah, I still think outside the Bay Area like revenue. Is revenue traction? Especially in SaaS B2B. Here’s this question. It’s an interesting, philosophical one maybe, but what one or two things should every entrepreneur working on a B2B SaaS startup know? Maybe it’s three, maybe it’s four. Let’s not put a limit on it, but what are some fundamental things that you feel like startup founders should know and some folks who we talked to in MicroConf, TinySeed to this podcast know most of these things and other people I think don’t?
Einar: It depends. What kind of thing or how do you frame it? Like, should know. If I ask them about their business, there are certain things that I think they should know.
Rob: Right, their numbers. Know your numbers, like your MRR, your RFC.
Einar: Their number is the key. That’s what I care about. You should know your revenue churn, you should know your […] churn, you should know your ACV, you should know for different cohorts. You should know that my bigger customers churn at this rate, my smaller customers turn at that rate like that. That thing, I think you just should know that I’m not sure that’s what they meant.
Rob: No, that’s a great answer, though. I think another one for me is that thinking years, not months. Know that this can take a really long time because SaaS takes long. There’s a reason that TinySeed is a year long accelerator and no one else is. Every other accelerator I know of, there’s 90 days. We do that for a reason because SaaS is just this very long ramp in almost all cases, right?
Einar: That’s true. One of the flip sides of that, too, one of the things, I think, particularly B2B SaaS founders should know is that their businesses are sellable and valuable at an earlier stage than most other startups. I feel like sometimes I’m frustrated talking to ex-founders who have sold their business and I’m like, woah, you left 3X on the table by selling to somebody who did not take advantage of you exactly, but you didn’t fully understand the value of what you had. The fact is, you get a B2B SaaS business north of say, a million a year, it’s a super valuable asset that you shouldn’t just flip for seller discretionary earnings, multiples, or anything like that.
Rob: Yeah, that is an interesting point. I think another one is that for most SaaS companies, as you grow, if you’re growing really fast, then money will be a problem. It’s hard. I’ve been in that position where we’re growing fast and the growth didn’t backfill. We needed money, we either needed to raise money, or sell, or I needed to pull more money out of my personal growth cost money. But the second thing is that the other biggest problem for most companies—not all—is going to be finding good people and keeping them around.
I know that for developers, we don’t want to hear that because we want to build SaaS’s software. It should be automated, but building a team is crucial. Having some people you can rely on, even in the lifestyle. I often talk about this lifestyle SaaS or lifestyle startups, where truly, you’re just building an income stream and it’s a $10,000, $20,000, $30,000 a month, 90% net profit.
Then there’s the more ambitious, whatever you want to call it. It’s like the growth bootstrappers that I think about. Either of those paths, you still need a person or 10 to back you up so that you’re not constantly on support and you’re not bringing your laptop with you on vacation in case the servers go down, that you have somebody that can back you up.
Einar: I actually think this relates to what I was talking to before, in the sense that, I think sometimes the mindset needs to change a little bit once you get to a certain size. I think a lot of people think, the more I can do on the fewer people, the more valuable it is. I guess, technically speaking, it leaves you with a higher profit margin or wherever you are.
The fact of the matter is that your business isn’t more valuable if you’re doing the same level of revenue, but there’s just you and you do everything. Versus you have a team of two or three, or maybe four people in place. You’re just a lot more valuable business to most people than if you’re the key person who feels like you need to do everything and keep it on a super low budget, that sort of thing. That’s the flip side to the cash side.
Rob: Yeah, that’s a good point.
Einar: Yeah, like having a team, having someone other than just you or maybe just you and your co-founder isn’t a bad thing. It’s inevitable at a certain point. I do see some particularly bootstrap founders fall into the trap of waiting too long to start that process of trying to build out a team.
Rob: You bring up a really good point. I had this epiphany, not an epiphany. I knew it in the past, but it just hit me like, I should say this out loud at some point and it was exactly that. If you have a $2 million ARR SaaS company and it’s just you, I would pause it. It is actually harder to sell than if you had a team of 5 or 10, but made a lot less profit. Because it’s not sold on the profit, it’s that the team goes with it. That’s, I think, counterintuitive.
Einar: Yeah, and it’s a much more scalable business, some bigger business, more potential, not so dependent upon you and whatever’s in your head. It’s just an easier business to acquire. It’s an easier business to imagine how you’re going to scale further.
I actually don’t know where the cutoff is. But certainly, once you’re getting within striking distance of a million or maybe even at $500,000, I’d be like, okay, if it’s just you at that point, I’d be like, why, what’s wrong? What is wrong with your business or you? That means you can’t keep people around.
Rob: Yeah, I would be thinking about, at a minimum, hiring. The early hires are usually someone in support because just tier one support can grind a developer. Because usually, if it’s just you, then you’re the developer. So you have a backup, and can go on vacation, and they can whatever. They can do all the stuff so you’re not grinding it out.
Then of course, if you’re doing all the sales, it depends on the type of business. Some SaaS leads heavy sales and others don’t. Certainly, as a founder personally, I did some sales until the moment I could hire someone to do it because I didn’t like it. If that’s not your gifting or whatever, these are all things you could hire out.
Einar: You definitely should. By the time you go to a million, there are very few or few 2 million era businesses that sanely can be run by a single person.
Rob: I’m sure there’s one or two out there. I’m sure there’s a listener right now thinking, well, I’m doing that, but most companies are not. They can’t do that.
I think the last one that comes to mind—there’s a bunch obviously; we could throw out 10–100 different things—I feel like finding predictable repeatable growth channel requires a lot of effort, and it requires a lot more time than you probably think it will, and you’re going to be wrong a lot of the time, either with the approach itself that it’s not in alignment or that you’re not doing it right.
I think it’s harder than most people think because they see the case studies. You see a SaaS app launch, and then they do the case studies of the five things they did, and three of them caught on. It’s just not like that for most founders.
Even founders who are having success and are growing, they often (a) either don’t know what’s working, or (b) if they know what’s working, it can be a bunch of different things or it can be one. It’s often like, even when it’s working, I remember always thinking, how long is this going to work? It was fleeting to me.
I never felt like I was in the middle of a growth thing and I’m like, this is going to take us to $5 or $10 million, and I’m super confident in that, and it’s going to work the whole time. The whole time, you’re still looking for the next thing to get you to that next level.
Einar: I think it’s true. That is something that I talked to TinySeed portfolio company founders about reasonably often. It’s a mistake a lot of people make, because in some cases, they have sort of half understand where business is coming from, kind of, maybe. Or they have like one channel that works, and then they’re like, yeah, I’m probably going to put $500 on Google ads next month, and then I might go to a conference next year. I’m like, no, you’re not moving anywhere near fast enough to do this.
You should have a very strong preference for action when it comes to just iterating through these growth channels because most of the time, you won’t have a clue about what works, and you’re just going to have to do it, and you’re going to have to spend enough time and money to really explore each one. Then if it doesn’t work, move on.
I see people sticking to their hobby horses. This is obviously true for features and things, too, where founders are like, well, this is what I want to build, and their market is telling them, that’s not what I want, I want this other thing, and you just refuse to build it. It’s like, all right, well, then you’ve left money on the table for sure.
The same thing is also true for channels. People are like, I want it to be self-serve. I want it to be content market–driven. I don’t want it to be cold email, or impressive events, or sponsorships, or Google ads, or integration marketing, whatever it is. It’s hard to know, but once you do find it, it tends to be disproportionate.
It’s not like, oh, one thing is 50% better, 30% better. It’s like, one channel is holy crap, this is 20 times better than anything else. If you don’t move fast enough, you’ll probably die before you figure out which one isn’t so good.
Rob: Very good, sir. If folks want to keep up with you on Twitter, you are @einarvollset. Awesome. Thanks again, sir.
Einar: Thank you.
Rob: Thanks for joining me again today. That was actually a fun and unexpected rant that I had. I was so angry at Quora. I’m just angry at the tech press in the narrative around just funding, funding, funding. It’s like, no, we can actually spend time investing and growing our businesses and not just concentrating on this lottery ticket mentality. With all that said, I enjoyed the episode. I hope you did as well. I will be back in your ears again next Tuesday morning.