How startup investors can kill a SaaS

May 15, 2023
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There's a lot of "hire faster" and "increase ad budgets," advice thrown around by startup investors in the name of delegation, specialization, and growth. Or, the "you're not spending enough." I don't know if you can feel the eye roll and air quotes as I say that last one...

Venture capital (VC) and Private Equity (PE) teams, we see you. Couldn't live without you, in fairness! But my god, do some VC and PE leaders give harmful, short-sighted advice.

Like in any area, there are good players and bad ones. Not every catcher fumbles under pressure but you won't know if that's your player until it's too late. And if you recognize how pivotal the catcher's role is, when they put down one finger, you're gonna throw a fastball even if you know the curve ball is your personal strength.

What sort of fastballs are VCs relaying to you?

Well, they might be telling you to hire fast, plan later. Being told to go hire sales development reps, "go out and get business" today? Can your development team keep up with incoming feedback from 10x clients? Can your customer service team?

If you're not familiar with how 1 more sales rep will break your business, ask yourself what might break if your platform's usage doubles. What's your tech's REAL capacity?

Or maybe you've been told to increase your ad spent to fill top-of-funnel, but there's no nurture content ready to actually funnel prospects down to your sales team or potentially worse, the content is there but hasn't been stress-tested to even see if it works.

I'm getting anxious just writing this... Filling the top of your funnel mindlessly is not on the list of "how to increase SaaS sales" recommendables.

Maybe you see money coming in, but just aren't staying in the black. Is your system set up to track things right?

Revenue might be slipping through cracks like expenses and software memberships or other perfectly controllable outgoings, but you can't see it. So how are you going to put a fielder in the right person to cover that gap?

"Growth at all costs" has had its day.

I'm not the first person to say this, Ido Wiesenberg wrote similar for Fast Company, as did Karen Rhorer of Twilio. But I'm jumping on the bandwagon because it's not been said enough apparently. Startup investors are still pushing this bullshit rhetoric.

Before we solve this, let's ask ourselves, why are operating partners continuing to put the wrong fingers down?


Why startup investors push "grow today, plan tomorrow" strategy

For the same reason all we see on LinkedIn is "hot takes", getting your foundational operations right is not sexy for startup investors or for any of us in reality. But I'm sorry, those are the things that actually fuel a large amount of growth.

Having strong foundations makes everything above stronger. We know this. So why do we feign selective ignorance when building our own businesses?

Good operational foundations make everything 10x easier. Maybe not 10x sales, but 10x smoothness.

How to increase SaaS sales without killing your startup

Ok enough complaining. There is a way to increase SaaS sales without breaking your team and your business in the process.

Here are 2 things you need to do to avoid the massive gaping black hole of growing with no plan:

  1. Pause now. Get your systems in place, especially if you've already proved you have product-market fit, spend some time on the foundations.

    Not got product market fit yet?

    Prioritize PMF, and spend time doing founder-led sales.  

  2. With your startup investors, get very clear on what you are expecting the round to provide, what the goals would be for that round, and the time horizon.

     Take their feedback, think about it.

    Don't feel the urge to say "yes" to everything.

Why do I share these opinions that are inevitably going to get me in VC's bad books?

I don't want to see founders get buried because of "guidance" from a board that is focused on the near-term return on their investment. 

I want to see you succeed, so take your board's advice, your peers' advice, and even mine, with a pinch of reality.

Happy with your catcher, pitcher... But think you might need a new coach? I'm a veteran of how to increase SaaS sales.

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