about this episode
There are few people in the industry who really do the work, and take the work seriously. Many investors don’t take the work as seriously as the founders take their work. Being an investor is a great privilege, especially if you started off as a founder first. There are very few examples of investors working harder or as hard as the founders that they invest in, but SaaStr founder, Jason Lemkin, is one of those rare exceptions of the people who take the investing seriously. In this episode, Jason gives an update to the presentation he gave at the Angel Summit.
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Five Key Takeaways
SaaStr: A curious mix of media, events, and venture
Jason built a community called SaaStr, which the largest community of SaaS founders and entrepreneurs, with about 3.5 million views a month on their content across different media. They have an upcoming 3-day event in February, the SaaStr Annual, which will host 10,000 B2B founders, along with 1200 CO’s. Jason shares slides about “Later Seed” and talks about the paradox of how to achieve a hypergrowth if you haven’t achieved it yet.
Jason looks for two big things: 1) Founders that are better than him (adjusted for time). Traction with a founder that’s not great will eventually fall through. 2) Potential for superior unit economics. If you can drive your unit economic up, that’s the fastest way to accelerate. Jason gives an example from his product, Adobe EchoSign, and how no matter how big the deals were, they all rolled back to $15/user/month. Another way to look at is, can you get abnormally high deals? If you’re selling to small businesses, can you get them to pay $20k? You can define an SME but call it $50k. He doesn’t consider it a real enterprise deal if it’s not $250k.
When you have those 2 customers out of 10, and they say they will spend more, this means that you will get 10 or 20 customers. A lot of investors will view this as an anomaly and won’t give you any credit for having just 2 customers. You may have to convince people more that these aren’t anomalies. It’s important to segment your customers, talk about them, and talk about and your pipeline. It’s important to also assess your leads–if you can get 20 good leads a month, you should be excited.
Other submetrics that are signs of suboptimality
The problem with tractions is that it can lead you to overlook other flags and flaws in the investment. The number one flaw for Jason is that it feels “too expensive”. The worst investment he did was with a team that wasn’t committed enough. You have to believe that sales is cheap, and make that commitment. If you do sales right, you make your money back in 3 or 4 months. You want to pay your sales team an insane amount of money with the hope that they deliver an insane amount of money back. However, most people don’t do this.
Be the CEO you want to be
Have confidence to go to all of the other auto dealers. Customers all want to meet with the CEO, whether it’s a 2-person or 200,000-person company. If you act like it with customers, you will learn that you sell better. Fluidity in your business model, margins, hiring plan, and when you act like that, it will boost your chances of getting funded.
00:24-01:10: Introduction/Welcome Jason Lemkin
01:14-04:19: Jason explains why he considers himself to be “Late Seed” and walks us through his check-writing process
04:20-05:43: What is SaaStr?
05:44-06:22: Jason shares more about his venture investment background
06:23-08:26: Jason walks us through a slide about growth of a company called Rainforest
10:15-22:20: Investment criteria
25:08-35:06: Jason presents a slide about SumMetrics, and talks about segmenting customers, assessing leads, and CEOs.
35:07-47:22: Even great traction isn’t enough. Jason highlights the importance of paying your sales team.