Live from SaaStr Annual 2022: AMA with SaaStr's CEO

Hey everybody! We're not over. We, we, uh, I think we have last call till 6 or later, but with only 250 sessions and 1,700 Brain Dates, we learned in Europa some people have more questions. So I, I'm only here to help. We can line up. I have no agenda, but if folks want to talk about stuff and I can possibly help answer it, let's do it. But before we go, can we just bring out Emilia Barra, who runs SaaStr, and just thank her for all her hard work? I think we did pretty good. I think it was the best SaaStr annual ever. Crossed 10,000 people. All of this made it. The reason this was the best one is Amelia does what the best leaders do, is make it look effortless. So, lots of respect. So, thank you very much. Yeah. Thanks everyone for coming. Yeah. So, and cheers to everybody. Thank you for being a part of all of this. So again, I've got nothing, although I'm happy to make up some things, but if folks got questions, come up to the microphone, and if I can help, I'll certainly answer some or create a dialogue around stuff. What do people want to talk about? Hm? What's been your biggest lesson from SaaStr the last 2 days? Wow, that's a trick question. My biggest— I should ask you what the biggest lesson is. You know, I think that I'll have to process that for a couple of days. I think, you know, it's interesting, when I started, when I was a SaaS-io, and even when we started, you know, one of the things we did at SaaS was try to not just shh, shh, shh, the number one goal was to share the mistakes that I and others made so that the odds were lower you would make them, but as time went on, we shared lessons. We shared lessons, what best practices were in customer success and revenue tension, and All these things are right. We know what top-tier NRR is and CAC and all of these things, but it was super interesting that the two, the two, the two big interviews I did were with Ben Chestnut from Mailchimp yesterday and with Dharmesh and Brian from HubSpot. And it was interesting that they broke rules. And I don't mean in an edgy way. I don't mean— what I mean is Ben broke the rule that he didn't care what NRR and churn were. And of course, we need to care at some level. But as a bootstrap business, it was top line growth and bottom line. And he said it, you know, he said it differently, but it bit them a little bit as they got to $800 million and growth slowed. And most of us would be thrilled to get to $800 million and see the growth slow. So it did catch up. But, but he broke, he did broke, break those rules. And the HubSpot thing today was so, they broke two rules which I hadn't really thought through. They had low NRR all the way until $30 million. They were aware of it. But, you know, startups that I work with closely or invested in, if they got all the way to $25 million with 75% NRR, I would, I would tell them to quit today, right? I mean, there's a, and so it's interesting that they knew what they were doing, and then I hadn't really thought about how HubSpot went. They're now in, we didn't get to all of it, but HubSpot's in like, they have like 5 or 6 products. They have service and all this, but the second cloud for them was sales, and it really makes no sense because I've asked, So many of the best SaaS CEOs that are public, how to go multi-product. If you read SaaS, it's been a recurring theme. And the best one of all, if you didn't see it, we did it at one of our digital events this year, was Spencer Skates, who's CEO of Amplitude, one of my favorite SaaS CEOs. And he did a whole one hour on his mistakes going multi-product into their IPO. And his point that many, many of the leaders say is the mistake is trying to sell something that's really cool to a different buyer. Like they wanted to sell the Amplitude product, I forget to, to sales or somebody else, and that was their mistake. And the learning is sell, sell sell two things to buyers. And the fact that HubSpot did the opposite and sold a sales product to salespeople, hooray, it started out freemium, but free doesn't make it any easier to sell anything, does it? So I think my learning is just know the rules, know the KPIs. They're all public. Find public comps and copy them, but it's okay to like get there a little bit differently or break a rule or two if it's intentional. Like if it's intentional. So that's my big lesson from both of them. Yeah.

I've been thinking about goal setting a lot lately for organizations and teams. And there seems to be sort of two ways to think about it. One would be set ambitious, inspiring, impossible goals that have low chance of success but sort of drive an organization in a direction, but that you kind of expect to fail towards. And then the other is to set reasonable, objectives that you know you can hit and that everyone feels good about when there's all greens on the chart.

Yep.

Whatever. Have you noticed a pattern among, I don't know, the ones that end up on this stage where they go one way?

I think I noticed a pattern, and I wrote it up a couple of years ago and refreshed it. And then I'll add a new anecdote. You know, I wrote this years ago and then I've updated it of like the 3 plans you need to make as a founder. And I call them No one's really ever copied this nomenclature, but I call them C10, C60, and C90, and C is the confidence factor. And C10 is the big plan that there's a 10%, like a 2% chance you're gonna hit it, like talk about that with your co-founder over beers or rosé, there's no point, right? 10%, there's a chance. So talk about what if we think we could do $9 million next year, but look, if the stars align, we did a Google Sheet, it's possible to do $12, that's your 10%. The 60 is probably where your core plan should be. We have a 60% chance thinking we can do it. More likely than not, but barely. That's how you build your core model. Your core models for sales, for marketing spend, for hiring and engineering and product. And then with your finance person or yourself or your outsourced person, you build a C90 plan, which is one we're 90% sure even if sales slow, we're going to hit this plan. And the advantage is you don't— in my experience, the 10 becomes your stretch plan. The 60 becomes your base, and the 90 is the quiet plan you use to not run out of money. That's how you manage your burn rate. Not enough people do that. Then you look and you say, okay, if let's say next year you think you're gonna grow 100, you think there's a chance you can grow 120, but there's a risk you grow 70%. I'm just making up the numbers. Okay, do that 70% plan that you know there's a 90% chance you're gonna hit, and sometimes you end up burning more cash than you thought. You've gotta readjust that so you don't run out of money. I like doing the C90 so that you know you won't fail, you won't run out of money, 60 for the company, and then 10 is the stretch. And then what's interesting is, I don't know if you were at the last session with Sam Blond, who was the CRO of Brex. He's done other stuff, but you know, when he came out to our Miami meetup, I think in March, he did a great— and go watch it on YouTube— he did a great presentation on how to set sales goals for his team. And someone who's been CRO of Brex from like, I think, maybe 10th employee. So first sale, then he did it at Zenefits, then he did it at another company with me, he did it for me back in the day. Like, these are insanely fast-growing companies, and And he said even to him, he wants 80% of his reps to hit plan. Right. So it's, it's not the same point, but he wants a successful sales team, a culture of winners. So you need most people hitting it. So anyhow, that's my thought. You can look on SaaStr, but I really like this C10, C60. Founders don't do it or they're lazy. And when they do it, their eyes always, always open when they do these plans.

And so the C60 is the one that gets communicated to the team is like on our base.

It's just the base plan.

Yeah.

Okay. If you have more than a 60% chance of hitting it, it's not ambitious. Right? 90 is too conservative, isn't it? We're startups. But 10 is the crazy CEO, and then all the sales, the whole team quits when it's 10%, right? So you can tweak those if you want, but they're like a Fibonacci sequence. Everyone kind of knows what 60 is, 10, and 90, and I think if you futz around, people don't instantly know what those things mean, right?

Cool, thank you so much.

Yep.

Great to be here, Jason.

Thanks for coming. Earlier when I talked with Aileen of Cowboy Ventures, you were talking about valuation, that kind of things, and you mentioned that elite founders could get better terms. And my question is, which are the characteristics of elite founders nowadays? How high is the bar right now? For elite founders? For— I mean, I'll answer the question generally, but do you mean specifically for raising venture capital or just in general? Yeah. Raising venture capital? I don't think the bar has changed. Um, and I'll step back a minute. When I was running my last startup, Adobe Sign, EchoSign, which I talked about too much, but, um, in my, in my batch of, of founders for my series, it was called The B Then and B&H Today, was Emergence Capital. So in my group was Peter Gassner, who's CEO of Viva, which is worth $30 billion. David Sachs, who then was CEO of Yammer. Rene Lecerte, CEO of Bill, which I think is where it was almost at $1 billion in revenue. Some of the best, like, and so I was like, I think either the worst of the best or maybe the best of the mid-pack of that group of CEOs. And it was correlated with the size of the outcome, having a 9-figure exit. They had 10 and 11. And so I'm rambling for a point. I realized quickly where I stood in the hierarchy, right? When I met Peter Gassner, CEO of Veeva, and we did a great session way back at 2017 Annual on YouTube. It's one of the best SaaStr ones ever. I'm like, this fucking guy knows. Like, this is the best CEO I've ever met with Peter. And how did I know? It's not that he was, had been the VP of Engage at Salesforce or CTO. It's not that he was smart and wise. It's that he understood my business almost better than I did in the first meeting, and that was that, and he was so nice the way he said it, but that level of insight I had really never seen, and then I met David Sacks at Yammer, not when he was whatever, all-in pod dude, and I mean, I love David, but, and David was different than Peter, but he had this energy, this intensity to drive something off the cliff, and I'm like, I'm kind of, I have my own kind of energy, but not like David. Like, David's gonna build something bigger than I'm gonna build, and I met Renée from Bill, and a lot of people didn't get Bill for a long time, and I wrote a SaaS post when they went public, our 5 interesting learnings, like, you've probably never heard of this company, but the CEO's really good, and I met Renée, and I really do think Renée's one of the top 10 CEOs, but maybe for a different reason. Rene is smarter than me, but maybe not in the crazy way that Peter is. Rene had a 30-year vision even when I met him, and he'd done a startup before called PayCycle that had had a lot of drama into it. Bought it for $100-150 million, which sounds like a lot, but there was executive turnover, and I don't think it was the greatest experience for him. I think he wanted— and he did build because he had a— he didn't just want to do payroll on the internet, he wanted to automate all the ways SME pay. And he had the same vision when I met him in 2006. He had it in 2008. 2009. And I remember with Renée, we were sitting at an event in Hawaii called The Lobby in like 2013, and I'd sold. I was kind of investing and chilling. And I'm like, Renée, who's running what, a $20 billion company today, right? And I'm like, Renée, how's it going? 2030? It's like friggin' hard, Jason. He's like, it's so good to see you. He's like, no one understands SaaS. I can't find any great VPs. No one will fund me. Okay. I'm like, yeah, that's pretty bad, my friend. And, and, but he's like, I'm on this. I'm going to find a way. I'm on this 30-year journey. He actually had to raise, I think, around at really terrible terms and prices at the time. And whoever got it got an insane deal. Right. But then I saw someone truly on a 30-year journey, right, to revolutionize the way accounting, bill payment, this, this, this, this network for SMBs. And he was such a visionary across two startups. And I'm sharing those stories to say the bar's always been that.

Okay.

Right. And And I will say, as an investor, if you want, from an investor standpoint, I think I've done only 30 venture investments since 2013. The ones that did really well, almost all but one, they were like that, right? And you walk into the meeting and, and the ones you wish you had invested, right? And so, and so the bar has gone up in the sense that investors are looking for even faster growth. Investors are hoping for 100% growth at $100 million ARR. That's what you can back into. Today, and it's crazy, investors want 100% growth at 100 AR, but the intangible piece, that founder that is better than me, that is better than even most people in the room, that's— I don't know if that's what people want, and it hasn't changed. It's that crazy thing, right? And like with Figma, talking to all the folks backstage that met— I don't even know him— that met Dylan at Figma, they all say he was just off the charts from the beginning, right? And that can mean different things, but that's what they want. 100% growth at $100 million, and then A CEO at least as good as Figma. That's all the VCs want.

Nice.

Thank you. Sure. But one last point, since we're changing, just so you know, like, why do VCs, why do they want Peter Gasner and David Sacks and Dylan from Figma? Look, I've written a little bit about it, but it's not obvious. Like, it's just, just so you know, so you don't bang your head against the stage. It's so hard to make money in venture, right? Let's just do some quick math for fun, you know. On day 3, but let's say you have a $500 million venture fund, to keep your math simple, $500 million, and you invest $10 million for 10% of a company, and it sells for $300 million. Like, that's a pretty good exit, right? I mean, it's not— how much do you make? $30 million. How much of your $500 have you paid back? You haven't even made 10% back, and the clock is ticking. Your goal as a VC fund is to do at least 3x, and obviously more. So that $500 million venture fund has to turn that into at least $1.5 billion. Now let's imagine you invested early in Figma. I mean, good God, $20 billion, and you owned 1%. How much do you make? $200 million? Like, you're not even halfway. Like, you don't even get a thank you note from your LPs, right? So I know working with VCs, the later stage, it can be frustrating, but at least in anything in the world, you want to understand their business model. Why do my customers act this way? And the VC thing, it's not just greed, it's not— it's just hard. To make all that money back, and until you think about the math, you don't realize why, and I'll tell you one last story, then we'll break, but like, so I was, you know, my second investor again was Emergence Capital, I love them, and you know, I made them $30 million in 2 years. At the time, I thought that was great of me, right? And then I go, someone shared with me their confidential returns, okay? This was like a 10x fund, so I think they turned $250 million into $2.5 billion at the time, and I was like, and they risked Viva, and they listed Yammer. I'm like, where's EchoSign? Like, I made you guys $30 million, and it was in an asterisk at the bottom, all other exits. Like, I was amalgamated. I didn't even get a line in the emergence numbers, and it was like an epiphany. I'm like, okay, now I'm starting to understand how venture works. Like, I get, now I get why people act the way they do, because I was so small for, I made them $30 million, I didn't even get a line. I didn't even get the bottomest line on the portfolio, right? So that That's why you can't make— it's so hard to make money, right? Yeah.

Hi Jason, thanks a lot for the event. It's been fantastic.

Thank you.

So from a former SaaS founder and investor's perspective, like early-stage startups, post-MVP, post-revenue, but, you know, pre-seed, where do you strike that balance between you're trying to get product to market quickly, you're trying to get the traction to get the numbers to attract the capital, but You're gonna have warts on the product from the MVP you're trying to— where do you strike that? Where do you see that balance struck where you start focusing more on the product quality and less on the speed? I mean, it's kind of a hard thing. Is that something you would expect founders to be focusing on prior to their seed round?

Well, look, I will say I'll answer the question in two ways. I'll answer it devoid of capital, and then I'll answer it related to raising money. As a founder, you're all— this is a trade-off you're gonna— were you at the session with HubSpot founders?

I was, yeah.

It was great. I mean, Brian said it took him 10 years to be proud of the product.

Right.

Right?

Right.

Um, so obviously that struggle is endemic to all of us. As founders, even if we're deeply technical, we never get the product we want. And if we have the sales guy leading the company, there's all these other issues. And it— there's always feature gaps, and everyone has technical debt, and almost everyone refactors the product once or half refactors it and hits some sort of technical debt wall between 2 and 10. Most people don't hit a technical debt wall on customer one, because it's like not a lot of load on the servers, but everyone goes through these trade-offs, right? So, but for raising capital, cry me a fucking river.

Okay.

I'll tell you the loserest thing, and I put a lot of things, but I actually don't think this goes. The loserest thing as a founder you can say to a VC, right? They make you sound like a loser, and I literally never use the word loser, right? It's terrible, but it's true. Is we didn't grow that fast last month because we were fundraising. As an investor, when you hear that, there's not even doors here, you're gonna run the hell out the door, aren't you? Right. And for many founders, it's true. Like, it's so much work to meet. How could I meet 50 investors and also hit the plan when I'm the chief sales officer? Like, how can you? Like, cry me a river. But you know who does it? All the people I just described. Right? They all hit the number when they fundraised, and all the great founders. And I'm not saying it's easy, and It's not just hours worked, it's hard, right? But like, so operationally, this is a trade-off you'll have for your entire, at least for 10 years, like at HubSpot, right? But for VCs, trust me, cry me a river, right? Because again, going to the prior point, if you really want to unpack VCs, like I got into this a little bit with Aileen this morning, but just, I know it's hard when you see the math that I described, you get it. VCs can only invest in outliers. You cannot make money outside of outliers. You just cannot make enough money, so any signals that a company might do great, but not be an outlier, you gotta run for the hills. And the signal of, "I couldn't do it 'cause I was fundraising," that's a signal that like, more power to you as a human being, but you'll never be an outlier, right? And so you gotta quit. You gotta quit, right? So don't ever, don't look like a fundraising VC loser, and don't let them see you sweat, and don't let the trade, share the trade-offs in a good way, right? I'm proud that, We not only hit the plan for the month, but I did 50 investor meetings. I'm like, oh, that— I want to invest in her. All right, thanks for the question.

Thank you. Hey, Jason, here. Thanks for doing the AMA. And SaaStrat 2022, the best ever. I have been here.

Good to hear. Thanks. If anyone on the team or Amelia can hear, rock and roll. 4 times.

4 times. Yeah. Well, I was here. I mean, I have a direct question to you. So I was here for SaaStrat 2020. I mean, the day I arrived is when I received the email saying that SaaStruck got cancelled.

Sorry.

Yeah. So that's totally fine. I mean, like, I was one of your supporters who were sending emails continuously to San Jose Convention Center asking them to do a refund and stuff.

Thank you.

I have like 2 questions for you.

Yes.

One, that was like a disaster, right? What happened the last minute, they want to refund. I mean, everyone can come in and support you, but then you are being the leader, you are the one who is taking the heat.

Right.

So how did you come out of this? Because this could happen to any business here. So when you have like the events, as industry was like down, right?

Yeah.

I mean, like no one could do anything. And that was going on for like the entire year. You had to postpone even by like 18 months after.

Yeah, we lost $10 million.

Right. So how, as a leader, what helped you to recover from a disaster like that? I'm just curious to know, like, what was your mindset and what steps did you take?

Well, it's funny if you really want to talk about it. You know, did you hear the HubSpot one? Were you here for this? It's amazing.

I'm afraid no.

Well, so Brian Halligan, the co-founder here, I mean, HubSpot's worth almost $20 billion. Brian, right after COVID, drove, had a horrible snowmobile accident, broke every bone in his body, almost lost him.

Oh, wow.

And it's crazy, and you can watch the session later, it's great. I mean, he barely recovered. I mean, he looks, he's great now, but it was a long roll back from falling off a big cliff on a snowmobile in the dark. And had to be airlifted out, and I think he broke 40 bones or something terrible. And I asked them the question after that, like, it's a black— but from a corporate perspective, it's a black swan event, right? It sounds crazy, and my experience in my career, every 5 to 7 years, I've had a black swan event. And I asked them if there were others at HubSpot, and interestingly, they didn't have another one, right? But I can think back, every 4 or 5 years, I can think of one. And I, if I wasn't tired, I actually wrote a tweet and I listed all of the black swan events I've had in my career, and they happen somewhat, they're unpredictable, but regularly on the 4 to 6 year cadence. And so, when COVID hit and the night came that Santa Clara was shutting everything down and we had to cancel it 2 days before, the team was beyond upset, right? I mean, as a leader, right? I mean, just ashen. And I was driving and pushing and pushing, and we went, we had to shrink from 3 days to 2 days as speakers cancel, and we had to do all these things, and we were down to like an afternoon event. By the end, we had, we had a core group of folks that still wanted to do it, and we still would have done it. Right. And then the night before, I realized we had to call, we had to call, we had to call foul. Like it was, there was just no more way when this tweet went out that Santa Clara County was prohibiting any gathering, even though there was no COVID really in the US yet. Then I realized, and then that minute I'd had black swan events before. Right. And I want to give you another story at the end. And I went to, you know, Amelia, who you met, who she was tougher, head of, I mean, the team was devastated. And I just, okay, we're We're done. We sat down and for 5 hours until 3 in the morning, we just planned out our best responses. And the team is better than me and they're great, but I had been through the black swan event. So immediately I went into black swan mode, right? I just, okay, it happened. I was not expecting it to happen, but boom, I know what you do and you got to flip the plan and you got to immediately be a leader and change. And I think if you ask like Puya, who's our number 1 sales rep, he's closed $28 million. He was, he's here, he's so great. I don't know if he's here right now, but he was just devastated, but he'd worked so hard, right? And he's like, I thought I was a crappy leader, but he's like, you were such a great leader through that because you were just, I don't know how you were so calm, but that's what happens when you've been through a couple, a couple black swan events, right? But related to that, there's an email, if I did, I'd put it. So, I look for them now, and as a leader, as crazy as it sounds, I think you have to look for black swan events. I think you have to look for them because you'll start to see them. And like in January of 2020, the CDC put out an email that said COVID might be an issue for travel. And I wish I had it, I put it on screen, I immediately forwarded it to Amelia and I said, my literal email is, this is probably our black swan event this year. Because I knew the signs, I'd felt it before. And every year for Saastr, there's some, except for this year, this is our best year in terms of execution. But every other year for 8 years, there was a little black swan event for us, right? Something blew up. You know, one year, the person that ran it forgot to reserve the venue. That was pretty bad. Oh my God, okay? Even this year, one of the big vendors for us quit 3 weeks ago. They quit 3 weeks ago, a key vendor that we've relied on for years, they just quit, they didn't want to do the work, okay? So those things used to destroy us. We built redundancy, we built resiliency. So the minute that vendor quit after 4 years, Ashley from Montgomery Entertainment, she's one of the best that produced this. She just stepped up and Amelia stepped up and we fixed it, right? It wasn't easy, but kudos to her, and she's not hearing this, hopefully she sees our, my appreciation in the video. But so now I plan, I plan for them, right? And so I'm not saying you literally have to plan for a snowmobile accident or a pandemic, but you want to think what, what could really, what, what kind of things could screw this company up? What if the, what if the round doesn't happen? What if What if my co-founder quits? Like, for example, someone on your executive team is gonna quit that you don't expect. And when I do, I don't ask these questions of the CEOs anymore, but I used to in the early days, you watch the videos, I'd always ask, like, was there a great VP that quit on you? And everyone has this story. Aaron Levie at Box had this story in one of the interviews I did with him, is how their first VP of Eng quit and he thought they would never recover. Right, they lost their VP of Eng, he thought the world had ended, and it probably had. But, and now I always plan for a VP to leave. And like, you know the ones that won't leave, but even then something could happen, right? Something in their life, and so that's one that every founder should plan for, which is that one of your most trusted teammates for some reason leaves, you lose them. Like it could be a snowmobile accident for HubSpot, it could be a personal issue, it could be a home issue, it could be, you don't realize how stressed they are and they just quit to go on a walkabout, but that's one. If you plan for nothing else, plan on someone, a key right-hand person that you would never think leaving, leave. And so, have a calm plan. What would you do if they quit? How would you handle it? Think about it on a walk when you're calm, so then when something like that hits, like losing $10 million, like I knew, I didn't know exactly what to do, but I knew immediately what to do. We called the lawyers, we called the people, we called the vendors. Like, the folks that do this AV stuff, this is $1.5 million, these lights. So the trucks had already started rolling from Texas. We immediately called them and saved about $700,000 because the trucks turned around. I mean, that's a specific example to a SaaS company, but think about people black swan events, team black swan events. Don't spend all your time on them, but if you're going to go long, like you're going to have a snowmobile accident or a global pandemic or friggin Twin Towers being hit by an airplane. I mean, I've been doing startups long enough to remember the day when the Twin Towers went down. Right? And almost too morbid to talk about in the afternoon. I can keep thinking of the '28, 2000, in 2000, I mean, most of you weren't founders in 2008, 2009, that, it was so bad. In 2008 or '09, I can't remember what, I'm sitting at an early SaaS, like, corporate banking event at like Pebble Beach on a beautiful day, having wine with like investment bankers and VCs, and I get a call on my phone from our bank, Citibank. Greg, my banker for years, to choose, I was like, Greg, how you doing? I'm at this event, but I love you. He's like, you gotta pull your money out of Citibank. I'm like, what do you mean? Citibank's the largest bank in the world. He's like, I think tomorrow Citibank's gonna fail. And Citibank, it turned out, almost did fail. Like Lehman failed, Citibank almost failed. And I'm like, Greg, where do I put my money? Like, do I put it in Silicon Valley Bank? What if they fail? And he didn't know. He's like, at least take half your money out because everyone in the office is I was talking about how we're going to do a press release tomorrow that Citibank is going to fail. Now, there was a bailout that night, and Citibank did not fail in the morning, but I'm just rambling through, like, I never as a founder thought my bank guy would call me and tell me to pull my money out. I didn't know where to, I didn't know, the banks were closed at 3 PM, where am I going to wire out half of my $8 million of venture capital? Like, I don't know, but so I could think of more of those. My co-founder at EchoSign, 10 months in, like my muse walked out the door and never came back. Never came back. I never fully recovered from that, right? And so, anyhow, rambly, but think about those when you're, if you're going short, don't worry about this stuff. Don't plan around it if you're going short, right? Don't worry, but if you think in terms of a decade like Rene from Build.com, calmly think about what you're gonna do when these things happen, and then when it happens once every 5 years, you'll like spring spring into action like I did, right? So thanks for the question.

Excellent. Once again, thanks everyone, and thank you, Jason and team.

Yeah, thank you.

Hey Jason.

Hey, thanks for coming.

Thank you.

Um, so Jason, come a little bit closer, could you?

Sorry. Yeah, so, um, if you are a founder— yes, in 2022, a first-time founder— and you get accepted to YC, but at the same time you have a seed offer which, and you're under $1 million ARR.

Yep.

Would you go for YC or, you know, skip it and immediately go to the VC stage?

I would— Yes, sorry, is that the question?

No, no, and like what's your thought process?

I've been through this. I've written a little bit about it on Quora, but maybe not on Saastr. I think that, and listen, I don't work at YC, right? I think if you're not sure, do it. Because the YC companies I've invested in, it, look, YC is expensive. It's a lot of dilution for a little bit of capital. When the earlier waves pre-YC that did this back when I was starting my career, you see, they were founder ripoffs, okay? Give us 7% for like 1 hour of a designer's time. That was like the biggest ripoff back in the day. But YC is not that. YC, and listen, I'm not into brands. I don't know where any founder I invest in went to college, but YC is Stanford. Harvard, MIT, and Caltech all rolled into one. And even if you don't learn a goddamn thing from the program, all things being equal, you might as well go to Harvard or Stanford or MIT, right? Not that I care. I don't care. Um, uh, and I went to Harvard and maybe that's why I don't really respect it or even ask for founders I went to, but it doesn't hurt, right? And, and VCs so respect it. Now look, there are like 220 companies in this batch, right? They can't all be the next Stripe, right? There's got to be a few, a few that will struggle and a few dogs. So, but, but everyone's looking for signals in this world. There's too many startups, there's too many opportunities, too many companies to join. There's too many companies to fund. And the network at YC is powerful. And the first time I saw it, I was— I'm a small investor in Front, which just raised $1.7 billion, and I saw the power to Matilde going through it. I invested in Algolia, which is here, which is worth $3 billion. They were very seasoned French entrepreneurs that raised a seed before YC and gave up a lot to do YC. And they will all tell you it was worth it to get them to the next level. And then later, for example, there's a company called Treasury Prime, which is a banking as a service API I invested in. And the best CTO I know in the world is the CEO. Back in the day at Echosign, Adobe Sign, I offered him half my stock when we were at $10 million to join me and half a million a year, and I would take nothing. He's that good. Okay? And, but he is a romantic. He didn't join me. We would both be billionaires if he had, but whatever, Chris, if you're watching this, dude, I love you, but you should have taken the offer I made 6 years ago. It would have benefited both of us. Anyhow, so, then he went and he was a romantic and he did a search company, hard, great engineer, hard problem search, right? Didn't quite work out. And he needed a job and I connected him with a great YC founder who was building a company called Standard Treasury, really early in banking, like way too early. But they got bought by Silicon Valley Bank. He made a little bit of money. And anyhow, so he'd done this, he'd done another startup that sold for $200 million where he was the CTO. He'd had an exit. He was wicked smart and he wanted to be a CEO this time and run the whole show. And he's seasoned. I mean, he's not, he's not old, but he's not young. And he had these wins and he could get VCs to give him the money, right? But he didn't have the whole thing. And I said, listen, just do YC. This will, This will create that missing slice that you're lacking, this confidence, this branding. And he's like, I don't know, I'm not the wrong guy for YC. I'm like, hold on, listen, I've never worked there, I'm gonna write your script. And we practiced it, and immediately they, you know, he got in in whatever, in 60 seconds, it's not that hard. He's like, hi, I'm Chris Dean, I was co-founder of Merced Systems, we were acquired for $200 million, then I was the CTO at another company, YC company, the treasury, The first one, Standard Treasury, the Silicon Valley Bank, and it became the core of their existing API. Now I'm running the whole show myself. I want to reinvent how banking is done in the 22nd century. I mean, you'd fund that, wouldn't you? Yeah, pretty good. Yeah. So, so, and I've tried to give that advice again. And then most recently, there's a, there's another one like Chris, one of the best CTOs in my life, right? I will do anything for them. That's starting a company as a first-time CTO. He's had a billion-dollar exit. Another exit, Wicked Smart, and he didn't have a lot, he had a little trouble raising money, but it wasn't that hard, right? Because he's got, in the grand scheme of things, and I told him to do YC. I said to him, look, you're gonna raise the money, but you're missing this slice, and YC is not magic, you know, watching a few things online, and now we can do it online, and I love Gary Tan, I love all these folks, I'm like, it's not so much, but it's gonna solve this slice for you, and he didn't do it, and I'm, one thing I'm 1,000% sure for him it was a mistake. So if I had to distill it all down, if you think YC is not a good deal, a rip-off, if you think you can raise the money, I'm sure there are, you know, Parker from, from, from, from, sorry, I'm getting tired. What's Parker's second company? Parker Conrad? Rippling, yeah. Parker will tell you to do it. He did it again. He didn't have to. Lots of folks will tell it to you. I say if you're like Parker, maybe don't. Like if you— Parker's— I mean, it's different, but if you don't think there's benefit at YC, don't do it. Right? If you're so far along, you can— and you just— you think it's a cool brand, but if you think there's a chance it will add that slice, that's the advice I give. Just do it. So if you're not— it's a rambly answer, but I think with some good examples. If you're not sure, I always tell founders, just do it. Even if you have the revenue, even if you have— if there's a missing slice, like just go to Harvard, MIT, and Stanford, get it done, and it's worth it, right?

Yeah, thank you so much. I think I need that slice, so—

okay, then do it. Yeah, do it. Yeah, and take this. Yeah, Gary, Anu, and Nicholas, please, you can give me a little thank you note.

But yeah, hey Jason, thank you and team for an amazing event. First time, really, really awesome. Um, so I, I really follow your tweets and your content, and you're like, I really love all the material that you guys put out there. And but sometimes, you know, like, I see the title, you know, like of something like after $100 million ARR, like, growth slows down. I'm like, dude, I'm trying to survive here, you know, super early. And like, you know, there's really a lot of other issues that I'm really concerned about that are not $100 million ARR. So what are maybe like one or two things maybe you want to, I think, give as an advice to founders who are doing sales in very early stage, the first couple of million ARR, maybe, uh, that you felt, you know, like are super, I think, useful in that stage in kind of like trying to develop that, uh, I think that that sales muscle, if you will, within that.

Well, look, first of all, it's a good, it's good, some good feedback. We, all the early SaaS content was only around folks sort of like $1 to $5 million, and we added more diversity to stages and others, and I think we've organized that, we could better organize it. So it's good feedback to us, to our team, to, to make sure there's an easy way that you can only get that content. And I've done some good videos and other content, but if you wanted me to distill like a couple pieces of advice that are most important post-1, 1 to 5, something in that zone, right? It probably goes back to so much of our iconic piece. First of all, and some of this, some of this was like really innovative years ago and now is table stakes and copy, but first of all, do whatever it takes to get 2 reps hitting quota. Whatever it takes to get 2 reps to hit quota. You'll never scale revenue if you can't get 2 people to hit quota. If you don't have 2, who do you hire? This is the number 1 hack. I've had this conversation like 20 times here. Why did your first rep not work out? I always know the answer. Would you have bought from her or him? No. Why did you hire them? Well, they went, they, I liked their LinkedIn, they knew how to talk about ACV and MRR and RRM and, but would you have bought from him? No, I would not have bought a product. This is why we screw up. You can have, when you hire your first couple reps, they do need to have sold a software product and vaguely similar, something at least vaguely close to your ACV. Like they can't have sold pool equipment or plastic. Sometimes people hire that, it can work out a little bit for tiny SMBs, but it doesn't work in software, okay? Because there's a playbook at $3K ACV and $10K and $25K and $100K and they just know how to talk to customers and they know the cadence. So hire 2 reps close to your ACV and then forget all the other crap you read. Talk with them. If you want, have them sell you this pen even if you think it's trite. Listen to them. Have them do a Zoom pitch, but then say, would I buy from him or her? And every CEO you talk to, almost everyone, will have what I've written about and called the first magical sales rep. And when I first wrote this on LinkedIn, I got like 100 comments with everyone telling me who their magical sales rep too. I say, they're a little quirky, they're a little smarter than usual, they're more product-focused, they deeply understand the product, and the customers friggin' love that magical sales rep. Right? They often came from a slightly different place. That was mine too. Mine was an opera singer. He had come from a failed SaaS company and was mid-pack at best, but his parents were both doctors, he was wicked smart, and he friggin' loved Adobe Sign and EchoSign. He loved, he knew the ins. Was he the best closer? No, he was mid-pack, but, and I remember, like, the first Dreamforce I went to in SF, I'm walking out of the parking garage, and this really tall guy grabs me by the back of my jacket. He's like, ah, Jason! He's like, you work for EchoSign? I'm like, yeah, I work for, I'm one of the founders, I work for EchoSign. He's grabbing me, like, this tall, 6'6" sales guy, he's like, do you work with Joe Colletti? The sales guy's like, I work with Joe, yeah, he's our only rep. Yeah, I work with Joe. I love Joe. I love Joe. And that's the kind of thing that you want, and you get that when you would buy from them. When you would buy from them. So find 2 reps you would buy from, work with them, help them so they hit quota, and then hire a sales leader. The other mistake people make, I mean, it's become so trite, but it, the last panel I'm sure will recite it, like it's hyper risky to hire a head of sales, even a stretch one, before you have 2 reps that hit quota, because a head of sales' job is to hire reps 3 through 300, not to create product market fit, not to create the playbook, but to take a really rough playbook that's, that it's not really clear why it's working, but you've proven twice 2 reps can hit quota. A smart first-time VP sales will listen, they'll learn, they'll get on calls, they may carry a quota, they may carry a bag, and they'll hire you 3 through 300. So 2 you would buy from, then wait, then hire the head of sales, right? And then the last one, then we could break, we go on a long is, and I wrote this so early, and people still think it's controversial today, but I wrote one of the first SaaStr posts, and I've updated it, which is, I hired my VP of marketing at $20K MRR. It wasn't a week too early. Okay, I used to have like cuter titles, but I hired at $20K MRR, it wasn't a week too early, and I went through the math. I hired Loretta at $20K. I didn't know much about marketing at the time, but I think we went from like $20K MRR, $240K to maybe $800K in a year. It wasn't like a rocket ship, right? But you come in and all she had to do was help get me enough leads to close another couple hundred thousand dollars. And that one, more than covered her comp. Two, fueled the sales team. Three, built our bones so we could do more demand gen and things. And so don't hire someone that works on your logo all day. There's another old classic SaaS post. Don't hire the wrong VP of marketing. You'll just get a bunch of pens with your blue logos on it. Half the folks here will tell you their mishire of marketing just did like branding and product marketing. In corporate marketing, no, but you can't hire a growth marketer, a true demand gen marketer. You can hire them too early when you have no customers, but as soon as you have even a hand, 10, 20 customers, you can hire a great senior growth marketer demand gen to get you more leads. So hire that person as early as you can find her or him. That's, that's the third of the things I distilled all down. Thanks for the question.

Thank you so much.

Really appreciate it.

Thanks a lot.

For sure.

Hey, Jason, thanks for a great event.

Thanks for coming.

You recently wrote an article that said, you know, when the phone rings, pick it up.

Yes.

Even though the current DNA is put people in a work cycle and schedule any meeting in 3 days.

Yes.

Two-part question. What motivated you to write the article? The other is, what's your advice to companies who want to change that DNA?

Yes.

But are struggling with it?

Well, yeah, look, the irony is, it's funny, support is so— I'm so passionate about support. For a whole bunch of reasons, but I got passionate about it initially because back in the day when I was the CEO, we quickly expanded to the UK very early, like 6 months in, our biggest 3 customers were in London. 6 months in, not expected, right? A white swan event, maybe not a black swan event, and we had 9 people and no one really was willing to do support from 12 to 6 in the morning, but our product went down every day. So someone had to do support when the load hit, and we went from like 10 concurrent users to 1,000 when this huge company rolled this out. So you, I mean, you could imagine why there were issues. And so someone had to do support, and so I did it every night from 12 to 5 in the morning until we could do it for UK time. So I became very passionate about support tools, doing this, me not having to do it, and so I got very early, I immediately, when I realized I couldn't hire 10 support people, I immediately hired an outsourced team in Canada so that someone could do the chat and pick up the phone 24/7. I figured out how to get good at that. and then I just kept investing in companies that did some of this because I was passionate about it. I invested in Talkdesk, which is worth $10 billion now, to do phone contact center. I invested a small amount in Front, which is $1.7 billion. I invested in Gorgeous, which has 10,000 customers in the Shopify ecosystem. I invested in MyStartQA, which is the leader in contact center QA, making agents perform, sort of like Gong but for QA. And so I'm very passionate about it, but to really answer your question, why am I more passionate? It's because all of these SaaS companies in support and outside of support that I invest in, no one does support. Even support companies do shitty support. And I go on, and I go on to all the leaders. Okay, do all the leaders in SaaS, do the Zendesk and the Intercoms, do they answer their phone? None of them do either, right? And I learned as a founder, I could make up so many competitive gaps by picking up the phone. So many, because no one did, and you can't solve a number one feature gap, but boy, when I had someone, even when we were tiny, 10 people 24/7 answering the phone, and I wrote them a script so the top 10 questions, even if they, they couldn't do tier 2 support, right, but they could answer the 10 questions and they could say, I'm sorry, Bob, I'm sorry, Linda, Scott or someone will get back to you in a little while, here's the best I know, like, that didn't solve their problem, but boy, they felt better, boy, our NPS was happier, and I'm just, shocked, shocked when SaaS companies say they can't afford to do support. They can't afford to do phone support. I'm like, I get it, but like, when I call the restaurant in San Mateo, they answer the phone. Why can't you answer the phone when all the restaurants at SaaS Tonight answer the phone? Well, no, you don't need your top engineer answering the phone, have a human being, and it's the same, half the questions are the same damn questions again and again and again. Do you have a HubSpot integration? Yes. Yeah, I mean, whatever. Or like, the internet, the app doesn't work. Well, you know, whatever. I mean, I'm not doing the best answers, but pick up. So that I'm passionate about it because I find so many folks in support are crappy at support. And I'll tell you a last story. Obviously, I love HubSpot to death. I love everything about Brian and Dharmesh and the company. But I, but no but, but I remember when they were kind enough to invite me to their Founder Day in 2019. and they did a whole thing on support, it was great, and they all talked about how they're gonna automate support more and more, and I said, that's great because you have so many customers, they're like, but I'm curious, how quickly do you pick up the phone? And they didn't know, right? And I get that it's hard, but anyhow, I know you're in the space, we could end the question there, but I just think the reason I write it is because I've seen it myself, and I've seen support, you gotta be good at whatever you do, right? And support companies struggle, but it's the simplest thing you can do this week, this next week. After all of the annual, is you can go back and you can upgrade your support. You can upgrade, you do not need the world's experts, you can outsource it to start, you can just hire one more person to pick up the phone. And if you're like, well, I'm gonna get too many calls, well, at least you're gonna answer some of them, right? And the other complaint we get is, hey, if I do real-time support, or if I do real-time tickets, all my free users and my small users overwhelm us. Well, At least you can talk to some, and then you can build systems, and then you can filter the questions, and then you can triage support, and then you can hire someone just to do free, and someone to just like at HubSpot, just to do 2 to 20, and then just to do— there are tools, the systems and routing is much more sophisticated today. But even if you don't ship another feature this year, you can go back and you can upgrade your support next week, and you can do some of it next week, and you can do it over 4 to 6 weeks, and your NPS will go up, Your sales will go up a little bit, your NRR will go up, and people will just be happier when, as a human being, why do I have to spend this money and I can't talk to a person? Like, it's criminal. Why can't I talk to a human being at any SaaS company? Why? I mean, we're switching to HubSpot because I love HubSpot. We pay Marketo like $100,000 a year. I can't get anybody on the phone, right? I tried to, I was using a product, a mission-critical product for SaaStr over the weekend. That went down, okay, it happens. I go on to their live chat, they're like, response, we'll get back to you within a few days. Like, you're not down anymore, you were down, I have a question, I have to wait 3 days for my, how many of you can go on to your Intercom or Drift or whatever you use, and it's gonna say someone will be back to you in 60 seconds? None of you, right? It's criminal. And as expensive as it is, and I will end my rant, or my ramble. Whatever you think it costs, it's cheaper than engineers, and it's easier to source than engineers, and it's cheaper than building features, and it's cheaper than building products. And it's not just that great support wins, that's of course hopefully true, it's that it's an upgrade. It's an upgrade you can do without a line of code, without another, without a VP of sales, without that great VP of marketing you've been spending a year to find. You can do the upgrade at some level next week. So thanks for the question.

Thank you.

Yeah.

Hi, Jason.

Hi.

Thank you so much for putting this together. I just want to give a shout out to— thank you so much for taking in diversity inclusion efforts at Saster.

Thanks for coming.

Yeah, it was, it was wonderful to sort of be a part of it. So my name is Zoya and we are basically a gifting company. And my question to you is, so what advice do you have for bootstrapped companies that have just under $1 million in ARR, but are having trouble, um, sort of selling their mission, their story to investors?

Well, okay, I'm gonna give, I'm gonna answer it. Let me break it up into two points. Um, I don't think, I'll give them the smaller point and then the large point. I don't think you're struggling for investors because you're bootstrapped. Investors prefer, actually, if anyone thinks investors don't prefer bootstrapped companies, you're wrong. And every investor wants to do what it— what Excel did in Atlassian. Atlassian bootstrapped its way up to like $50 million, $100 million, $100 million in revenue. And you couldn't get this deal today. I think it was $100 million. There's an old video I did with Jay Simons, who was president then. I think at $100 million, Excel invested at 400, so 4 times revenue, and I think bought a quarter of the company. Okay. That's the best deal as a VC because there's no one else on the cap table. There's no— you're not jockeying with Sequoia and Andreessen for space. Everyone wants to invest in The gem. I talked to a founder, the first one I got here, right when I walked into Sassafras Square Park, we have a Meet a VC program, and I talked to a bootstrap founder. He's like, Jason, I love your Meet a VC program. I'm like, great, but some people have different experiences. Like, I got 32 meetings already. I'm like, well, what's going on? He's like, well, I'm at $4 million ARR, I'm bootstrapped, I'm growing 150% a year, and I'm in a really hot space. Well, you're gonna get the meeting, right? So I just want to simplify, it's not VC's performance prefer bootstrap companies. Yeah, you want signals. YC is great that we talked about, that first round did the pre-seed, but fuck that. What they want is hot companies with room on the cap table where they can buy every share they want. So don't let that be an excuse. Bootstrapping is not— bootstrapping is a reason it's harder, right? We'll get to that next, but it's not— it is a positive for most investors. VCs would love to be the first one on the cap table because there's more space and less drama, right? It's what you want. The different point is bootstrapping is harder, and I asked Ben Chestnut from Mailchimp, if you saw that session, and we— I didn't, but we asked Michael Cannon-Brookes from Atlassian, and everyone says the same thing. I wrote this post a long time ago. It typically takes 3 to 4 years longer being bootstrapped. It does, and it's sometimes that can kill you if you pick the wrong part of a fast-moving segment, because someone will get funded and And there are spaces, there's parts of fintech payments where there's no time to bootstrap, right? There are other niche spaces, maybe you vertical SaaS where, you know, it's competitive, but like you're competing with 20-year-old software. Like sometimes it's okay if it takes a little longer. But however you get there, by— here's the last point— by it takes longer, but by $10 million or so in ARR, you have convergent evolution. These paths converge. By $10 million ARR, you have, if you bootstrap to $10 million ARR, you're generating enough cash to hire all the VPs you want, okay? You can't hire 1,000 sales reps like maybe a Brex or someone can, but you can hire enough. You're generating enough cash at $10 million that you do, it is only elective if you want to control your future, right? So the painful but best advice I can give to bootstrappers is if you're, unable to get funding and you want funding and it sucks, and it does suck, it may be brutal, it may be painful, but by $10 million you may be Ben Chestnut. When they finally, after Constant Contact went public, they finally came to him and said, "Ben, can we invest in you?" He's like, "I don't need your money. Why would I take your money now? Like, I'm gonna just own all of it at $12 billion." And you're not, you probably won't exit for $12 billion, but it does normalize at $10 million. So you got to brute force it to there, right? So thanks for the question.

Thank you so much.

Hi, Jason. Hi.

Thanks for coming.

Right before me, thank you for the diversity program. Very grateful to be here.

Good to hear.

And great to see a lot of different faces. So I think that makes it a better event. And congratulations on 10 years.

Thank you.

And that's actually where my question comes from, because you said at the beginning you were very focused on everyone learning from your failures and mistakes and then got into best practices. Businesses. So we all know as entrepreneurs, once you hit a goal, it's really important to have the next one.

Yep.

Otherwise you're going to be like, okay, I got it, so what do I do now? So that's my question for you. I mean, what do you see as the next big thing that you want to achieve, either with this event or the brand? How do you reach more founders? How do you help more people? I'm just curious to know.

For SaaStr itself?

Yes. Um, or if you have personal goals also, you're like, now that I've done this, No, it's a good question.

I think that we don't have it all figured out. Basically, what we really want to do is do more types of mentorship and learning at scale. So, you know, if you did it, you know, we did, we do like almost 2,000 Brain Dates here. We've got pretty good at it here. We got pretty good in Europe. We want to start doing that every week online, a version of it online, which hopefully we can roll out in Q4. 4, there's different places that can go, but like, maybe it's too nichey. I mean, SaaStr is a community, it's not an event, it's a community. And we started doing meetups for a community, because I'd never been to a meetup, but I heard people did it. So we did one, and like 500 people came to the first, and that's common today, but it was unusual in business software back then. And those events got bigger, those meetups got bigger, and became events, and then became 10,000 people at events, and But it's not about events, it's about what a sort of self-organizing community— we're not forcing people to go on Circle or Discord, so it's a weird community in some ways, but how can you add value for the community? So the real goal is to add one minor and one major piece of value to the community each year and to grow, to grow with it. So I know it sounds a little amorphous. SaaStr itself You know, basically has broke barely. Well, it lost money. It lost $10 million last year, broke even. As a side, almost everything's free, right? All the content's free, SaaS University's free. But to fund operations, we do have, for our internal team, we do have a goal of getting it to $100 million. So SaaS took a long time, but we'll do $27 million this year. Still give away almost everything for free. It's not, it's kind of fun to give away everything for free and do $27 million, right? So our goal tactically, and for fun too, is to see if we can get from 27 to 100, because 100 is a fun outcome, right? And if you're at 27, it's like, so it's kind of fun because like now we know how to get to 40 next year. It's like we know we can go from 27 to 40 bootstrapped in a way, right? Even though I invest, it's bootstrapped. 27 to 40, we don't know how to get to 100, but we have hints of 100. And so kind of redoing that journey, but that's secondary to investing in the community. If we invest in the community, the rest of the stuff with good people just kind of I don't mean to exaggerate, but it almost takes care of itself, right? Because these sponsors here, who we are grateful to, right? They're here, they're not diluting your performance, we're not selling out, but they want to be where number one is, right? So if we keep, if we keep at just add value, we'll get more sponsors and make it fun without having to like dilute our mission or anything. There you go.

Thank you.

Thanks for the question.

Hey Jason, this is Anthony from Deselect, and I'm sure you're fed up from hearing thank you by now.

Thanks for coming.

We implement like 80% of your content, so being here at Saastr for the first time was quite transformational. So thank you.

Thank you.

I got, I got two questions. First question is like a little more personal, founder-related, potentially cultural. What would you recommend an early-stage founder who recently, let's say last Saturday, relocated to the US as a European to further scale his company?

What do I recommend?

Yeah.

Well, um, look, when I started investing, I did almost all Euro to US, right? The first one was Pipedrive, Estonia to the Bay Area. The second one was Algolia, France to the Bay Area. The third one was Talkdesk, which was Lisbon to the Bay Area, right? Um, and then I did a bunch of others, um, but that's a generation ago, right? That was a generation ago. Um, But, and some things have changed, especially now that we're running distributed teams, right? But what hasn't changed is that the ones that got the most out of it, and then I did like Showpad from Belgium.

Yes, they invested in us, I know them.

What's that? Yeah. And some got more out of it than others, and I know this is totally obvious, so I don't know that I have brilliant advice here, but you gotta, you gotta like network. And you gotta meet the Americans. Okay? And, um, and sometimes, I mean, I invest in so many French-to-US, Gorgeous, Play-Doh, Algolia, Front, um, Voxy, um, I mean, a long list of others. And, um, the French entrepreneurs, there's a great B2B ecosystem, right? Especially technical. But I have, but they do hang out a lot together. Okay? And I'm glad the French have each other here and that they still come to the Bay Area since it's much further than New York. But you gotta meet other people, and too many founders end up coming to the US and mostly hanging out with somewhat similar founders, and I get it. And I think that's okay for peer CEOs, like, because you need peers, but it sucks for VPs.

Yeah.

Right? You don't want— if you're from France, you don't want to meet the French VPs of sales that happen to be in the Bay Area. You want to meet all the other ones, and sometimes they're too insular, and I'm a little bit of an introvert, Even, you know, I thought Brian Halligan was the most extroverted sales guy. He considers himself an introvert. Dharmesh considers himself an introvert. But you gotta just network, right?

Well, maybe on that note, we're still hiring a sales leader for Austin office, so.

Yeah, Austin. So, and you gotta hustle. You just gotta, that's the thing. And so, if you're gonna move here today where it's, it absolutely helps, right? But it's not as critical as it used to be. It's not like do or die. Like your world will end. If you're a European founder and you don't come to the Bay Area, like, your company will die. Like, we don't think that anymore, right? Just make sure you get the bang for your buck, 'cause it is expensive on the soft cost side. I just don't— go to every event, meet every VC, network, go to every— even if you don't like to, do more of it. And, you know, I'm the world's worst networker. I don't even know how to network. I don't know how to go to par— I mean, you heard Dharmesh's story with his wife does the networking for him. I'm kind of like that, except I don't have the partner to do it for me. I don't know what— I literally don't know what to do at a cocktail party. So one of the reasons I started SaaStr was so I'd have something to talk to people at parties, because I would go to like parties with like the dads at school and people would make fun of me because I didn't talk like, you know, I'd be like, how's your sales team going? And they wouldn't want to talk about sports or like the core curriculum. So I know it sounds silly, but I wasn't good at it. So I formed a community to talk about SaaS. But force yourself, get taught, and what the— sorry, I got a little off on a tangent. What I've learned doing this for 10 years is this shit compounds. These were the people you meet here today, a few of them, most of them won't fail, because very few people come to SaaStr that are pre-revenue, and almost no one comes before a million in revenue, so the people you meet today, you will meet a couple incredible people here that will go on and you will turn around, I didn't even know until I did a digital event with them that the founders of Monday came here for like their first US event from Israel. I didn't even know they came, and then I checked my email, they sent me an email, I never met them, they're like, "Dear Jason," whatever they're called before Monday, "Would you like to meet? Would you like to invest?" I didn't even respond. That was a mistake. There's others, but a rambly point of you don't, the Monday guys, they'll be here, right? And so, don't just come to SaaStr, do everything you can when you're local to do that because This person you meet here that in a year, if they bond with them even a little bit, they may recommend a VP of sales to you in a year. Like, these, even recruiting takes years over time, right? And the executives you have today, you may need different ones in 3 to 4 years. And so these connections are so, especially if you're like me and you're not inherently hyper-social, these relationships can become, you don't even have to force them, they can become so valuable over time, right? Rambling answer is get, get, get off the YouTube and network until you want to throw up in the local community, right?

All right.

Fantastic.

Thank you.

And if you have a hard time networking, I'm happy to have a drink.

Okay. Thank you.

I did have one more question.

I was exaggerating a little bit, but not, not too much.

Yeah, I did have one more question.

Okay.

So say in today's market, you're early stage and a bunch of great VCs are actually willing to give you money at, say, a happy valuation. But you don't really need it.

Yes.

Are there any conditions you would still take that money?

Well, okay, look, yes. Let me step back for a minute. The rough rule as you scale over time is only raise money if you need it or it's cheap. If you need it and you're lucky enough to get it, of course take it, right? Both of my startups, at the time, I need— I did not have enough personal resources to fund what they did, so I needed venture capital both times. The first time I got the Worldworth deal, I raised 8 on 2. Do the math. 8 on 2. What's the post?

Oh, is that a real question?

Yeah. 10. So how much did you sell in the first round?

25%.

80%. No, I raised 8 on a 2 pre. Oh. Bad times. But I needed it, right? I didn't even, it didn't even bother me for a moment, because the company wouldn't exist without 8 on 2, right? That was, that was like the lowest point in the history of fundraising, but we could chat about it later if it's fun, but, or if someone else wants to ask, I'm happy to talk about it. But, and then the second time I needed less money, but I still needed it. So you need it, you raise, right? And then for me, it was probably a mistake, but once I was profitable, even the second time, I stopped raising because I didn't need the money, right? And if I hadn't, we hadn't sold to Adobe, I probably would have later raised when it got cheap, right? So if you, if you need it, it doesn't matter, because you need it, and if it's cheap, It's cheap, then like, there are reasons to not take cheap money, but you should at least think about it, right? Okay, so you're not in that, you're doing okay, people want to fund you, but it's like, you might sell 20 or 30% of your company now for some good money, but not a life-changing amount of money for the company. That's the question, right?

Yeah, well, different numbers, but—

But enough, but not enough to change the— like, it's enough, but not— it's not $100 million tomorrow, right? For 1% of the company. So notwithstanding the heuristic of cheap or whatever, I think that you, if you can raise money but you don't need it, you need to calmly take your time and say, who are the executives over the next 18 months, the VPs, that I can calmly hire with this money? Because that's when you get the bang for your buck. And you have to ask yourself, am I, am I a sequential hire? Do I hire a VP of sales and then marketing and then eng and then product and CS? Can I hire in parallel with this money? That's worth it if you can find the people. It's worth it to hire in parallel. Am I too nervous? Did I turn away that VP of sales candidate because she wanted a $600K OTE? Now, $600K sounds like a lot, right? But actually, when I think back on it, it was $250K but $350K. So $250K base, but $350K if she hit the plan. And $250K base is only $20K a month, isn't it? So it's not that much if she performs, because she, raises the money, or if she doesn't, I'm only out $20K a month. So like, but if you're too lean, you think, oh my God, $600K OTE, like I'm getting ripped off. Like I only make $80K. And this VP of Sales wants— So you gotta think calmly. It's not just how would you spend the money, 'cause you'll come to the wrong answer. It's just the VPs. 'Cause this is all about, once you hit even a million in revenue, it's all about who you can recruit, right? Before that, it's your founding team. And so if raising this money de-stresses a couple critical VPs, raise it tomorrow, right? That's the answer. All right.

Great answer.

Thank you. Thanks for the question.

Hi, Jason. My question's about the VP of sales.

Yes.

We're a company that's— we have 2 reps. They're going way over quota.

OK. Well, you're there, right? Yeah.

We follow your advice quite closely. Quite seriously, to be honest. So we're about to hire our first VP of Sales.

Okay, good timing.

And what do you think we should watch out for in the next 90 days, and when should we bring in our VP of Customer Success?

Well, those are two— what should you watch out for while you're hiring the VP of Sales?

No, once we bring them in, what should we watch out for?

Look, what you should— I'll tell you that I'll give you a simpler answer first. Success next. What you should watch out for when you hire your VP of sales, you will know before she or he starts. And I know I've written about this and I know it's now become trite, but it's so true. Will they bring 1 or 2 good people with them?

Right.

A real VP of sales, you know, this is old school, not old, it's not dated, but it's one of the first stuff I wrote where, and I've written it probably 100 times. What's the number, the number 1 job for a VP of sales is recruiting, is is building a team. You have 2. So whether her job is to get you from 3 to 10 or 3 to 6 or 3 to 300, it's recruiting. Recruiting's hard, right? Anyone think recruiting's easy in this room? Like, congrats to you, but it's hard, right? And so the best, even stretch VPs of sales, even they're really just directors or leaders, they're always recruiting. They're always, they're always meeting people, recruiting. You know, I'm gonna, in my next gig, I'm gonna get Tony to run the West. I'm gonna get Linda to run this. And they always have, they're always recruiting. And if they're more senior, they're always recruiting directors and VPs. And otherwise, they're recruiting ICs. They're like, okay, well, at my last gig at Aircall, I worked with Joe. He was the best. I'm gonna, like, I'm always with Joe. I'm getting drinks with Joe when I'm in town because when I do my next role, or when I'm finally VP of sales the first time, I want Joe to be the first person on my team, and I want Sarah to be the second. And so, Even if they're a stretch VP, even if they're, this might be their first VP role, if they don't have 1 or 2 queued up, 0%, approaching 0% chance they make it. Okay. If they tell you, and so I always ask, where are you going to get your first couple reps? And they're like, well, I'm going to hire some recruiters. We all need recruiters. I love recruiters, but when you don't have anybody, it's the biggest red flag there is. Even worse is, okay, what recruiter are you going to use? I'm not sure. Ugh. Like, okay, if you're a great recruiter yourself, one, you recruit yourself, and two, you use recruiters to help. You have to use both, right? And so the best VPs of sales also have a recruiter they work with in some fashion, right? Even if they don't love them, and so, point being, if they haven't told you who those people are, they probably don't have them, and you can talk to them and interview them and see the motion before they even start, and if you cut those corners, and sometimes we do, you will know within 30 days whether they're on the job. Right? And then we could talk, it's so true, but like let's imagine your VP, how much are you doing, a million in revenue?

5.

5, woo, for 2 reps, good job. Okay, so your VP of sales job is to take you from 5 to 10, right, or whatever, but let's call it 5 to 10 to keep the math simple. Let's say you obviously you've been wildly efficient, okay, but let's say you decide calmly, okay, our reps can do like $800K to $1 million each. You're probably a little bit more enterprise or I don't know the story, but anyhow, okay. What's that?

$750K per rep.

Okay, so, but like you're gonna need to go from 5 to 10, let's say it's $500K per each, you're gonna need 10 scaled reps, aren't you?

Yeah.

To go from 5 to 10. So the best VP of sales is really, okay, that means I need 4 in my first quarter, and that means I need, 2's not enough, I need 2 more of my first month, and so they're always doing that. And so you see this motion, and you see 1 of 3 things when the VP of Sales starts. You either see no motion in people, that's the worst sign of all. You see them bring in 2 or 3 folks they worked with before, that's the great sign. Or sometimes they bring in a bunch of crappy people, which is risky, but at least they're trying. But always, always ask them, Who will you bring with you? And more experienced, they might know 10. If it's really a stretch, I would settle for 1. Okay. Right, I know it's not enough, but the best ones always somehow bring their ringer. They bring their ringer one way or another. And like on our little sales team at Saastr, Brian, our VP of sales, he brought in his old boss. One of his ringers was he convinced his old boss to come in and be one of our top sales folks, right? And so that's just another way to get it done, isn't it? But he did it, right? But none of those, like, just, no matter how much you like them, no matter how good they look in the blazer, no matter how much they talk the talk and tell you what it was like at GitHub or Twilio, or what did you just, okay, great, hooray, hooray, you're tall, strapping, handsome, and worked wherever, who you bringing with you? Who you bringing with you? And if you get a mushy answer, just, and anyhow, that's my rambly answer of even if you don't listen to me, even if you make the mistake anyway, If 30 days in there's no one, they haven't brought in any good, like you need, it's not a black swan event, but it's like a micro event. You need to already be planning, as tragic as it sounds, that they're not gonna work out. And you know, we hate, everyone talks about hiring slowly and firing quickly. There's some toxicity in that, right? It's not more that, it's more everyone will tell you that gets on stage here that made a mis-hire in VP will tell you, It's not just that they should have gotten rid of them quicker, it's the damage they do. The damage they do to your org, they spend all the money and they hire 10 terrible people. And so give them severance, friggin' give them a year of severance if you can, who cares what the severance is, move out, if they don't have anyone good in 30 days, realize by day 60 you may need to move them out, as painful as it is, right? And then the last rambly point is, the big mistake then they make is they don't talk to the 2 reps, They don't see the progress and they give them more time. Right, you can be a human being and it's not this like this lame fire people, it's admit to the VP you hired it's your fault. That terrible VP of sales you hired may well go on to a better environment and thrive. That VP of sales maybe should not join a $5 million ARR company but will thrive at a $50 million ARR company with a brand behind them. Or a $40 million company with money or in a different industry, it is your fault as CEO if you hire a bad VP. Read more Saster. It's your— do not— I blamed my first VP of sales. I blamed him for coming from Salesforce and never working at a startup and failing. I blamed him and it was not his fault. It was my fault for hiring him. It was my fault for sticking with him for 9 months. That's all 100— I thought it was like 50/50. No, it was 100% on me, right? Move them out by day 60, apologize, honestly say it was your fault, give them a check if you can afford it, give them a bigger check than you think they deserve. If you can afford, if you think they deserve 30 days, give them 60. Like treat people the way you would like to be treated, but address it honestly, take the blame and move on. So that's just what you want to do between 30 and 60. It doesn't mean don't back them. You got to back your hires. But if they don't bring in anybody, It's hopeless to go from 5 to 10, right?

Yeah.

Okay, rambly answer, but hopefully there's enough in there to be helpful.

That was really helpful, thank you. Can I ask about the VP of customer success?

Oh yeah, real quick, then we'll do one more. But look, I've written stuff like when the ideal time to hire VP of customer success is, but the real truth is you're too late at $5 million. You have too many— how many customers do you have?

Well, we have self-serve and enterprise.

Yeah.

But about 22,000 in total.

And you don't have a VP of customer success, so you know it's too late. You know it's too late, right? Yeah, you can hack it with self-serve and support and other things, but like the real issue today, so look, you can't actually hire a head of customer success too early per se. Here's the problem in today's world, right, which has changed is so many folks aren't willing to do any work anymore. The problem used to be everybody wanted to be senior, but now most VPs, you know, even 5 years, 10 years ago, a VP would come in and actually do sales or do support or do marketing themselves or set up HubSpot themselves 10 years ago. 5 years ago, they would do a little bit of it and hire them. Today, everyone wants 8 people. Everyone, everyone that has 3 years of experience wants 8 people on their team. Okay, I'm a marketing manager here. I'll be your VP, but I need a head of content. I need a head of demand gen, I need a head of growth, I need a— What are you gonna do? So the real problem with customer success is finding someone that will do any work themselves these days, and that can mean different things in different functionaries. The problem in CS is folks that won't do the work all want to do process and systems. Now you will get big enough in CS where everyone knows your brand and everyone knows your product, and your CS team do not have to be cutthroat product experts. It's true. It's a weird moment in time when they don't have to be product experts, but usually even up to $20 million ARR, your CS team have to be product savants. They're fixing feature gaps. They're tweaking things that don't quite work. They're doing hidden settings. They're fixing your admin tool. They're finding this rogue consultant that kind of gets you to integrate with HubSpot when it doesn't quite work. They're fixing a webhook or an API call that's sort of undocumented. And the best ones are these gurus, right? They're gurus of your product and When you hire a too senior VP, they just want to install software and hire a team and it just fails. So that's who you can't afford. You're not big enough yet, right? So, but make the hire, but make sure they're a product person today, right?

Got it. Thank you so much, Jason.

Thank you. Good. All good? Okay. Thanks everybody. Thanks for coming. I think we have happy hour till 6. 6.