The Top 10 Worst Pieces of SaaS Advice with SaaStr Founder Jason Lemkin

Advice is everywhere in SaaS these days, especially with the explosion of LinkedIn. There are hundreds and thousands of experts everywhere telling you how to do it in SaaS and startups, and it's great. And so many of these folks are incredible voices that we learn from. But boy, by the same token, there are certain consistent bits of just terrible advice that folks tell you again and again. And you hear this both from folks that haven't quite done it folks that maybe had rough experiences out there. And also you sometimes hear bad advice from the hyper-successful. Sometimes the folks that are so successful so quickly also can sort of give you wrong advice inadvertently if you're doing pretty darn good but not great. So I wanted to dust off a SaaS classic of the top 10 worst pieces of SaaS advice. And there are truths to these worst pieces of SaaS advice, and these are advice and thinking you'll get from lots of people. And I want to explore why at least in my experience, a lot of this seemingly good advice is pretty bad. Okay, number 1 is ask VCs for advice when you want money, ask for money when you want advice. This is terrible advice. There's a germ of truth in it, like a lot of this. Look, to some extent, if you have the hottest startup in the world, if you are the hardest, hottest generative AI company in the world today, if you have the full package, you can play some games with investors. You can tell them they have 1 hour to invest. You can tell them, you know, even though you're pre-revenue, to log into your data room and grab the data and make a— make an offer at $1 billion pre or more by Friday. Sure. But 99% of us are not that. 99% of us are pretty good and not great or unheard of or are outsiders and not insiders and don't have the perfect package and understand the way venture capital works. Most VCs only see a handful of companies per month that are truly great. And then hundreds that are almost, that are almost, that like there's a hint of something interesting in the email or the deck, but not enough to go the extra yard. No one wants to, has time to have coffee with all those folks and meet with all of those folks. So be clear, don't play games. If you, again, if you have the full package, if you check all 10 boxes, then be oblique, ask for coffee, ask for advice when you really want money and money when you really want advice, so you can kind of trick investors into doing what you want. But if you're very good but not obvious, put it all out there. Have the world's best cold email, the world's best deck, customer references ready to go. Don't play games on anything. Be clear on how much money you want to raise, when and why and where you're at. That will increase the odds you get a deal done. So again, my advice is for 99% of us, when you want money, ask for money. Tell investors you want money so that they know, so they can go into that mode. And if you want advice, you probably won't get it from VCs, but ask for advice. Okay. Number 2, and this is resonant on so many pieces of SaaS or content over the years. But trust me, the number 2 bit of terrible advice that you will get and that some of you will give is give the VP of sales more time. It never works, folks. It never works. You cannot always expect a great VP of sales to double sales in 30 days or 60 days or 90 days, although it does happen. But what you've got to see is progress in one sales cycle. You've got to see a couple good hires brought in. You've got to see improvement on some metrics. You've got to see like a big deal or two that was hanging out there brought in and closed. You've got to see things taken off your plate. If in a sales cycle things are not improving on several core metrics in sales, they never will. They never will. The best VPs of sales— and I know a lot of folks don't want to hear this and disagree with it, but it's true— the best VPs of sales hit the ground running. They already know the product or they learn it really, really fast. So they're not lost for a quarter. They bring in at least a couple ringers with them. All the best VPs of sales are constantly recruiting. Half the job VP of Sales is recruiting. So they know when they go into a new role, they've got to have at least a couple ringers with them, a couple great ones. So they always bring in a couple people and they always move out the low performers. Moving in two great folks, moving out the two worst always improves performance pretty quickly. Um, and, and they get great really fast. They know sales processes, they know objections, they know timings, they know FUD. So at least they bring in a few deals that are in the pipe to close faster. So more time does not make a VP of sales better. Now, more time may, may make a VP of sales even better. Like, you know, if you're— if you were hoping that they would come in and double sales and you just see a little bit of improvement, things are a smidge better, they're 10% better, they're 15% better, that often compounds. They may make 10% or 15% or 20% improvement in sales in one quarter and then 30% and then 50% and so on. So you can't expect epic improvement from your VP of sales. But if you don't see it in one sales cycle or less, you've made a mis-hire and you just got to course correct. Hey, number 3, this is, this is the biggest misnomer. And you got to bear with me because like a lot of this, there's some truth in it. But the number 3 worst thing I hear from founders, especially good but not great or even mediocre founders, or especially founders that have settled into slow growth or mediocrity, is we can't afford it. We can't afford it. We can't afford a VP of marketing. We can't afford a VP of sales. We can't afford customer success. We can't afford a VP of engineering. It's just not true, folks. The reason you're saying that is you've never worked with a great one. Now, listen, in the very early days, if you have no money, $500,000, $700,000 in cash, you maybe you can't afford it. Okay. You— there are certain— there are certain just base salaries you can't afford. But after even a couple million in ARR, you can afford any higher if they're accretive. Now, we've done this math on SaaS before, but I want to repeat it because almost every day I talk to some founder doing millions or even tens of millions of revenue and says they can't afford something. That is ROI positive. If you think you can't afford a VP of Eng, and let's say that VP of Eng wants a $250,000 comp package and you ship 2 more huge features that let you close 2 big enterprise deals, they've paid for themselves. You don't, you don't really want to pay up for that VP of Sales. But what if, again, they come in and instead of going from $2 to $3 million this year, you go to $2 to $3.5 or $2 to $4? They've more than paid for themselves and so on. Literally, once you've done it, once you've seen it, almost any 10x higher, almost any magical VC more than pays for themselves. And where they get expensive is actually where you go too junior and they can't own it. That actually costs you money. It doesn't save money. Or when you settle for mediocre or not great, then they, then they, then hires really do become a cost center. But I have never in SaaS, in B2B, with the high margins we have, with the recurring revenue we have, with the upsell opportunities that we generally have, I have never seen a great VP of any role— sales, marketing, customer success, eng, or product— not be accretive. You can always afford it. Find a way for the great ones And don't settle for the mediocre. And whatever you do, don't settle for the junior hire. Okay, point 4 that there's a huge germ of truth to, but it's also a terrible idea and terrible advice so many times that it's done wrong. Point 4 is let's add a freemium edition. Let's add a cheaper edition or let's go PLG. It will solve our problems. I, I hear this too many times. Going PLG is not 3 magic letters that fixes a broken business model. Freemium similarly is not a marketing strategy. Just adding a free edition does not magically give you millions of users to convert to paid. And going super cheap and super low end does not solve problems either. Tacking on some new PLG, freemium, low end initiative to magically boost numbers because you think it's cheaper than a sales or marketing led initiative is the wrong way to do it. The right way to do it is to say, look, things are going pretty well, but we're losing this segment of the market. We're going to invest and we're going to make freemium or PLG or a low end edition a top 3 corporate priority. We're going all in, folks. We're going all in. We know it's going to work. We have some data. It's going all in. That often works. And in fact, we are seeing more and more companies add freemium editions. Atlassian adding free, HubSpot adding free, Mailchimp adding free as 3 mature examples actually allowed their business to accelerate. So I'm all for adding a freemium edition, and I think it actually tends to make the product better because it has to be self-serve. I'm all for adding a low-end edition if you have strong organic demand. But, you know, freemium on its own is not a go-to-market strategy, and PLG is not a go-to-market strategy either. PLG— saying 3 letters of PLG and really just adding a crummy self-serve edition does not solve your problems. And in fact, all of this PLG stuff actually can add to cost. It can add to cost not only because there's more software to build, but if PLG creates a flood of low-end leads that distracts your sales team or distracts you from closing bigger and bigger deals, your cost of sales is often higher. If you look at the PLG leaders SaaS and cloud, they're wonderful companies, but the, the Asanas and the, and the, and, and the others, they're, they're, um, their cost of sales to marketing isn't lower than the folks that are purely sales-led. Okay, so it's great. PLG is great. Freemium is great. Super cheap is great, but they don't magically solve your problems, especially if you don't go all in. Okay. Number 5, which we kind of chatted about, but I want to hone in on. I don't need a real VP of whatever yet, especially VP of marketing. VP of Eng, VP of Sales. And look, you always do. I know it's slightly redundant with, with the— you can't afford it. They're related. But I've never, ever, ever, ever seen a junior marketer get you the leads that a head of marketing would get. I've never seen a very junior product person that can't manage engineers, that can't— hasn't really shipped significant product to market do what you hope a VP of Product does. It never works. The junior product person is your first product hire. Never works. The junior marketer might work a tiny bit. Maybe you get some tweets and some Instas, but you never get MQLs and SQLs and leads and the whole thing. You need the leader. You need someone that can own a number. Someone at $150K salary that will own the number, that will commit to getting you leads, commit to getting you revenue, commit to shipping features is a heck of a lot better than someone at $100K that can't really commit to anything because they haven't really done it before. Trust me, never settle low. Instead, aim even higher. If you think you can't afford, again, a VP of marketing, you're thinking of going for a junior hire or a marketing manager, don't worry about the cost. Instead, challenge yourself to find someone truly great, and you will find that person is cheaper than the junior person. Okay, 6th bit of— the 6th one is just a bit of hubris that I hear. It's a small flag, but it can scale over time, which is, oh, they're not a significant competitor. We beat them in every deal. When I hear that, that's a sign of a company that is delusional at some level, either a sales team or a marketing team, or that sometimes that's a little bit okay, but when I hear from founders, it's very risky. There's no way as a startup you beat Salesforce or Adobe or HubSpot or Datadog in every deal. Just slow it down. Um, what you really want to see as you scale is that your win rate goes down typically because you're getting into more markets. It makes sense in the very early days when you're feature poor, but you have one great 10x feature, something special, something no one else has quite figured out, that you will win for a very narrow ICP for folks that are doing a certain type of sales in a certain workflow, in a certain geography, at a certain size. It makes sense that you could win that market immediately. I mean, Shopify started with snowboard sales. I guess it was very good at that in the beginning. But, um, and so maybe in the very early days you really will win every deal because the prospects won't even bother with you unless this brand new vendor no one's heard of truly, truly solves a problem no one else solves. But after that, as you start to compete with Zendesk or HubSpot or Mongo or Datadog or whoever it is, you actually should start losing deals because of course you're feature poor. Of course you don't have everything that those leaders have. So when I hear that we win every deal, I just know it means you're not doing any marketing, you're not doing any marketing, and you're likely not doing any outbound in sales either. Outbound should be losing lots of deals as you scale. And marketing should be— that's a good sign. It will put pressure on your product team. It will put pressure on you to build more software more quickly. And eventually, you will go over that hump, and you will close— your win rates will go up. But they should go down as you approach $10 or $20 million, and then only tail up as you truly become a market leader. OK, number 7 of sort of things that folks say in SaaS that are terrible advice or terrible ideas are, let's not bother with RFPs. They're too much work and we lose them all anyway. Well, yeah, you probably will for a long time. RFPs, requests for proposals. As you go upmarket in enterprise, if you haven't done it before, a bunch of things will drive you crazy. First of all, you will need to do all the enterprise security stuff, the SOC 2 and whatever. I just spoke with a great repeat founder who built a billion-dollar company the other day in his new startup. He can't penetrate enterprise markets because they didn't do the SOC 2. Well, it happens. I mean, you got to do this stuff. It's a pain in the ass. And his engineering team and product teams don't want to do the SOC too. Well, that, that's life in the enterprise. And RFPs are part of it too. And requests for proposals will bother you in the beginning because they are a little bit rigged. Generally speaking, not always, not always, but generally speaking, when an enterprise vendor goes to the trouble to put together a massive RFP, one, they do it because they're required to, but two, by the time they get there, by the time they spent all the time to issue that RFP, they probably know who they want to go with. And generally it's the market leader. Generally it is the market leader. Sometimes they use the RFP as a cover to buy an emerging vendor because they need the backup to not choose the market leader. But I would say 8 to 9 times out of 10 in an RFP, the default vendor is likely chosen. But when you got into the deal, you didn't get into the deal for nothing. You do have a shot to— you will get better at them. You will start to figure out where you can win on the RFPs. 3, hire someone to fill them out so your sales team and engineering team don't have to do it themselves. You will eventually get bigger and you will eventually steal a deal on an RFP. You will steal a deal no matter what. It is part of going upmarket. Being compliant, doing SOC 2, doing RFPs are part of closing bigger deals and you just got to embrace them and get good at them. If you shrug your shoulders and say you lose them anyway, you will lose them all anyway. It becomes a self-fulfilling prophecy. Okay. 8-bit of a— this is more complaint than advice, or observation rather than advice. But boy, this one's dangerous when I hear from founders, early-stage founders, or even later. The leads are there. The problem's the sales team. And, you know, we hear that in the early stage, and we've actually heard that a lot the last 12 to 18 months. As in many SaaS categories, things have gotten harder. The leads are there, but the problem is the sales team. Now, look, I'm sure there's often a germ of truth to this. A mediocre sales team closes far, far less of what the average— what a great sales team does. We've written about it at Saastric. It's often at least 2x. A great sales team can close 2x what a mediocre sales team can, sometimes more. And a truly great rep can often close 9 to 10 times what an average rep can. It really is true. But here's the thing. If nothing— if you have leads and nothing's closing, nothing, it's not the sales team because those leads are good. They're coming in. They found something they like. At least some of them should be closing. And also, if, if the leads are fairly consistent but sales is plummeting, you got to understand why. Is it a soft miss and a hard miss? And a soft miss is when you hope to grow 20% faster than last quarter where you're increasing growth rate, but you're kind of short of where you hoped. Ironically, that's often true to the sales team. If the sales team can't grow, if sales team plateaus, that probably is a sign you need a VP of sales. You need to reboot things. A hard miss is when things— when the same— when things rapidly deteriorate with the same team. That's usually a market condition. And now I guess the meta point is a mediocre but consistent sales team with good leads will generate some revenue. So the leads aren't there. The problem is sales team. Sales is not always the solution. Marketing has to be great. Product has to be great. Okay. Number 9, this is one you hear from a lot of founders that there is truth in, but it's an excuse. It's an excuse to not go big, which is our market is too small. And look, of course, that's true. Everyone starts off with a TAM that is too small. I mean, Airbnb literally started off with air mattresses in people's homes and then it started off just renting a home, not condos and houses and what it is today. But here's the thing. If you found— if you have 100 customers, of course, you can get another 100. Of course, there's another 100 people in the world that will buy. If it's 500, there's another 500. So, you gotta stair-step it. There are cases where you absolutely outstrip your TAM. Most market segments, it gets hard to get more than, say, 10,000 customers in any market segment. If you look across all the public SaaS companies, most of them get multi-product well before they have 10,000 customers in any market. But the best founders find ways. They find ways to expand the surface area. They find ways to go more enterprise, more mid-market, to, to add more features, to add more things. A market is too small is both a truism, but it's also an excuse. There's always another customer like the one you have. Okay, point 10. And this one is slightly redundant with the earlier points of I can't afford it or, or I don't need a real one. But it's so important, which is just that we don't need a VP. We don't need a VP of sales. We don't need a VP of engineering, especially. We don't need a VP of product. We don't need a VP of marketing. We don't need a VP of customer success. Sometimes founders don't think they can afford a VP. And we just chatted about that. You always can afford it. A great VP is always cheaper than a mediocre manager for 50% less. But when folks think they don't need a VP, when especially they think they don't need a VP of product or engineering, I have this conversation with so many founders as they begin to scale. They say, I don't need a VP of product. I've got a junior product manager. I don't need a VP of engineering. My CTO can handle everything. Look, the reason you're saying that is you've never worked with a great one. Trust me on this. If you don't think you need any of the VPs, sales, engineering, marketing, product, CS, go meet with 10 great ones. Great ones. Because what you realize is the great ones just let you scale. You, you, a great, so many great CTOs that I love think they don't need VP of engineering. Well, how much time are you spending on code review? How much time are you spending refactoring the code base? How much of your time are you spend fixing old crummy code that you wrote or things that didn't scale. It's great that you know how to do that, but someone else can do that. If you're the CTO, go do the creative stuff, go build the next generation stuff that no one could understand. Bring in a VP of Engineering that can do all the, the, the routine parts of the job. The VP of Engineering, they can spend half their time recruiting and you will just fly. Similarly, I see so many founders that think they can be the VP of Product at $10, $15, $20 million in ARR. You can't. You don't have 50 hours a week to be VP of Product. And what happens as you come up on 10 or more, uh, ARR is that the product gets so complicated, the partnerships get so complicated, the way you mix up features becomes so complicated. You don't have time and you don't have time to follow up. And so you think you're this great product strategist, but I will tell you founders, as the product gets bigger and more complex, you get to be a worse and worse VP of product. There's too much going on. It's too complicated, too many workflows, too many customers using your product too many different ways. You can't keep shooting from the hip. So folks that don't think they need a great VP of product as they cross $5, $8, $10 million in revenue just haven't worked with a great one. Same with all of them. It's the insight. All of them, all of these VPs, a great one is always creative. And if you just don't think you need one, go meet a great one. They will almost always transform what you're doing. Good luck, everybody. Go forth and conquer. Get all the great advice. Just maybe listen to two different people on it and, and realize there's, there's so much out there. Understand where the biases come from and what it really takes to go big.