Anand Sanwal, CB Insights Co-founder & CEO: Don't Do These 68 Things in Your SaaS Company

Please welcome Anand Sanwal, CEO of CB Insights, to share his learnings on scaling to $10 million in ARR. Completely bootstrapped. Cool. Well, thanks. I sort of changed the topic of my conversations. Sorry about sort of false advertising. I have 74 slides and I have 22 and a half minutes. So we're going to get going. I'm going to talk about 68 things not to do in your SaaS company and hopefully some of them you'll like. We've screwed up a lot, so hopefully you'll benefit from some of our mistakes. All right, first, I'll give you some context. How many of you get the newsletter? All right, if you didn't raise your hand, please go to cbinsights.com newsletter. All right, so, you know, kind of just to set the stage of who we are. So technology is eating every industry. You guys have heard the software is, you know, eating the world. Maxim. So similar. And we aggregate lots of data on VC patents, media attention, etc. And try to predict where technology is going. And we sell that to generally large enterprises. So think of us as like a Google Salesforce McKinsey. If they had a baby focused on tech, like, that would be us. A lot of great customers. We get a ton of press attention. This is our employee growth. So we were. We bootstrapped to 66 and then we sold out and raised money, raised 10 million. We haven't touched any of that. Now we're at 110 actually. And because nobody likes revenue, they like to talk about venture financings. This is our revenue in terms of whether it would be an angel seed or Series A round, because we think people seem to care more about that shit. So this is our revenue from last year. We've grown by 100% plus every year for the last three years. So. So yeah, we've raised 12 funding rounds and I'm hopeful that TechCrunch or somebody will cover us. Finally, this is me. If you want the slides, I guess they'll be giving them out, but if you want them, just tweet at me. Please don't email. Tweet at me. It'll be a lot easier. All right, context. Who will this be useless for? Entrepreneurs, People who believe VC is required to build a business. If you can't grind or if you sell a $9.95 a month SaaS product, it's just not that that's bad. It's just we sell a more expensive product. So I think some of our lessons won't be as applicable there. So Just context. So number one, you know, don't take advice from non customers. I'm not going to spend a lot of time on each slide because I got 70 more to go. You know this is a big one. We've had people who are killing it on their sales quota but who were just dicks and we had to fire them. You know they were inappropriate. So you just get rid of those people. Even if it hurts your bottom line, it'll be good for culture long term. Don't fall in love with pedigree. I think we are generally a company of misfits. We don't have. Maybe we have a couple ex Googlers now but in general like we're just scrappy. So don't get enamored with that nonsense. This was really important. There's a great article and I should have linked to it here. It's on first round review about the importance of onboarding new people into your organization. We used to just give them a laptop and say hey go to it. Now we spend a lot of time on onboarding. They say that people make a decision about whether they're going to stay at an organization we within the first 30 days and I'd say it's probably in the first week. So make sure you really get people acclimated in the organization. This is a challenge as you scale if you're the first 10 people. I think somebody who's joining in the first 10 knows what to expect. Don't over engineer it. At that point I'm going to hammer this theme. So I have 68 of these. This one you'll see a lot. This is nonsense. You don't have to raise venture capital. So that whole pitch is great for the VC industrial complex. Revenue is the best funding ever that you will get. It is the cheap, it is the best validator. Go for that. Second when we have had competitors that have raised money and then we get lots of calls from VCs saying like oh so and so raised. You guys should probably raise. You need a war chest or some other nonsense. You know again just because somebody else. If you want to raise, raise because it makes sense for you to raise not because some third party did. Do not let them do this. This is such garbage. So you know lifestyle business is sort of like oh you're building this cute little business like you can revenue fund a beast and Mailchimp and Atlassian are examples of that. And so I think that's increasingly gonna happen. If you look at I think the seven billion dollar exits that have happened recently, in the last six, eight months, three of them were bootstrapped. So the narrative that you need to raise a bunch of money and own the market and whatever is kind of not real pr. So when we raised money, we tried some things we wouldn't have done as a bootstrap company. We hired a PR firm, we fired a PR firm. It's good for certain things. I don't think it's in our experience and in talking to other founders, it's not good for getting customers. It's great for hr, it's great for recruitment, it's great at getting the team riled up, but especially early, I think do it on your own. People in the media wanna talk to founders, they don't wanna talk to your agent. So don't waste money on pr. If you're in a niche, if you're targeting the insurance sector, get coverage in the insurance trade. Rags people. UnitedHealthcare aren't necessarily reading TechCrunch. So go for the places where your customers are. I repeated that one. I'm bad at this. I get fixated on when we lose and it's not a good thing for the team. You just gotta let them kind of rub off your back. In the beginning, we were extremely promiscuous about the market we were targeting and that's actually helped us. So I would say don't be fixated and don't think you know the market you're gonna be attacking. We thought we were gonna attack a certain market. We ended up going after a very different one as a result. So, you know, be open minded to feedback that said, don't be promiscuous forever. So now we know that sales teams are not a market we're gonna go after and so we don' that. So we've now kind of, once we've found the right market, you have enough data, pick a market and then just go flood the zone on it. Did a lot of this. You're like, oh, we're going to hire this really smart person, we'll figure it out later. And then generally smart people get frustrated because they don't have a lot of structure around what they're doing. I shouldn't say structure. They just don't have a lot of context. So give them clear goals, give them clear priorities. Don't hire under pressure. So we're way behind our hiring goals because we're just really anal about who we're going to hire. And, and every time we've said, hey, we just need somebody in that position, maybe this person Will get better. Maybe they're not like annoying. Hire them. They always end up being annoying and they always are terrible. So don't do that, don't fire slowly. This one's like this. Hire slow, fire quick or whatever. Yeah, I think I got that right. Yeah, it's really hard. It's great advice. It's great for medium blog posts. You know, like these are people that you're going to potentially put out of a job. Like so it is, it's try to do it. It is hard. So you know, don't be like a Terminator about it. This. I was talking to a friend of mine here out in the Valley and he's like, yeah, I'm at a three person startup, I'm the cto. My other co founder is a coo. And then we have the CEO. I was like, what are you guys doing? So the problem with this is like it sounds good like to be the cto, but you know, once you scale like you might not have the skills to be a CTO and then you're going to get demoted and whether you're like, oh, I'm cool with that. But you know, when everybody knows like, oh, Joe's no longer the cto, we've brought in this person who's like scaled companies like, you know, Joe doesn't look great. So I think be careful about the titles. You know, I would try not to over promote on the titles. We were terrible at this for the first like three years I did payroll by hand. Like not a good idea. So you know, outsource the non core stuff. Find good expert advisors. That said, expert advisors don't always turn out to be expert. Like you should fire them ruthlessly as well. They are vendors, they should deliver their service. If not, say bye, you know, don't follow, like whatever the soup du jour of the software world is. So, you know, Slack's hot, Dropbox was hot, Evernote was hot. We should do what they do and you know, badges or whatever is like the thing. So, you know, everybody's super smart until they're not. Like you have to do what's good for you and not what is popular. You know, again, if you go back to my earlier point, if you're trying to raise vc, like sometimes doing what's popular is good. Like if you're in this room and you want to raise vc, my biggest piece of advice right now is to sprinkle AI into your pitch deck like hell. Because you will get funded way, way quicker. You know, don't believe sort of the growth hacker like advice. There's a lot of great skills that you can learn there. You can't hack your way to like $100 million revenue business. Right? So this morning somebody reached out to me and was like, hey, I Love your newsletter. 235,000. Like, do you have any tips on how we can get there? I'm at like 9,000 and my boss wants me to get there by like in 18 months. I was like, I don't, like, I don't think it's, there's a great way to do that. I don't have a trick. We've been at it for five years there and we finally got there, but there's no trick. You know, we're sort of a five year overnight success. You know, back to my VC point. Money buys you time, it doesn't buy the ability to execute. We've had multiple more well funded competitors come into our space. They all die. They just, you have to be able to execute. It buys you time, it buys you some hype, it buys you some, you know, creates some noise amongst your, your employees potentially. But you know, it's not the metric for success. Don't only celebrate your big wins. So, you know, I think there's a challenge here where sales often is what you celebrate, but there's lots of other things that are worthy of celebration. Small, small and big. And make sure you do that. If you have a gong or whatever ritual that you might use, like make sure that everybody in the organization is ringing that or hitting that or whatever it might be. Do not sell to startups. If you're selling to startups, please, like, for the love of God, don't do this. They are the worst market that you could imagine for SaaS. It is the definition of sash hell. They die, they're cheap and they churn quickly. We tried this in the beginning and it's just the worst thing ever. Don't be the lowest priced product in the market. I think if you're competing on a price vector, it's a very tough place to build a big company. You have to find some other value that you're going to, that you're going to be, that you're going to be successful on. Don't get cute with pricing. So we put up this insane stupid pricing at one point like, you know, and people are like, oh, what's the difference between town car and limo? And we're just like, we're laughing on the phone like, I can't believe we're having this conversation. Like, have Just don't try to be cute. Right? Like, nobody's gonna see this. You know, I think we saw something on Hacker News once and we were like, oh, that's such a cool. Like somebody who's like a Doberman and like a bulldog and we're like, oh, that's so creative. And like, enterprise people will love that because they'll just be like, oh, you guys are so avant garde. And it's like, no such garbage. Yeah, so don't do stuff like this. Like, don't be cute on your pricing page. Just like have pricing and mean normal. You know, don't be afraid to ask if your product sucks. You know, if you get a conversation with somebody like they want you, unless they're just a horrible person. Like they want you to succeed and they've taken that meeting because they want you to solve a pain for them. But you have to be honest with yourself and get feedback. And if they're like, this isn't the right direction for us, understand why. See if there's something that you're doing is better. We, we kind of dodged a big bullet by asking lots of questions and we're going to go down this path that I think we'd be dead if we went down. And a lot of it was because we kept asking like, why do you hate what we're doing? And they were honest about that. I do this, you shouldn't do it. You know, I think in the beginning, like technical debt, you are going to have it and that's part of early stage. You should have technical debt. Like if you're trying to over engineer your tech stack in the beginning or you know, you're trying to like do whatever is like the hot new technology. Like you're just optimizing for the wrong thing. So, you know, in the beginning revenues is greater than technical debt. As you start to scale, you do have to pay down that technical debt. And like that's where you know, we're at now. But I think that that's something you do later if you're in enterprise especially, like, you have to realize like people that you're selling to are people. And they don't just talk in, they're not like at home talking like synergy. Like, you know, they don't like, that's not the way people talk. Like that's just, you know, corporate nonsense. So talk to them like people and you'll like, actually, I think get out from the noise. You know, for those of you who a lot of you submit your data to CB Insights, like when you do it, please, if you're like six people, don't say you're like world leading, right? Like you know, like you're not right. And don't say you're best in class. Like just say what you do and be normal. That would be really awesome. You know, don't chase startup fads. So badges AI big data. So like CBI over time, we first were big data and VCs called us and like, oh, you guys are big data. We're interested in big data. And then predictive analytics became big. So then they'd call us like, oh, are you predictive analytics? We're like, yeah, I guess so. And now they're like calling us AI and we're like, yeah, cool. So don't do that. You have to train your biz dev and CS people. You can't just say like hey, listen to me, do some calls and pick it up. I mean you can do that and you'll have a couple of AES who are really good who will get it. But if you invest in training, like they will get, they will all get really good. If you've hired the right people, they want to get good, but they need to be shown how to be good. And so investing in training as you scale will help you. And if you don't, it will hurt you. Don't wait to hire customer success. Even if churn is low, just invest in that early, the one higher messiah. It's like, hey, this thing is broken in the organization. But if we get X, like they'll fix it. Like maybe they will. But if you bank on it, it's, it's a risky sort of proposition. Don't half ass reference checks. So like you know, somebody's been through the interview process. Like ask hard questions. Like we disqualify probably a third of people that have made it through the interview process at the reference check stage. Because we're just not getting the feedback that we need at the reference check at that part of the process. Meet with VCs only when you're ready to raise. Don't price based on the compass on the competition. If you are indistinguishable from the competition and price again is the vector you have to compete on, that's a problem. So think about that. Channel partnerships. We've had a bunch of people are like, oh, we'll distribute CBI and we'll do all these things. They've resulted in a grand total of $00. So it's hard to get somebody else motivated to Sell for you. You gotta rely on yourself. And I know there's people who've done channel partnerships very well and you look at Salesforce and Twilio and other folks, but especially in the beginning, it's hard to do and it's a very sort of specific set of characteristics that probably enable you to do that. When you're talking to customers, you're having a conversation, don't dominate that conversation, right? So I've done this where we'll be on a 30 minute call and I've talked for 28 minutes. Like that's pretty much a recipe for not getting that sale, right. So you need to have the, you know, whatever the right mix is. 50, 50, I'd say if you can have two thirds of the time the customer talking, you're in a good place. You know, early on. Don't try to delegate product management. Like this is what the founders and the early engineers need to do over, you know, as you get bigger, the product managers you can hire. You got to ask for the sale, right? I was, I'm not a salesperson and by training I'm a chemical engineer and a finance guy. So asking for the sale was a little uncomfortable. But nobody's going to give you money unless you ask for it. People who are like, oh, I don't have money but I want a partner, just run the hell away. Don't fear non scalable work. So elegant solutions are often not worth the time. And we're a New York City based company and I run into a bunch of our Valley peers and like the Valley guys love, they want to like use machine learning on like to get the data. Like they, you know, sometimes like for us you just have to get dirty and get in the PDFs and manually do the work and like that's the best way to do it versus looking for some elegant, you know, ML solution to everything. Don't focus on the competition. Customer night and day. Jeff Bezos, if you read his stuff on like why they only think about the customer, it's phenomenal. It'll take change your changer world. Just read anything you can find that he writes about. We spent so much time trying to get on the front page of Hacker News, I have no idea why we did this. Now it is such a colossal waste of time. Like the people who are there. Unless you're maybe selling developer tools, I'll give you that one market. Unless you're there, everything else is just vanity. And it's like, ooh, we're on hacker news. And then like, just, like the worst types of people sign up. Like, just. It's horrible. You know, I, my, my view is that you have to focus your innovation efforts on your product. That's the only thing to focus on. And I see all these people doing all these, like, cool things in hr. Like, HR has got. There's a little bit of science to hr, you know, and people are like, oh, we're super transparent. And like, you know, you can bring your dog and we send your dog on vacation. And like, what? Just, like, just like, pay people well, give them time off. Like, treat them with respect and then innovate on your product. Don't try to, like, be like, some innovation guru in hr. It's just bizarre, you know, when you think about perks, think about if the market turns and, like, the shit hits the fan and you can't, you know, you have to cut costs. Like, is that perk going to stay? Because the thing with perks is they become entitlements and people begin to expect them. And when you pull back, then they're not like, oh, yeah, it was a perk. Cool. I understand things are not going well. What ends up happening is like, hey, I really like that green tea. Why isn't that green tea available anymore? And then you're having a conversation about some stupid shit that you shouldn't be having. So hire salespeople only when you can sell it yourself. If you can't sell the product yourself as a founder or early employee, like, there's not, you know, it's back to the one hire messiah idea. You know, not all leads are created equal. This is kind of obvious, but in the beginning especially, you're so eager to get a sale. You're like, you know, hey, let's make it work, right? You know, like, you just want to. Like, you're desperate. Like, you just have to double down on the best ones and just understand who's not good. Don't try to please everybody. So, you know, you'll end up building sort of a. A generic product. So pick your market again is really important. This is just my personal one. Like, I don't know. There's a lot of personal brand nonsense. Like, you know, I think your employees see that when you're like, oh, I'm trying to, like, you know, you're positioning yourself to, like, well, if things don't go well, like, I've got a brand. Like, smart people see through that as, like, it's nonsense. Like, you know, build the brand of the company unless it helps you do. Unless Your personal brand is going to help you recruit people or get new customers. Customers or, you know, if it's going to be additive to the business, then sure, I tried to do this. You know, I like, thought I knew what a salesperson acted like, you know, like the guy who, like, does all that shit. And so I. And that's not me. So it's just those sales were horrible. Like, those demos were terrible. So be yourself. At the same time, don't ignore sales advice. There's a lot of wisdom out there. There's probably a lot that you've gleaned at this conference. So I think pay attention to that. And, you know, there's lots of conflicting advice, but don't think you know it all. There's definitely a lot of wisdom out there. This is something we're trying to do with our team is talk less about having a demo and more about having a conversation with a client. This is back to the idea of engaging and having sort of a dialogue with folks. You know, you try not to be a tool with buttons and features, but something that, you know, you're positioning yourself as more after you have that first conversation. Like, this is when, you know, I think you, we are myopic as founders. If you're founder in the room, that people really care about your product, like, they have other things to do. So you have to make sure you can make them care. And so it means adding value. After that first conversation, this is back to like the VC thing, right? There's this like Maxim where they're like, well, would you rather have like the whole grape or the slice of the watermelon, right? And it's like this, you know, you got to raise money because if you want a slice of the watermelon, like, who doesn't want to slice a watermelon? But you have to focus on the narrative that works for you. And sometimes the whole grape's pretty good. And I'm torturing this analogy. The media VC survivorship bias is really excessive. Most of your exits are less than $200 million. So Google and Facebook are freaks. This is exits, what they actually look like. The vast majority of exits are sub 200 million. So, yes, go try to build a billion dollar company. But like, the math is such. And you know, you know it is. This is the math. So pay attention to that. Don't always look for new channels. So we did this in the beginning. We're like, oh, let's put our infographics up on Pinterest. And like, that'll be amazing. Like, you know, chief innovation officers and CIOs are not looking for infographics on Pinterest, right? So it was just a waste of time. We realized that what channels work for us and now we sort of doubled, you know, double down on those pointlessly networking, right? So you know, if you're sending emails, it's like, hey, I wanted to pick your brain or I want to swap notes. Like just stop doing that. It's a colossal waste of their time and your time. I have become this. Last year I did 40 events this year I'm not going to do that. So this is, you know, conferences can be good, but like, you know, don't hoe it up too much. You know, flood the zone. So when you find something that works, like milk the hell out of it, basically. Like, if you've seen our periodic tables, like we found that work, like we will do a periodic table of anything now, right? Like that's, we know that, like people love that and like we'll just keep doing that. The newsletter works. Like that's all we care about. We're not, we're myopic in terms of what things we know work. And we're just going to keep doing those until they maybe we, you know, kind of use them up and they don't work. Oh shit, I'm out of time. Don't deceive yourself on the size of your market. This by Kristoff Johns at 0.9 Capital is like the best framework I've seen. Five ways to build a hundred million dollar business, you know, you know, you have to think about like, do you have. If you're selling a hundred dollar a month product, is the market big enough that you're gonna be able to get to 100 million again? I'm presupposing that that's your ambition, but if that is your ambition, this framework's really fantastic. You know, don't fetishize, fetishize failure. Like failure. It's, you know, it's one of the things that's remarkable about the States and the Valley in particular, that you can fail and come back from it. But like failure sucks. So like don't like be like, oh, I'll just learn something and I'll go on to my next thing. Like you should just not want to fucking fail, right? So that's what you should be working on. Don't worry about your name and logo too much. This is what we started with. So like it can't get. It cannot get worse. So we were the CB and cb Insights is chubby brain, actually. So that's, that's, that was us. So yeah, you're not going to get worse than that. Don't expect clients to tell you what product to build. So it's not their job. And I'd say generally clients give you incremental feedback, they don't give you the game changer feedback. So just be cognizant of that, you know, like they're not gonna just take you to the promised land. You have to understand them really well. Don't do feature demos. Nobody really cares. They wanna know what's good for them. Okay. I don't know if that was like my warning. Sorry. So, you know, this is a great illustration. You know, like people wanna feel that's what customers buy, right? They don't buy what to click around in your presentation. You know, don't ever forget what's in it for me? Like nobody gives a shit about your product. They care about what it's going to enable them to do. And I think this is my last one. Don't blindly follow this advice. There's no playbook. Anyone who tells you there is is a charlatan and or stupid. Some of this might have been useful. I hope so. That's it. If you want the presentation, email me or hit me up on Twitter. Do not email me. Thanks.