The 6 Things I'd Tell My Younger CEO Self.

Hey, everybody. I wrote a Saster post a couple years back to summarize the six things that the old me, as I called it, would tell the young me. And in these Covid times, I updated it for today and I thought I would go over it. And why? Because I think one of the most important things after you hit, especially after you hit a few million in revenue and beyond, is mentorship. It becomes a playbook. The whole point of Saster is that it is a playbook that any, almost any SaaS company, a 10k, 50k, 100k, ACV, 500k, whatever it is, the products are different and technology does change over time, but basically they're sold, marketed and scaled the same way. And you can learn if your price point is the same as Aaron Levy's, you can learn from box, and if it's the same to zoom and has a freemium component, you can learn from Eric Wan. And we should. And so at the end, we all need mentors. And the whole point of Saster, in many ways, thousands of pieces of content, years of events, hundreds and hundreds of sessions and podcasts, is to be your virtual mentor. And that's what I needed. I needed my mentors to tell me a few things, to push on, to go further. And there were hundreds of things I wish I'd been told, and we'll try to tell you, but what are the six most important? What are the six things that I wish I'd been told? And the number one thing I wish that the old me, the current me, had told the young me, the young sassy o me, was that it's not as far away as you think. And I will tell you, at 10 million ARR, it felt like forever to 100 million. I went through the analysis of, gosh, we're coming up on 10 million. And boy to IPO, I said, we've got to get to 100 million or more, and that's going to take five or six years. And that seemed forever. It seemed forever when it took us five years to go all the way from nothing to 10 million. I wasn't sure I had it in me to do another five or six years to get to an ipo. And what if the IPO wasn't big enough? Or what if we came up short? What if we weren't quite growing fast enough anymore? What if the competition got us? What if Adobe killed us? What if the market moved beyond the relatively simplistic type of technology we had? It seems so risky to get to 100 million. And the advice I tell every founder today is no. If you get to 10 million ARR and you have happy customers, 40, 50, 60 MPS. And importantly, if you have high net revenue retention, if you're keeping 1001-101201-30140% of your revenue each year from your customers, you have something, you have profound product market fit. And if you keep those customers happy and you're growing it even a mediocre rate today you will get to 100 million. Now look, we all want to get to 10 million ARR tripling or at least growing 100%. 100, you know, get to 10 million ARR, to 20 to 40 to 80 to. We all want to grow a datadog and zoom rates. But you don't have to. It turns out you do not have to do the math in your head. Even if you get to 10 million AR and you're only growing 40%, that's more than enough because SaaS compounds, if you're growing 40% and you have 120% net retention of your revenue, you'll get to 100 million in five or six years. And if you get to 100 million in five or 6 years, another 5 or 6 or 7 after that you'll be at 300 million and you'll have a multi billion dollar company. I wish someone had said that to me. I wish someone had said to me, Jason, at 10 million AR, growing 100%, with 140% net revenue retention, you have an annuity. If you make your customers happy, whatever the numbers are for you, once you have that, once you have those happy customers at 5, 6, 7, 8, 10 million and even decent growth, push on. Because compounding takes time in SaaS. But it's a force of nature. And the related point, the related point that I worried as a Sassio back in the day and the cloud was smaller, but I worried, was our TAM big enough? Was our market size big enough? Well here's the thing, for most of you, your TAM is not big enough today the way you're doing it, your approach, your little segment of it, the area where you win. But our TAMs grow, especially if they keep our customers happy. Bear in mind, cloud is still growing over 20% a year. So if you just hang in there for five years, 20% will compound. Like even if you're in a 500 million dollar market today, in five years that'll be a five or six hundred million dollar market. You'll also grow your market share. Almost none of you have 100% market share. So hang in there and just grow your market share. If cloud grows 5x and your market share grows 5x, that's 25x growth just by doing what you're good at already. And then lastly, remember, for most of us, we'll grow our ACPs, we'll grow our deal sizes. In almost all categories, our deal sizes go up. Not all of them. We see examples like pager duty that we've looked at where deal size is surprisingly consistent. But most of us find a way to to add more seats, a bigger addition, to drive pricing up so that our deal size goes up 3, 5, 10x so you can grow your market 100x just doing what you're doing by riding the wave of the cloud, driving up your market share even if it's not all of it, just a bunch, and then growing your ACV over time. That's what I needed to hear is the power of SaaS will get you from 10 to 100 if your growth is even mediocre. And the next thing I worried about, and I know some of you worry about that, is what if we're not quite good enough? What if we're not a datadog? What if we're not an okta? What if we get stuck in the middle? What if our growth decelerates? And in 2011, it frankly didn't seem like there were a lot of options when I sold. But what I tell folks today, even in the crazy world we're in today, is that in SaaS today, there are so many other options. First of all, there are so many private equity firms like Vista and Insight and Thoma Bravo and others that that want to buy up every SaaS company with decent revenue retention. So many of the founders I started with at the same time didn't sell to an Adobe or a Salesforce or Microsoft. They sold to a PE firm for 50, 100, 200, 500, $800 million. And they offer an on ramp if you need one, an exit before the ipo, before having to build the decacorn. The other thing that you should know, and I wish I told myself this day, is that over time, if you build something big. So secondary revenue, secondary sales of shares take some pressure off. And what is that? Well, today, any SaaS deal, even today that's done approaching 100 million valuation, that's high, but that's where you'll get if you get to 10 million ARR, growing decently, they all have at least a little bit of the round set aside to buy some of the shares of the founders and that will take the pressure off you. And right before we sold our company, I was offered, we were offered a lot of secondary liquidity. And I said no at the time because I didn't understand it. But now I realize of all the options we should have taken it secondary liquidity gives you those other four or five years to not worry, to put some money away, not all of it, to sell 5% of your stock, 6%, 3%, 8% so that you can push on. So that takes some of the pressure off on the way to ipo. And the last thing I would have said to myself, and it seemed back then that between 10 millionaire and IPO there there were a few options. But what we've learned today is there's so many options. There are so many more acquirers in SaaS. So many normal companies, non tech companies want to buy SaaS. Companies, they all want this recurring revenue, they all want cloud revenue. And so the number of potential acquirers you can have will go up geometrically as you cross 10 million. Error as you have something real, something tangible, something folks can sink their teeth into. As your mini brand starts to become a brand, you will be surprised how many 10 billion, 50 billion, 100 billion app companies just might want to acquire you. Maybe not tomorrow, maybe not this year, but eventually. So there are many more options between 10 million and all the pressure of ipoing and take some of the pressure off yourself, just get to 10 million, which is hard enough with positive north of 100% revenue retention, happy customers and not entirely, but many of the liquidity options will take care of themselves. That was the second question. The third thing I struggled with as a founder and I know some of you feel this, some of the companies I, I work with feel it, which is not wanting to sell all of my company, not wanting to work for the man, not wanting. I really, I had done two VC rounds and I just really did not want to do a third one. I felt like I would go back to my first startup where the VCs told me what to do and snap their fingers and I, and I had to do everything they said. I felt like it. I felt like I, I worked for them, not our customers, not the team, not myself. But I felt like I constantly worked for my VCs and in my first start, frankly a patronizing matter and what I wish I told myself is it's not so binary. And we turned down 20 million, $30 million as we approach 10 million in revenue from a couple of great VCs who I still work with today, we turned it down. And we turned it down not just because of the dilution, but because of the control. And what I, what I wish I had said to my younger self is it's okay, wait, just. VC capital is not binary. If you're doing okay, wait till later today. Yes, if you, if you sell a lot of shares early, you're going to give up control, you're going to give up board seats, you're going to sell a lot of shares. It's just part of how venture capital works. But push on. If you wait until 20 million in revenue, 30 million of revenue, these later stage VCs, especially if you're profitable or cash flow positively as we were, the expectations go down. They just want the shares, they just want the economics and they're okay buying less later, they might be okay buying 3, 4, 5, 6%. Do it. Atlassian did wait till. I wish I'd said to myself, do it. You can wait and do it. At lasting did. Not that we quite built Atlassian, but we had something good at lasting. Didn't raise until 300 million pre. They waited until they had a big business. Qualtrics essentially did the same thing. Others will do the same thing, I am sure. So if you don't need to raise, don't feel pressure to raise, the money will be there later. You do not have to give up all of the control if you don't want to pick your own journey is what I wish I told myself. The other thing that stressed me out is just as it was getting good, as we were getting to 10 million, as I worried, as we all do too much about the competition. And I didn't just worry for the standard reasons, I really worried we would get outspent, that our competition would just raise massive amounts of capital. Looking back, that was a valid worry. Certainly hundreds and hundreds of millions of dollars were raised by the competition. But you know what? So what? Look, it is stressful that money can be used. We've talked about dominant, dominant strategy. When you're big, you can raise a lot of money and you can start competing not just where you win, but you can start competing where you lose. You can put a whole team on categories where you're less competitive and win deals by brute force and rip them away from the competition. It does work. It does work. But I didn't get the magic of net Revenue Retention IPS. I didn't get that we were retaining 120, 130, 140% of our revenue at 10 million, just think about how that compounds over time. Just think about keeping your customers happy. Your customers do not want to switch, they do not want to go to another vendor. If they trust you, keep those customers happy. Think about the second order revenue. And if you're growing decently at 10 million in architecture, the competition cannot kill you. App Dynamics did not kill New Relic and New Relic did not kill datadog and et cetera, et cetera, et cetera. And Squarespace did not kill wix. And there's so many examples and there's so many categories today where there are multiple winners. There are. Mailchimp is a force of nature, but ActiveCampaign just crossed 100 million. Klaviyo crossed 100 million. So there are multiple nine figure entrants in email marketing and there may well be in your category too. Focus on happy customers. If your growth is decent, that's enough. The competition cannot necessarily kill you. And then the last point that, that really stressed me out quite a bit and I couldn't share with anybody, you know, as I approached 10 million is it seemed like everyone was doing better. And back then the SaaS universe was smaller. I knew Aaron Levy from Box and I knew David Sacks from Yammer, and I knew Peter Gassner from Viva. Those were the folks that I really looked up to for different reasons. And it seemed like as well as we were doing approaching 10 million, they were doing better. Aaron was always on TechCrunch and, and Peter Gassner and Viva. My jaw just dropped when I saw his numbers. And David Sacks seemed to be a magician that could recruit anybody and raise vast amounts of capital. And Yammer seemed to be growing so much faster than us. And they were Box, Viva and Yammer, which were my group, my peer group at Emergence Capital, my investor, they were all doing better than us, but it didn't matter. We were still doing great. We were at 10 million, growing 100% with 140% net revenue retention and cash flow positive. So yes, of course the other guys are doing better. You're not going to, maybe you're not going to be Zoom or Slack or Datadog or any of them, but recurring revenue is so powerful. I wish I told myself, don't worry, don't worry. Judge yourself in SaaS by absolutes. Judge yourself by how you're doing with growth, retention, nps, because recurring revenue is magical. And if you're hitting the trifecta, if you're growing fast enough with happy enough customers, enough recurring revenue, it really doesn't matter about the decacorns it really doesn't matter how well they're doing because you, your growth will power you there. And go long, go for a decade, because that's the magic trifecta. These are the six things I wish I told myself. 1. 10 million to 100 million in revenue is far, but if you're compounding, it's not too far. Push on, keep going. The second one is, what if we can't ipo? What if we're not that good Again, it's okay. There are more options on the way to 100 million than there used to be. 3. If you don't want to raise more money from VCs, if you don't want to lose control, then don't do it. Find another way then. The venture capital will be there in a year, it will be there in six months, it will be there in 18 months. If you're doing well. If you're doing well, it will be there with less control and less dilution. And then the last two. Competition. Focus on the competition. Worry about it. Only the paranoid survive. But if you're growing as fast as they are, if you have happy customers, they can't kill you. It's you that's going to kill you. And last the others, the others, the other peer set. Judge yourself by yourself in absolutes and SaaS. And the last point, the last point, and this is maybe the toughest of all, the last point that I. I talked to myself at 10 AR and I wish I'd had a mentor, which is a lot of my team was tired. We had very little attrition. We had the team together for years and it was hard. It was as hard as it is to build a SaaS company today, in some ways it was harder then because the markets were smaller than. My team was tired, My team was tired. And that happens to all of us. And the lesson is recruiting doesn't get any easier, friends. It doesn't. It's always harder. But you'll get better. And what I should have told myself at 10 million ARR is, look, if the team is tired, go find just one other great VP or a CEO or an svp. Just one. And what I've learned is one great VP that is great. Not okay or mediocre, but one great new addition can just re energize the team. They get it. They have years of experience, they want to win. But the daily grind wears us all out. In SaaS, the dials go back to zero. In Salesforce at the start of each month and quarter, it never really gets easier because because the bar goes up each year, we have to close even more and more bookings than last year, even with that net revenue attention. But one magical VP could just reboot everything. So I wish I'd hunkered down at 10 million even more and been an even better recruiter and found one or two VPs to re energize the team. That was the advice I wish I'd had. Go find a couple great mentors. Read more Saster Come to Saster Annual at home this year it's all digital. We'll have a thousand plus mentors and this was the advice I needed to hear.