A lot of rules are just that — guidelines. You can blaze your own path. 1 founder, 5 founders. Bootstrapped, overfunded. There are many ways to get there.
But here’s my list of things I don’t think you should do, almost always, in SaaS/B2B:
- Committing for less than 24 months to get to product-market fit. Less is almost never enough in SaaS. You’ll run out of money, time, commitment and more, if all the founders don’t commit to 24 months to get to product-market fit. 12 or 18 aren’t enough. And yes, this is hard. More here: If You’re Going to Do a SaaS Start-Up … You Have to Give it 24 Months | SaaStr
- If you do raise capital, raising less than 125% of what you need. You always need a little more than you think. If you raise < 125% of what you think you’ll need, odds are high you’ll regret it. You almost always need a little than you raise. A little more here: A Quiet Plan B For When The Good Times Are a Smidge Less Good | SaaStr
- Starting without any real, true customer interviews. Folks don’t do enough homework in the early days. Internet research is not enough. Your gut is rarely enough. Early interviews won’t be magic — customers can’t give you perfect feedback on wireframes. But it will help you avoid a ton of obvious mistakes, of thinking things are true in a market that are only sort of true. More here: Planning to Do a SaaS Startup? Don’t Forget the 20 Interview Rule. | SaaStr
- Not paying up for the best VPs. The best VPs will rarely come cheap. But a great VP will be highly accretive. A mediocre one likely won’t be. Better to pay 50% more for a great hire that will do 500% more. More here: At About $2m in ARR, Every Great Hire Will Be Accretive. | SaaStr
- Not paying themselves — once the company can afford to. This is a subtle one, but once you have enough revenue to pay yourself, make sure you do. Otherwise, working “for free” becomes an excuse to not hit the plan, go 110%, etc. More here: In The Early Days, Don’t Forget To Pay Yourself, Too | SaaStr
- Handing off sales to their first sale hire and not be involved in sales anymore. This just never works. You will always be involved in sales. Forever. Your role in sales will just evolve. You will likely be more of a “middler”, dropping into deals, rather than closing or creating them. But you always have to spend a lot of time in sales.
- Not sharing bad news. This isn’t always fatal, but it does compound on itself. Your team, your investors, they can take it. They know start-up life isn’t perfect, nor a straight line. Hiding from bad news damages your culture and erodes support. More here: Handling Bad News | SaaStr
- Not getting out of the office. If you are a very low-end product, yes, maybe you don’t need to meet your customers and partners. But everyone else does. Go meet them. Get on a jet. Relationships are only built in person. Not a call, or email. More here: 10 Things That Would Have Helped Me Go From $1m to $10m Faster with Less Stress | SaaStr
- Not paying your mentors and top advisors. You are going to need a lot of help. A lot it. If you are lucky enough to find 1 or 2 folks that can truly be mentors — pay them. Some stock options, or whatever. But free help doesn’t last. You’ll get a long of free help, and leverage that. But pay the folks that help you more than once or twice. Or they’ll fade away. More here: On “Paying” Your Mentors and Advisors: The 2.5x Rule | SaaStr
- Not agreeing who is CEO. This issue fades away later, but few things will wreck a start-up more than not agreeing who is CEO. A little more here: Day 1: Who Should Be CEO? A Checklist. | SaaStr
(note: an updated SaaStr Classic post)