The Godfather of SaaS: 10 suggestions for myself when I started my business
1. Be patient when looking for co founders
I have been patient in looking for co founders or VPs, and sometimes I have been impatient. Whenever I am impatient in this respect, I always make big mistakes. In many entrepreneurial processes, whenever I am very patient in looking for a co-founder, I can find a very excellent co-founder. We have the same values and driving forces, and we can complement each other in skills. At this time, we can always overcome the obstacles in the entrepreneurial journey and accomplish those seemingly impossible things. However, although some of the co founders have strong personal abilities, our views and ideas are inconsistent, which will make it difficult to carry out a lot of work. You can't wait for the perfect co-founder to come to you. Give yourself a few months to try to find a really good co-founder, a co-founder you really trust.
2. If a good takeover offer is received, selling the company is a good choice
Generally, there is no reason why you should not accept the first decent takeover offer and cash out. In order to start a business, you have spent all the money in your personal bank account. At this time, if you can get 2 million dollars, 5 million dollars or 10 million dollars by selling the company, it is too important for you. At this time, whether to earn 2.5 million to 10 million dollars or 50 million to 500 million dollars, there is not much difference. With the money earned from selling the company, you can take better care of your family, do what you like, live in the way you like, support your children to go to college more easily, buy a house, and travel around the world. You don't need to continue taking risks, and you may end up with nothing. The first startup company I joined was later sold at a price of $1 billion, and my book assets at that time amounted to $12 million. Because I didn't cash out in time, all my assets evaporated a few months later. It took me several years to recover, and several more years to finally overcome it.
Therefore, if someone is willing to offer a very decent price to buy your company, you can accept it. Unless you can clearly see the future of the company that others cannot see. As a newcomer to your first venture, your risk is actually very high. In order to start a business, your bank account balance may be zero or even negative. You have invested several years in this entrepreneurial project, and you have no alternative plan other than this entrepreneurial project. After several years of hard work, you have finally achieved millions of dollars in revenue. At this time, someone is willing to buy your company at the price of 10 million dollars, 20 million dollars or 50 million dollars. At this time, it is recommended that you accept the other party's acquisition. At present, there are no more than 100 acquisitions of this scale in the world every year. As the purchase price rises, buyers will only become fewer and fewer.
In this case, any rational person will advise you to accept the other party's acquisition. Usually, only when your company is operating well will someone be willing to pay a higher price to buy your company. You are the founder of the company. Do you know that the company is more likely to be crushed to death by competitors in the future, or do you firmly believe that you will eventually lead the company all the way through the difficulties until the company becomes a unicorn.
3. If you find good entrepreneurial opportunities, go all out and don't miss them
Whether you are starting a company or doing a new big project, you must carefully collect data. Conduct customer research on at least 20 potential customers. Create a thoughtful product model. After the previous work, if you find that the project is feasible and worthy of full commitment, you should devote yourself to it and do a good job. In fact, everyone has very limited opportunities to discover a great cause, join a great cause, and create a great world. Of the 1000 start-ups, only a few can meet a good opportunity. If you encounter a good entrepreneurial opportunity, you must not miss it.
4. Double your investment in yourself
It took me a long time to realize this truth. If you are the founder of a company, the best investment you can make is in yourself. No matter what you invest in the stock market, start-ups or anywhere else, the return of your investment is not as high as that of your own.
5. Small markets can become big markets
Many people may tell you that your market is too small. Of course, the scale of this market may be relatively small today. When starting a business, you are either doing something new or changing something. Today, Salesforce's revenue is expected to reach $20 billion, and the company's market value is expected to reach $100 billion. This scale is far larger than the size of the entire CRM market when Salesforce was just founded.
Yes, many markets today look really small. However, as the market matures, some of these markets will grow in size. Other markets are Marc Benioff Steve Jobs, Bill Gates, Mark Zuckerberg and other founders redefined the market. You can do the same. Increase the value of the existing market by 10-100 times, and the market size can also grow to 10-1000 times.
6. Visit your customers, all your customers
This is the experience I learned in the process of founding my first company, but I forgot this experience in the process of founding EchoSign later. At that time, the order amount of each customer of the company was up to 7 digits. At this time, of course, you have to visit every customer in person.
In the later process of founding EchoSign, I didn't even visit half of the customers because the customer price was not so high and the number of customers was quite large. This is a big mistake I made. When EchoSign didn't develop well, I asked Mark Selcow, my former boss and entrepreneurial mentor, who is also one of the most talented sales leaders I have ever met. He is the founder of Merced System and BabyCenter, and is now the general partner of Costanoa Venture. I told him all the challenges and problems the company is facing now.
"What you need to do now is to visit your customers and potential customers quickly," he told me. At that time, I didn't know whether it was really useful to visit customers, but I didn't have any better way, so I had to follow his advice.
It's unbelievable. Facts proved that he was right. I have never lost a customer I personally visited. Customers have bought more products from us than before. Then we got more orders, and even companies like Google were won by us. It's amazing. It's that simple.
7. When financing, you must choose the VC you trust
As the founder of the company, in fact, I have made product Pitches to more than 150 VC institutions and obtained financing from several of them. But I really trust only a few VCs.
What does trust mean in VC? This means that you are free to do what is right for the company. VC doesn't need people staring at you all day long, VC also need not worry about your position, you need not worry about what kind of people they will introduce to manage your company. You also know clearly whether they will be willing to invest more money in your company in the future.
VC is crucial to many people. It is the driving force behind the success of many people's entrepreneurship. If there were no VC, I would not have achieved today's results. Therefore, the financing transaction should be completed as soon as possible. However, in the financing process, if you have a choice, you must choose a VC you can trust. If you need a certain amount of time to judge whether you can trust a VC, you should spend some time on it as patiently as you spend time looking for a co-founder. Don't worry. Even if it means that the upcoming TS will slip away, even if it means that you need to ask for an additional meeting with the VC to put this round of financing transactions at risk, even if it means that the company's valuation will be affected, it does not matter. It must take some time to find a VC you trust.
8. If you need to start a business, it is also possible to mortgage your house to pay your salary
When I tried to put my first startup on the right track, I messed up a round of financing, but I had to continue to pay my salary. At this time, a new investor consortium came in, but as part of the financing conditions, I had to guarantee 750000 dollars and the payroll of the next month (I know this sounds crazy, and I will not elaborate on why there are such conditions).
At that time, my total savings were only about $15000, but my wife and I had a house. Without telling my wife, I mortgaged my house and signed all the recourse loan agreements. This sounds crazy, but it's very effective. We paid our employees' salaries and successfully obtained financing. Twelve months later, we sold the company at a price of 50 million dollars.
Entrepreneurship is very difficult, really very difficult. This is an ordinary employee VP and other non partners will never understand. Sometimes you even have to mortgage your house for this. If your intuition tells you you need to do this, do it.
9. Diversified corporate culture is very important
The first startup company I founded is the most diversified company I have ever seen. Two thirds of the partners are women, and 80% of the top 10 employees of the company come from multicultural backgrounds, including those from Vietnam, India, Pakistan, Mexico, etc. Infinite diversity does bring infinite combinations.
Later, I entered a company that was not so diversified. But looking back, the lack of diversity may be the biggest obstacle to the company's not doing well enough, just like it was 20 years ago. Now I am working on the SaaStr project. We are trying to create as rich a diversified environment as possible for SaaStr.
10. After the company starts to gain a good momentum of development, let go of all the work at hand and concentrate on recruiting VP
On a more tactical level, if I can give a suggestion to myself when I started my business, the first suggestion is that once the company starts to gain a good momentum of development, I should temporarily put aside all the work at hand and concentrate on recruiting excellent VPs.
What I am good at is to form an initial strong team to complete seemingly impossible things. Now I have had three such entrepreneurial experiences. Several times ago, I felt powerless before the company's revenue reached 10 million dollars. After achieving a good momentum of development, in order to achieve large-scale expansion, we must recruit VPs, which I did very poorly in the past. This is the problem of the first two start-ups. It is precisely for this reason that my first two companies failed to become as strong as possible, and eventually they were sold. For the third time, I was pushed to the edge of exhaustion.
When the company's ARR reaches $8-10 million, if necessary, it would rather risk not completing a quarterly performance target, but also invest time and focus on recruiting all VPs (sales, marketing, products, engineering and customer success). When the ARR reaches 2 million dollars, you need to recruit 1-2 VPs. Otherwise, the company will not be able to achieve large-scale expansion, and you cannot be responsible for all the work.
