8 Dos and Don’ts for SaaS Startups3 min read
Many SaaS startups make mistakes in their initial years of doing business, and that sets a foundation for how they continue to do business. Whether you’re a founder, sales leader, or product specialist – everybody makes mistakes. But if you’re equipped with the right knowledge from the get-go, those mistakes can be avoided, to an extent.
Christoph Janz, Partner at Point Nine Capital, and Nick Franklin, Founder & CEO of ChartMogul, shared eight do’s and don’ts for SaaS startups, on the SaaStock stage. Let’s get right into them…
Don’t give away your product too cheaply.
It’s natural for founders to downplay the quality and potential of their product, because you know all the shortcomings of your product better than anyone else. It’s probably a mistake which most SaaS founders make, especially those that are trying to sell to bigger customers.
DO try to increase your prices. Companies spend millions of dollars on software, so double your prices. You don’t have a lot to lose. But if it works out, and in many cases it does work out, it can completely transform your business.
Don’t assume growth will be the same after your first year of business.
Just because you’re growing at over 20% month-on-month in your first year of business, you won’t necessarily be able to do the same thing in your second year of business. You can have high percentage growth rates, of course. But you’re starting at a very low base.
DO base your forecasting on net MRR increase, instead of percentage growth rates, to help you think about what you really need to do to achieve continuous growth. What churn rate do you need to maintain? How many salespeople will you need to hire? Think about those things.
Don’t reinvent the wheel.
Don’t try to build tools and processes that already exist. Today, we live in a world where you have AWS for your infrastructure, Algolia for search, New Relic for application performance monitoring, Optimizely for A/B testing, Stripe for billing, and the list goes on.
DO leverage all these great tools and all the work that others have already done for you, so you can grow at a much faster rate. You can still innovate, but don’t reinvent the wheel.
Don’t mistake latent demand for product-market-fit.
The initial spike you get after launching your product can often be short-lived. The product often needs to evolve quite considerably post that initial traction, in order to be addressable to a wider market beyond those early adopters.
DO understand the market dynamics of your product and the market, and before your growth plateaus, evolve your product. Evolve until you’re ready to scale up, and invest in sales and marketing when your product is truly ready to scale up.
Those are the first four tips on what to do and what not to do when starting off a SaaS startup, from Christoph and Nick. Watch the full video on our YouTube channel, for the next four tips from the experts.
Sign up to our newsletter
LATEST | POSTS
SaaStock Local Talks #4: interview with Rafal Muszynski [Harmonizely]
SaaStock Local Talks are interviews we at Brainy Bees carry out with people who live and breathe SaaS. Over these virtual coffees, we’ll discuss everything SaaS related. The fourth interview features Rafal Muszynski, CEO of Harmonizely. You are Rafal Muszynski and you are… the founder at Harmonizely. I’m a software engineer with 10+ years of…
Product Market Fit, with Matt Lerner
Matt Lerner, Founder & CEO of Startup Core Strengths, is this week’s guest on The SaaS Revolution Show to share insights on product market fit (PMF). Learn: What you need to think about as a founder to get to product market fit Why you need to focus the entire team on getting good at attracting…
How to Price SaaS with Paul Lynch, Chargify
You don’t want anything getting in the way of attracting new customers, especially not price. Many businesses focus a lot of their time, resources and efforts around their marketing funnel, around their sales funnel, around their general organisational charts. Pricing, specifically to win within SaaS, is under-invested. There’s no one-size-fits-all approach to pricing, but there…