Practical Founders Blog
Every SaaS founder knows their valuation multiple numbers if and when they decide to sell their companies someday.
But what about the important factor of WHO YOU SELL TO?
Would you sell it earlier or not take the highest offer for a ...
Here are 11 things that will not change much in a software business when truly transformative AI superpowers are unleashed.
These laws of nature have existed for many years, well before we agreed on their names and usefulness.
1) PMF - ...
Most new founders have it backwards, believing you hire people to solve the big problems in your business.
But it rarely works to hire someone to solve a complicated problem you don’t understand well yet.
You need to understand it well ...
I'm speaking with the practical SaaS CEO Josh Turley at SaaStock USA 2025 in Austin on May 13-14. I will interview him about his scaled-up success story at RTA Fleet.
Josh has grown this business 10X in revenues since becoming CEO in 2015. ...
A new wave of AI-powered features and products is bringing back the word "magical" to software. This has happened with every new wave of tech since the beginning of PCs and Macs.
Remember how many times Steve Jobs said "magical" in his ...
Most SaaS founders dream about selling their companies and having the freedom to do whatever they want.
They surely get to do that after a successful exit, but few founders actually retire and stop working after a year or two out of the ...
I had a great time visiting three great SaaS founders in London last week. Simon Berry, Wayne Cartmel, and Scott Rowlandson are three UK SaaS CEOs in my Practical Founders Peer Groups.
In-person time still matters, even when you talk ...
AI can strengthen your established and practical SaaS business, even in your slower-moving vertical market. It's not all about about AI-first...yet.
Maybe you brushed off AI tech and ignored it. You've got plenty to do in your SaaS business ...
This month, I've been talking to growth equity, private equity, and buy-and-hold investors in B2B SaaS companies about their current view of AI in the companies they invest in.
Here's what they told me:
1) AI is clearly improving very ...
Most startups experiments don’t grow up into real companies.
Many startups fail outright, especially when they took on “Go Big or Go Home” VC funding. Most of those go home.
Dori Yona is co-founder and CEO of SimpleClosure, a technology- ...
The chart below says, "You should raise tons of VC funding and try to be valued over a billion $ by those private funders."
This chart also can say five other things that founders should understand.
1) There is a place for VC funding. ...
Vertical SaaS founders each serve different markets, fund in different ways, and have different goals and outcomes. Why should their SaaS benchmarks be the same as those at VC-funded horizontal software companies?
Are you a ...
Every practical SaaS founder I know works hard, takes risks, and does things normal people don’t do—for a long time. But how much of our successes came from "luck" as we define it?
Most things we do don’t work out so well, but some things ...
The biggest challenge for 90% of software companies isn't "building a better product." The biggest problem is getting new customers, revenue, and growth--reliably and efficiently.
The growth side of the business is what makes or breaks ...
Many smart people who leave their big corporate jobs to start a company don’t make it very far. Startups are just a very different sport than big companies.
It can take time to learn the scrappy new rules of the startup game, even if you are ...
If you have a product that solves a real problem but you struggle to get attention and convert customers, you have a marketing and sales problem.
Here are the 4 most powerful words that can help you increase attention, engagement, and ...
Thousands of bootstrapped SaaS founders have built valuable software companies that created serious wealth for the founders.
But few of these entrepreneurs started with the only goal of making that much money. It's an entrepreneurial ...
Growing from $3M to $10M ARR is almost the opposite game for B2B SaaS companies than getting to $1M in revenue.
It's so different that most sales and marketing team members who got you started won't learn the new game to scale. It's a ...
Profits are often underrated in software companies that are scaling up. Why run profitably if you could raise funding and grow faster?
Selling equity for growth funding can create a great ROI for founders. Sometimes, but not usually.
VC ...
It still needs to be said, even in the age of AI-first startups: The default case for 80-90% of SaaS startups is never to raise VC funding.
VC funding has always been the exception and not the rule in the software business. This isn't ...
Even highly successful software companies with huge exits struggle at every growth phase, experiencing near-death experiences similar to those that didn't grow bigger.
They just found a way to keep going and growing.
Brian Hamilton is one ...
It's a great time to grow a practical SaaS company that isn't "AI-first" and is all about VC funding.
Sure, AI-first companies are getting lots of attention and most of the crazy VC funding. Some will win big for sure, but most won't.
But ...
Half of the SaaS growth game is keeping your company alive long enough to try things that can unlock efficient growth.
Most software startups don’t succeed - VC-funded or not.
And the successful ones rarely get there in a straight line. ...
More people resolved to post almost daily on LinkedIn this January, as they did last year at the same time.
You can see it and feel it. This means there is MUCH more content on LinkedIn, but about the same number of people to see it.
AI ...
As companies grow, the role of the entrepreneur changes from scrappy founder to CEO of a much bigger team.
It's a different game that all founders can learn to play, if they want to take on the new responsibilities.
The impact of your ...
Product-Market Fit and Ideal Customer Profile are usually 25% customer demographic traits and 75% behavioral and belief traits.
Many founders don't learn this until too late.
The first cut of PMF and ICP are demographic traits, of course. ...
Why sell your software business if it's wildly profitable AND you still love building great products for your customers every week with your amazing team?
Jason Fried is the co-founder and CEO of 37signals, makers of the popular Basecamp ...
Tech-enabled services companies are a lot like a SaaS business. Many of them evolve into software-first companies with extra services.
They have recurring revenues with MRR, CAC, LTV, ACV,, churn, and net revenue retention metrics.
They ...
I helped a stranger with directions on the slopes in Park City yesterday when he said, "Wait, do you have a podcast? I recognize your voice."
It turns out it was Jeremy Clarke, one of the amazing SaaS founders I have interviewed on my ...
Here are the 7 Stages of SaaS Churn, when you build a successful and valuable company:
1) Churn and Burn
When you start, the first thing you do is sell your crappy early product to those who will pay you.
You learn very quickly which ...
Most tech services entrepreneurs who try to build a new software product business don’t reach SaaS nirvana, with a growing recurring revenue product business that is worth much more to the founders.
But this services-to-software shift is ...
Growth equity and private equity sound similar, but savvy SaaS founders need to understand several fundamental differences.
Yes, they both raise funds from investors and then invest in practical SaaS businesses that are growing steadily and ...
SaaS is dead! SaaS is back! VC funding is down! Now it's up!
These headlines get the clicks, but there are only two reasons SaaS founders should pay attention to these trends.
1) You're serious about selling your company in the next 6 ...
If you still love working in and on your business every day, would you sell it when it grows and becomes more valuable? Why not "Build and Hold?"
Most practical SaaS founders love what they do, despite the long hours and the hard ...
I asked more than 30 practical SaaS founders about the progress they made in their businesses this year, starting with the question:
What was your revenue growth rate in 2024--and how do you feel about it?
Practical founders are building ...
Big VC funding is the most expensive growth capital on the planet when your company has rocket-ride growth that requires rocket-fuel VC funding in exchange for equity.
There are more practical forms of equity funding from angel investors or ...
This bootstrapped SaaS startup took 5 years before it started growing steadily every month. Five years after that, the founders sold it for $300 million.
SaaS startups also take time and crazy effort to get moving before growth starts and ...
I can judge the experience level of a startup founder or investor by how they use SaaS benchmarks.
Newbies learn the general metrics and averages; experienced founders go much deeper and find their own way.
The great thing about the SaaS ...
There is an active crowd of founders with side gig SaaS startups who are winning the fast-start, fast-flip game in their own terms.
Troy Munson was a successful enterprise SaaS sales rep for several years, but he wanted more control over his ...
This week I met a founder of a SaaS startup who asked me, "So you can build a software company without big outside funding?"
My first thought was, Uh oh. He's going to get in trouble fast.
I'm not against VC funding or VCs.
I'm against ...
Product-led growth (PLG) in SaaS sounds simple, but it’s much harder than it looks to succeed and grow faster with the product doing most of the GTM work.
Product-led growth is not new in software, but the PLG term is new. There have always ...
Most VCs have moved on from "traditional" B2B SaaS companies and are focused on AI-first companies.
It's nothing personal; it's simple math.
Most B2B SaaS companies will not double revenues yearly for the next 5-10 years, even if they add ...
When SaaS founders win big on their exits, they have these things:
A growing business that will be worth more next year.
A sustainable and profitable business, so they won't run out of cash.
Multiple offers from buyers to choose the ...
The acquisition game is very different from 10 years ago now that private equity investors or PE-owned strategic buyers lead 70% of SaaS acquisitions.
Most SaaS founders aren't thinking about the new realities of eventually selling their ...
SaaS product startups are often created out of service businesses.
It's rare for an experienced product builder to create a successful services business. But it happens.
Last year I interviewed three-time SaaS founder Matt Watson on my ...
Private equity buyers (and PE-backed strategics) are the most likely home for your SaaS business, if and when you try to sell it.
PE buyers now make up 70% of all software company acquisitions.
This change started to grow 10 years ago and ...
Savvy entrepreneurs tell you not to just “Build It and They Will Come” with your software startup.
But once in a while, very rarely, this product-only strategy actually works.
Word spreads so fast that you don’t need to invest any time or ...
Don't feel bad when someone tells you your startup serves "just a niche." It's actually a compliment.
Everything is a niche of a niche...of a niche.
This is an old put-down in startup-land, especially from institutional investors ...
In modern SaaS, TAM is overrated and TIME is underrated.
It's about time we started talking about TIME > TAM.
What's your TAM (Total Available Market)? That's generally an investor question.
How big can this business get?
Can ...
Raising VC funding is not very common. And it's very expensive for founders, but...
There’s something that many SaaS founders miss by not having experienced investors:
Help from expert advisors who are very committed to you and your ...
Should I sell my "Rule of 40" SaaS company sooner or wait a few years?, a founder asked me last week.
Here are 10 questions I asked him before I shared my thoughts:
What is your current revenue and growth rate?
How confident are you ...
SaaS founders stay on about 10% of the time, just two years after they sell their companies to private equity investors or strategic acquirers.
That's what I've seen and experienced in hundreds of transactions over the last twenty ...
I spoke at the Tidemark VSaaS Collective Live event in San Francisco last week. Over 100 vertical SaaS founders came to learn from each other and meet their peers.
Here are 5 things I learned at this event:
1) Some vertical SaaS companies ...
People have been sending me "SaaS is Dead" articles and posts almost every day in the last month.
That makes for better clickbait headlines than the real truth that "SaaS is Changing, and It's Complicated."
Here is how I see it this ...
Profit is profit, right? Not in the software business, where all profits are not equal.
Here are 11 different definitions of SaaS profit used this year in SaaS:
Dream Profits - If we grow fast enough and throw enough money at it, someday ...
Vertical SaaS used to be a sleepy and scrappy corner of the entire software market, but now, about half of all software companies are industry-focused.
They don't create many billion-dollar companies we know about or attract monster VC ...
Twenty years ago, it was really hard to build software, but it was relatively easy to find open markets with people eager to buy from you. It’s the opposite now.
It’s much easier to build software now, but it’s more difficult and expensive ...
Most new SaaS founders don’t realize the bottom of their revenue funnel isn’t selling new customers.
Sales is important, of course, but it's just one step in the revenue system that creates the most efficient growth and highest value for ...
How are SaaS companies growing when top-of-funnel tactics that worked last year almost don't work at all this year?
More content, outreach, and spending on sales and marketing have less effect in this year's explosion of automation and ...
One of the most common ways practical founders get into SaaS is by creating a software product business out of a service business.
But it’s harder than it looks to try new and risky things when you already have a steady and successful ...
The most common conversation with a new software founder starts with the question, “What should I do about _____?”
I reply, “There are several ways to do it. It depends on what kind of company you are trying to create in 5 or 10 years.”
...
What's the weakest link in your SaaS revenue growth chain?
Where should you focus first to have the most efficient impact on revenue growth?
Growing revenue isn't simple or obvious or just one thing. Otherwise, every company would grow ...
One of my favorite SaaS CEOs is hiring her first VP of marketing after years of successful growth and success.
This is the best senior marketing leadership opportunity I have seen in years in SaaS--for the right kind of marketing ...
It’s better to have a smaller slice of a bigger pie, so you should raise as much VC funding as you can.”
The “bigger pie” pitch is a popular closing line in the funding game. C’mon, kid, bet it all. It’s what serious founders do.
When you ...
Last week, I hosted 25 SaaS CEOs at our first Practical Founders Summit, which lasted two days in Phoenix.
It was awesome to meet in person with Practical Founders Peer Groups members after meeting monthly on Zoom to work on their businesses ...
Practical SaaS founders who defy conventional startup wisdom usually win bigger with much better odds.
They do the opposite of what their startup ecosystem echo chamber of investors, experts, and peers tells them: there’s only one way to do ...
This year's headwinds of slower growth and reduced VC funding for B2B SaaS companies have created an opportunity for serious SaaS founders who didn't raise institutional funding:
It's easier to hire best-fit executive leaders to help your ...
SaaS pricing can be easy when you start, but it’s always more difficult to manage as your company grows. Pricing improvement decisions get complicated quickly.
When you are starting, you need to get in the price range that makes sense to ...
For every product or service we can’t live without now, I’ll show you there was a time when it didn’t exist. Someone made it up when it was uncommon and “crazy” to imagine it.
In the early days of every startup that grew up, there was always ...
Many new SaaS CEOs hope for a magical SaaS executive hire who will fix their major problems in sales, development, or marketing next quarter.
Unfortunately, expensive exec hires don’t always work out so well.
Experienced software CEOs ...
Vertical market SaaS companies are great businesses with efficient customer acquisition and sticky solutions. But a single industry focus can also have speed bumps that must be managed well, or you'll get stuck.
Here are the five most common ...
When my son graduated from university with a degree in electrical engineering in 2017, he didn't join a big company for his first job. He created a tech startup with a friend.
For the next few months, his friends and his parent’s friends ...
30% average annual revenue growth is healthy and sustainable for most bootstrapped SaaS businesses, but it's a nightmare if you have raised big VC funding.
Here's why:
Many B2B SaaS acquirers consider a 30% growth rate with some profits ...
The biggest change in the exit game for practical SaaS founders in the last five years is the rise of the partial exit.
Partial exits are so common today that we forget that software founders almost never did this ten years ago, and when they ...
When pre-revenue SaaS startup founders ask me, “Do you think this is a great product idea?” my answer is always the same:
“I don’t know. And neither do you.”
My opinion of your customers’ problems and the usefulness of your software ...
About half of the 40 SaaS founders I work with have shared that they are getting tired and can't shake their grumpy moods as quickly.
Is this a mid-summer dip or something deeper going on?
Here are the top reasons I hear that founders are ...
Being the CEO of a growing SaaS company can be lonely, even with 15 or 50 employees.
This is especially true when the company is bootstrapped or lightly funded without big VC funding.
VC funding comes with board members, big lawyers, ...
When you don’t raise big VC funding, you get to do it your way and succeed on your terms. No two founders do it the same way.
And here's yet another way to do it, in episode 100 of the Practical Founders Podcast.
Erin Fletter is one of those ...
When will high valuation multiples come back to B2B SaaS acquisitions so I can sell my company for the highest premium?
Two CEOs with B2B SaaS businesses almost to $5M ARR asked me this question last week.
They remember the boom time with ...
SaaS CEOs who grow past 40 employees have to learn how to hire and lead senior leaders who will help their businesses grow, not just the junior leaders who got them up and running.
Senior executive leaders differ from junior leaders regardless ...
The folks at SaaStr asked their LinkedIn audience, "If you had to do it over again, would you raise more or less venture capital?"
42% of respondents answered, "Neither - I would bootstrap my company if I did it again--with no VC funding at ...
I spent five days in the SF Bay Area with B2B SaaS founders, funders, and senior software engineers. The talk is all about adding GenAI and LLM features to software apps, but they were unclear exactly how or when the AI big wave revolution will ...
Here are a few memories of my Dad on Father's Day.
Jim Head was a lanky kid from Dearborn, Michigan. He grew up to serve as a Navy pilot for a few years and eventually became an advertising agency executive in Chicago. He had ambitions, but ...
Some larger fintech payments businesses are buying smaller vertical SaaS businesses--as a form of distribution. They are acquiring customer bases to sell more of their payments services.
Investors and acquirers love to see a profitable ...
SaaS company growth rates are down, SaaS app buyers are frugal, IPOs are nonexistent, public SaaS multiples are low, big tech layoffs continue, and VC funding for SaaS has plummeted. Is this the end of the SaaS era?
The B2B SaaS industry has ...
The most important letter in MVP is the V. It’s the Viable in Minimum Viable Product. Viable means highly useful. Minimum means incomplete and imperfect.
When should you ship your new thing in a software startup?
When should you push that ...
“Our SaaS product works, we have happy customers, and we have enough leads—but our demo close rate is too low.”
Every day, B2B SaaS founders tell me about the hard problems they are working on in their startups.
A low close rate is one of ...
When you have a vertical SaaS business, your churn rate is either a force multiplier for your business--or a growth killer. High churn for too long will permanently hobble your SaaS company when you sell in a tightly connected market.
Sure, ...
Acquirers of smaller SaaS businesses are moving slowly and taking their time this year, but valuations can still be interesting for companies that fit the buyer's strategy.
That's good news for practical SaaS founders who didn’t sign up for ...
“Our SaaS product works, we have happy customers, and we have enough leads—but our demo close rate is too low.”
Every day, B2B SaaS founders tell me about the hard problems they are working on in their startups.
This is one of the better ...
Doubling down on a narrow niche is the fastest way to create a $5 million - $10 million ARR (revenue) software company that can create life-changing wealth for practical founders.
But only after you get started, try many things, and find out ...
This week, 3 SaaS startup founders told me people are telling them to raise a seed round of VC funding. They asked me if they should listen to these experienced mentors and play the big funding game.
- Each has an early product, some ...
How will new AI technologies change traditional SaaS businesses and products in the next few years?
Will they simply improve SaaS products and create higher value for customers while keeping the same per-user business model?
Or will they ...
The DNA of a tech services business is almost the opposite of the DNA of a successful software product business. Here are the 3 biggest things tech services entrepreneurs need to understand to create a successful software product business.
...
Creating software to improve your own services business can be a great way to create a standalone SaaS business.
But some major pitfalls trip up most founders who are trying to make this services-to-software transition.
First, the good ...
A bootstrapped founder of a fast-growing £2 million ARR B2B SaaS company asked me what he should expect on their march to £10M in revenue. How will his role change?
I told him that the founder/CEO role itself changes a lot in almost every ...
Most people don’t know that when a practical SaaS company raises money from a growth equity investor or private equity investor, those dollars mostly go to the founders.
It’s not risky rocket fuel for the business like the VC funding ...
Beware of universal business recommendations on LinkedIn. Very few business rules always work for every business at all times. For everything else, it depends.
The best advice for you today always depends on questions like these:
What ...
Serious SaaS startup founders are starting to see how pursuing big VC funding too early will decrease their odds of success.
Like buying a lottery ticket for a bigger Powerball prize, the odds go down the more money you raise early in your ...
I hear the same thing over and over from practical SaaS founders I interviewed on my podcast who successfully sold their companies:
"We were profitable and growing and weren’t trying to sell our company.
We kept telling prospective ...
Should a healthy early-stage SaaS company care about profits when strategic or PE buyers value revenue size and growth rates so much more?
SaaS companies are mostly valued on their revenues and growth rates and not so much on profit ...
Perseverance usually comes at the top of the list of entrepreneurial success traits. But there’s a twist that isn’t so obvious that makes perseverance work.
Persistence doesn’t help if you keep doing the wrong things that don’t work.
You ...
Why do venture investors tell SaaS founders they invest for 10x to 100x returns when a VC fund would do great with a 3-5x lifetime return? It's simple.
It's the massive churn problem in venture investors' portfolios. Most of their investments ...
Here are the biggest milestones for practical SaaS startups on the way to $5 million in ARR when they get started and grow without big VC funding:
Finding an idea that inspires you to start a company.
Validating that customers have a ...
True product-market fit usually takes years; most startups don't get there.
But there's a rare situation when a software business can start with product-market fit and ecstatic customers years ahead of the rest:
First, you need to build a ...
It was a great two days at the #SaaSOpen conference in Austin last week, where hundreds of serious SaaS founders learned from each other in one place.
Dozens of successful founders shared their hard-earned learnings from building ...
Most SaaS founders who have successfully sold their companies say they will start another software business, even when they have already had serious monetary success.
They love the difficult puzzle of solving big problems with cool software ...
Almost all B2B SaaS companies are either horizontally or vertically focused. They either sell to all industries OR just one industry. There's another model in between that can be tricky to pull off but very powerful and ...
I talked with Rand Fishkin this week on the Practical Founders Podcast about what he has learned six years after publishing his book, "Lost and Founder."
In 2018, Rand published “Lost and Founder” in which he revealed the pains and pitfalls ...
The glum news that "VC funding is down again this quarter" doesn't matter to more than 80% of new software companies around the world. The startup environment for modern SaaS founders is much better than it was just a few years ...
For up-and-running SaaS companies, growth isn't just about GTM--going to market to acquire new customers with marketing and sales efforts. There are other levers that help create more efficient revenue growth in the long run.
The magic of ...
People-powered tech businesses require documented processes much earlier than scrappy “software-only” solutions. These founders procrastinate documenting processes and enforcing processes at their peril.
On the outside, services-assisted ...
I recently interviewed a dozen founders who have run their software businesses successfully for 15 years or more. When asked how they sustained profitable growth for so long, they all talked about the same thing.
Customer service.
Not ...
I talk to so many founders who grew their valuable SaaS business out of their services business that I wonder why this isn’t a recommended path for young founders.
There are many obvious benefits:
Young entrepreneurs learn how to ...
The Power Law of VC investing means that just a few of their startup investments create all their returns. It's a game of a few blockbusters, not a game of averages.
The Power Law of venture investing applies to venture funds themselves. ...
I talked to a bootstrapped SaaS founder today who asked me, "Should I raise a little funding this year?" Here's his situation, my questions, and my recommendation. It always depends.
I know this founder well. He has boostrapped a vertical ...
It used to be bad news for a bootstrapped software company when a competitor in their space raised big VC funding. Now, there are plenty of examples where bootstrapped SaaS companies can do just fine or sometimes even win bigger.
It's an old ...
When should a serious SaaS founder raise outside funding from institutional investors—and when should they not?
There are only a small minority of software companies where a bigger investment bet with more risk could make sense for the ...
I have worked with hundreds of software startup founders on their messaging and websites through the years--and watched the results.
Here are the simplest ways to improve conversion on your website and create momentum in your early startup. ...
Have you heard the tortoise and the hare metaphor used to compare bootstrapped startups to VC-funded companies? It's not as true as it used to be. The tide is turning.
Grow faster with big funding! Bootstrapping takes too long!
But when you ...
An old term has become more popular in the last year to describe a style of software companies of all sizes: Capital Efficient. It can mean 3 very different things for SaaS founders in 2024:
1) Most VC-funded software companies that gorged on ...
When a software company founder sells their company successfully, they have more choices about how they fund their next startup.
I always ask these second-timers, “Will you raise venture funding again, or will you go the practical way ...
This year, there has been more discussion about practical "One-and-Done" rounds of angel, pre-seed, or seed funding for startup SaaS founders.
But it usually ends up being "More Than One and Never Done," which adds far more risk for founders ...
I just crossed 40,000 followers on LinkedIn last week. Here's how I doubled my followers last year with 5.3 million post impressions--and, more importantly, why.
I'm not recommending you do these things. You may find an insight you can ...
Most practical SaaS founders want to do better with SEO to drive efficient revenue growth. More organic, less paid marketing. Who wouldn’t want that?
When it works, an inbound marketing strategy that combines organic search engine ...
A bootstrapped software startup founder I know presented her 2024 business plan this week. Her progress and plan were impressive, but they were the opposite of the story a VC-backed founder would tell.
Two years ago, she was getting her ...
It can be overwhelming for SaaS founders to deal with so many different and complicated things every day. Some entrepreneurs run out of energy and get stuck on their startup journeys.
And the mental list of questions, tasks, and goals expands ...
I delete comment spam on my LinkedIn posts.
They add no value to the real discussion there and are clearly promotional, AI-created or not.
It's like barging into a real conversation, repeating what people say, and handing out business ...
Your SaaS startup can make a better version of something that already exists or it can make a new thing that people haven’t heard of yet. They are two different games.
Existing categories in markets that are already crowded
New ...
The SaaS business model keeps getting better while the VC business model is getting worse. They are headed in opposite directions.
The SaaS business model is one of the best business models in 100 years. It's great for founders, customers, ...
Building a great product is important to grow a SaaS startup into a valuable company. But it is figuroutable once you have deep knowledge of a big problem someone will pay you to solve.
A customer you care about with a big problem AND
a ...
The Power Law drives the venture investing business model. Every VC investor's success is powered by a few blockbuster 50X-500X returns that make up for the 75% of their bets that either go bust or don't win much.
There's no defying the Power ...
I don't know what's going to happen in 2024 with SaaS funding, tech IPOs, M&A exits, or AI breakthroughs. But there are a few long-term trends I'm betting on that affect the SaaS industry.
I'm not losing any sleep over what negative events ...
When you raise big VC funding, the chances increase that you will listen to your investors about what product to build and what business template to follow.
When you DON'T have big outside funding, the chances increase that you will listen to ...
Is there anything big you expected to get done in your business this year that didn't quite happen? All of us had something that didn't go as well as we planned.
I have heard these responses from capable SaaS founders and CEOs I know about the ...
Your Crappiest Customer Profile (CCP) is the opposite of your Ideal Customer Profile (ICP). They exist on a continuum of customer traits that will either accelerate your business or kill your business.
Just because they bought your product ...
Why would a founder sell a steadily growing SaaS business that is increasing cash flow (real profits) every year?
Some growing and profitable SaaS companies are like perpetual motion machines.
They keep growing steadily and become more ...
The fastest way to grow your early SaaS startup isn't working on your Ideal Customer Profile (ICP). It's identifying your CCP--your Crappiest Customer Profile.
Finding and saying No to your most expensive and worst customers usually produces ...
It was reported by Pitchbook this week that 3,200 funded startups failed this year. This isn't the end of VC funding; this is how that game works.
Boom times before back to normal.
Big bets before failures.
Overspending before ...
SaaS founders with successful companies often learn what is important to serious acquirers too late in the game.
What is valuable to a buyer right now is sometimes different from what was important to a founder as they grew their company.
This ...
Product-Market Fit and Ideal Customer Profile are usually 25% demographic traits and 75% behavioral and belief traits. Many founders don't learn this until too late.
The first cut of PMF and ICP are demographic traits, of course. They are ...
The SaaS founders I know with the highest growth rates in 2023 are also the most clear about what they want to accomplish in 2024.
I have been working with dozens of SaaS founders, including 35 founders in my Practical Founders Peer Groups, on ...
What’s more common than big VCs investing millions in pre-revenue startups? Founders funding substantial software development, design, and sales cycles from the profits and staff of their other businesses.
It is often a related services ...
There's a common assumption that startup funding means big VC funding from professional investors. This is not true at all.
But all startups are funded in some way in time and money to get started, including the majority of software startups ...
Can experienced corporate leaders succeed in startups? Can startup leaders succeed in big companies?
The answer to both is the same:
It's possible, but it's not common.
Most people who are successful in big companies struggle to retrain ...
There’s a hidden truth behind the product-market fit that creates happy customers and efficient growth in any SaaS business.
Product-market fit sounds like this:
Make an amazing product that delights your customers.
They buy more, tell ...
It needs to be said: The default case for 80-90% of SaaS startups is never to raise VC funding.
VC funding has always been the exception and not the rule in the software business.
But in recent years, "Go Raise Funding" became the standard ...
For SaaS founders to succeed at the big VC funding game, they need to hit their ambitious growth goals every year and then sell the company for a big payoff in 5-7 years.
VCs will tell you this rarely happens. But they don't advertise this ...
Some folks are waiting for the boom times of two years ago in software tech to return, but this is now the "old normal" and it will be this way for years.
Things have slowed down in most parts of the software business compared to 2020-2021 when ...
When you grow a software business to $10 million ARR in three years without VC funding you keep your optionality as a founder and focus 100% of your energy on your customers.
This is Customer Funding with sales and revenues. Not VC funding ...
SaaS startup founders often neglect a very important goal area when planning for next year. This question won't appear in any planning frameworks, but it creates a powerful multiplier that will make achieving your other goals easier:
What's the ...
The biggest challenge for 90% of software companies isn't "building a better product." The biggest problem is getting new customers, revenue, and growth--reliably and efficiently.
The growth side of the business is what makes or breaks software ...
Practical SaaS founders can win big without betting the farm, losing their health or family, or playing the all-or-nothing VC funding game.
This is possible around the world, not just in the US or in the biggest cities.
Bernardo Carvalho ...
A practical SaaS founder I know sold his software business last month for a successful majority exit. It was a great business with over $10M ARR and no outside investors.
We had several conversations in the last few years about all the ...
Compared to 20 years ago, modern software companies are 10 times more resilient when the inevitable recessions, financial busts, wars, and other crises disrupt the economy.
This is one of the reasons why SaaS companies are much more valuable ...
Entrepreneurs tend to be generalists, but our talents and interests are not evenly distributed. We channel our superpowers to power our early startup progress.
Most times, we are unusually good at a few things. We hate to do other things ...
One of the most powerful ways to improve startup execution and align your team is to become great at setting a single goal to rally around.
I'm surprised how many founders I work with are not as clear or specific as they need to be about where ...
This SaaS founder bootstrapped his first company and did pretty well when he sold it, but he didn’t want to go back to stressful 80-hour weeks again.
So when he started his second SaaS company he decided to work reasonable hours to spend time ...
It is great to be around so many practical SaaS founders at the SaaStock conference in Dublin this week.
There was more talk of bootstrapping this year than about big VC funding.
This photo is what the Bootstrap Stage looked like for two ...
Some things have to change as your SaaS company grows bigger. But not all things.If your company is bootstrapped and growing very fast, you can choose what to change and what to keep doing.
If your unusual culture or business model works, you ...
I have been asking VC investors:
What percentage of the pitches they see will be great SaaS businesses for the founders but aren't a fit for their fund?
The average is 30%. One in three software companies they look at are great founder-scale ...
For certain startup founders who are wired to be generously helpful, creating an active community of peers can be a powerful way to fuel customer growth with loyal fans.
But thriving communities are not about selling your software product at ...
Every software founder understands that if they build a valuable company, they can win a big financial prize if they sell it someday.
Work hard for many years.
Be frugal and invest wisely.
Do the right things. Get the SaaS flywheel ...
Here's one of the most dangerous words for ambitious entrepreneurs: EVERYONE.
"Everybody who wants to save money should want what we have."
"We sell to every small business."
"Every doctor's office needs our solution."
ANY and ALL are ...
Creating a real SaaS business is more like climbing Everest than doing a hard workout at the gym.
The startup climb is totally possible, but the odds are against you. It takes unusual effort to get through each of the stages and it takes a team ...
Growing from $5M to $10M ARR is almost the opposite game for B2B SaaS companies than getting to $1M in revenue.
It's so different that very few sales leaders or salespeople who got you started will be around when you scale. It's a different ...
Here are the 5 biggest reasons we don't hear about 90% of the successful exits that create life-changing wealth for bootstrapped SaaS founders.
The bootstrapper success stories we do hear about are just the tip of the iceberg. Big wins for ...
The "Purple Ocean" strategy has the best odds of success for SaaS startup founders who want to grow efficiently without big VC funding.
It's a twist on the Blue Ocean strategy of creating a new category and the Red Ocean strategy of competing ...
Selling your software company is always stressful and tricky for SaaS founders, especially for bootstrappers who don't have VC or M&A partners to lean on.
Most founders who sold their companies tell me it was the most stressful thing they ...
Corporate refugees can make great entrepreneurs, especially when they were the frustrated doers who didn't fit the corporate mold.
They are the ones who ask too many questions, break the rules, tell harsh truths, and frustrate their bosses and ...
The chart below explains why there's a big problem for companies that raised a lot of VC funding in the last three years--and for the VCs that funded them.
It clearly shows that there are almost no successful exits to pay off the huge ...
If you think you want big VC funding someday with Series A, B, and C funding, then you've got to create one of the few software businesses that will grow crazy fast and exit for over $500 million or $1 billion.
This is just how the math works ...
Last week, three practical founders told me, "I could raise a few million dollars, but I don't know how we'd invest that much money so quickly."
I hear this more often these days. It's the opposite of the "raise as much as you can and spend it ...
The first founder of 30 CEOs in my Practical Founders Peer Groups just sold his business successfully last week. It was an atypical deal for an atypical founder.
Bootstrapped and lightly funding founders often sell their businesses when they ...
Have you heard that second-time startup founders have an easier time raising funding from VC investors because of their experience? It used to be this way.
But I’m seeing more successful second-time founders starting their SaaS companies ...
I talk to 500+ software founders and CEOs a year all over the world. I'm amazed that every entrepreneur's story is different.
Different founder personalities and backgrounds
Different times and tech cycles
Different markets and ...
Optionality is one of the most important words that practical SaaS founders will ever possess.
It means you have all of your options open AND the freedom to choose what works for you.
When you stay off big funding drugs and grow a profitable ...
What should I do with my slow-growing SaaS startup? Should we stick it out or find a better opportunity?
A founder I know asked me this question this week and we talked about his situation and options.
He's a smart and savvy founder who can ...
Startups are glamorized. They can look pretty cool from the outside. This is not helpful to serious new founders.
Sure, there are occasional breakthroughs and flashes of good fortune.
But mostly it’s grinding away. Trying again. Fighting the ...
Once or twice a year, a new software entrepreneur tells me they "don't want to be pigeonholed." This inevitably means they didn't want to declare a clear focus and specialty.
They don't want to cut off any possible customers they MIGHT sell to ...
We often hear that 50% of new businesses don't make it through their first year. Or that 90% of startups fail. That's not the whole story or even useful for software entrepreneurs.
Software and tech startups are not normal small businesses ...
Three SaaS CEOs I advise are looking for fractional CMOs right now--or potentially senior new marketing leaders.
They each have growing software businesses with $2M-$5M ARR, but their marketing managers and specialists have taken them as far ...
It's lonely being a software startup founder. Even when you have a leadership team and 15 or 50 employees.
Your family and neighbors don't have a clue what you really do.
You can't talk about your really hard issues or deeper questions ...
There have been layoffs in big tech and many former execs are now fractional experts and consultants. I'm getting a lot of outreach for referrals, but many new service providers struggle to help me refer them.
Here are the 3 things I recommend ...
l operations are often neglected by startup and early-stage founders, but it always comes back to bite them later.
Here are 5 most common questions I hear from serious SaaS founders and CEOs about financial ops:
Which SaaS metrics are most ...
The common sales and marketing tactics used by SaaS companies have been beaten to death. This creates the primary risk for new software startups.
It's just very, very difficult for frugal software startups to create an efficient customer ...
WeWork announced this week that they have "a substantial doubt of continuing as a going concern." This is a pre-bankruptcy announcement. They will likely wind it down and sell off the assets to pay creditors.
WeWork could have been a great, ...
The potential success and value of your modern SaaS business is all about Sales and Marketing.
Quality products are necessary but not sufficient.
This is often a hard lesson to learn, especially for super-coder technical founders like Wissam ...
Most SaaS startup founders who raised $10M, $20M or more in 2020/21 when VC funding was "cheap and easy" will never win a prize for their startup efforts.
Investors knew this was the game when they raced in and paid high prices for cool ...
Many of the practical SaaS founders I interview every week have never been on a podcast before. Only a few are podcast pros.
Here are the 5 things I recommend to these founders to avoid low-quality audio quality on their side that will be ...
How much of your health, your family and marriage, or your sanity would you sacrifice for the chance to win big with your crazy startup?
Practical founder Lloyed Lobo describes this Silicon Valley all-in addiction as “unicorn porn"--Why aren’t ...
So you have an idea for a software product and you're thinking of starting a company to build it. I talk to hundreds of these folks a year, year after year.
Here are 3 things that can help you increase your odds of success when you get ...
Two technical founders last week told me they shipped the first version of their new products 10 TIMES FASTER than they did five or seven years ago in their previous SaaS startups--with the same-sized teams.
It's because better cloud ...
Many startup experiments don’t end up growing big and winning a big prize for founders. Failure is actually a possibility, however you define it.
The lessons learned can be just as powerful as the success stories.
Many VC-funded software ...
If you have a product that solves a real problem but you are struggling to get attention and convert customers, you have a marketing and sales problem. 90% of up-and-running software companies have this problem.
Here are the 4 most powerful ...
Here’s my biggest surprise after interviewing 46 successful practical founders on the podcast in the last year: When you aren’t raising big funding from outside investors…
There are as many ways to grow a valuable software company as there are ...
In the last 5-10 years, we have seen a tech funding boom and bust, technology waves of web3 and AI, and other big shifts in the software world.
But these deeper changes have changed the startup SaaS game the most:
It's getting cheaper and ...
I talk to practical founders every day who have built really valuable software companies without any outside funding.
No two founder stories are the same. They do it in their own ways.
But underneath all their stories are the same principles ...
If you're a leader in a growing company, at any level, you need to spend some of your time working on the future, not just executing for today.
That can feel impossible when the mountain of urgent execution tasks can take up every waking hour. ...
A software company CEO with a growing $2M ARR software company asked me what he should expect on their march to $10M in revenue. How will his role change?
The founder-CEO role itself changes a lot in almost every company at this phase in these ...
A software company CEO with a growing $2M ARR software company asked me what he should expect on their march to $10M in revenue.
He can feel that his business is changing fast internally. He knows what got them here won't get them there.
He ...
How many founder stories have you heard about grinding hard for a long time and then finally selling their company to “win a big prize?” But choosing your business OR your life is just one way to do it.
Practical SaaS founders have another ...
Most of my conversations with startup and early-stage software founders this week weren't about funding or bootstrapping.
They were about how and when to FOCUS to accelerate traction and growth.
Focus is usually the F-word for early-stage ...
In the last year, I interviewed 44 amazing SaaS founders and 6 expert guests on the Practical Founders Podcast.
When I talk to founders now, I recommend specific podcast interviews that are relevant to their situation and their approach. I put ...
When you start your SaaS business that you eventually want to sell, should you have a theory about who will buy your company?
Most tech investors will tell you not to think about your eventual exit so specifically. Just take the funding and ...
If we don't raise outside funding for our bootstrapped SaaS company, should we offer equity shares to key employees?
A practical founder with a growing SaaS company asked me that the other day.
He worked for a couple of VC-backed companies ...
What do you do when one of the key leaders in your growing software business is struggling?
Struggling to build productive teams, hit reasonable goals, and keep up as your business organization evolves through its growth phases.
This topic ...
What if you grew your bootstrapped SaaS company to $5M ARR, but you were still having fun and momentum was building? Would you sell it now or keep going?
You enjoy having a leadership team and more employees with a great culture
Your ...
What did you think your software business was going to be when you started it? Is that actually what it is now?
I ask this question of software company founders I talk to every week who have up-and-running SaaS businesses with $2M or $20M in ...
From the founders and friends I've heard from in Silicon Valley, the mood is pretty glum there outside of the AI bubble.
VCs are dealing with the indigestion of investing in too many companies at crazy valuations that aren't making their ...
How can a bootstrapped SaaS company raise big funding without raising money from venture capital or private equity investors?
By selling their bootstrapped software company to a big software company that is backed by big funding.
This happens ...
I moderated a panel at the SaaStockUSA conference in Austin yesterday with two VC investors and a revenue-based financing (RBF) lender to share what has changed for each of them in the last 18 months.
The world of tech finance has changed ...
Back in 2019, after three years of talking to 1500 software founders and documenting ALL the software companies in Phoenix and Dallas on Gregslist, something became obvious to me that was previously hidden.
I could see that there were at least ...
New software founders often ask me to review their funding pitches or their startup strategies.
I let them talk and I ask questions. Then I tell them "This is what it sounds like to me. Did I get that right?"
They usually talk for 15 minutes ...
Most founders who sell their companies eventually start another company or create a new project. Old habits die hard for most former founders.
But there’s also a type of software company founder who intentionally built a valuable software ...
I spent 3 days with 8 successful SaaS founders last week. Each founder presented their vision of what they are trying to create with their company.
These discussions were very different from the thousands of investor pitch presentations or ...
Successful software entrepreneurs are just abnormal people who do abnormal things.
That’s not better or worse than anyone else. We just do things that “normal” people don’t do.
That’s usually where the opportunity is. If everyone is doing it or ...
Most VC investors and software entrepreneurs were skeptical of the new SaaS recurring revenue model during 2005-2010.
Why would you invest so much upfront and only take a little slice of the revenue each month?
Before that, software companies ...
Big potential markets don’t always lead to startup success, even with big funding. Some big markets are tough to crack, especially big consumer markets.
For twenty years, I watched many entrepreneurs try to solve the “capture your life story ...
Professional VC investors are some of the biggest fans of my content about practical founders here on LinkedIn.
I talk to a VC or two every week. Most of them tell me how much they like what I'm talking about in the SaaS + funding game.
Most ...
Every time I talk to a successful practical SaaS founder I hear about a different way to start, build, and scale a modern software company.
Unlike the VC "Get Big Fast" startup game, there’s no template you have to follow when you bootstrap or ...
SaaS companies have had a relatively steady playing field for the last 10 years. No major disruptions have put off the steady growth and adoption of SaaS.
But now generative AI and large language models are looking like the next disruptive ...
In the last three weeks, I talked to 56 practical SaaS founders from all over the world about their products, businesses, and their visions.
Since they aren't trying to raise outside funding to grow their valuable software companies, they all ...
Four big changes have arrived in the software business in the last five years that didn’t exist 10 or 20 years ago.
The cost of making a quality software app has gone down 10X.
You can reach your target user and buyer efficiently without ...
I’m traveling with my wife on holiday this week in Edinburgh, Scotland for the first time. One of the highlights of the trip was meeting an amazing practical SaaS founder I know from Edinburgh—Craig Letton, founder of MRM Global.
Last year, ...
There was a hidden secret in the rooms of two startup funding events I attended last week in Phoenix.
The richest people in the rooms of both events were the founders who had built and sold valuable software companies without any outside ...
When a venture investor doesn’t invest in a software company, they often describe the startup’s product as “just a feature.”
A feature that could easily be built by a competitor. Or just a partial solution to the problem.
But what if your ...
I was back in Phoenix last week and I attended two popular events for tech entrepreneurs to connect with potential investors, including the annual Venture Madness event.
These venture-pitch events are well-organized and useful, but this year ...
The biggest questions and concerns of SaaS CEOs change as their companies grow.
Here are the most common issues I work on with founders I talk to every day by size and stage of the company:
Growth Founders - getting to $1M ARR with ...
Every year we all get more automated robocalls, unsolicited emails, robotic LinkedIn DMs, and spam texts.
It makes us tired. We don’t want to hear from marketers and outbound sales development reps who are trying to reach us.
SaaS founders ...
Two weeks ago I called my mobile phone service provider and told them to shut off my voicemail completely.
I was getting 5-10 spam voicemail messages a day. I haven't received a useful non-spam voicemail in a few years.
I'm tired of the ...
Practical founders often tell me something that they don't talk about much:
It's lonely being a software startup founder.
Your family and neighbors don't have a clue what you really do.
You can't talk about your really hard issues or ...
One of the biggest differences between bootstrapped software companies and their VC-funded peers is their time frames.
Most venture funds have a 7-10 year time horizon. The companies they back need to grow fast and sell in under 10 years to win ...
It’s rare when a business in a tech-laggard industry like real estate creates its own custom software for internal use.
And then spins it out to create a new software company that sells this solution to their peer competitors.
And then grows ...
I heard from three new SaaS entrepreneurs this week who each had the same question: How should we price our software now that we have our first 5-10 happy customers?
First, congratulations on getting that far. Most savvy people who find ...
Last week, a friend asked me how many people I know who have made more than $20 million from selling their software company.
I thought about it for a minute. Here's what I told her:
I know over 200 founders who have made between $20 million ...
Most founders who sell their software companies don’t join the leadership teams of their acquirers. Or they don’t stay around any longer than they have to.
But what if you sold your beloved business to a bigger company that had the same ...
I hosted a dinner with 15 founders last night at the SaaSOpen conference in New York.
After an hour of great conversation, I realized I was talking with founders from Poland, France, India, and Tel Aviv at my table.
Other tables included ...
The whole SVB crisis this week was about VCs and VC-funded startups.
There’s a place and time when VC funding can be a good thing for both software company founders and their big VC investors. But that's the exception. Always has ...
Everyone in tech will remember the day that SVB, "the bank for funded tech startups," surprisingly failed in just two days.
Here's how I see it so far. What do you think?
This can't be blamed on Jerome Powell's well-broadcast interest rate ...
I wish more bootstrapped SaaS founders would think like VCs. Not about taking on big funding, of course.
It's how VCs play the Power Law to patiently look for an advantage and then boldly place a few bets that can create outsized results.
It's ...
Moving from a custom services business to the holy grail of a subscription-based software product business can take a while.
Most don’t make it.
Too much to invest for too long to get to a recurring software product business that can sustain ...
Investors and bootstrappers have very different reactions to achieving real Product-Market Fit.
Big Funding Investors:
Great! You have finally happy customers and accelerating revenue.
You should add our rocket fuel funding to go faster ...
"What are the pros and cons of bootstrapping versus raising outside funding from investors?"
That first question by a student struck me as the right question future entrepreneurs should be asking about funding their ventures.
I was a guest ...
Venture capital investors won’t invest if your payback opportunity isn’t big enough to provide massive returns.
What if your growing software company could someday provide those big VC-scale returns, but not in the 5-7 years these investors ...
I met two new software entrepreneurs last week who set out to modernize the industry they succeeded in for the last 20 years.
Their industry is a notorious technology late adopter.
Almost none of the people who deeply understand their ...
Many new entrepreneurs hesitate to ask for help from experienced founders and savvy mentors.
They are missing out on POWERFUL INSIGHTS that can help them overcome their big challenges or learn how to approach something new.
I have had over ...
I interview successful SaaS founders every week on the Practical Founders Podcast.
Every founder story includes the savvy bets by the founders, the extreme hard work for long years, and the balance of risk-taking and good timing.
I asked them ...
M&A in the software space has slowed down in the last year, but it hasn't stopped.
I'm still hearing about acquisition offers and transactions for savvy early-stage SaaS companies for multiples of 4X-7X annual recurring revenue.
But these ...
If you ever choose to raise big money from outside investors for your software company, it’s better to do it much later than early in your startup journey.
Later--after you have created a real product, built a team and a culture, established ...
Early-stage software startup investors screen thousands of companies to have hundreds of conversations with founders for every one company they invest in.
Here are the most common reasons that startups fall out of investors' sales funnels and ...
When startup founders start raising outside funding, they quickly realize it's a big sales process with a little marketing too.
Most founders are surprised to learn that investors have their own marketing and sales processes, but they are 10x ...
The journey of successful software companies is most often told with a revenue line that goes up and to the right.
We don’t hear much about the internal growth that had to happen to make that topline growth happen.
The unlikely evolution from ...
February is here and it's reality time for our 2023 New Year's personal resolutions and the quarterly plans and goals in our businesses.
I make personal and business plans, but I don't accomplish everything I set out to every month or every ...
We heard about big VC funding and sky-high stock prices in 2021.
Now we’re hearing about layoffs at most of these companies in 2023.
Go fast and spend big while you can. Cut back and slow down when you can’t. That’s not the only way to play ...
Patience is an underrated superpower of successful entrepreneurs.
I don't mean slowness or never being bold.
You can be fast and impatient about SMALL things like execution and experiments. Speed works here.
But when you are impatient about ...
I talk to a few people every week who are worried that the software industry is imploding with all the big layoffs.
These layoffs and valuation haircuts only affect only a small segment of the software industry. But it looks like "everyone is ...
Two years ago I told software startup founders that almost all early-stage VC investors need to see some revenue "traction" to consider investing.
Now, this is even more true. Professional investors and experienced angels rarely invest in ...
So many things are changing in the software startup game every year.
But there are still some universal and fundamental “laws of nature” that haven't changed. Yet.
These tend to be how we think as humans—our deepest wiring.
This week’s ...
Getting startup funding from outside investors just got much harder this year.
Bootstrapping with self-funding and then customer-revenue funding is hard too. Pick your poison. They are both hard.
Either way, founders shouldn't be making ...
A really important milestone for a new startup is getting “traction” with your earliest customers.
Traction simply means having enough customers using your enough of your product so you can get meaningful feedback to make better ...
Bootstrapped and lightly-funded SaaS companies looked pretty uncool the last few years when they didn't raise big VC funding.
These practical startups are feeling better about themselves now.
They aren't at risk of shutting down their ...
Is it ever a good thing for a practical founder to raise a big funding round from a VC? Sometimes under the right conditions, but it doesn't happen very often.
You just have to create a valuable and scalable business FIRST, before you raise ...
Most funded startup companies are going through brutal "rationalizing and rightsizing" right now. This is a healthy exercise that bootstrappers go through every day.
If you are breakeven and profitable in your business, you ask questions like ...
The practical founders of growing software companies that I talk to every week never took big outside funding.
None of them are talking about LAYOFFS right now. It doesn't come up.
They are just talking about the usual hard stuff: selling, ...
I got my annual "Your price for Quickbooks increased because we can" email from Intuit. They want me to pay almost 40% more than I paid two years ago.
Intuit is a master of nickel and diming and raising prices. Because they can. ...
The best founders I know get the best advice from experienced entrepreneurs and other experts.
Great advice is usually the result of the founder's investment of time in their network of experts and experienced entrepreneurs who want to ...
Here's the biggest difference I see between self-funded and overfunded software companies--from the inside.
PACE. How fast you have to race ahead to meet your bigger goals.
Founders with lots of outside funding have already made an explicit ...
Gregslist is the curated list of ALL 6000+ software companies in 12 major cities in North America. I started this project 7 years ago in Phoenix.
The most surprising stat? There are JUST AS MANY self-funded software companies with over 50 ...
I talked with a young startup founder who was more than a little panicked by the sour financial news in tech recently.
Venture investment is down by almost 50% this year. New unicorns are rare again. Tech layoffs continue. Crypto crashed. Hot ...
Sometimes I hear from people who have an idea for a software product but no money to fund any initial product development.
They don't have savings to invest, profits from a business they own, or friends and family with money to donate. Some ...
It takes confidence to start and grow a company. It also takes a healthy dose of humility.
It's strange how experienced founders can do both at the same time.
Confidence helps you keep moving forward when it's hard. And persuade customers and ...
It's that time of year when ambitious entrepreneurs and startup leaders plan for the next year of their quests.
Now it’s time to assess how you did this year and determine what needs to happen next year.
Great execution requires serious ...
Founders often tell me, "How can we be big unless we sell to everyone?" I call this the Target Market Trap.
It's where most startups get stuck on their way to achieving their big dreams.
Here's one way I help ambitious entrepreneurs clearly ...
Why doesn't Chik-fil-A sell hamburgers?
Chick-fil-A is the 3rd largest fast-food restaurant chain in the US, behind McDonald’s and Starbucks.
They just sell chicken sandwiches. $17 billion of them a year.
Chick-fil-A doesn’t sell ...
There has never been a better time to start a B2B software company without big funding.
Here are 10 reasons why:
You can build the first sellable version of a B2B software app for $100K-$400K. Less if you are coding it (or no-coding it) ...
I have been blogging, speaking, and contributing on social media for over 15 years.
But I didn't create big crowds and make a sizable impact until I did this:
I FOCUSED IN on a specific type of software founder creating startups at a specific ...
There are many levels of traction in the software startup journey.
Here are the levels I see most often:
Idea Traction - You tell people about your idea and they don't think it's totally stupid. Doesn't mean much
Prototype Traction - You ...
I talked to a practicing doctor and a former pharmacy exec this week about their software startups. They asked me about funding options.
I used the healthcare industry to describe how I think about funding for software startups these ...
Last week I asked a VC friend how founders should think about taking venture capital investment and when they should not take it.
His answer: What's the ROI for founders of taking outside investment from venture investors?
If you spend any ...
This week I talked to three practical founders of growing software businesses with $1M, $3M, and $7M annual revenues.
Each of them told me, "I don't know what I don't know about the next stage of growth inside our company and for me as the ...
Yesterday, I asked a venture capital investor this question:
"When should a software startup founder not take venture capital investment?"
He didn't tell me that every founder needs VC investment.
Like all VCs, he knows that venture capital is ...
Bootstrapping, self-funding, and resisting big VC funding are still not very common in Silicon Valley these days.
It's not as easy for startup founders to raise funding there this year, but serious outside funding has always been the main ...
I think the startup idea-to-business journey is mostly about this:
Surviving long enough to keep experimenting, iterating, and trying things until you find a combination that can grow into a serious business.
Startups are experiments to find a ...
Three years ago at a tech conference, I heard a SaaS founder on a panel describe how he raised debt to grow their business, not funding with equity.
The audience almost gasped when he described how they are happily paying back the loan with ...
It’s generally easier to start a software startup with a group of potential customers with a big problem they will pay to solve. Then build a product just for that.
Or you can build a cool product with whiz-bang technology and then go in ...
Software company founders who sold their companies for big prizes tell me the same thing on my podcast:
"It was great to see the money in my bank account for a day, but then it wasn't so great right after that."
For some founders, it only took ...
What if your first startup didn’t go anywhere and it ate your life savings?
Would you do it again?
If you are like Brad Redding, you’d start another software company five years later to prove you actually learned some useful lessons ...
When I talk to startup founders who think they want to raise money from investors, I always ask this question:
What kind of money are you raising?
Most founders don’t know what I am talking about.
But this is the most important funding ...
It’s easy to get ahead of yourself and build too much product before real users get their hands on it.
Some industry experts go and build the “complete solution” before talking to potential customers.
Most startup newbies set out to deliver a ...
I talked to the CEO of a serious software company this week who had an offer to buy his company. The deal was almost closed.
"Is this a fair price for my company?" he wanted to know.
We talked about the general trends in acquisition ...
The most successful founders and CEOs say NO more than everyone else. How does that work?
Doesn't having a bigger business allow you to say YES more often?
You'd think so, but it doesn't work that way.
Experienced entrepreneurs, big business ...
Starting and growing a software company is always hard.
Often your company takes over your whole life, at least for a while. Sometimes for a lot longer.
Many founders go “all in” and sacrifice all of their time, their health, their families, ...
When a venture capital investor or investor pitch coach gives you advice on your business strategy, here's how practical founders should hear it:
"Your company would fit our very specific investment criteria better if you did it like ...
Twenty years ago, entrepreneurs used different words to describe what we now call mental health challenges.
Stress, depression, anxiety, burnout, and nervous breakdown were the words we used back then.
We didn't talk about it much. But it ...
There are some tried and true practices that work in the startup game. But even when you do all the startup steps in the right order, it usually doesn’t work.
Most startups still don’t grow up.
A bit of MAGIC is required and difficult to ...
Here's how I think founders, entrepreneurs, and CEOs should take any business advice, including any advice from me:
Consider everything you hear as an interesting POSSIBILITY to consider, including that which sounds like a ...
The startup game for investors is pretty much about this:
"What do we know and what do we not know yet about this founder, their team, their product, the business model, and the market?"
This is why early traction with paying customers, ...
Entrepreneurs place bets every day.
But sometimes the odds are not what they seem.
Think of all the clapping for startups that raised big rounds of venture capital.
“Congratulations on your big VC funding. You’ve made it!”
Well, not ...
Bootstrappers are measured by their REVENUES. But VC-funded companies are measured by their VALUATIONS or their latest FUNDING.
Isn't it interesting how tech and business media treat companies that didn't raise any outside funding?
Valuations ...
People ask me all the time about their startup or product idea. "What do you think of my idea?"
I don't give them any answers. I can only ask them a bunch of QUESTIONS.
Here's what I ask them:
Who do you think will buy and use it?
What ...
Two years ago I started a new habit during the COVID lockdown that I haven't stopped.
It has made a huge difference in my business and in my life.
The COVID lockdowns are behind us, for now, but this habit keeps going.
It's this:
I ...
"One big reason we were successful is that we identified our ideal customer profile early, and we owned it, and then we really targeted them.
"When you can start saying NO is when your trajectory starts taking off.
"In the beginning, you’re ...
Startup success stories are often told by a single founder. But usually, there’s another founder involved.
The co-founder. Another crazy person with the same passion and grit (and deferred wages), but with completely different skills and ...
I've been raising my voice on LinkedIn for over a year to show how practical founders are successfully creating valuable software companies without big funding.
Do you know who isn't arguing with me? The many venture capital and private equity ...
The average valuation for a growing $3M-$5M ARR SaaS business is a 7X multiple of revenues, for the small slice of higher-quality deals I see. Some are higher, some are lower.
So these SaaS companies are already worth $15M-$50M to serious ...
When a startup founder creates a software company that another company acquires, they become members of an elite club: founders who have sold their companies.
Here are a few reasons second-time founders get more attention and credit than ...
The Practical Founders Podcast is picking up steam every week after just 10 episodes so far. But I need your help.
I want to interview more practical founders who are women. And people with different backgrounds. And practical founders outside ...
I talk to dozens of entrepreneurs every month who are building a new software product to solve a problem they care about.
But I have to take a deep breath when I hear some of them say this:
"We are almost done with our MVP. So I'm going to ...
How are fast-growing SaaS companies scaling up the human-powered customer success and customer support that can't be automated? The tech talent crunch is real in every country around the world.
In this month's Ask an Expert in-depth video ...
What if you saw an obvious problem in the world that you could solve with a new software product?
And you and your co-founder friends quit your jobs to live off your savings to build a product you could sell...
And then it took two years ...
One of the biggest differences between successful practical founders and founders who have raised big funding is not their speed. It's their PACE.
Practical founders go slower at first.
It makes all the difference later in order to grow ...
Multiple practical founders this week have shared something with me that they don't talk about a lot.
It's lonely being a software startup founder.
Your family and neighbors don't have a clue what you really do.
You can't talk about ...
Jeremy Clarke was living a lie when he was growing his software company.
He would say, “We’re working on this…” or “We tried this and it worked.” He wasn’t being truthful at all. He told people what they wanted to hear.
The lie was the ...
Many founders are struggling to keep their startups alive right now. , because they are spending more than they make and their cash is running out.
Maybe they funded it themselves so far, with their time or savings or profits from another ...
I hear from founders every week who pitched big investors and were turned down with responses like these:
“Your market is too small”
“We don’t like services revenue in the mix with SaaS”
“We don’t like transactional revenue"
These are ...
I talked to software founders last week in Ireland, Salt Lake City, El Paso, Dallas, Phoenix, and other places.
I didn't recommend the same thing to any of them about funding and growth. There is always "it depends" with many paths.
Some ...
A practical founder told me yesterday that he made a bet with a friend many years ago.
Who would end up with a bigger prize when they sell their companies someday?
His friend had raised big Silicon Valley venture capital, but he had ...
Have you heard investors say, “You can’t make big money unless you raise big money?”
They say there is a bigger pie when you raise big VC money, and your founder's share will be even bigger, too.
Occasionally, founders actually get a bigger ...
"It's all about the X."
I told that to a technical founder yesterday and it finally got through to him.
We were talking about their prospect pipeline, expenses, milestones, funding, and marketing activities.
There are many serious projects ...
The role that good luck plays in startup success
is usually overestimated by founders as they are building…
and underestimated after they have achieved some success.
I wrote that as a short post on LinkedIn here. Then my friend Hamid ...
Here are 20 of the most common types of software companies that I see right now. Which one describes your company?
1) The startup just starting. More hope than traction so far.
2) The big public company grinding it out every quarter.
3) The ...
Hamid Shojaee is one of the most well-known, successful, and generous entrepreneurs in the Arizona tech community.
Hamid explains the most important lessons he learned building the two software companies he successfully sold in 2021, Axosoft ...
A software founder friend in Phoenix just asked me this common question:
"Should I be responding to inbound acquisition requests that ask about our EBITDA?"
His company will either double or triple in revenues this year. From single-digit ...
Early-stage Series A and B venture funding were down 22% last quarter and startup seed funding was down 11% from last year's crazy times.
This is not a crash for tech startups. It's a modest belt-tightening by early-stage investors. That's ...
Q: What happens when a founder creates a vertical software company that grows slowly and steadily with just a little outside funding?
A: The founder ends up being worth more than the VC-funded founders who told him he was doing it ...
If you didn't hear this story for yourself, you might not think that a tiny software company could bootstrap and grow profitably for 8 years, then finally raise outside capital at a $2 billion unicorn valuation. But they did.
In this episode ...
I was on an accelerator panel this week to give feedback to the founder of a marketplace startup.
Her company has already generated over $500K in net revenue with no outside funding. Happy customers and providers too.
She quickly presented ...
This month we just crossed 6,000 companies on Gregslist - my curated list of all software companies in 12 cities in the US.
A curious thing becomes starkly visible when you track all the active software companies in big cities outside Silicon ...
If you think you want "big VC funding" someday, then you've got to have one of the few businesses that will grow crazy fast and exit at over a billion $.
This is just how the math works for the big Silicon Valley-style venture funds we all ...
I'm excited to announce my newest project--it's live today!
The Practical Founders Podcast has in-depth interviews of serious founders who have built valuable software companies--without big funding.
There are MANY practical founders who ...
There has been a serious pullback in the valuations of private and public software companies this year.
But I'm not seeing a serious pullback in demand for software tech from business or consumer buyers. Not yet.
For speculative web3 and ...
"The future is already here, it's just not evenly distributed."
-- fiction author William Gibson.
You've created a new thing that actually works. But that's not enough.
A few customers use it and they are ecstatic about how you solved a ...
Do you ever get 90% of the way through building a new business, product, or project only to realize you're only halfway done?
This happens to me and every entrepreneur I know.
I call it the "Other 90%" of the work.
You already put in a ton ...
Building a software product is very hard.
But getting customers, revenue and steady growth is now the HARDER PART of the startup-to-scale game.
Great products are necessary but not sufficient.
It doesn’t matter if you are just starting or ...
Public and private software company valuation multiples have come down hard this year, but they are still valued on MULTIPLES OF REVENUE.
Here are 5 reasons why SaaS companies are still valued at 10 times revenue on average:
1) RECURRING ...
I have seen a lot of technical founders become capable CEOs and great leaders.
But I have never seen a savvy business/sales founder develop into a great coder and engineer.
This is mostly because leadership, management, and the CEO's job are ...
Many startup founders complain that investors won't invest until they show a lot more traction. Proof that the product works, that customers love it, and that the CEO can grow it.
They aren't the only ones waiting for you to show more ...
We sometimes hear that 50% of new businesses don't make it through their first year. Or that 90% of startups fail.
Maybe. Here's my take on it for software startups.
First, software and tech startups are not normal small businesses like your ...
When I’m talking with startup founders, I often use a specific term that requires some explanation.
It's LEVERAGE.
As in "Where's your leverage in that area?"
This isn't financial leverage that multiplies your investment results.
I'm ...
The highest-leverage way to grow a business faster is to DOUBLE DOWN on a target market, sales channel, use case, or marketing message that is already working very well.
But there's another playbook that also gets companies (and careers) ...
Every mentor, advisor, consultant, board member, or peer founder has a powerful magic trick when they give feedback or advice to an entrepreneur.
They are not you.
They haven't been fanatically thinking about your business all day and all ...
When my son graduated in 2017 with a degree in electrical engineering, he didn't join a big company for his first job.
He created a tech startup with a friend.
For the next few months, his friends and his parent’s friends offered ...
Here’s the fourth most successful way I see software founders funding their way across the Startup Traction Gap between MVP and sustainable sales.
It’s not something I can recommend to new founders, because these startups were funded by ...
Entrepreneurs are optimistic. They find hard problems and think "I could fix that."
Normal people don't do this. Most people run into problems or frustrations and just think "that sucks."
A big part of any entrepreneurial opportunity is the ...
Bootstrapped and lightly-funded SaaS companies looked pretty uncool the last few years when they didn't raise big VC funding.
These practical startups are looking pretty cool now.
They aren't laying off 20%-50% of their people like their ...
Founders often tell me they want to create an advisory board.
I ask this question to see if this would be useful for the founder:
Do you just need more advice, do you also need accountability or just credibility?
95% of founders just need ...
When I talk to software venture investors, there is one question that reveals their stage focus 100% of the time.
It’s like a law of gravity that can’t be defied.
Here’s the question:
How big is your fund?
If they say $300 million or a ...
Here is the third most successful way I see how software startups get across the Traction Gap from MVP to repeatable revenues.
But most new tech founders I talk to think it's the first.
Remember, the first and most successful way to cross the ...
I'm looking for a few seed and pre-seed investors who actively invest in B2B SaaS, vertical SaaS, marketplaces, platforms, and consumer apps.
I talk to over 500 serious software founders a year.
Some of these startups are worthy of (and want) ...
Here's the second most popular way I see founders get across the Traction Gap between MVP and sustainable revenue traction.
It may seem obvious, but it's less common than you think.
FOUNDER SELLING!
This is hard because you have to create ...
I wrote a post last week about the dreaded "startup traction gap" between having a sellable MVP and getting to $50K MRR or some other measure of traction.
This is 1st in a series of 4 posts describing how software founders are creatively ...
In the last couple of weeks, I have talked to a dozen startup founders who are stuck between the ideation/starting/MVP stage and the early customers/revenue/growth phase.
This is the dreaded Traction Gap. Early-stage investors now tell you to ...
There is more Service in most SaaS product businesses than they let on.
The general baseline for B2B SaaS companies is that at least 80% of revenues are from software, less than 20% from paid services.
That doesn’t count unpaid ...
Investors and acquirers know there is a huge difference in company value between these two kinds of $5M ARR software companies.
One kind of company will accelerate.
The other kind will decelerate.
What they are worth couldn't be any more ...
For startup founders who have just finished building their first "sellable" product,
I am often the first to tell them what their real title is. For their primary job.
It's VP of Sales.
Yes, it's hard to create software and create new ...
These two things never go together:
1) Ambitious startup founder with growing revenues and big exit ambitions. "Someday this will be worth millions."
2) No lawyer or "some lawyer I know" who isn't focused on working with early-stage tech ...
How many things did you try before you decided on this startup idea?
First-time entrepreneurs are surprised to hear this question. They just don't know simple "innovation math" yet.
Experienced entrepreneurs know that for every 10 good ...
There are many benefits to creating, pitching, refining, and defending your investor pitch deck--then pitching it over and over...
Even when you don't successfully raise funding or you aren't trying to raise outside investment at all.
Here ...
Founders are often frustrated by inconsistent feedback from investors after a pitch meeting.
Too low of a valuation. Or too high.
Too much story. Or not enough.
Traction means $20K MRR or $1M ARR. Not enough customers.
The key metric ...
How much time and effort is required to raise money from outside investors for your early startup?
It can take most of the founder's time for six months to a year if your startup has these characteristics:
Product not built yet or it's not ...
I think software startup valuations will stay on the high side for the while, compared to 2019 levels.
We’re already seeing fewer crazy-high deals, but valuations aren’t dropping off a cliff as a whole.
Here's why:
Just like anything scarce ...
All startups have to cross a massive credibility gap on their way from a startup idea to becoming a big company.
Early customers, employees, investors, and partners all have a healthy skepticism about your new thing.
Rightly so. There's a ...
I heard three software startup investor "pre-pitches" in the last few weeks that all had the same big problem.
They were missing the simple startup math story about getting their first customers, creating early revenues, growing up in stages, ...
Show me something that is changing in our world…
And I’ll show you a crazy person behind it all.
Crowds don’t change on their own.
There’s always a “crazy” person and their team that started the wave.
People tell them they are crazy ...
I talked to a startup founder this week whose business is growing steadily.
But he has issues with a cofounder. It's killing his hope for the future of the business.
Cofounder problems are one of the challenging issues that can prevent a ...
When investors evaluate a tech startup or growth-stage company, they look at things like the potential market size, your team, traction, customers, and product.
But they are really asking one big question about the CEO in charge.
Can this ...
I talked to a software startup founder in London yesterday who was in a bit of a mess.
His MVP software was late, they are running out of money, not sure about customer demand, and have big co-founder disagreements.
Sorry to say, it's the ...
I talked to over 10 early-stage software startup founders in the last week about their next funding rounds and all the options.
They think growth funding is "getting investment from outside investors," but the first funding option for these ...
Measuring avg. Customer Acquisition Costs (CAC) with clarity and confidence is really hard when you are starting your SaaS business.
Here are the most common CAC mistakes that SaaS startup founders make before they hit $1M ARR:
1) Not ...
There's a serious question that a lot of people are asking these days after the chit-chat stops.
It is asked by successful people who devoted their entire careers or invested everything to build their companies.
It's starting to be asked ...
For startups trying to find traction and happy customers, it just doesn't pay to try to sell to everyone in your market. Or the average customer.
For startups selling new things, market averages are meaningless.
You're not going to sell to ...
One of the most useful tools I use in entrepreneurship and marketing is The 10% Rule. I use it every day.
It works like magic well when looking at any market or any set of execution results.
It's like the 80/20 Rule of the Pareto Principle, ...
Almost 50% of software companies on Gregslist have no outside funding and fewer than 20% are VC-funded.
Does that surprise you?
There are 5438 software companies on Gregslist.com in 11 cities outside Silicon Valley.
1019 companies are ...
What's the least believable part of this startup financial projection chart?
Hint: It's not the hockey-stick revenue growth.
100% YOY revenue growth is not common, but it happens.
The crazy part of this forecast is the profit number.
Fast ...
Getting 100% of your startup funding advice from investors is like getting nutrition advice from McDonald's.
"Of course, you should supersize it. Everyone's doing it."
Investors aren't bad or wrong, it's just that few of them will bring up ...
How are entrepreneurs getting software built for their startups this year?
Does the tech stack matter? Offshore, nearshore, or US-based teams? No code?
In this Ask an Expert in-depth video interview, I ask software development expert Vincent ...
I talked to 10 startup founders last week who are raising money from investors, have raised, or are planning to raise.
I always ask this question: What kind of money are you raising?
This is where the fun begins in our discussion. Most ...
I didn't think about my own luck when I was in the midst of my career.
Most things didn't go my way and I worked almost all the time. Where was the luck in that?
I hoped that working hard and being savvy would create more ...
A lot of social debate in the last week about using Calendly and other scheduling links.
Here are 9 ways I have used Calendly to schedule 3000+ meetings in the last 5 years with almost no effort on either side.
1) I don't share or send my ...
The people who succeed are the ones who say no to the things that don’t help them succeed.
VC funding isn't bad. It's just not for most startup software companies.
More than half of VC-funded companies wash out completely with no big prize for founders and their employees.
I just met Dave Whorton of The Tugboat Group. He has a lot ...
Most startup founders I talk to every week are hearing about the BIG FUNDING game.
They are wondering if they should be playing that game too.
It's everywhere online with big funding announcements, unicorns, and IPOs.
It's what founders and ...
Who is more likely to get their startup to product-market fit:
technical founders or business-side founders?
Greg R. asked me this question on a podcast interview this morning.
Here's the simple answer: Both technical and business ...
For big businesses, the main thing is keeping the main thing the main thing.
For startups, the main thing is surviving long enough to find your main thing.
I talked to 3 technical founders this week who had the same problem. In Ukraine, India, and Phoenix.
These are serious coders who have built real $1M ARR software businesses with their teams. But each of the startups stopped growing.
They ...
The savviest entrepreneurs and the most experienced marketers know something that isn't obvious.
You wouldn't know it if you haven't done it for years.
It just looks easy and effortless when you see it done well.
But great marketing ...
A startup founder I talked to this afternoon was in a bit of a panic.
"Is it going fast enough? Should we be doing different things?"
So I asked her what she had learned since the last time we talked a few months ago.
She rattled off ...
I was talking with a friend today about the over-coverage of venture capital funding in the tech media and at all levels of tech ecosystems.
Scott Petty also happens to be a general partner in a successful venture capital fund in Utah. He told ...
In the startup world, there is a lot of conversation about raising VC funding and successful exits.
But what if you didn't do either in your software business?
I know thousands of software company founders and CEOs.
By far the happiest ...
I talked with a technical founder today who never got revenue traction in his startup, but he was able to sell his technology to a bigger software business that wanted the platform he built.
I asked him what he'd do differently next ...
Show me any growing business with a line of waiting customers...
and I’ll show you a specialist who is known at the best at something specific in their market.
We don’t line up for generalists.
(Unless they are now effectively ...
In the last 5 months, I have invested in 5 software startups as an angel investor.
When I talk to founders about raising money, I always ask this question:
"If someone wrote you a $30 million check for your business today, would you take ...
The most successful founders I know are extremely savvy about execution. Superpowers.
But they also were thoughtful and clear about the strategic decisions they needed to make to execute so well.
Most founders aren't good at both of ...
There's an assumption there that "funding" means big VC funding from outside investors.
But all startups are funded in some way. They are never not funded.
Here are 9 ways startups fund starting up without venture capital or institutional ...
Here's my definition of strategy:
Strategy is just the decisions you make that make execution work better.
If execution doesn't improve eventually, it was the wrong strategy.
I believe these things about strategy and execution:
1) Execution ...
For 30 years I have been an avid student and practitioner of time management systems, planning approaches, productivity software, and mental approaches. It's mostly to help me manage my procrastination and distraction tendencies, which I fight ...
I caught up with a founder friend yesterday to hear about his new Web3 startup that uses blockchain, cryptocurrency, and NFT technologies.
We last spoke when we both lived in Phoenix a few years ago. Now I'm in Dallas and he's somewhere ...
Finding product-market fit requires product-market grit.
I don't know any entrepreneur who easily found their sweet spot of the right customer and the right product at the right time and things just took off.
It's always hard and takes ...
A founder I advise just sent their annual 2021 investor report today.
They grew from $1.8M ARR to almost $5M ARR this year.
This means the value of the company more than doubled too. I'm a happy investor in this software company.
They are ...
Here's my favorite thing about the crazy game of growing startups into bigger global companies:
Fast-growing companies are opportunity factories.
Fast growth creates massive career acceleration for those who join early, grow the fastest, and ...
I have this conversation 10 times a week:
Me: How’s it going over there?
Software startup founder: Great!
Me: How’s it really going?
(pause)
Founder: We’re f*cked. It’s all hard.
Me: Welcome to the club. That’s why everyone ...
I talked to a savvy software startup founder this week who reached out to me for a mentor call to get my thoughts.
He has a big newfangled idea, a first product that mostly works, and a few early pilots with large companies.
He has an offer ...
Sam Knight is a startup entrepreneur who grew a construction software business with a friend in the Dallas area.
Sam and his cofounder sold their growing SaaS business in 2020 for an exciting multiple (of revenue).
BOLT Software had just ...
Startup accelerators, incubators, and studios can be helpful for first-time startup founders.
But there's a problem with the accelerator business model that is frustrating to a growing number of savvy SaaS founders.
More and more software ...
"How big is your potential market?" is an interesting question.
But it's not very helpful to software startup founders.
Here's what's actually useful:
"What's the fastest way to get 100 or 1000 extremely happy customers who pay you and ...
There's a new thing happening in the software startup game that didn't happen very often just 5 years ago:
Some savvy startup founders are self-funding software companies and growing them to $1M or $2M ARR in 2-3 years,
Then they sell ...
Self-funded software startups can raise outside funding someday if it makes sense. Or not. Or sell it for under $100M.
Venture-funded software companies don't have the option to be unfunded at some point. The race is on until you exit for big ...
As a warmup to next week's holiday, here's one thing I'm grateful for:
Software companies are valued on multiples of revenue.
That's pretty darn amazing.
Most other companies are valued on multiples of their profit.
So SaaS ...
There are twice as many self-funded companies on Gregslist than companies with VC funding.
There are 3 times as many software companies that have "no or very little" equity funding (67%) than have outside institutional VC or PE investment ...
Three founders and two investors used the term "base hits" in the last week when talking with me about founders selling companies for $10M-$50M.
Here's why using "base hits" vs "home runs" baseball analogies doesn't work when talking about ...
Every week another founder friend sells their tech business.
This week it was Dan Jaffe, founder and CEO of LawLytics, who sold his company to one of the largest legal software companies in the world.
LawLytics is the leading website ...
Most of the big angel investors I know have one thing in common:
They bootstrapped and sold their own software businesses.
Isn't that ironic?
The entrepreneurs who never took any outside investment are the most active angel investors in my ...
A Dallas software founder asked me this on our quarterly call today:
"How can our company look serious and credible when we haven't raised a big funding round?"
He started his vertical market B2B SaaS business in March of 2020.
Now they have ...
Every week another founder friend sells their tech business.
This week it was Joshua Strebel and Sally Strebel, co-founders of Pagely, who sold their managed WordPress business to GoDaddy.
I'm very happy for both of them. They did it ...
I know 20+ founders who sold their business in the last year who didn't raise any outside funding or were unusually efficient in raising capital.
These founders had a much higher "exit success" rate than other founders I know who raised big ...
You won't believe this story of successful software entrepreneurship unless you hear it for yourself. I have never seen anything like it.
Nine years ago, my friend Saeed Eslami got a job with a large construction company while getting his ...
Ben Chestnut sold Mailchimp for $12 billion to Intuit.
Big news, but there has been little media coverage and celebration.
You'd think there would be gushing stories and endless positive headlines about growing a business without outside ...
Product-market fit means a company has "very happy customers who want to buy more and who recommend your products to their peers."
But the concept of Product-Market Fit has been far more simple and useful for VC investors (who created the ...
Startups are everywhere.
Everyone seems to be starting something.
Where are all the finish-ups?
Where are all the founders and their teams getting to their end game?
For all the starts who raise money from investors, finishing up is ...
Two weeks ago I volunteered to judge a live startup pitch day with 23 undergraduate presenters at a major university in the Dallas area.
Seven of the 23 startup pitches were already micro-businesses run by these students (or were very close ...
Gregslist Phoenix is 5 years old this week. Gregslist.com/Phoenix
I published my first curated Gregslist of 126 Phoenix software companies in August 2016.
Back then, tech leaders and SaaS founders in Phoenix didn't think there was much going ...
I talk to hundreds of SaaS startup founders and software CEOs every year through mentoring, networking, speaking, advising, consulting, investing, events, and now the Dallas Software Podcast.
I'm amazed that every story is different.
...
Last week I wrote a popular LinkedIn post about how all experienced angel and seed investors need to see some revenues before considering investing in your software startup.
I implored software company founders to get customers first and not ...
I have had 13 versions of this conversation in the last 3 weeks with savvy startup founders in Phoenix, Dallas, and Austin.
Founder:
I'm working on a cool new software startup with a team and we are almost finished with the product. We don't ...
Last week in Phoenix I spent an hour with my good friend Hamid Shojaee to talk shop on his AZ Tech Podcast. Here's what we talked about:
- What's happening in the Arizona startup tech scene right now
- Which Phoenix software companies are ...
Last week in Phoenix I spent an hour with my good friend Hamid Shojaee to talk shop on his AZ Tech Podcast. Here's what we talked about:
What's happening in the Arizona startup tech scene right now
Which Phoenix software companies are ...
Several times a month I talk to successful founders of:
recurring revenue businesses that have great margins
that are powered by software.
But they aren't SaaS software businesses.
They are "Service as a Software" businesses.
(Yes, I ...
Three (other) SaaS founders I advise are planning to raise sizable rounds from VC investors this year.
These founders are NOT talking to the biggest Silicon Valley VCs that require unicorn returns.
They are talking to growth equity VCs who ...
Gregslist started in Phoenix with 126 local software companies on the list in August 2016.
Now there are over 5,000 software and SaaS companies on Gregslist.com in 11 cities in 2021.
We also list all 2,500 new open SaaS jobs at those ...
How long will it take to get to your next big startup goal?
Here's my rule of thumb when estimating how long a venture or project will take to make real progress.
Double it.
For extra measure, work even harder, add more people, and run ...
There are 301 industry-focused software companies in Arizona right now on Gregslist.com/Phoenix. That's half of all B2B software companies in the state.
Surprised?
For the first 20 years of my career in software, there were almost no vertical ...
There is a lot more startup innovation funded by existing businesses than anyone sees.
It just doesn't make the headlines that big funding does.
Most of the founders I work with are managing their products and services as a portfolio. It's a ...
There are more than 1700 software and SaaS companies in Texas in Austin, Dallas, and Houston.
There were already a lot of software companies in Texas before 2020 when more tech companies moved here.
742 software companies on Gregslist ...
In the current tech boom in Silicon Valley, first-time tech founders can raise money from VCs before they have a software product or paying customers.
Outside of Silicon Valley, I don't see SaaS founders raising VC-seed investment before they ...
I have talked to dozens of founders and CEOs this month about their plans for 2021.
The most powerful words a founder can say about their plans next year: Doubling down.
"We will accelerate our growth by doubling down on ..."
...the ...
The VC-Industrial Complex dominates the conversation about tech startups.
They have convinced new founders to chase outside funding to start their companies and win the SaaS game.
They say this because it's their business model. It's how they ...
"Why do we need to worry about our category as a startup right now?"
That's a common question. The category game is not for every business.
Small businesses play in existing categories. Big businesses dominate categories that are already ...
A real conversation with a talented and dedicated founder:
"The seed investors I'm talking to don't think our TAM (total available market) is big enough since we focus on healthcare."
Really? How many real companies in your market?
"738,000 ...
Of all the founders of software companies I have worked with at Scaling Point in the last two years, half of their companies serve vertical markets.
They are focused on a single industry.
Not just an industry-market now so they can get to ...
I have been looking for an example of a successful company that started "wide" by being many things to many people and then grew from there without focusing.
I have been looking for 20 years. I still haven't found one.
It's totally ...
Industry-focused software startups have a much better chance of getting to product-market fit than other startups.
Vertical software companies focus on a particular industry, like dermatologists, childcare centers, insurance agencies, ...
Every buyer categorizes everything they buy, including your product or service.
Every company is playing one of only three category games.
The first rule of the game is to know which game you are playing, but most startups and growth ...
Overall software tech is booming, especially for the biggest tech companies. In the "almost" post-COVID world, there are winners and losers in early-stage software sectors that full -time early-stage investors follow.
Last week I asked 10 ...
A salesperson selling face to face can find a customer problem and then select one of their many solutions to solve that problem.
That's how sales works: "We can fix your specific problem from our menu of solutions." That's not how marketing ...
When you have a growing business and you are pushing hard, you look for every advantage, shortcut, and resource that can help you keep growing. Grow or die!
Some revenue-accelerating tactics create immediate results and can be repeated at ...
When you start a company, you do every job in the business. As you add employees, you stop doing a few things yourself and hire others to do them.
For companies that grow big enough, your team members eventually do all of the day-to-day ...
When savvy founders with real businesses ask me if they should raise money from investors, my first response is always the same:
“Don’t raise money right now. Wait a little longer and gut it out.”
I know they desperately need additional cash to ...
Last year I met with over 300 founders and CEOs, worked deeply inside 30 businesses all over the U.S., and spoke to thousands of people at conferences and events.
Despite that, my own business wasn’t a cakewalk and many things didn’t work out ...
Chick-fil-A is now the 3rd largest fast-food restaurant chain in the country, behind McDonald's and Starbucks.
They just sell chicken sandwiches. $13 billion of them a year.
Chick-fil-A doesn’t sell hamburgers.
Their average revenue ...
From early 2011 to the end of 2015, I was the chief marketing officer of Infusionsoft (now called Keap) where I led the marketing group. I was part of an amazing team that helped grow this amazing startup into a world-changing software ...
Experienced venture capital investors have been telling us for years how they “invest in big markets and founding teams.” Markets and People.
First, there needs to be a new market category that can grow big enough to support a couple ...
All of us experience marketing all day long, almost everywhere we look. Surprisingly, this causes most people think they understand the marketing game.
That’s like eating a nice meal at a restaurant and proclaiming you can cook it yourself ...
When I see a movie or a painting, I see the result of what someone created. I don’t think much about how it was made. I don’t understand it like someone who studied art or made a movie.
When I see a website, ad, sales pitch or product ...
I’ve noticed something that all successful entrepreneurs say when they are interviewed about how they grew their crazy startups into big businesses.
You also hear it in interviews with Olympic gold medal athletes. And when successful ...
Public Relations is one of the trickier parts of the marketing game.
It’s not like digital advertising or email marketing, where you can push a button and make measurable things happen right away.
A year ago, I hired a savvy PR agency to ...
I have been an observer and student of the Scaling Point for 25 years.
It’s the strangest thing. It’s completely obvious on the outside, yet we don’t notice it or understand it. It’s hidden in plain sight.
Like the joke about the fish ...
In the startup-to-scale-up growth game, achieving “product-market fit” has become a common indicator of a startup’s potential to grow into a successful company. This term was created and popularized by startup tech founders, investors and ...
Discovering and executing on your Scaling Point is a necessary requirement for growing a little company into a big one. But why is it so rare?
There are two reasons why Startup ADD is an almost universal disease that is very hard to ...
When starting a new business, you try many things to learn what really works. Your best ideas may look great on your whiteboard or in a slide deck, but they may not work in the real world.
So you go forth and build your first product, try ...
"I have this problem. What should we do?" a busy CEO asked me.
"Well, it depends."
The answer depends on your situation and what you are trying to accomplish. It depends on what's working in the world these days for this type of problem ...
Tech startups and innovative businesses are out to create new industries, or at least put new twists on established industries.
This creates a challenge for these entrepreneurs. Most are not prepared to answer the question, "What business ...
Surprised at how hard it is to raise funds for your startup or growing business?
Almost every entrepreneur I know who has tried to raise money is surprised by the incredible amount of time, effort and energy needed to raise equity ...
Like most entrepreneurs who are trying to achieve big things, I pay attention to what’s working and what’s not.
Some things are working pretty well for me, so I keep doing them.
Other things are not working so well. I’m struggling or ...
Every week, a CEO or business owner asks me if I know any great marketing leaders who could join their company to help them grow faster. I know a lot of great marketers, but my response to them is always the same:
“It depends. What kind of ...
Your audience doesn’t always hear you as clearly as you think they do.
What your business is and why it exists may be clear in your head, but most entrepreneurs are surprised when they ask their prospects, customers and even their own ...
Small businesses and startups look more similar than ever. Quick, can you tell if this is a small business or a startup?
Growing 30 percent a year with 10 employees
Subscription business model with customers across the country
...
At a recent event for Phoenix tech leaders, fellow entrepreneur Adam Toren and I were catching up over beers. Adam waved to a friend across the room. Gabe walked over to join us.
“Hey Gabe. How’s it going?” Adam asked.
“Great!” Gabe said ...
Last Friday I had the opportunity to interview three entrepreneurs who have created billion dollar companies at the Venture Madness investor event in Phoenix: Justin Kan, Steve Huffman and Daniel Kan.
Justin, Steve and Daniel have each ...
Have you ever delivered a great sales pitch to an ideal buyer but they didn’t call you back? Or made a great presentation about your new business idea but the audience didn’t buy in?
Your pitch may have been flawless, your argument clear and ...
The software industry has almost finished its 10-year conversion to SaaS (software as a service). It's software that runs on PCs, web browsers and mobile devices, and is centrally hosted on servers outside our data centers (in “the ...
If you are like most early-stage entrepreneurs, you set aggressive goals. You probably got a lot done this year, but you still came up short on achieving everything on your plan. Now it's time to assess how you did this year and determine what ...
A few months ago, I had a long conversation over dinner with entrepreneur and investor Michael Dornbrook. I got to hear how his startup company went from long-suffering video game creator to one of the most successful companies of its ...
When I help CEOs with their growth challenges, I first list of all the problems they face. Then I divide these issues into two buckets - tactical and strategic.
Tactical issues exist when execution isn’t happening and you can figure out ...
David Hewlett, co-founder of Hewlett-Packard, used to say this:
"Marketing is too important to leave to the marketing department."
He knew the strategic questions that drive great marketing execution are the same questions at the core ...
I met with two founders of a local startup software company last week. After learning about their history and current situation, we started to dig in on their big question, "How can we grow faster?" Game on.
Regardless of company size, my ...
I wrote this post years ago for the Infusionsoft blog and it is now posted on Medium. I'm sharing this again because I repeat this story often with early stage CEOs who are on their own leadership journey.
You become a leader as soon as ...
Your startup has built a software product that has "cool features" that actually work. That's a big milestone for every startup. The thing actually works!
Your customers talk about your product's features by name and they give you feedback ...
The product your customers evaluate, purchase, use and talk about is not just the product you deliver to them. The actual product is critically important, but it’s not the “whole product” in the eyes of your customer. There’s more to the story, ...
I have been part of the Phoenix startup and software scene for 20 years.
I see ten times more activity in startups and fast-growth software companies in Phoenix than there was just five years ago.
As an executive leader, I have helped two ...
Creating a new venture and surviving the brutal startup phase often feels like a negotiation in which you need to say Yes to everyone just to survive. This is the fastest way to end up in startup purgatory – you get started but you get stuck on ...
After almost five years, Friday, October 30, 2015 was my last day at Infusionsoft.
It has been an honor to be part of several exciting phases of growth at Infusionsoft and to accomplish world-changing contribution with so many passionate and ...
Even though I am 46 years old and live 1500 miles away from my Dad, not a week goes by when I don’t hear his voice in my head telling one of his many stories about business, marketing or management. We still talk weekly, but I am most often ...
Remember the old days when marketing resulted in printed material you could touch and feel? Just 10 years ago, the majority of marketing artifacts included printed brochures, product packaging, magazine advertisements and direct mail letters. ...
Imagine a world where people don’t listen to what your business says about your new product: they only listen to what other people say.
A world where there are hundreds (or thousands) of choices for almost every product. Where every buyer ...
Ambitious entrepreneurs naturally aim to create large companies in large markets. They make their plans, build their newfangled products, assemble scrappy teams and then set out on their holy quests to be big winners.
But most startups don’t ...
Angel investors regularly hear pitches from local entrepreneurs who need money for their growing startups. Unfortunately, too many entrepreneurs don't succeed in their first meeting with potential investors.
How can you be more successful ...
Any business that is succeeding in the marketing game is relentless about executing their focused strategy. Owning a valuable position in the market is not easy. It takes focus, creativity and discipline. The discipline to communicate your ...
Earlier tonight I presented a five-minute speech to 500 people at the Ignite Phoenix event. The topic of my talk was “Mastering the Pomodoro Technique in 5 Minutes.” The Pomodoro Technique is a very simple method that can help anyone enable ...
What’s the biggest difference I see between a $1 million technology company and a $10 million technology company? You might think it's something like the quality of their products or the size of their management team, but it's not.
The key ...
Do you know what visitors are doing on your website each week? Where did these visitors come from? Which pages did they think were most important? Which search terms brought them to you?
Using Google Analytics, the popular and free website ...
Where do CEOs of small service companies struggle most when trying to create a "scalable" service business that can grow to be a large company?
They underestimate the amount of refinement and development of their service offerings, marketing ...
You've been working hard to build your new product or launch your service. You're excited because your first potential customers are still interested in buying from you, despite several delays. Now it's time to start chasing more customers by ...
Think about it: Who is your customer? What does this customer value?
These are two of Peter Drucker’s “Five Most Important Questions” for your organization. I often find myself returning to Drucker's questions in strategic discussions about ...
Successful startup entrepreneurs almost always have impressive skills in two areas: product creation and sales. They find problems in the marketplace and create products or services that satisfy those needs with teams that can deliver the ...
Outliers is the latest book from best-selling author Malcolm Gladwell. He also wrote The Tipping Point, one of my favorite marketing books. Gladwell is an astute social researcher and a master storyteller. His other books and his columns in The ...
The marketing communications challenge is getting harder, not easier.
Why? Because there are more communications channels than ever. Each channel you use requires time, effort and some expense. And it’s not easy to be proficient with so many ...
Many entrepreneurs and CEOs ask me if they should create a formal Board of Advisors so they can get advice from experienced leaders or well-known figures in their industries.
The most common reason to create a formal advisory board is to ...
It used to take considerable expense to create a high-quality company Website, even for small businesses. I just finished a project that confirms that popular and inexpensive Website creation tools are taking much of the development cost and ...
One of the hardest things for entrepreneurs to tackle is the definition of their core business "positioning." Positioning is known by many names - your focus, your marketing strategy, your elevator pitch, your business description. This ...
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