SaaS Founders at Work '22 Edition
42 inspiring heuristics and hunches from 194 years of building...
Welcome to the 64th edition of The SaaS Baton. A fortnightly newsletter that brings you 3 (well, we broke that rule this time), hand-curated pieces of advice drawn from the thoughtful founder-to-founder exchanges and interviews taking place on Relay (curated with 💛 at Chargebee) and the interwebz. So, stay tuned!
This is a special edition where we pause and gather founder notes from Relay’s past year. Spread across 7 deep-delving categories, these voices offer a necessary, reflective, and captivating slice of what starting up a SaaS really feels like today.
We hope that these and Relay’s ever-expanding compendium of lived insights (we remain indebted to founders who take the time to unpack the practical and the philosophical of building 🌻) stay with you as you approach 2023’s uncertain realm.
In this particular edition, you’ll find the following instructive and inspiring pickings that offer a glimpse into the post:
#1: [Founder’s self] Bento’s founder, Jesse Hanley, on being aware of where burnout, for him, really stems from, and a work-life routine that helps.
#2: [PMF] Wethos’ co-founder, Rachel Renock, on questioning the assumed binary of product-market fit.
#3: [People] Airplane’s co-founder, Ravi Parikh, on how people tend to overrate “relevant” experience.
#4: [GTM] Pulley’s co-founder, Yin Wu, on why (and how) to build for a “non-obviously” large market.
#5: [Product] Cord’s co-founder, Nimrod Priell, on “burnt pizza” and why MVPs worked in a different era.
#6: [Capital] Merge’s co-founder, Shensi Ding, on crafting a high-quality business especially when times are good.
#7: [Operating principles] Panther’s co-founder, Matt Redler, on asynchronous principles that inform and drive better decision-making.
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#1: “I think… [feeling strung out is] normal and healthy”
(From: Bento’s Jesse Hanley)
I get overwhelmed, stressed, strung out all the time — I think that’s normal and healthy — but I find most of the issues stem from either me not having some key piece of knowledge (i.e how to scale a specific system) or not thinking about things from first principles (i.e the insight that our support could be done almost entirely on Discord vs. email and live chat was a huge one but felt VERY weird at the time).
Talking to friends, my wife, my dad or hiring help tends to be the unlock required to get out of whatever anxious loop I’m in.
As for routines most days are like this:
- Wake up around 6-7am
- Go to the gym (clean out Discord messages here)
- Make breakfast
- Work for 3-4 hours
- Have a late lunch, go for a walk, do something fun whilst my food settles
- Lock into an afternoon work session until dinner
- Play video games whilst doing support until bed time
I’ll often also go exploring on my bike after lunch and find somewhere new to settle into. It’s nice to mix up my environment from time to time and I love finding a new cafe or book shop to work out of.
If I find myself really burned out I just wont work for a few days and forgive myself for it. I think this is the hardest part of being your own boss but I’m slowly getting better at it. After all, we all need rest.
Oh and a fun one I do often — some weeks, I divide a “40 hour work week” by 7 and just work a little every single day (inc. weekends). I find that’s super sustainable for me and slows things down a lot.
#2: The PMF trifecta
(From: Wethos’ Rachel Renock)
I believe that product-market fit isn’t a binary, black-and-white thing.
It’s a trifecta, instead.
Which gets completed only when you tie in and iterate as much on the third, equally decisive element — the business model. And the question a lot of people have on business models is: how are we going to make money?
But the question I have is: How are we going to provide value to our users and help them realize that value at the point of monetization?
To expand this line of inquiry:
- Where and at what moment are we going to get somebody to an aha moment?
- What is that aha moment actually worth to that person?
- How does that tie into their overall ability to succeed on the platform?
- And who are we actually going after, because that also has to map together, right? (folks you initially target as customers might be very different from those who can actually afford to pay)
#3: Why hiring for similarities (deal sizes/categories) doesn’t yield much
(From: Airplane’s Ravi Parikh)
I believe people overrate relevant experience in the same field. It’s really tempting to be like, ‘oh, we’re Heap, we should hire reps from Mixpanel or Amplitude or something like that.’
That’s great. They’ll perhaps ramp a little bit faster.
But the right reps honestly can learn most products pretty quickly.
If you hire, let’s suppose, I’m making things up here a little bit, but let’s say you hire someone from a direct competitor, who’s in the same space as you.
They’ll probably do a great job in your interview process, especially if it’s sort of product centric, but you don’t actually know their ability to ramp on your product. You only know their ability to have existing current knowledge of the space.
Your product is inevitably going to be somewhat different from the product they’re coming from. So I don’t want to give too much detail because I don’t want to name specific people, but we have hired people who had a lot of ‘relevant’ experience.
And then their ability to just get that 20% more to learn Heap, specifically, was actually a lot more difficult than I thought it would be.
I don’t know if it took them two years to learn all that stuff. Whereas there’s other people that may have come totally out of the industry. Todd, our first sales rep came from Square. Square and Heap have no relationship with each other. Different deal sizes. Different products.
Yet he figured Heap out within a couple of weeks.
And to me, it’s that slope, that rate of learning that matters a lot more than the knowledge that they come in with today. Especially for your early sales reps, who don’t have all that scaffolding and support.
If you hire from the same industry, you’ve actually diminished your own ability to discover their rate of learning, in some sense. Because they will come in and feel very knowledgeable compared to the average person you’re interviewing.
#4: “We didn’t invent cap table management”
(From: Pulley’s Yin Wu)
Consider a market that seems huge. Let’s take Search. That’s as big as they get. Google is a trillion dollar plus company. How do you compete against such an all-encompassing incumbent?
Then there’s another kind of massive market. If you look at the CRM space, where Salesforce remains a clear leader, there are tons of other products. An ever-expanding long tail of niches. Which is great, but what’s your differentiation then and how much of the market can that really allow you to carve out?
The way I think startups win is by betting on and building for markets that seem small today but would be non-obviously large in the future. The bet being: Why do you feel this vision of the world will materialize? And can you ride the wave as it does?
Non-obviously large. That’s the key.
The obvious ones already have everyone going after them, especially behemoths with big resources. Thus it becomes really hard to find an edge.
Pre-Stripe, it wasn’t clear how big payment processing could be. The (assumed) ceiling, almost a decade ago, was the price tag of the Braintree acquisition. But Stripe proved that if you can build a 10x better product you can expand the size of a market.
With Pulley, for instance, we didn’t invent cap table management. That category has been around and we have a lot of respect for products in this space. But the thing that most people don’t realize is that this is going to be a much bigger category than it is today.
To begin with, we’ve been pursuing verticalized differentiation. We want to focus on early-stage founders. The GTM for Pulley has been concentrated primarily on serving early-stage founders and then growing with them as they grow.
Other tools in the market are focussed on late-stage companies and are very complicated to use. This isn’t a lot different from when Stripe first came out. They were essentially saying: “let’s focus on startups, a lot of these processors or large companies are not selling to developers and making it hard for them to integrate.”
So, instead of making a product that only cap table administrators/lawyers/paralegals can use, we’re selling directly to founders and making them understand how to manage equity well. Also weaving in the complexity over time, so that their future finance teams can have a robust tool.
What we’re also finding out is that across verticals, whether that’s healthcare or biotech, there are companies that you probably wouldn’t even think will need cap table management.
Large coffee producers that do profit sharing with their employees, for example. All of those are within the scope of Pulley. So although we’ve started with a targeted segment, we understand that we slowly need to build for the edge cases as well.
How do we prioritize building out the edge cases? We start by asking: What is the size of the market? What does the competitive landscape look like? And do we have a plan to win?
Then, most importantly, we drill deep into what our new users are saying.
#5: Burnt pizza and why Instagram never rose out of Facebook
(From: Cord’s Nimrod Priell)
The notion that a minimum viable product doesn’t cut it, in a lot of instances, is fundamental to how people need to think about their startup journey.
Because the Lean Startup was written at a point in time where mobile was just starting up as a platform. And you could get away with things. Really. The first apps on mobile were exceptionally basic and still got propelled into huge success.
On the B2B side, a lot of givens we take for granted today just didn’t exist back then. A self-serve kind of SaaS model for example. Everything was over a long sales cycle. SMBs were completely underserved. There were barely any sophisticated tools.
You could build a basic thing like Shopify (when it started) and score massive success. The need to grab a space first mattered a lot and people’s expectations were low.
Today, there’s a focus on other elements. And we cannot get those right if we serve burnt pizza. People wouldn’t comment and tell us anything if they’re dealing with a poorly executed product.
Essentially, if you measure yourself quantitatively, trying to get high retention for example, which is a good measure of PMF and getting to some scale, or getting a good CAC and better rates across different parts of the funnel, none of it will work if the whole product experience doesn’t shine.
What that means is that, as founders, we do have to put a lot more attention to quality and a lot less attention to metrics than most of the PMs who’re trained or who grew up in these post-PMF, large companies that are scaling or optimizing.
This has certainly been an unlearning for me. Or a relearning for the early days of my career. Because after 5.5 years at Facebook as a PM and as a data team leader, everything that was hammered into me was around how analytics and experimentation give you the right path forward.
And that’s just not the case.
It’s true for incremental growth. It’s not true for new experiments, ideas, and products. That’s actually something that Facebook got wrong.
Facebook had a period where it was investing in this initiative called Facebook Creative Labs, with which they aimed at expanding the core Facebook apps like messenger and building novel experiences that people might want. Essentially, to build the next Instagram in-house, instead of spending billions on acquisitions.
That failed miserably.
Internally, some leaders noted that one of the reasons why Facebook Creative Labs would never have come up with something like Instagram is that it just didn’t allocate enough time, enough patience for these experiments to come to fruition.
Instagram took 4 years to build up. Not to scale. To build up, to refine and hone the product until it was useful. Same with Figma (I know the stories as we share investors).
They took years to hit their stride. Notion, incredible story, again. 4+ years. Where they almost ran out of cash. And they didn’t really pivot much.
All of these companies seem like overnight successes.
They’re all overnight successes, yes, but years in the making.
What we built in the first half of the year was total crap.
Cord is now, 2 years in, with some of the best engineers one can hire in Europe, getting to the level of quality that people expect from the core loops in the product. I don’t think there are shortcuts here. This takes hard work and ardent attention to details.
Without reaching that level, users simply turn themselves off from even the most useful products. And it isn’t just bugs or bad design experience. Things that you can clock in metrics.
People can leave for the tiniest of things in the journey. An interface that’s slightly slower than they’d expected. A brand not quite resonating with them.
Getting all of that right just takes time.
#6: Raising a major round in a difficult environment
(From: Merge’s Shensi Ding)
Why raise a round in the current environment?
Well, we didn’t know where the market was headed in the near future, we were doing really well as a business, and we had amazing investor interest. It was really a seize-the-moment situation.
We’re really happy that we did because now we can scale faster, build out more integrations, support more customers, and hire more post-sales team members.
We could make this fundraising decision primarily because of another one we had made long back. Hiring a Head of Finance and Ops very early in our journey is something we’ve been incredibly grateful for, especially since the market turned.
Thanks to that hiring decision, we have always been a very efficient business. We’ve been really careful about our spend, about how much money we were generating, and we’ve been really deliberate about ROI on every single hire.
Over the past few months, it’s been reaffirming to have been focusing on building a high-quality (and also high-growth) business.
The ethos of pushing and stretching as much as we can as a team has been a helpful, hard-won strength for Merge.
Having a great finance leader really changes the game for a company. It makes you more careful with experiments and more thoughtful when hiring.
It’s definitely a critical early hire in my book.
#7: Making public decisions a norm
(From: Panther’s Matt Redler)
Okay, so how do we think about decisions in an asynchronous workplace?
The first thing I’d highlight is committing to a lot of public communication. What we attempt (and we’re not perfect at this) to do is that we avoid making decisions in private, direct messages.
Because that takes away potential know-how on what went into a given decision; why did it happen the way it did, and how could we have prevented it from happening again.
The next principle is nothing special at Panther, this is something I’ve copied from great leaders I’ve followed. It’s deliberately pushing decision-making ability towards individual contributors as much as we can.
In an opposite situation and at a very ineffective org, all decisions will come through the CEO. Nothing would get done. Because people will constantly be stuck, waiting for the “dictator” decision-maker to step in.
So, as long as the decisions are reversible, we try really hard to enable our ICs to make them on their own. If they’re irreversible calls, then it makes sense to slow down and get more people involved.
A prerequisite for having the confidence to give as many folks decision-making autonomy is to hire really damn good people. And, in my opinion, one of the easiest ways to do that is to not filter some of the world’s best talent because of silly, unnecessary reasons like someone’s location or their time zones for that matter.
Another thing we follow is to ensure that every decision, whether that’s for a fundamental product change that someone’s advocating for or something smaller in scope, we have a listed, universally understood decision maker.
Until next time,