Dear SaaStr: What’s The #1 Biggest Fear For Most Founders? - The Entrepreneurial Way with A.I.

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Tuesday, July 12, 2022

Dear SaaStr: What’s The #1 Biggest Fear For Most Founders?

#SmallBusiness

Dear SaaStr: What’s The #1 Biggest Fear For Most Founders?

In the earliest days, your #1 fear is business failure, going under.  Not building something anyone will buy.  Running out of money.  This fear, though, is highly actionable.  You scramble, you hustle, you find a way … or you don’t, and blink out of existence.  Another start-up that came and went.

But after that, if you make it, post-Initial Traction … the longest stretch for me at least was Fear of Being Stuck in the Middle.  The middle between “just” a small/medium business — and A True Success.

That’s the phase where the business is now, more or less, self-sustaining … but only at a small level … enough revenue to provide for at least a very small team … but not enough to get to IPO or M&A, or “big enough” ($30-$40m in SaaS terms) to create other options (e.g., dividends, fat salaries, secondary liquidity, etc.)

Todd McKinnon, CEO of Okta, expressed a somewhat similar concern.  He didn’t really believe that had something real until $30m ARR, growing quickly:

Stuck in the Middle is building a product a small group of customers really want, with a real value proposition — but not enough of them.  Not something where your equity will ever be worth anything.  Less than 100 companies have a material, positive exit each year.

A lot of companies are stuck there.  There are a lot of SaaS companies, for example, > $5-$10m-$20m in ARR, but only growing 20%, 30%, whatever a year, in a space with no liquidity options.  They got old, they get stale, there is lots of team turnover.  As the turnover increases, the quality bar eventually goes down, as you can’t attract aggressive, gung-ho folks any more.

My learning is you can outgrow this, if you are patient and dedicated, as with everything else.  You’ll have down months, even a down year once or so in your history.  But if you’ve had a good quarter, and then a good year under your belt — even if things seem off at the moment — you can do it again.  You can.  I worried too much about this.  More on what to do here: https://www.saastr.com/what-to-do-if-your-business-decelerates/

What to Do If Your Business Decelerates

 

In fact, for many SaaS companies at least, growth re-ignites at some point, perhaps around $20m ARR, +-, if you just keep at it AND have happy customers.  You’ll see it in the lead flow even before the revenue.  At that point, you have enough of a brand, enough momentum, that if you continue to invest in the platform, in your customers, in your team, it starts to become something Real.  And you can get from Real to Big.

But it’s a daunting concept.

too slow sticker from here

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Jason Lemkin, Khareem Sudlow