The Top Mistakes Killing Your SaaS Company - Growth Hacks Your Start-Up Needs Now
Founders & entrepreneurs are passionate, driven and thrive on the possibility of building something great. Most entrepreneurs I meet — especially at earlier-stage companies — happily trade family time and vacations for seemingly nonstop work, and a chance at meaningful success.
Intense efforts to build a category-creating, market-leading product may be diluted — even completely negated — by avoidable errors and pitfalls with a company’s go-to-market plan. After all, a great product without a great go-to-market is a rocket without a launchpad.
When embarking on this journey, your initial customers often come through “warm channels” — they may be contacts from your professional network, past customers, or introductions from investors. These initial sales will come much easier, however, getting beyond them and achieving meaningful scale will require that you avoid making one — or more — of the mistakes outlined below.
The purpose of this article is to shine a light on some of the more catastrophic, yet avoidable problems I personally encountered as a 2X CEO and 2X COO. I’ll share recommendations so you’ll have a greater chance at achieving the success without making one, or multiple, mistakes referenced here.
Mistake #1: Go “Cheap” When Hiring Talent
Don’t try to save money by hiring someone who doesn’t have the experience to help take your company to the next level. This includes missing domain expertise; for example, if you are in the cybersecurity market, don’t hire someone into a key leadership role with no cybersecurity experience. It sounds completely logical, but I encounter this all too often. While I strongly support developing talent and providing growth opportunities, you don’t want to enable what I call “growth through trial and error”. Young companies don’t have time for this, and it will cost you more in the long run.
Don’t go cheap when hiring, it will cost you more in the long run.
If you need a marketing or sales leader, find the best possible candidate and do whatever it takes to get them onto your team. Don’t cede a key role in your company to an individual who is in a development role. Development roles are great, its our duty to develop talent, but don’t merge a leadership role with someone who is “learning on the job”. A key step toward building a culture of excellence in your company is to hire great leaders and get out of their way.
Mistake #2: Overstepping Roles and Boundaries
The good news is that CEO’s and founders are passionate. The bad news is that passion knows no boundaries at times. C-level leadership (and founders) need to set and communicate an overarching strategy, but also know when it’s time to step back and allow their team to define, execute and continuously refine that strategy.
Over-involvement and micromanagement are not only counter-productive, but create confusion and — worst of all — send a message that there is a lack of trust in the team.
Passion knows no boundaries at times.
Publicly second-guessing decisions or communicating any level of conflicting direction to a team sends a message that there is an unclear leadership structure and a lack of alignment and trust in functional leaders.
Finding the right balance of leaning in and directing a team versus a hands-off leadership style can be challenging to achieve. Good leaders know how to balance this and avoid overstepping their roles.
Mistake #3: Overlooking the Importance of Product Marketing
One of the most common — and potentially fatal — mistakes in a go-to-market is overlooking the criticality of great product marketing. This is especially crucial when starting up and going through the process to build and launch a product with a strong market fit. (Check out my entire article on Achieving Product Market Fit). Hiring a great product marketing leader will likely be one of your most challenging roles to fill. It requires someone with pre-existing market domain knowledge, an understanding of the target-buyer persona, strategic thinking, and someone who excels at creating simple, compelling messages that are differentiated and easily understood.
A product marketer’s primary goal is to deliver the right product with the right capabilities to the ideal target customer to ensure customer adoption. Think of product marketing as a “GPS” to help you get to the right customer with the ideal, must-have product.
Without this key hire you are destined to miss the mark and waste countless cycles and venture capital.
This journey will include a 3-step exercise consisting of market research and validation, product positioning, and go-to-market execution. During this process, you will make ever-critical adjustments as you learn from customers and hopefully begin to cross the chasm beyond early-adopters to drive adoption with the mainstream market (also known as the early and late majority).
Tip: As an executive or founder, hire someone you can trust to lead this critical function, but do not excessively remove yourself from the process. Your future success depends on a strong product-market fit, and these decisions are a critical linchpin to get there. Making this investment early increases your team’s probability of building and launching the right product.
Mistake #4 — Using an Old Playbook in a New Market
You undoubtedly bring value as a leader today due to your career experience. Accruing this experience makes you more valuable and increases your ability to succeed and make the desired impact. However, you must not become over-reliant on past experience and lean too heavily on your tried and true “Playbook”.
What worked well in the past, may no longer work in the future.
I learned this the hard way as a first time CEO when I pushed a simple online freemium sales model into more of an enterprise, sales-led approach. It was what I knew and where I was most comfortable. I errantly added cost, complexity and friction to a simple sales cycle. We quickly pivoted away. I found myself thrown into waters where I had to learn and adapt quickly, but operating in an uncomfortable setting forced me to get better. Our sales process improved along with our results, and I developed a powerful new playbook focused on low-friction, product-led go-to-market and have never looked back. Learn to be uncomfortable, stretch yourself, and constantly develop newer and better playbooks for your business.
Mistake #5 — No-Touch Purchasing Too Soon
In pursuit of the most efficient and “purest” SaaS selling model, many companies work hard to establish a frictionless, no-touch purchase capability. While that sounds like nirvana (“we can book deals 24 hours a day!”), you miss the opportunity to connect with your prospects and learn what their needs really are and which features are most important to them. From those discussions you’ll understand what other vendors they’re considering, and you’ll have a chance to validate your pricing model and potentially negotiate pricing. None of that would occur if the only purchase path is exclusively online.
At the early stages of your company, that insight is pure gold — you’ll be getting first-hand feedback from your best prospects, which is far better than an ultra-efficient, frictionless purchase. Instead, train your team to engage and listen for key insights that can lead to improvements across the entire purchase process — from feature gaps to ease-of-use to price.
Mistake #6: Not Investing in an Ecosystem of Technology Partnerships
The process of building a technology stack and determining how to go-to-market is a a time-consuming, “heads down” process. A surprising number of companies overlook the importance of building technology partnerships. This is an opportunity to cost-effectively plug into a larger ecosystem without spending millions of dollars in marketing. Customers — especially in a down economy — want to leverage existing investments. If you don’t easily connect and interoperate with what is already in use, you are making it more difficult on your sales team, and ultimately hampering your growth.
The partnership itself becomes a proving ground where you demonstrate potential synergy, and, these partners may also become a facet of your exit strategy. Throughout my career, the most significant sales growth and exits have come as a direct result of such partnerships.
Think of the partner ecosystem as an “on-ramp” for users with a lower cost of acquisition.
Think of the partner ecosystem as an “on-ramp” for users with a lower cost of acquisition. Who are the “giants” or disruptive companies in your space? How can you add value to their solution and help their customers? Can you grow your sales funnel by launching an app in their marketplace? Will they support you with co-marketing and joint-selling? If you can leverage this opportunity, you will have the chance to “rise with the tide”. If you establish the right relationships, you will greatly increase the chances these partners could invest in or acquire your company. For more detailed guidance on building these relationships, check out this recent article with tips and best practices: “Productive Partnerships, How A David Can Partner With A Goliath.”
Bonus Tip and conclusion — Don’t Hide From Failures; Embrace Them
Develop a culture of constant experimentation, and celebrate the valuable learnings you’ll gain from the things that go wrong along with the things that go right. With a willingness to experiment, you’ll find that even small “tweaks” can become cumulative improvements to the overall efficacy of your go-to-market. Solicit ideas from across the company, and build a roadmap of tests to run. Strive for multiple tests running concurrently. Be sure to share the learnings, and of course, celebrate the wins, but also talk about the failures and what you’ve learned.
I hope this article helps you to avoid some of the major pitfalls I have encountered in my career. You’ll make a lot of mistakes on the journey to grow your business— embrace them, and learn from them. As hard as it may seem, strive to share them with your team, even your investors, so peers can learn together with you.
If you benefited from this article, please feel free to share it. If you have any questions or want to discuss any of these topics, please feel free to reach out to me.