A Conversation with Jason Lemkin of SaaStr

Jason Lemkin

The founder of two successful startups, Jason is now a Venture Capitalist and just raised a fund of $70 million based on his famous SaaStr brand.

Jason Lemkin is a rock star in the startup world. Dubbed as the Godfather of SaaS, Jason has co-founded two super successful startups, and both acquired for boatloads of money. One of them was EchoSign, which was acquired for $400 million by Adobe in 2011. Prior to EchoSign and Adobe, he co-founded NanoGram Devices, which was acquired for $50 million just 13 months after launching.

saastr.com/

quora.com/jasonlemkin


Discussed:

Overcoming challenges at EchoSign, Difficulty of raising a VC fund, Mistakes of Saas Founders, Hiring Executives, Starting a Company Today, Websites and Podcasts Recommendations.

 

“IF YOU AREN’T DREAMING AT LEAST THAT BIG, I CAN’T INVEST.”


LAWTRADES

At the early stage of starting Echosign when you were just getting started, what were some of the biggest challenges you faced and how did you overcome them? 

JASON

It was a long time ago in internet time.  The biggest challenge we really faced 10 years ago when we got started where how tiny the SaaS markets were.  I projected $2m in ARR in our first 12 months — in 2006.  I thought we were a failure for hitting a fraction of that, but looking back, we actually did well our first year.  The markets are just 100x+ bigger today.”

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LAWTRADES

You’ve raised a pretty large fund this past summer, how hard was it? Where do you see the funding landscape going in 2017 for founders and investors? 

JASON

“Raising a venture fund is very hard.  Much harder than raising money as a CEO.  It’s a very small and nichey industry, and most of the capital there goes to “re-ups” in subsequent funds, not new funds.

I was fortunate to be able to raise a fairly large round in just a few months.  While my track record helped, the incredible support I had from the CEOs I invested in, and also my co-investors, was what made the difference.   I owe a lot of thanks here.  My NPS was very high.” 

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LAWTRADES

You get a lot of pitches, meet with a lot of companies and make a selective amount of investments each year – what are the most common mistakes that you see from early stage SaaS founders? 

JASON

“Everyone makes the same operational mistakes.  Hiring the wrong first VP of Sales is the classic SaaStr error 70% of them make (or more).  Waiting too long to hire a VP of Demand Gen / Marketing (do this at $20k MRR, not $200k MRR).  Hiring one rep to start, not two.

At a strategic level, with my VC hat on, the big mistake is not thinking big enough.  I know it’s almost trite or annoying to hear, but I also need to see how your business looks at $300m ARR — not just at $3m in ARR, or $300k in ARR. I need to believe you can at least be the next Zendesk.  If you aren’t dreaming at least that big, I can’t invest.”

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LAWTRADES

You have a lot of experience in hiring for executive sales roles and marketing roles, what should founders look for when making a key management hire?

JASON

“Hire someone who has sold successful at your target average price point for last year.  And for a VPS, make sure you hire someone that has at least directly hired a handful of successful reps.  Not just managed them — but hired them. People don’t do enough reference calls on folks their VPS hired.  Talk to their team members.  That’s a key diligence step founders don’t do enough of.”

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LAWTRADES

What books or resources do you spend a lot of time reading that you think would be helpful for founders? 

JASON

“The SaaStr podcast and From Impossible to Inevitable! 🙂  Also, beyond the obvious SaaS folks — follow and read Auren Hoffman (@auren), who had $1b in exits last year.  He has some of the best thinking for founders I know of.  I learn from him every time I read something he’s put out.”

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LAWTRADES

How would you start a company today, knowing what you know now? 

JASON

“I think the bar is higher on the dev side.  You need a better engineering team, earlier, solving bigger problems.  AI and ML and Deep Learning may sound like buzzwords, and they are.  But automating a business process often won’t be enough in 2017. You need to do something important with the data you generate and analyze.  That’s harder to do with a hackey-app. Put differently, if your app is just a hack — I have to believe that hack can get you to at least $10m in ARR.  Then, we can bolt on the 20 engineers from Palantir.”

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