6 Lessons From My MOST SUCCESSFUL Investments in B2B SaaS

0:00after investing in 171 SAS businesses over the past 5 years I've uncovered more than a dozen patterns among the businesses that grow the fastest and lead to life-changing outcomes for the founders in this video I'll reveal six of these patterns and show you why they make your startup more valuable even if you never plan to raise funding the first lesson is that fast growth in a SAS startup is a multiplier between the founder and their market and what do I mean by a multiplier well if you have an amazing founder but they're in a bad Market a market that's not growing fast a market where not a lot of people are

0:35looking to switch or coming into the market then they will do so so and if you have a so so founder in an amazing Market they might do okay but if you have a crappy founder and a crabby Market they multiply together and you get a low number and if you have an amazing founder and an amazing Market this is where I see companies growing the fastest so in terms of Founders there are several traits eight or nine traits I've mapped out elsewhere about things that I see in SAS Founders that allow them to succeed but realistically if I were to boil it down to two things

1:06it's being capable and being coachable so capable is they get stuff done they move quickly they generally work on the right things they're right enough of the time to keep pushing the boulder up the hill coachability is the willingness to ask for advice to ask smart people whether it's an investor an adviser someone in their Mastermind another startup founder that they know and take that advice and maybe not implement it directly but at least in incorporate that into their thinking so that's founder if we switch to the market I talk about total reachable market so total addressable Market is what Venture capitalists talk about right which is

1:39some billion dollar Tam you might hear this for me total reachable Market is how many people are looking for your solution or this type of solution on a monthly basis how many new businesses are cropping up that need it how many existing businesses are switching from existing Solutions how entrenched and hated is the competition so apps like Shopify are really not like by a lot of companies mind body has a bad reputation with gyms and fitness Studios and frankly the end user doesn't love them either so having an amazing founder who is coachable and gets things done in a market that is growing fast or there's a

2:11lot of folks switching all the time can really lead to strong growth lesson number two is that insas technical Founders have a leg up this may not come as a surprise at all if you are a non-technical founder and you've tried to launch his ass you know how hard it can be within Tiny Seed and the 171 companies we've funded about about 85% of them have at least one technical co-founder and that's approximately the number in the broader ecosystem we survey 6 or 700 Founders every other year through the microm state of independent SAS survey and we show that the numbers are about 15 to 20% of

2:46non-technical Founders the challenge is the product is so core to your business so that teams without a technical founder inevitably struggle with scaling with code quality and every new developer or agency that comes in tells them they need to rewrite their entire app from scratch another data point of our seven figure companies so those doing millions and multiple Millions 96% of them have at least one technical founder and in all of those companies one of the founders figured out how to Market or sell first before handing it off to someone else lesson number three is almost contrary to the point I just gave but it's that we have funded three

3:19or four apps that are built with no code so there are pros and cons to building a product in no code the biggest negative I think is that all of them will eventually have to be Rewritten and at that point they will stand still for months and that's not just something that I think that's not my opinion I've talked to the founders who we funded who have their apps in no code and they see the writing on the wall they know that they will not scale this to a seven figure company with the app built in no code so while it's a super minority of the number of companies we funded it

3:49hasn't been a hard no to date when we had that decision to make lesson number four is that the best team composition for founding teams is a developer plus a marketer or a developer plus a salesperson whether it's marketing or sales depends on the funnel obviously if it's a marketing funnel you need marketing if it's going to be a high touch sales funnel you need a salesperson the other thing we've seen work and I would say is comparable is a developer plus a subject matter expert but only if that subject matter expert learns how to do sales or marketing because having someone building the product your developer and the subject

4:23matter expert telling them what to build and usually doing customer success but then no one doing sales or marketing is not a recipe for fast growth so usually it's that subject matter expert who gets out there and starts doing the sales and marketing if they want to grow fast the fifth lesson is just how big of a win focus is anyone we've seen trying to manage multiple apps or an app plus Consulting is really giving half effort at best and they can't dedicate all their their thought their time attention and energy to Growing this single thing that is hard to grow so we've seen folks who for years have been trying to juggle

5:02two three or four things they come on board with tiny seed and they focus and suddenly their main SAS app starts growing really quickly and I've had multiple conversations with folks asking them you know is this the Tiny Seed effect like why did you start growing and they say well it's the advice it's the mentorship it's the funding but also it was my ability to focus and this lines up with my own experience when I had eight or nine products well back 15 years ago none of them would grow I could maintain eight or nine products but if I wanted one to start growing faster and get into that six seven or

5:32eight figure Mark I knew I had to focus and that's exactly what I did when drip started taking off I sold all of my other apps so that I could focus solely on growing drip as fast as possible my sixth lesson looking across data from these 171 companies is that lower price points tend to churn faster pretty much in every case actually I'm still looking for a counter example or two to this idea that lower price plans and lower price customers turn faster and in fact we don't fund consumer or really prosumer apps because the churn in those apps are pretty much catastrophic like most applicants that we've seen have

6:09this 14 to 30% churn when they're dealing with consumers and prosumers and that type of churn is business ending thing to keep in mind though is you can't just raise prices and expect your churn to go down you actually need the features to serve up Market customers in order to get that churn down to those marks where you can really grow a business at you know 2 3 4% per month if after hearing this list you think your company checks some of these items you might consider applying to Tiny Seed that's my accelerator for bootstrapped SAS Founders it's where we've invested in 171 companies and we offer the right

6:42amount of funding we offer mentorship camaraderie advice community and applications for our next batch open September 2nd and are open until September 16th I'd love it if You' apply head to Tiny seed.com apply so when I started putting this list together I actually had another seven or eight lessons but putting them all in this video would have made it too long so I decided to put the rest of the list on the next episode of my podcast startups to the rest of us you can find the podcast on Apple podcast Spotify and even here on YouTube that podcast is up to 730 episodes or so and I've been

7:17doing it for 14 years every week week in week out and I talk about building launching and growing bootstrapped software products really bootstrap sass is what we focus on these days and I provide inspiration and and tactics and sometimes interviews but a lot of question and answer episodes solo episodes anything to get you to where you want to go faster if you're a bootstrap or mostly bootstrap founder if you want to hear the rest of the lessons I've learned from running Tiny Seed you should pause this video right now open your favorite podcast player and search startups for the rest of us look for my face on the orange cover and hit

7:51subscribe I realize that raising money isn't for everyone if you're struggling to decide whether you should keep bootstrapping or raise some outside funding there's a key decision you'll have to make that you cannot undo that's what I cover in this next video make sure you go check it out thanks for watching