Articles by Jason Lemkin
- Your Customer Success Team. Hire Early. And No Squishy Goals — It’s All About the Numbers.
Customer success teams are critical for SaaS companies as they own the customer relationship from start to finish, managing up to 75% of revenue through renewals and upsells. Hire your first customer success manager as early as you can afford to once you have some larger customers. Measure customer success teams based on renewal rates and revenue growth from the existing customer base, aiming for 80-90% renewal rates and 110-120% revenue growth from upsells. Tie compensation to these metrics to incentivize performance. If done right, customer success can drive significant additional revenue through attitudinal loyalty and trust, proving it is a revenue enhancer, not just a cost center.
- 10 Crystal Clear Signs Your VP of Sales Just Isn’t Going to Work Out
Jason lists 10 warning signs that a VP of Sales may not work out at a startup. These include blaming others for missed numbers, dropping quota attainment, top reps leaving, making unrealistic plans, declining revenue retention, and showing fear. Jason notes that a VP of Sales may still succeed elsewhere, but if they are not a good fit for a particular startup, that is the founder's responsibility. He advises that when these warning signs appear, founders should make a change sooner rather than later to avoid further issues. Waiting will only make the problems worse.
- 10 Learnings On How To Build Your Own Community
Jason Lemkin shares insights he learned from building SaaStr, a successful community for Cloud and SaaS founders. Drawing on his experience, he advises starting in an area you're knowledgeable and passionate about, and prioritizing quality content over quantity. SEO remains vital, and building your community often necessitates personal involvement. Avoid blatant self-promotion and focus on adding value through mistakes and hard-earned lessons. Lists, like email or text lists, are valuable tools, and platforms should be well-chosen for their engagement potential. KPIs need constant tracking and you need a persistence in trying out different avenues to see what resonates, understanding that building a community takes time. Lastly, he emphasizes the significant role "super fans" play in your community's growth.
- How would you structure a sales team to get you from $10s to $100 millions in revenue?
Jason provides a ton of tactical tips on how to structure a sales team at $10m in ARR: • He recommends hiring an experienced VP of Sales to structure the sales team as the company approaches $10 million in ARR. Doing it yourself is too complicated. • As the company grows past 10 reps, they will need a Director of Sales to manage every 8-12 salespeople and SDRs. • The company will need a VP of Sales to manage every 30-50 sales reps. As the team grows past 100 reps, they will need multiple VPs. • The company should segment sales into Small, Medium, and Large customers as they approach $10 million in ARR. • The company should open local offices in other geographies once that area reaches $1-2 million in revenue. • The company will likely need 1 Sales Engineer for every 8-10 sales reps to support the technical side. • The company will need a Sales Ops/Enablement professional for every 30-50 salespeople to manage training, onboarding, territories, and compensation plans.
- 2 Cold Emails I Funded For Millions
Cold emails to investors can work if they are personalized, compelling, and show early traction or metrics that demonstrate a clear opportunity. Jason discusses two successful cold emails that he received and then funded - one from Mapistry that summarized the opportunity, customers, and growth profile, and one from Talkdesk that highlighted metrics, case studies, and go-to-market strategy when they were at $1M in ARR. While cold emails face long odds, these examples show that a great pitch tailored to the recipient that indicates the potential opportunity can succeed in getting a founder an initial meeting and potential funding.
- Competition In SaaS Leads to A Lot of Things. But Not Lower Prices, Usually.
SaaS prices are not usually lower due to competition from developing countries. While Zoho initially charged lower prices from India, as they grew they normalized their prices. Most SaaS products are not commodities that can be easily swapped, so customers are willing to pay fair prices for trusted brands. The total cost of ownership and risk of switching makes customers unwilling to switch for just slightly lower prices. While competition does limit how high prices can go, truly free competitors do create some downward pressure on pricing. Overall though, SaaS prices have not come down significantly over time.
- Outbound Always Works. If You Do It Right. And You Put In The Time.
While some older outbound sales techniques may no longer be effective, Jason argues that outbound sales can still work if done thoughtfully. Targeting prospects with specific, customized messages about how your solution addresses their most important problems can cut through the noise. Taking the time to understand each prospect and tailor your outreach is important. While you may not close the deal every time, this approach can at least start a dialogue and get some prospects to take a meeting. Jason suggests iterating your outbound approach to focus on reaching senior executives at larger companies who have the bandwidth to consider new solutions and where your product's value is the clearest.
- I Was Wrong. NPS is A Great Core Metric.
Jason explains the three reasons he used to distrust NPS, but then changed his mind for a variety of reasons: it keeps companies honest, is good-enough for predicting churn, works on a relative basis across an industry, and it builds confidence.
- The Power and Honesty in a L4M Model. Build One Now.
Jason explains how many financial models are too rosy, and that a model that is constantly updated based on the trailing last four months can be highly accurate and predictive.
- Why We’re All Ready for a CRO or COO Earlier These Days
Jason explains why his thinking on when to hire a COO or CRO has changed. Previously he thought it was unnecessary until $40m in ARR, but now he thinks it can be appropriate at $5-$10m in ARR.
- 10 Ways to Build a Moat in SaaS
After previously believing it is hard to have a moat as a SaaS company, Jason now believes at least 10 types exist: 1. Brand 2. Data 3. Structured Data 4. Partners + Ecosystem 5. Integrations 6. Agencies and Implementation Partners 7. Long-Term Contracts 8. Using Massive Amounts of Capital To Play In Every Segment 9. “Most Enterprise” Vendor 10. No Contract At All