Ask HN: Selling 7 figures ARR SaaS vs. growing it yourself | Hacker News Reader

Ask HN: Selling 7 figures ARR SaaS vs. growing it yourself

8 pointsmake_it_sure7 comments

Our bootstrapped SaaS is growing at 3-5%/month and recently reached 7 figures. Was launched 4 years ago specialized on an under-served niche that for most it was too small.

Since then that segment grew and lots of competitors appeared on the market, some grew a bit faster than us because they had better marketing (we did no marketing) and a bit better UI/UX, even though we were the first.

In the last year, 2 of the new competitors that are close to our size got acquired and even if we had no plan to sell it, I'm wondering if we shouldn't do the same mostly because of the extra help in hiring, managing the business, etc.

we're only 3 people, the business is very profitable but hiring is very challenging. As far as I know, those acquired businesses got access to an already built team of designers, developers, marketers and sales people..... something that will be hard for us to do. I'm afraid that our competitors will eat us alive with those resources at their disposal and when we are prepared to sell the business, we'll be too far away from them.

Any ideas on how to handle this? Is there a way to do both, like a partial exit and get access to an already built team?

Easiest is to make marketing to works for you. This will take time (from 6 months to year), but once you finish this then growing can become like 10%/month.

How to do this - long story but can be outsourced initially. This can be content marketing, SEO, PPC, social networks ads, etc.

THIS IS EXTREMELY IMPORTANT step! I've seen many SaaS that they're "too good and do sales w/o marketing" and fail spectacular once marketing oriented competitor(s) enter on same niche.

Step #2 - it's finding good sales oriented person. Because good salesmen can sell anything to anyone.

Connecting that two dots can make a growth like 20-20% per month or even more.

Disclosure - i'm technical SEO oriented dev. One of best example i've involved is growing Ecommerce site from $50k per month to $250k per months just for 6 months. Today they make some like $500k-$1M per month or even more.

Watch this excellent talk in 2012 by Gail Goodman titled "When software and people mix" at Business of Software: https://vimeo.com/54076835

She talks about the "long, slow, SaaS ramp fo death". She gets into practical details on how they went on from starting in October 2000, having a 100 customers at $30/month by April for a total of $3,000/month total revenue. She also talks about specific things they did to distribute the product, get more clients, charge more, etc.

Just watch the first 5 minutes and you'll know you will want to watch the rest.

Thanks for reminding me about that video.

Sell now. This is an incredible cash rich, frothy environment. I doubt you will ever get a higher multiplier.

I own an agency that runs ads for dozens of b2b SaaS companies and the rate of funding and acquisition is really high.

You have a few options.

1. Have you been growing less since those competitors have come into the space? If you didn’t know they existed, would you even be worried? Have you actually lost any customers to them? If not I wouldn’t worry.

2. Are you making enough money to pay you and the other founders a good bonus or a dividend? It sounds like you just want some cash for all your efforts.

3. You talked about a partial exit. My previous company was acquired and spun out. You can effectively do the same thing by trying to get acquired but retain some equity and keep working for the company.

4. You could also raise money, valuations are the best they have ever been.

Thanks for your response. 1. I can't quantify exactly how many customers were lost because of them, but %-wise, our best customers are lower than it used to be, many went to competitors. Before them, we would get those "best customers". I would have been, yes.

2. Money is not a problem, we have enough cash in the bank to invest, the execution is the main problem. It's not as easy as just hire someone to build a team for you.

3. That's one of the options we're considering. Selling a % and keep working on it as a product manager, letting everything else to be handled by them.

4. Money is not the issue, we haven't reinvest a big portion of the earnings, we're a small team with a high profit margin. We can invest for ex. on building the team, but for me at least, that's something too stressful and takes my focus from the product.

> Selling a % and keep working on it as a product manager, letting everything else to be handled by them.

Why did you start the company in the first place?

If you wanted autonomy, consider that you'll completely lose it by selling (regardless of promises made).

If it were me, I'd look to hire an executive, maybe someone late in their career who could bring in the roles to handle the work you don't care about (running the company). If you found someone in early retirement they may be willing to work for equity and only X hours per week, which would free budget to hire other roles (HR/bookkeeping, marketing, etc). It'd require finding good people that are willing to wear multiple hats, but the right executive might already have great connections.

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