Alex Theuma (SaaStock CEO): How to grow your SaaS ARR to 10 Million

Note: this is an automated transcription of our podcast interview with Alex Theuma. There will be some typos 🙂
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Alex Theuma, welcome to today’s episode! And actually, let me give the floor directly to you. Maybe you can introduce yourself…

Sure. Thanks, Jan. Great to be here. Obviously, it’s nice to be invited by your colleague Johan, who I met recently. So. Yeah, my name’s Alex Theuma, the CEO and founder at SaaStock. SaaStock helps SaaS founders and their companies grow to 10 million. Ours is really our sweet spot and where we help SaaS founders the most. We do this through our events, our content media, and our memberships.

Very cool. And does your business have a specific geographic focus?

We have a global audience but geographically, we’re almost all based in Europe. And therefore, we have a  big flagship conference in Europe. And at that flagship conference, which is happening in October this year, probably 80% of the attendees will be European with 20% from the rest of the world. But if you look at who consumes our content, probably most, you know, the biggest market is the US for us. And then, you know,  Europe sort of comes after that. 

So, we’re definitely a global organization. In 2019, we actually did five conferences on five continents, so we were in the US, Latin America, Australia, Asia, and Europe. I’m not sure if we’d repeat that again, certainly with the size of the team that we had. But yeah, we’ve definitely looked at that global view. SaaS has been global for a long time and I think most of the content is relevant for any SaaS founder or company, no matter where they are. There are obviously some nuances in certain markets, but in general, the things that we talk about—growth and scaling and playbooks, etc.—are very valid for whether you’re a founder in Rio or you’re a founder in New York or in Sweden, etc.

So this conference in October is intended for mainly founders and people that work at SaaS companies.

Yes, correct. So, a gathering of SaaS founders that have built and are growing and scaling their businesses. And generally, what we see in terms of the attendees there, it’s the SaaS founders, they bring their exec team with them. But because we bring all these SaaS founders, that obviously attracts a lot of investors and VCs. So, we had about 400 VCs at our 2019 event and we’re probably expecting around about 500+ for this year’s event. So pretty much every VC that is in SaaS will have some sort of representation there and a shedload of meetings happen during the few days in Dublin and a lot of deals get done. So we’re very much known for that as well as the content and the networking and all the fun that happens in Dublin.

So the conference is about learning how to scale your business to 10 million and about meeting people to help you to get there.

Yeah, exactly. Stepping out of the business for a few days to work on the business to get inspired, to meet your peers, to help you get out of a rut…coming away with actionable ideas to work on your business. 

The theme this year is Velocity: Boosted. Our objective and my objective is that every single person that comes to the event is going to leave with multiple things that are going to help them grow their SaaS business faster. We want to help them boost their velocity through every talk, every engagement, and every interaction. So that’ll be hopefully what they come away with.  Some people come just to watch the content from the great speakers that we have there and then they get their notebooks out and come away with lots of great ideas to share. Some people come with a big team to divide and conquer and share the learnings and then also work on the business development side of things. Some people come just for the networking and the meetings to try and find new partners for their business. Some just do VC meetings. Very few come just for fun but some do just that. But overall, I think there’s the full package, try and do a bit of everything.

I heard a VC say it used to be a triple, triple, double, double, double and now it has to be triple, triple, triple, double, double. Is that what inspired this theme?

Actually, no, I didn’t know there was that update. I think it was Neeraj Aggarwal from Battery Ventures who came up with that 2d3 framework. But no, it’s not inspired by that. Actually, I would say it’s inspired by a piece of content that we saw a few years ago and some data that’s come from Verne Harnish and his book Scaling Up. We saw a statistic that only 4% of SaaS companies make it past 1 million in R. And I’m pretty sure it’s well-researched and I guess whilst it looks shocking or feels shocking when you think about it most businesses, SaaS or not, don’t survive. Most startups don’t make it so 4% of businesses get to a million and then get to 10 million, the number is 0.4%. So, the odds are stacked against you and one of the big reasons cited is that companies get sucked into these valleys of death. And once you’re in the valley of death and if you could see the chart, I’m sure people have probably seen it before, but it’s very difficult to get out. Then, you’re spending all your time firefighting and trying to get out of that, which really slows you down. 

One of the big reasons that Verne cites can help become part of this 0.4% statistic is velocity. If you’re not growing fast enough in that one straight line and if you’re doing this all the time, you’re increasing the odds of failing. So we want to help SaaS founders and companies overcome these odds to hopefully make a difference to this 0.4% so it can become 1% or more. So that gave us the theme Velocity: Boosted. 

Make sense. So I guess that means that other SaaS companies that have made it to the other side and have avoided the valley of death will be sharing experiences on best practices. Repeatable processes.

Yeah, exactly. So we like we’ll get we already have I think we’ve got some deck acorns on the stage. So I’m sure you’re familiar with the decacorn term, but so like Daniel Dines, who’s the CEO and founder of Uipath, I think it was Europe’s first SaaS deck, is speaking. We’ve got a number of unicorns now. There are so many unicorns, they’re not that rare anymore. But we’ve got a number of unicorns on stage as well, including the CEO of Padel, the CEO of Papaya Global, and a number of founders that are in the Forbes Cloud 100. But we also recognize it’s fantastic that we can get the founders and the CEOs of these huge companies to come and speak to our audience and the SaaSol community. But if we look at this as a community, I think, as we said, most of the founders and the attendees will be under $10 million. They’ll probably be near a million or even less than a million so we can’t just have a deck on stage saying, “How we got to a 10 billion valuation and here are the things we did”. I mean, that’s great and it’s very inspirational and there’ll be some practical stuff. But we also look to get a lot of founders, execs, and operators on stage who are just a few steps ahead. So, in some cases, they might not necessarily be the biggest names, but maybe they’ve got to 10 million in revenue and they can tell you how they did it. And I think with that, you get a lot of content that’s much more applicable to the audience. So we look to ensure that we’re not just having the unicorns and acorns on stage, but we also sprinkle them around.

Pretty cool. So, on the one hand, you have the ones that made it all the way to the top sharing their best experiences, how they did it, but then also some that are closer to the people that want to grow to 10 million and they can share what they’ve been doing.

That sounds very good. And of course, every business is different. So, you come, learn, and apply the lessons to your own product, your own business, or your own situation, and then you create your own playbooks on how you are going to scale your sales, marketing, employees, business, and find the right product-market fit. ‘ve been in SaaS for about 20 years now. I’ve seen a lot of companies that have a great idea but they forget that execution is the hardest part. And they also forget that continuous learning and in my opinion, going to conferences, is critical. Not everything you learn at a conference is going to be applicable to you, but you’ll be able to take that information and say, this is how this may apply to our business. We may not be able to grow as quickly as Uipath because we don’t have all the money or the resources or whatever they had but these are some lessons that they’ve seen and that we can use for our business.

100%. So, as we said earlier, they’re all tried and tested things that people can implement and have implemented. And a lot of that gets shared as well. But within each business, there are new nuances: there is not one playbook that fits all or one path that fits everybody. Obviously, there are many different flavors of SaaS companies, depending on your HCV, your target market, actual TAM, and so on and so forth. 

Ultimately, people will get that flavor. I think there will be something like 200 speakers. So, let’s imagine that there’s going to be something like, I don’t know, 100-plus sessions. You can’t attend them all but you’ll go to the ones that are relevant to you and your business and learn. And so if you want to scale to the US, you’ll attend the sessions that are focused on that topic. And again, that is one of those things that if you’re looking at your European SaaS company and aiming to get 10 million in revenue, I see this content every year but in different flavors. Founders and VCs, VCs specifically, are often coming up with content about how to scale in the US. And we see that and you know it’s done in a different way each year at Saastock and things like that. So depending on where you want to learn, what you’re currently doing within your business, and what stage you’re at, you can curate your own agenda, and watch those specific talks.

Cool. And for you as an observer and you’re obviously looking at a lot of SaaS companies simultaneously, what would your pieces of advice be, let’s say for the first group. The 96% who are failing to get from zero to 1 million. Let’s pretend I have this great idea. I’ve built my MVP and I’ve figured out a few customers that are interested in the product. What are the key things I should focus on to get to 1 million?

So it’s a good question. First of all, we’re looking at the product right at the beginning, you’ve got the idea and you’ve got to speak to your customers. Don’t go ahead and build with that without speaking to customers. I think that’s where you probably get most failures, where you get the eager founder that has got a great idea and they just go ahead and build it, and then they find that actually nobody wanted that product. 

So go and do your customer development, speak to customers learn from their pain points and feedback. Hone and shape that product. I think a lot of that work together with understanding your ICP will help you get a great product-market fit. If you’re delivering value, you created something that people want, then obviously you’ve got to have the ability to sell that. If you’re a technical founder, I think sometimes that might be a challenge and you’ve got to maybe come out of your comfort zone. I’m going to mention a founder I know: Saravana Kumar, who bootstrapped his 15 million SaaS company—a multiproduct SaaS company. He’s a technical founder, probably an introvert, I would say not really someone who would naturally put yourself at the sales front line. But as the founder, you have to put himself out there. I remember him saying to me that he did the first 1000 demos for the products so he led sales. By doing that, obviously, he knew the product better than anybody but he was also getting all the customer feedback. Then, he was in a strong position to hand it over to the sales team and coach them in the right direction. So, I think that’s pretty important,  building the product that customers want by getting their feedback, focusing on the ICP and having that narrow focus on a specific customer, the founder leads the sales certainly to the first million in revenue, a bit like Saravana. I think also you’re going to have the most traction and get the most learnings from that.  Another founder today who has done well got his first ten customers to 300 EUR. They became his customers because when he worked at another business,  he decided, “Actually, I could create this myself.” He took those customers with him and got to 300 EUR pretty quickly.

I agree with you here. I’ve done a few SaaS startups now and I agree that in your first maybe even half million of sales as a founder, you should probably lead those sales not only because you know how to sell the product and because you probably are better in sales than you think, even if you have a technical background, but also because you understand much more and come to a better ICP by giving so many demos and by talking to so many customers. Often, your products are going to end up in a different market than you thought because of what they can do for certain markets. 

And then looking at the next step, which is EUR 1 million. So, you’re in the lucky 4%. And I feel good now because I’ve been there a couple of times. Let’s say you’re in the 4% that made it to the million so that typically would mean that there is proof that there is a market, there is revenue for your business, and now you want to scale to 10 million. You probably can’t do this by yourself anymore as a founder so you really need to start scaling up. So where should the focus be:  hiring sales and marketing or messaging or something else? What are you seeing?

It depends. You definitely see in Europe, you’ve got the product-market fit right. And now it’s about go-to-market fit and scaling up to 10 million. I’ve seen probably a lot of organizations still focus on the sales side and be very sales-led, building out that sales team and the sales playbook. 

We’ve also seen companies do little marketing until they get to 5 million, being very sales-led. But that only makes sense if your ACV is at a certain price point where you’re looking at maybe customers spending 15,000+. 

If you’re selling to SMB, then you’re probably not going to be a sales-led organization and you’re going to go more heavily on the marketing side and you look at really scaling out the marketing organization, demand generation, doing paid ads, doing content marketing, and investing heavily in marketing. Examples would be companies like LeadfFeeder or ChartMogul that took that approach—heavy investment in content marketing and thought leadership—which then took them past 10 million EUR, at least for LeadFeeder. Their price point is so low that they don’t really, I think, have the sales team—they don’t need to. 

But I would think that if you’re selling to enterprises or a higher ACV product at a million, you start to bring in someone, maybe not necessarily a VP of sales. It depends, but it’s certainly seen as sales, maybe a director of sales that has some experience and would probably be the person that will get you to 5 million, maybe get you to 10 million. You’ll have different salespeople or different people, in general, across roles who will perform certain capabilities to get you to certain milestones. But they might not be the person that gets you from 1 million to 10. They’re probably not going to be the right person to get you to 100 million either. 

Essentially, it depends on the business, but definitely that investment in sales and marketing and of course, constant investment in the product. People talk about product growth and products are like the soup du jour these days. I think maybe five years ago, you could have a shitty SaaS product but a great sales team and you could probably build a 10-100 million business. So, maybe some of those shitty SaaS products are still out there today but maybe made slightly better. But I think nowadays you can’t win with a shitty SaaS product because there’s so much competition so you can’t start with a shitty SaaS product. So you’ve got to have a great SaaS product and keep investing in that as well so product lead is super important.

It sounds like there are more and more VCs coming to these conferences. Let’s pretend you did 1 million and you’ve mainly done it bootstrap, maybe some friends and family, would you say that is the moment to start raising capital, or is it better to wait until later down the road?

It can be earlier. It really depends. I’ve seen companies raising pre-seed. Pre-seed exists where you have no revenue, you have no metrics, but you just have an idea almost on the back of a napkin and you can get investment on that. And I’ve seen those cases. 

Now, how have they managed to do it? I think in many instances it’s probably a founder that already had an exit. They’ve come up with an idea and they’ll receive investment because of their credentials. And that’s a real bet from the VC. But, if you get to the seed stage, the VCs want to see metrics, they want to see certain growth rates. You probably need to have 40K MRR or something like that, maybe ten. It depends. But you’ve got to have some good metrics, growth rates,  and clearly a great idea and a great team. So, I don’t think you need to be at a million. Obviously, being at a million puts you in a stronger position but I think there are a lot of options. These days we’re seeing more and more bootstrapped companies. I spoke to a company that is being bootstrapped. It’s taken ten years but they’re bootstrapped and they’re close to 100 million in revenue. The owner, the founder, owns 97% of the business. So, it’s not a bad place to be with that. 

But if you’re coming to SaaS stock and you’re looking to raise, I think you’ve just got to think in advance about what stage you’re at, what metrics you have, and who are the right voices that you should be speaking to? Do some research in advance. Think about the VC’s thesis and where they invest. So there’s no point going to be like a growth-stage investor when you don’t have any metrics in your pre-revenue or something like that. So I think you’ve got to think about it properly but it depends again like if you’re at a million and you want to build a $100 million business and you want to do it fast. VC might be the better option because generally bootstrapping is the slower of the two. But we are seeing but there are not that many but we are seeing more bootstrapped companies that are getting to 100 million in revenue, which is good to see.

Yeah. And I guess it also depends on your risk profile. I’ve been in both situations, so my first company was bootstrapped. We raised €400,000 for the new business I just started with Johan based on an idea on a napkin. And if anybody wants to read about that, we posted it publicly, how we raised the money and why we raise money—inside.playbookify.io.

But again and I agree with you, it depends on your risk profile. Do you want to take the risk on yourself and fund it yourself as a founder? Do you want to get other people involved for whatever reason? It could be just financial. In our case, we also did it for the network effect. We got money from 28 investors, so we also have 28 people supporting and committed to our success. And I agree with your observation that further down the road, it also depends on do you want to grow quickly with the associated risk and get venture capital on board? Or do you want to grow slowly and do it with the cash that’s coming into the business? They’re both viable options. I do notice and maybe this is a reason to go to your conference that, founders are not very well-informed about the VC landscape. So who’s who? Who should I be talking to and at what stage? My personal complaint would be that VCs are not always very clear on their website. It would be great if it’s clearly said on the website if you’re doing this and you’re looking at growing quickly and looking at this sort of valuation, then you should talk to us. The role is very vague. Do they do that on purpose because they want to talk to everybody?

Good question. I’ve not asked them that. But yeah, it is strange because they almost all have a very specific thesis. And, as you say, maybe it’s not always super clear what that thesis is. Like I had a founder reach out to me yesterday and he said, “Look actually they’re a bootstrap to a couple of million now looking to go down the venture path and wanted to understand who are the right VCs to speak to.” So I said, “I’m happy to help that or speak to him.”. 

But you do often get a lot of founders that will just get a whole list of VCs, not do any research and just start reaching out to all of them. But maybe if they’d done their research, they would have found the right ones. But again, as you said, maybe it’s just also not always that easy to understand who are the right ones. So you get, let’s say, the 400 VCs that came to the last conference in Dublin, they are probably being contacted by many founders through networking apps and other means. And in return, the founders are not getting responses because unbeknownst to them, that VC is just not specifically interested in that stage of company or type of company or a company with those sorts of metrics. So sometimes that feedback is not always coming back to them but I think maybe more education around that for both sides could be helpful.

Maybe a great extra topic for your conferences is how to find the right VC in just a few clicks. That would be magic. 

Yeah, definitely. We’ll see what we can do to help improve that and improve the chances of people finding the right VCs and then, getting the investment that will help them continue to grow their business.

I’ve seen quite a few initiatives to sort of build up a centralized database. But so far, none of them have been very good or successful. Or are you seeing different things?

It’s weird. You’re right. I observe through social media and things like that that there are a number of VC lists and databases, and so on and so forth. Personally, I’m not necessarily going into them and checking it all out and seeing what is a good resource versus what is a bad resource. I just know that they exist out there. 

I think SaaStock would be well-placed to do something similar. But again, if it’s already out there in the market, I’m not necessarily sure whether it’s something that we need to spend a lot of time doing. People are pulling VC lists together. But again, it’s about how specific, how niche are they? But who knows? There might be one for just B2B SaaS investors for those that invest in Europe and you can segment that and so on and so forth. But I think if people can search online, they’ll probably be able to find the right lists for them.

Well, I’ve learned a few lessons. In general, I would say, first of all, remain educated, go to conferences and figure out which ones are the best for you. It sounds like yours is a pretty good one, especially if you’re a European, want to grow, and are interested in going international. I would say then once you’re at a million and you’ve figured out your ICP, then it’s time to start growing. And the conference is a good place to come and figure out how to do it. But really in the first phase, focus on how you can make scaling a repeatable and predictable process by documenting what you’re doing and trying to find the patterns to become successful. Thanks a lot, Alex.

Thanks for having me on the podcast. I enjoyed it.

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