9 things I wish I knew before starting my first SaaS business

HubLogix (formerly eCommHub) grew out of ecommerce sites I’d been running since high school. What started as a side project turned into years on the startup rollercoaster, eventually growing to 30+ employees. Here’s what I’d do differently next time.

Disclaimer: These lessons are specific to my own experiences and may not translate directly into advice that makes sense for you or your business. Every business and every startup journey is different.

#1 Have a technical co-founder

When I first started HubLogix, I could code. I had built ecommerce websites before and knew front-end web development. I had just recently interned at a Ruby on Rails shop and was amazed by the agility at which one could build a new product using a framework like Rails. So I picked up the Ruby Pickaxe book and got to work.

I never finished the book, but I read enough to know the basics. I started building out a prototype for the idea using contractors on oDesk. I would code and style the front-end views, then have them “wire up” the backend stuff. It was a pretty good system that worked the first year or two (I was still in high school and Georgia Tech at the time).

While this was super scrappy and let me build up a base of a couple hundred “beta” customers (not paying). This early success fooled me into thinking I could get by without a technical co-founder. My thinking was that I could later hire a super talented developer or development team to take it over then.

What was wrong with this thinking? Well, a few things:

• Developers are expensive. Not to mention, incredibly difficult to find and attract in the first place.
• The developer(s) who inherit the pre-built application do not know its history. They also inherit all the bugs, problems, issues that come with it. This makes them less able to take full responsibility for its success, not to mention makes it difficult to fix bugs deep in the application’s guts without doing a complete re-write of the system.
• It’s super hard to hire a development team later without having someone technical on the founding team

About a year into HubLogix, I was hitting the limits of what I could build on my own. I went looking for a technical co-founder. We worked for a few months but things ended up not panning out for a variety of reasons. One of those reasons was we could not come to terms on equity. Looking back, this was a foolish mistake of my younger self. If he was the right person the equity should have worked itself out. I think the mindset problem I had at the time was that I was “already a year and a half into this” and I was focused on the past versus solving for the future.

If I was to do it again, I would find the right technical co-founder from day zero and not let something as arbitrary as equity get in the way. There are also common vesting structures that protect the company if someone ends up walking away or not being the right fit.

#2 Don’t raise venture capital too early

I bootstrapped the company for the first few years. We had real traction — 100+ paying customers and north of $20K MRR — before we raised a Series A of a few million (a lot for a solo founder in the Southeast at the time). I did raise a small amount of seed funding from angels and friends and family before that.

Looking back, that was too early to raise VC money. Why? We had nailed the product but A) product/market fit is not stationary milestone and, more importantly, B) we had not figured out how to scale the growth side of the business yet. Everything up to the point had been inbound and organic. We had no predictable revenue or repeatable customer acquisition process yet.

So why did I raise money? To build a team.

Generally investors look for these things BEFORE they invest, in order of importance: Team > Market > Product. Somehow I had built up a business, but I had not built up a strong, foundational team. The team at the time of Series A was mostly part-time friends of mine that were helping keep day-to-day operations of the business afloat (who were doing an awesome job by the way!)

It got to the point where the business was severely lacking resources in key areas (e.g. no dedicated customer support team, no in-house development team or leadership, no sales team even though we were closing some big deals). For instance, we had just closed a five-figure deal but I had to coordinate the implementation schedule around my team’s class schedule and finals. I knew I needed a team that was full-time and ideally one that was experienced. However, it felt like a chicken and egg problem as I did not have cashflow and credibility (or so I thought) to bring in an experienced team.

Now that I write this, it’s pretty obvious we were not ready for venture money. And I think that’s an important lesson as just because the money presents itself doesn’t mean you should always take it.

If I was to do it again, I would not raise VC money until I hit at least $1M ARR. I definitely think that’s doable with the resources available today (e.g. AWS, apps for everything, outsourcing) if you’re starting a SaaS business.

#3 Build a support system

I met a lot of great people very early on in my journey, starting with Flashpoint the accelerator program I joined in 2011. I met other entrepreneurs that had been through it and were running some of most respected companies I looked up to. I had every opportunity to seek out mentors and advice from some of the best people in the business.

What did I do? I stayed heads down working on my startup. I figured my problems were so unique and times that I had reached out before I did not know how to ask for advice properly, so instead what I got was opinions. I found that the more opinions I got from smart people, the harder it was for me to make decisions.

Additionally, the times I needed help most, it was that much harder to reach out when I had not maintained the relationships as well as I could have. It’s also hard for someone to provide useful feedback when it’s been 6 months since they’ve heard about the business.

If I was to do it again, I would seek advice, but seek it from fewer people. I would focus on maintaining a regular cadence with those relationships (e.g. meeting for coffee once per month to talk about the good and the bad). Furthermore, I think every entrepreneur needs a person or two that they can use as a sounding board that’s totally independent. Who else can you go to about issues with your company, employees or investors? I find that other entrepreneurs makes great sounding boards because they have their own business to worry about and there’s no impression you have to worry about.

#4 Pace yourself

This one sounds obvious and something you could apply outside startups. But startups are particularly stressful environments because there is so much change and uncertainty. Each week brings new challenges and setbacks that have to be dealt with (e.g. employee issues, upcoming board meeting, new competition, etc.).

I used to deal with the stress by working more. I would skip meals, pull all nighters, and view weekends as chances to “get ahead.” My body eventually forced me to reconsider. I started focusing on sleep, meals, “turning off” at night, and protecting my makers schedule. Basic stuff, but it all makes a difference.

If I was to do it again, I would approach things like a marathon and not a sprint. It’s concerning that overwork has almost become a startup badge of honor. It also sets a dangerous example when you start hiring employees. Everyone’s work/life balance is different, but it’s important to find what works for you and not blow it off completely.

#5 Invest in onboarding

Startups are strapped for resources. You’re constantly in all-hands-on-deck mode with roles that need bodies in them yesterday.

Typical startup recruiting process: You spend weeks interviewing various candidates for a particular role. They get vetted by multiple members for things like culture fit. You’re half vetting and half selling on these people joining your team. When they finally do, you pat yourself on the back and get back to the next 5 positions you have to fill.

Typical startup onboarding process: Day one, person joins. Person gets walked around the office, introduced to some people. Gets set up with their laptop. Finds the ping pong room. Finds the snacks. That’s the extent of the training.

Startups tend to focus too much on recruiting and not enough on training once people start. We weren’t much better. We didn’t have a formal process for the longest time — “training” was usually buddying up with someone or getting thrown straight into problems. We didn’t know what we didn’t know. This proved inefficient for a business like ours that required a lot of domain expertise.

Looking back, I would have invested more in structured onboarding — teaching the business, product, and culture instead of relying solely on “baptism by fire.”

#6 You can’t hire co-founders

After raising the Series A, I wanted to bring in the best, most experienced people I could find to the business. As a solo founder, my plan was to hire a C-Suite of the best executive team I could put together. I figured it would make later hiring easier as these people would have their own networks to pull on and also provide experience for younger employees to learn from.

What’s the problem with this? Well, 1) these people are expensive. 2) they can affect your culture in unintended ways, 3) they often want lofty titles and positions, leaving little room open for later senior hires.

While I was able to hire some strong executives, I found that they were not a replacement for having co-founders.  I was new to hiring at that level and learned that impressive resumes don’t guarantee alignment on values and direction.

Looking back, an executive team is not a replacement for a strong set of co-founders.

#7 Experience is valuable, but it comes with baggage

I do strongly value experience. It can save you time — the most precious startup resource — when you have people who’ve solved a particular problem before.

But experience can also be over-indexed on. Someone might come in and run the enterprise sales playbook that worked at their last company, without listening to what’s already working organically for your business. Experience can blind you to new opportunities and cause you to jump to conclusions before considering all the options.

It can also create unhealthy dynamics. People sometimes pull the “experience” card to shut down ideas, especially from younger team members. Experience saves time, but you have to manage the baggage that comes with it.

#8 You can’t delegate leadership

As a solo founder, I thought hiring experienced executives would fill the gaps in my leadership. Instead, I ended up building an inverted pyramid of a company all on top of my shoulders.

Around the time we hit a couple dozen people, we were moving fast and trying to build out a real sales motion. We had an executive who had done it before, had been a CEO, and had run this exact stage for other companies. It made sense to me and the board to hand him the reins. It seemed like a smart play to accelerate the business.

It didn’t work out. Over time our working styles and visions for the company diverged, and I learned that experience alone isn’t a substitute for alignment on values and direction.

Looking back, the lesson is that you can’t outsource the CEO role. You can hire great executives, but the founder has to stay in the driver’s seat on vision and direction. If you’re feeling gaps in your leadership, find mentors and advisors who can help you grow into the role — don’t hand it off.

#9 Think hard before you drop out of school

Dropping out was a calculated risk. The business was taking off, and I knew the four years I’d otherwise spend in classes were the best point in my life to go all-in. I didn’t have kids, a mortgage, or other obligations yet.

Looking back, I think dropping out was the right decision for me. But I don’t think it’s the right decision for everyone and it’s almost encouraged a bit too much by the entrepreneurial blogosphere these days. The benefits of staying in school are that you are going to learn a ton of fundamentals. Things like finance, accounting, and general management are good to know. On top of that, school is the best place to meet like-minded, smart, and hard-working individuals. People that can be future co-founders or employees.

So think hard before you drop out. I would encourage other young entrepreneurs to stick through school as long as you can. Soak up knowledge and connections while you are there. You may meet your future co-founder there. And don’t forget, it will most definitely be that much harder to go back later if you do decide to drop out.