MicroConf Tactics: SaaS is Hard Until You Learn These 4 Skills

Speaker A: Foreign. It's the microconf podcast. I'm your host Rob Walling, and in this tactics episode we look at audio from one of our most popular YouTube videos. This one's titled SaaS is hard until you learn these four skills. And this is where I talk through the core four SaaS skills. Before we dive into the episode, I have started writing again. I used to be a blogger before podcasting and microconf and all that. And aside from writing books, I really haven't done much writing in the past 15 years. But I've rebooted that and it's all happening in my email list. If you head to robwalling.com emails, you're going to hear me talk about my mental frameworks for how to build an incredible company, how to hire task level, owner level and project level thinkers, thoughts on pricing, positioning, founder mindset. All the stuff that I talk about on startups for the rest of us and in these YouTube videos, but with more meat and it's all written out and it drops in your inbox once a week. That's robwalling.com emails. I'd love to have you be part of that. And with that, let's dive into why SaaS is hard until you learn these four skills. If your SaaS is stuck, say you're doing five or $10,000 a month, or maybe you can't even get to a thousand MRR and you can't figure out why it won't grow, odds are good that you're missing one of the COR for SaaS skills. After working with thousands of founders and investing in more than 230 SaaS companies, I can tell you miss even one of these and it becomes a ceiling on your entire business. No matter how good your market is or how smart your idea is, when most founders hear that, they think you can hire an agency for marketing, that you can find a freelancer for development, or you can get a co founder to do whatever it is you don't know how to do. And almost every time this doesn't work. So in this video I'm going to break down what the Core 4 actually are. What to do if you don't have all of them right now and when you can realistically start handing them off because you can, it's just a lot later than most founders want to. So let's start with what the core four SaaS skills actually are. The first one, and these are in no particular order as I go through them, but the first one is product. It's the knowledge of what you should be building and how it should be built to a certain extent. And I don't mean the underlying software architecture that's born development, but I mean how it's going to integrate into your existing application. And frankly, this skill product is the one that most people don't think about, or they underestimate how hard it actually is. This is not project management, where you are just moving things along. This is deciding what gets built, in what order, why and how. It's about taking customer feedback, understanding your space, your industry, your niche, and iterating towards something that people want and are willing to pay for monthly after month. You can't build something people want by accident. This is the job of the founder. And that's why skill number one is product. Skill number two is development. And again, these are in no particular order. For now, development's not just writing code. It's the ability to ship fast and maintain a code base that doesn't collapse so that you don't build a ton of technical debt that screws you 12 months down the line. Feature velocity in the early days is one of your only real advantages over bigger entrenched competitor. And the idea is that you ship features fast, but you don't introduce a bunch of tech debt. And you have no bureaucracy because you are so small you can ship in days what takes big companies months. Skill number three is marketing. Now, this is not posting on Twitter. It's not audience building. I've ranted about this before. Audience building is not a core SaaS skill. There are really three layers to marketing. It's execution, like the individual contributor pushing buttons in an ad console, or writing the actual content that you're going to use. For SEO. The second layer is project management. This is keeping everything moving, reviewing things, keeping everyone accountable. And then there's marketing strategy. This is deciding which approaches to test and where to double down. Now, there are 20 B2B SaaS. Marketing approaches. I've talked about them, um, on this channel, on my podcast and in my book, the SaaS playbook. And as I've said, just going and posting on social media is not what I'm talking about with marketing strategy is the one that matters most and is hardest to replace because that is deciding what to test and where to double down. And that's not something you can just outsource to an agency or ask ChatGPT to do for you. And the fourth skill is sales. This is having real conversations with prospects, understanding objections, closing deals, dealing with procurement, all the things it takes to sell your product. Now not every SaaS needs this. If you are purely self serve you can skip it. But the fastest growing companies in my portfolio are almost inevitably doing some sales. So I mentioned earlier that missing any One of the core four SaaS skills can put a ceiling on your business. Here's what I mean by that. The way I think about the success of a company is a multiplier. It's the founder or founders times the product, times the market. And you might say each one is on a 1 to 10 scale and realize that they multiply, they don't add. That's very important here. So if my founder score is a AH3 because I'm missing sales and marketing, even a 9 market and an 8 product gives me 216. But if I'm a 7 across all four with the same product in market, that comes out to 504, nearly two and a half times the outcome. And obviously these numbers are not exact, they're just meant to be directions. But here's an example of WP engine Jason Cohen, who's got to be a 9 or a 10 out of 10 founder launching into a growing market with a smart product idea at the right time. That's about as close to 10 times 10 times 10 as it gets. So what does it actually look like when one of these core four is missing? There are four patterns or maybe archetypes that I see over and over. The first is the builder. The builder is missing sales and marketing. And this is the most common pattern I see because I deal with a lot of developers. This is where you're a technical founder, you build good products or great products but nobody ever knows that they exist. The builder thinks that the product should sell itself or they think posting on social media counts as marketing. If you're really good at product and dev, but you just can't get anyone in the door, you can't get anyone to pay attention then then you might be falling into this trap of the builder. The second one is the marketer. This is where you're missing product. This is very common with info marketers or audience first founders who jump into SaaS, they can drive traffic, they can get signups, but churn is through the roof. They don't know how to iterate on a product because in information or as a creator, the headline is what matters. People pay once and if they never use the product, who cares? If they buy your course and they don't go through it, these folks don't care. SaaS is different. You have to build Something people keep using and keep paying for month after month. And these founders, these marketers, can't figure out how to do that. They don't know what to build, they don't know how to take feedback and turn it into something better because they don't have product or development experience. Then we have the outsourcer. This is where you're missing development. So I often see non technical founders who hire an agency or freelancer to build their product and think that that freelancer is going to handle both product and development for them. And the number one struggle I see from these founders month after company after company is they have too many bugs. The next agency they hire, because they inevitably fire that person or that agency wants to rewrite the entire code base and they can't ship fast enough. They have technical debt by the time they launch and this becomes a permanent headwind for the business in almost all of these cases. I believe that if you removed that headwind by having a developer, co founder or a founding engineer who really owned that code base and kept the code quality up, it would be a significantly different business in almost every case. Now there are exceptions to this, but they are in the vast minority. Even across my entire portfolio, there's only about 10 or 15% of companies that I've invested in that don't have at least one technical co founder. But as I said, there are exceptions. Craig Hewitt, the founder of Kastos, has done it and there are a handful of other tiny Cs that have accomplished it, but it's a small number and the pain is real and it's ongoing. And the fourth archetype is the Vibe coder. And this is where you fall into the no code trap. Or maybe it's having AI just write all your code and ship it to production without review. This is a pattern that we're only seeing over the last, I don't know, 12, 18 months. So it's a newly formed archetype. And these are, uh, products that are built on Vibe code, no code or third party platforms. And inevitably they need a complete rewrite at some point. They're not, you're not going to build a seven figure business on these platforms. I've never seen it done as a true SaaS offering. I have seen some that are like services on top of software where the service is actually providing the real value. But if you really want the software to compete on its own, everyone I've ever seen or invested in, which is just a handful, have needed a rewrite. Often it's between say 5 and maybe 20k a month in revenue, the founder starts realizing this isn't going to scale. So when you do that, when you rewrite it, that means you stand still for three, six, nine months, right? When your advantage as a startup is speed. My analogy for this is if you and I got together with some tools and some lumber with no carpentry skills, we could build an outhouse or a small tool shed and it'd be fine. But the moment we tried to build a garage or a house or a skyscraper, it would fall over. And that's vibe coding. So it's not a descent. We've actually funded a couple several no code tools. I hope we haven't funded any vibe completely Vibe coded tools. We funded a few of these at tinyseed, but it's a meaningful drag on your odds and we actually now ask upfront if folks are vibe coding or using no code in their tool so that we know how to rate that as we decide who to make offers to. And there are trade offs here because no code and vibe coding can get you to an MVP quicker. But man, it's really hard to stand still for six months in the early days, you know, in that 5 to 20K MRR range, when you really want to be responding to the market. So if you're watching this and you recognize yourself in one of these archetypes I've laid out, here's what you can do about it. So I'm going to lay out three paths that you can take in my order of preference. So the first path and the one that I would recommend is to learn it yourself. This is my preferred path, especially for solo founders. You don't need to master all of the core four. You need to be just good enough to scrap and get by. There's a big difference between I need to already be an expert at all four and I'm going to take ownership and commit the time to getting good at all four. And the second one is what matters. As a founder, you're going to be a Jack or Jill of all trades and a master of none. That is the job. Most successful solo founders I've seen have done exactly this. The second path is to constrain your idea. It's to use the stair step method. So if you don't have all four, pick a business that doesn't require all four. So a step one business in my stair step model is like a Shopify plugin or a tool built on any app, uh, marketplace. And of course we have a list of more than 80 on the Microconf website. These Step 1 businesses need less development. Maybe they're no code, maybe you vidcode them. And ah, that actually works here in this case because it is like a tool shed, it's a small utility. These have built in distribution because they're in an app marketplace. So you only need to learn one marketing channel and they often don't require sales. Now you limit your ceiling of how big it can grow, but you stay in the game and more importantly, you learn a ton of skills along the way. You build confidence, you get some revenue. This is why the stair step approach works and why I've preached it for years. Path three is to find a co founder, but you want to be specific. You don't want to look for a business co founder. Like what does that even mean? You want to find someone who fills the exact gap in your core four. The most valuable skills in a SaaS are sales and marketing one and two. Sometimes it's marketing and sales, depending on what uh, what niche you're in and your price points. Don't give away half the company to someone who can't actually execute in sales and marketing. Or if you're non technical and you know sales and marketing or you're willing to get really good at it, you need to find that dev who's not just a developer but also knows product. That's the thing to find out. What do we build, in what order, why and how. Among the successful companies I'm invested in, the core four are sometimes spread across three co founders, sometimes it's two. And occasionally you get one person who has all four. It's certainly rare, but it happens. Ruben Gomez is an example of this. He's a founder of Signwell. Eran Galbrin, who I've had on my podcast, founder of gymdesk, is also someone who was a developer who learned product and then learned how to do the other two. So next I'm going to give you a high level overview of when you can realistically start delegating each of these skills. And if you want my full thoughts on all of this, the Core 4/ more, you should check out my podcast startups for the rest of us, specifically episodes 807 and 811. I dive deeper into this framework and I answer some listener questions about it and we'll link to those episodes in the show notes. So let's say you got the core four covered, either yourself or across your founding team. The next question everyone asks is when can I stop doing all of this? Myself, when can I delegate it? And the key principle upfront is it's not really about a revenue number, but it's about repeatability and how standardized and certain you can make each of these core four you've heard me talk about on this channel before. But as a founder you should be working on the risky or the uncertain areas of the business. Once something becomes more repeatable or more certain, that's when you can find someone to hand it off to. And of course don't make the common mistake. You want to delegate, not abdicate. So you have to train someone up and look at their work and help them get better at it. Since people always ask me for ranges of revenue like when you should do it, here's what I've seen. Development is usually the earliest and the easiest to delegate. You can hire a developer as early As, I mean 10k, 20, 30k MRR if you're technical yourself. So with my last startup Drip, I had a contract developer who later became my co founder. That was Derek plus another junior dev. By the time we were at about uh, maybe 10 or 15k MRR. But that specifically was a market that needed years of development just to get table stakes. There were hundreds of competitors in the uh, email service provider marketing automation space. If you're in a tighter vertical with less competition, maybe you hire a dev at 10, 20, 30k mrr and it's a huge weight off your shoulders. But keep your architectural decisions and the tech leadership on the founding team much longer. Delegating execution is very different from delegating direction. Let's talk about sales. This depends on complexity. So if you have a simple repeatable one call close, I think you can start delegating that at 20, 30k mrr. I handed off sales at Drip around that, that range because the calls were very similar to each other. And I had our customer success person take over for sales. If you're doing enterprise sales, big ticket, 35,000 a year and more going through procurement, I think you need to hold on to this at least past 500k, probably into seven figures. And if you have a dual funnel, let's say you're at $500 a month and $5,000 a month, I would hand off the lower end deals first and keep the high value ones to yourself. The key here is repeatability. If every call is different and complex, you're not ready. Now in terms of marketing, there's three layers and so three timelines, right? First you have marketing execution. This is the individual contributor who is actually running the Ads, writing the articles, creating the videos. You can delegate this early to contractors and freelancers. It's a black box. Does it work or doesn't it? Marketing execution of individual tasks is actually quite easy to delegate and I recommend doing that early. Project management is to delegate when you have budget, right. This is keeping your campaigns and your people on track. But strategy, this is deciding what to test, analyzing what's working, where to double down. This is the hard one and the earliest I've ever seen successful founders bring someone in to even collaborate on strategy. After seven figures, it's in the 1 to 2 million ARR range and they didn't even hand it off. It was still collaborative. If you're at the zero to one phase and you're still figuring out which channels work, you cannot outsource this. And the fourth and final one is product. And this is probably the last one you can let go. Now it depends on your product and your space, but usually I see folks again it's that uh, maybe one and a half to three million ARR, two to three million. If I'm, if I'm being uh, conservative, I can't think of a single company that I'm invested in across the hundreds I'm invested in that brought an outside product help before that. So at Ah Drip, the example I've used a few times in this video, my co founder and I made every single product decision until I think we were doing 5 million a year. We didn't need to do that, but it felt comfortable and there were two of us heading it up. Then we brought in a great product person and even then it was still a three person collaborative process. Good product people are very hard to find and they're very expensive. And this area is one where the slow burn approach matters most.