Hey - Marc here.

Happy Saturday morning, motivated B2B SaaS Founders!

Here's at least one tip to keep in mind as you grow your B2B SaaS company:

Today's issue takes about 5 minutes to read.

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In today's issue, I share some key takeaways from Upekkha Managing Partner Rajan Maruthavanan’s presentation at Nathan Latka's "SaaS Open 2023" in New York. He discussed 108 ways of getting to a million dollars in ARR.

Rajan loves working with founders who are building great software products, especially Indian founders building global brands. He roots for them, helps them, and nudges them to perform at their peak.

About Upekkha

Upekkha, founded in 2017, is a SaaS Accelerator for founders who care about optionality. They help founders build Value SaaS businesses — capital-efficient growth businesses that have built a DNA to keep burning multiple less than one.

They worked with about 108 startups as of their last cohort, which is the 11th cohort. And in their first cohort in 2017, they had 10 startups that joined them. Eight out of the ten have crossed a million dollars in ARR.

The concept of product-market fit is a flawed metaphor commonly used by investors but not embraced by founders. Seasoned SaaS founders, instead, rely on the SaaS flywheel to drive recurring revenue and sustainable growth.

The SaaS flywheel represents a state where a business generates more revenue than it spends, creating self-sustaining momentum for expansion. Every year, they carefully select more than 50 SaaS startups in the early revenue stage to participate in their 6-month accelerator program.

It involves making six fundamental choices referred to as the "inner flywheel." These choices are interrelated and impact the startup's growth. In the interview, only four choices were mentioned, namely: solving a high-value problem, choosing your geography carefully, positioning deliberately, and pricing.

Challenges

Only 15% of SaaS startups cross a million dollars in ARR.
According to statistics from Nathan's database, the majority of SaaS startups fail to achieve significant revenue milestones. This highlights the challenging nature of the SaaS industry and the need for strategic decision-making.

Advice to Other Founders

Product-market fit is an overrated concept.
The concept of product-market fit, often touted as a crucial milestone for startups, is not as actionable or helpful as it is often portrayed. Many entrepreneurs struggle to apply this concept effectively in their business strategies.

Strategize with the SaaS flywheel framework.
The SaaS flywheel is a mental model that helps guide startups through the zero-to-one stage. It emphasizes the interconnectedness of fundamental choices in areas such as problem-solving, positioning, and pricing.

Don't be afraid to raise prices.
Startups often hesitate to increase their prices due to fear of losing customers. However, it can be an effective strategy to improve profitability and signal value. Social Pilot's success in doubling its growth every year was partly attributed to its willingness to increase pricing and not being afraid to test the market's response.

TL;DR

Only 15% of SaaS startups surpass a million dollars in ARR. Crossing the ten million ARR milestone is a significant achievement, leading to higher chances of success. The zero-to-one stage of a startup has the highest mortality rate. use a SaaS flywheel as the mental model for you to actually chart your path out of the zero to one. And within that, the three most important and powerful levers are: solve a high-value problem, make sure that you are positioning in an existing category, and be very deliberate about the pricing.

PS Here is a link to the full interview if you are interested in listening to the full episode: 108 ways of getting to a million dollars in ARR

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See you again next week.

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