When Jason Lemkin sold his last company, EchoSign, to Adobe for $400 million in 2011, there was one thing he knew he was going to miss: not leading the next part of the company’s journey.
EchoSign is now part of Adobe’s Document Cloud business, which is on pace to hit nearly $400 million in revenue this year.
Although Lemkin won’t be able to see EchoSign turn into a billion dollar “unicorn” , he is now growing his own company called SaaStr and using it to help other cloud software startup founders build their own businesses.
He is now a VC and has recently raised a new $70 million fund in little over 3 months. He’ll be the sole manager, and the fund will be dedicated to investing in SaaStr community startups at the “late-seed” stage — that is, companies that have some traction and are ready to build their first sales team.
Most investments will be in the range of $1 million to $4 million, but Lemkin stresses he won’t be going out of his way to find startups to invest in.
“I only want to invest in this community — spend less time in trying to meet founders, and be more successful trying to invest in the community,” he says.
“I want to help other people. I want them to do better than me. And if you do it better than me, you have a shot at having a billion dollar exit,” Lemkin says.
The goal is to at least quadruple the money for investors he says!
The Godfather of SaaS
SaaStr is already one of the biggest names in the cloud software industry, leading one publication to give Lemkin the nickname, the “Godfather of SaaS”.
His SaaStr blog posts are required reading for any cloud startup founder, and his annual SaaStr event has become a big deal after only two years.
But as much as he cares about his performance, Lemkin says he’s enjoying every moment of his life now because it keeps him relevant in the tech space — where hotshot founders often slide into obscurity after selling out for hundreds of millions of dollars.
“These companies are just so great, and to be a participant in this next journey of enterprise, it’s pretty special,” he says.
For anyone contemplating a move into the cloud space, he offered 3 gems on how to really grow a healthy cloud software company:
- Double down on what’s working:In the cloud business, it takes a long time to grow your revenue. Don’t get frustrated! Just make sure to double down on what’s working, even if it’s not growing fast enough. It doesn’t mean don’t make your product better. But sell to the customers that already like your product. “Just focus on what works and not try to do anything new,” he says.
- Measure customer satisfaction religiously: As soon as you have just a handful of customers, measure your net promoter score and other customer satisfaction metrics. And do whatever you can to make them happy, because a lot of your future revenue will come from word-of-mouth and referrals. “When in doubt, triple down on your existing customers, and make sure that they are truly happy with your products,” he says.
- Spend most of your time on hiring: Once you start to see some traction, the CEO has to spend more than half of his/her time on hiring the best possible management team. If you don’t build the right management team, you will slow down just when it gets good. Do everything from hiring recruiters, networking, and buying banner ads. “The only thing worse than not hiring a VP of Sales when you get to $1 million in revenue is hiring a terrible VP of Sales,” he says.