15 May 2020

The SaaS founder’s dilemma

Tom Beckenham, CEO & Founder of fintech company Commazero, explains how to code, sell, fundraise, and survive all at the same time.

Technical founders face a dilemma when starting a SaaS business…It’s tough to build a product without funding. It’s tough to gain customers without product. It’s near impossible to get funding without customers. It’s super hard to build a product without working on it full-time.

This environment creates a situation bordering on discrimination — unless you already have money, it’s very difficult to start a SaaS business. Unless you’re targeting enterprise customers, you can’t presell. You can’t sell services either. Just as no one wants to buy tech from a services business, no one wants to buy services from a tech company.

People talk about the grind, the hustle, the working all-nighters to get ahead and it sounds glamorous. It’s not, that’s just bullshit. Most founders live hand-to-mouth and watch personal savings evaporate. They make big personal sacrifices they pray will pay off. Eternal optimism keeps founders going. Focus is what drives them forward.

A SaaS founder must focus on four areas

Customers: Talking to prospects, building a pipeline, marketing, blogging, and social presence — anything to do with putting yourself and your company ‘out there’

Product: Mockups, design, and coding. Product management is intertwined with customer communication at early stage — later it’ll separate. What I refer to as product is design and coding. It’s a very different activity to speaking to customers.

Fundraising: Preparing business plans, financials, pitch decks, pitching to investors, chasing investors, and networking. I included financials in that list. 99% of all spreadsheets put together at early stage are investor targeted.

Survival: Ensuring you and your business can survive. How are you paying yourself? How are you looking after your family? How does your business can pay its bills? This is very different from fundraising.

“No matter how hard you try, it is impossible to focus on all 4 areas at once. You can focus on two areas maximum per week.”

Context switching between areas is time-consuming. It hinders your ability to get anything done. Have you ever tried coding between customer meetings? It doesn’t work. Constant context switching wastes all your time.

This is how I managed focus when starting my latest venture — Commazero.

In early 2019, I knew I wanted to start something new and I knew it was going to be in Fintech. I was working full-time elsewhere and needed bandwidth. I negotiated my way down to three days a week part=time — giving me enough money to live and enough time to formulate the new business. I used the two days a week I had free to speak to as many people as possible.

I was surviving through part-time work and speaking to customers to build a clear picture of the biggest problems to solve. Speak to enough people, and they’ll tell you exactly what you need to build.

I registered Commazero in the Summer of 2019. By September 2019, it was time to make the leap. I needed to build as much customer validation as possible and raise funding. It was a bullish investment market, and I was encouraged by early conversations.

I negotiated again with my boss and resigned by moving down to two days a week for the last quarter of 2019. This gave us both time to reorganise the team to replace what I was doing. It gave me three months to survive.

My focused moved from survival to customers and fundraising

Focus moved from Survival to fundraising

My brother Nick joined Commazero as a co-founder in 2019 — splitting the company down the middle. Nick’s experience as a Fintech CTO meant we could split focus evenly. Nick would take on technical responsibility, and I would take on commercial responsibility. Nick would continue to work at his previous business part-time to survive while focusing on the product.

This left me to focus on customers and fundraising

Tom (blue) and Nick (red) split responsibility

We pitched to a number of investors in November 2019. Investors loved the concept but wanted to see the product further ahead before committing. We had customers lined up, just not enough substance.

Developing the product was the only way we were going to move forward with investors. We also knew that without a product we couldn’t sell services to customers either. There was no depth to our offering.

We cut all costs and switched focus to the product

I am now working on borrowed time. I can survive until March from savings.

All in on product

Doubling up on a focus area is dangerous. We know it. Our worry is that if we don’t produce product fast, we will have nothing to sell and we also won’t have investment.

We produced product at lightning speed. It came at a cost. Communication with customers lapsed. We spoke to no one in December and January. We were all in on product.

We got back in touch with customers in February, set up a pre-release group, then got back in touch with investors.

By March our focus had moved to product and fundraising

Product & Fundraising focus

As you might guess from the dates, this story does not have a happy fundraise at the end of it. Covid-19 struck the world and investment froze. Angel investors were the first to pull back then came the funds. We had three no’s, and five not right now’s.

We had to treat everything as a no. Fundraising takes effort, and we can not afford to more spend time on it in this environment.

Our focus moves back to survival, product, and customers

Survive first, then balance responsibility

If you can’t survive, then nothing else matters. Survival for a startup can sometimes mean getting a job — as awful as that sounds for most founders. Do whatever you can based on the situation you’re in. Pushing too far can lead to debts that take years to pay off. It can lead to mind-crushing stress that affects your family and loved ones.

With a primary focus on survival, look for maximum income. Leverage that income to loan funds to your business. You might have enough to hire a junior staff member who can take on a lot of the leg work.

By working in the way we did, we will release Commazero to the world. Hopefully, the world will love it. Hopefully, it will generate income.

Until the world reads this, no one will know what we had to do behind the scenes to get it there. It takes a lot to start SaaS businesses.

This article was initially published on Medium.

Tom is the CEO & Founder of Commazero, a fintech company that aims to accelerate payments to small businesses by making it easy to offer early payment discounts.