In Part 1, we reminded you of the 12 best practices for success that we published last year and noted that, since this obviously wasn’t read enough (or properly) understood, as the doctor is still seeing founders make the same old mistakes year after year, he needed to do more. So, using his 18 years of experience as an (independent) analyst and 20 plus years as a consultant, during which he has researched and/or engaged with over 500 companies, of which 350 were publicly covered on Sourcing Innovation or Spend Matters (between 2016 and 2022), he’s decided to make plain at least 15 of the same mistakes he has seen over and over again, in hopes that maybe he can prevent a few founders from making them again.

Then, we covered the first nine (9) of the 15+ mistakes we promised you, namely:

• Assuming that because you were a CPO, you don’t have to do your market research. (Part 1)
• Assume you can serve any company that shows interest in your product. (Part 2)
• Assume you can go for disruptive or innovative first. (Part 2)
• Assume you can take Tech Shortcuts and Fix It Later. (Part 2)
• Assume that because you could run a Procurement Department that you can run a SaaS company. (Part 3)
• Assume you know the average process and technology competency in your potential customer base. (Part 3)
• Assume that you know the messaging because you received the message. (Part 4)
• Assume if you cut the price to get in the door, you can raise it later. (Part 4)
• Assume you need a CMO early to get noticed and build demand. (Part 4)

If the mistakes stopped here, we’d be done. But they don’t. So, today we’re going to cover three more.

10. Assume that becoming an “influencer” or “thought leader” on LinkedIn will replace proper lead-generation!

If you pay attention to LinkedIn, you’ll see that the strategy of a number of founders is to post daily, if not twice daily, content in the form of short segments, videos, articles, and write paper excerpts in an effort to establish themselves as a thought leader under the assumption that will bring their start up more leads.

There are many flaws with this assumption:

• just because you establish credibility doesn’t mean that it transfers to your company — you’re establishing credibility in yourself, so unless you are marketing yourself as a speaker, consultant, or potential employee, your effort is likely not achieving the goal you think it is
• the credibility you are building will hit a substantial amount of your target customers — depending on the stories you choose to tell, how you choose to tell them, who your network is, and who they share it with, the people you reach may be a very small set of your target customer base (or at least the target customer base you should be trying to serve)
• you’re getting enough of your unique product messaging through — often the content that attracts the most attention is the content with the least unique or valuable information about the product or platform you are trying to sell

Putting this all together, while you can generate interest in you, unless you can get those potential users to come and talk to you at a (pricey) trade show or local association event, where you can then talk about your product, the return on this effort is quite low, if there is any noticeable return at all. Furthermore, this still doesn’t address the most important assumption:

• that doing this is a good use of your time

Presumably you are the only one who knows what the tech needs to do and how it needs to do it, the only one who understands key parts of the service that are required, the only one that has an idea on what is missing in the message, and, hopefully, the only one who can do one of the key CXO jobs at your company well. While someone needs to do the LinkedIn etc. marketing and influencing, it’s likely not a good use of your time when, especially in the early days when you need to work closely and consistently with product, marketing, sales, and the rest of the management team.

(Of course, this entire mistake assumes you are starting a SaaS company, as per the premise of this series. If you are starting a consulting company, then, yes, you need credibility and this could be a great use of your time.)

11. Assume that you need AI or that jumping on the Gen-AI bandwagon will save you.

Our last bonus best practice was don’t mention AI until asked. Not even once. Not even if you are using proper AI. Many people are starting to realize the huge disconnect between the marketing hype, especially around Gen-AI, and the reality that, for the majority of problems it just doesn’t work, and sometimes you’re lucky if just doesn’t work is the outcome as it has been found that Gen-AI is gender/race-biased, hallucinatory (which should be no surprise as Gen standars for Generative which literally means make sh!t up), harmful/hateful, murderous, thieving, and sometimes even contains unknown sleeper behaviour that won’t materialize until months or years into the future.

Your customers are looking for solutions, not buzzwords. If AI is part of that solution, great. If it’s not, also great. At the end of the day, they want to solve their problems and see a solution that solves their problem. And while the cool factor will make it easier to open the door, it won’t help you make the sale if it doesn’t solve the organization’s core problems.

12. Assume that you can get a great salesperson or grow your sales team (primarily) on commission.

While it’s true a top sales person will work commission only in a large software vendor who will give the sales person a 30% commission on every sale, that’s only true for a large vendor. This is because, in tech, a sale takes the same amount of time and effort whether it is a seven-figure (1,000,000) enterprise sale or a five figure (50,000) single module sale. And if a salesperson can only expect to close 4 deals a year because of the effort involved (and the typical success rate of 33%), that means the sales person would make at most 60K in commission at your company (if you gave them the same percentage, and less if you didn’t), and they probably couldn’t live off of that. And why would they want to when they could go to a big company and make 20 times that?

If you want a good sales person, you’re going to have to pay a VP level salary in the first couple of years because they know they’re not going to see much commission. The only way they’ll take less is if they see a bright future for your company, did very well at their last few jobs, can afford to make less for a couple of years, AND you give them a sizeable percentage of your company so they can make up their lack of pay on the back end when the company starts growing and you get a big valuation on an investment of acquisition down the road.

And while we still have a few mistakes to go, we’ll end here for today and then conclude our initial series in Part 6.

In Part 1, we reminded you of the 12 best practices for success that we published last year and noted that, since this obviously wasn’t read enough (or properly) understood, as the doctor is still seeing founders make the same old mistakes year after year, he needed to do more. So, using his 18 years of experience as an (independent) analyst and 20 plus years as a consultant, during which he has researched and/or engaged with over 500 companies, of which 350 were publicly covered on Sourcing Innovation or Spend Matters (between 2016 and 2022), he’s decided to make plain at least 15 of the same mistakes he has seen over and over again, in hopes that maybe he can prevent a few founders from making them again.

Then, we covered the first six (6) of the 15+ mistakes we promised you, namely:

• Assuming that because you were a CPO, you don’t have to do your market research. (Part 1)
• Assume you can serve any company that shows interest in your product. (Part 2)
• Assume you can go for disruptive or innovative first. (Part 2)
• Assume you can take Tech Shortcuts and Fix It Later. (Part 2)
• Assume that because you could run a Procurement Department that you can run a SaaS company. (Part 3)
• Assume you know the average process and technology competency in your potential customer base. (Part 3)

If the mistakes stopped here, we’d be done. But they don’t. So, today we’re going to cover the next three.

7. Assume that you know the messaging because you received the message.

You know the message you needed to hear, the message that got through to you, and the message that came to you when you had a vision of your future path, but that doesn’t mean you know the message that you need to deliver! There are a few reasons for this:

• you need to know the standard terminology the big firms are using so you know what terminology you should be using …
• as well as any adjustments you need to make for the local geography, verticals being targeted, and key companies you want to target …
• as well as the standard messaging noise you need to cut through …
• and, most importantly, messaging that will be not only differentiating but meaningful to your customers

And if you don’t know the market, and the messaging currently being used, you won’t be able to get your message right.

8. Assume if you cut the price to get in the door, you can raise it later with an increased value proposition.

Go back to your Procurement days. How often were you willing to accept a price increase that was more than inflation for the same product or platform you bought last year? And be honest in your answer. (Never!).

Furthermore, you know deep down that just adding more functionality is not going to raise the price, as all of your competitors are doing that and it’s a basic market expectation. And while you might be able to charge more when you add new modules, if your first module was 20K/year, you’re not going to all of a sudden get 60K/year for your second module, which is not as extensive or mature as your first module on its launch. While there is a need to be competitive, you still need to price at a point that will be sustainable and support growth, even though it will be hard when you desperately need those early sales.

9. Assume you need a CMO early to get noticed and build demand.

You need leads, but you don’t necessarily need a CMO. In our space, good CMOs are expensive. VERY Expensive. The average CMO in the US is 360K a year (or 30K a month) plus benefits. Then they need a BIG budget to work with, and in-house or outsourced support staff to write the product marketing, run the campaigns, staff the booths at the pricey trade shows they will insist your company be represented at. If you can’t devote at least a Million dollars a year to Marketing, you shouldn’t even think about it. Instead, when you do need to start marketing (which is never as early as you think), use a fractional CMO and/or an expert Marketing Firm. You will still be relatively small and only able to handle so many leads at a time anyway.

You need to invest first in a good salesperson who knows the space and has a lot of connections who can help you find and close those first critical sales at (marquis) reference customers that will help you grow as time goes on. Then you need a good pre-sales person to support her. Then, with those key references, you expand the sales team and when they start to gain traction, and you complete more successful implementations, only then do you look to marketing. Remember the basic formula of Business 101: Profit = Revenue – Expenses, which, for a ProcureTech/FinTech start up equates to Profit = SALES Revenue – DEVELOPMENT Expenses … there’s no marketer in that equation in the early stages.

And while we still have many mistakes to go, we’re past the halfway point, so we’ll stop here for today. Come back for Part 5.

In Part 1, we reminded you of the 12 best practices for success that we published last year and noted that, since this obviously wasn’t read enough (or properly) understood, as the doctor is still seeing founders make the same old mistakes year after year, he needed to do more. So, using his 18 years of experience as an (independent) analyst and 20 plus years as a consultant, during which he has researched and/or engaged with over 500 companies, of which 350 were publicly covered on Sourcing Innovation or Spend Matters (between 2016 and 2022), he’s decided to make plain at least 15 of the same mistakes he has seen over and over again, in hopes that maybe he can prevent a few founders from making them again.

Then, we covered the first four (4) of the 15+ mistakes we promised you, namely:

• Assuming that because you were a CPO, you don’t have to do your market research. (Part 1)
• Assume you can serve any company that shows interest in your product. (Part 2)
• Assume you can go for disruptive or innovative first. (Part 2)
• Assume you can take Tech Shortcuts and Fix It Later. (Part 2)

If the mistakes stopped here, we’d be done. But they don’t. So, today we’re going to cover the next two.

5. Assume that because you could run a Procurement Department that you can run a SaaS company.

When it comes to founding, running, and building a SaaS company, there are many truths you need to be aware of, including these four that are among the most critical:

1. Using SaaS/software is not the same as building SaaS/software.
2. Running a Procurement Department is not the same as running a Technology Company.
3. Most importantly, running a SaaS company day to day is different from selling a SaaS company day to day and, most importantly,
4. Growing a SaaS company is NOT the same as running a SaaS company!

What you need to understand is:

1. effectively building SaaS and running a SaaS company takes mad tech skills, not just mad domain knowledge and mad management skills (remember, tech is the doctor‘s area of expertise)
2. in Procurement you’re buying, in Tech you’re building; you’re managing architects and developers and testers, not process owners and users and stakeholders
3. you don’t just need to build a solution, you need to sell, sell, sell it; remember, you were a buyer, NOT a seller (or a marketer or a demand generator etc.)
4. you don’t just need to sell; at some point you will also need to raise money so you can scale (or at least take on some debt) … where your former peers are concerned, if you can make them happy and show them an ROI they believe, that’s one thing; but even getting the attention of an investor is another, and then keeping them interested through a pitch for a follow up conversation, then getting terms, and so on … and at the same time you either have to progress up the enterprise food chain in the pipeline or significantly increase the number of real prospects in the pipeline to keep those investors happy

It take s a lot to build a successful startup, and typically a lot more than a founder will even think of when they take the plunge. (For a very good overview, the doctor will again remind you that he recommends Garry Mansell‘s Simplify to Succeed.) And the reality is that most of us don’t have all the skills to be a successful growth CEO (and, more importantly, are much better suited to excel at other CXO roles and do an above average job when we are in those roles best suited for us). Thus, it’s critical that

• you understand your weaknesses and bring in people to fill the gaps until
• you are big enough to
  • add the right full time roles and
  • headhunt and hire your replacement (and step into the CXO role you are best suited for)

6. Assume you know the average process and technology competency in your potential customer base.

There’s a reason that best practice #6 was to understand your current customer process and typical restrictions and that’s because not all of your potential customers are at the same stage in their journey, and, more importantly, they might not all be similar to your experience. If your company was behind the curve in your vertical, you will need to develop more than you think to be relevant to your industry, and if your company was ahead of the curve, you will need to ensure your technology is as easy to learn, integrate, and use as possible. Even easier and more accessible than you thought when you started out. It may even need to disappear into their process entirely (with a lot of configurable automation). Every provider wants to be the portal the customer logs into every day, but while a company may need a dozen providers, there can be only one that provides the portal. (And if the portal doesn’t solve the key problem, it won’t necessarily be the most valuable solution. Remember, ERP isn’t sexy, but ERP and Big X consultancies get the biggest tech-related checks every year from traditional tech-consuming organizations.  There’s a reason for this.  Sometimes you need something stable and reliable that just works.  Side note:  be aware of when you should be using Big X! )

And while we still have many mistakes to go, we’ll stop here for today. Come back for Part 4.

In Part 1, we reminded you of the 12 best practices for success that we published last year and noted that, since this obviously wasn’t read enough (or properly) understood, as the doctor is still seeing founders make the same old mistakes year after year, he needed to do more. So, using his 18 years of experience as an (independent) analyst and 20 plus years as a consultant, during which he has researched and/or engaged with over 500 companies, of which 350 were publicly covered on Sourcing Innovation or Spend Matters (between 2016 and 2022), he’s decided to make plain at least 15 of the same mistakes he has seen over and over again, in hopes that maybe he can prevent a few founders from making them again.

Then, we covered the first of the 15+ mistakes we promised you, namely:

• Assuming that because you were a CPO, you don’t have to do your market research. (Part 1)

If the mistakes stopped here, we’d be done. But they don’t. So, today we’re going to cover the next three.

2. Assume you can serve any company that shows interest in your product.

If you recall, best practice #1 was to identify the market sector you are competing in and best practice #3 was define your target industries because you can’t be everything to everyone. More importantly, if you try, you will fail miserably chasing every deal, building features your ideal market has no interest in (and that can’t compete with other companies already there), and wasting time and money for naught (as you will close very few deals this way). In order to compete, you need to do something very well, and better than the majority of your peers, not do the 60% solution from a number of competitors.

3. Assume you can go for disruptive or innovative first.

It doesn’t matter what great new feature your product has or how innovative or disruptive it is if you don’t solve one or more of the customer’s core problems AND have all of the baseline functionality required and expected for a product in the category you are selling in. For example, in sourcing you need to have very extensive and configurable RFX functionality as even e-procurement platforms have simple RFP now. Supplier Management needs to be able to not only store any information of interest about a supplier (extensible and organizable/tagged into categories), but support a more specific organizational need around simplified Procurement (especially in direct where you need to replenish quick after contracts), compliance, risk, or program management. e-Procurement has a whole host of requirements around PO (compliance), catalog support, order acknowledgement, approval requirements, etc. (And in our Source-to-Pay+ series we did overview a lot of the baseline requirements for core modules.) The reality is that when it comes down to a face-off evaluation, if your solution doesn’t check core boxes, you won’t get the deal, even if your functionality, usability, and customer commitment are far superior.

4. Assume you can take Tech Shortcuts and Fix It Later.
There’s a reason that best practice No. 5 was understand the data needs and design the full data model and that’s because if you take shortcuts, you will never get it right and you will never be able to fix it. You need to understand that every single line of code written without forethought and care will become technical debt the second it’s checked into the code repository, vs. technical debt five to ten years out when the language and stack you use is deprecated. If you start in the technical debt hole, you never get out of it.

Moreover, as per our last mistake, if you can’t capture the right data, no one will want your product, and if you can’t support the right process, no one will want your product. This means that, at the foundational level, you can’t take shortcuts. You see, just like you can’t build a 10 story apartment building on a foundation you poured for a two-story house, you can’t eventually build a best-in-class solution for an enterprise on a foundation that doesn’t even support a micro-mom-and-pop shop!

And while we still have many mistakes to go, we’ll stop here for today. Come back for Part 3.

Last year, the doctor ran a 5-part series on 12 best-practices for success, in an effort to let you know, in a very polite way, things you needed to do for your business to grow and be successful.

This was based on his experience as an analyst who has been consistently researching, engaging, covering, and providing due diligence on vendors for the past 18 years (having covered over 350 publicly on Sourcing Innovation and Spend Matters and researched and/or engaged with over 500 on/in projects).

However, one thing that has become clear to him over the past year is that many founders did not read this, or if they did, missed one or more of the key points. So, as per our introduction yesterday in Mayday! M’aidez!, he’s going to be a lot more direct and instead focus on the same old, same old mistakes he’s been seeing for 18 years as an analyst and over 20 years as an independent consultant. This is because if some of you don’t stop making these mistakes, and, more importantly, another founder tries to enter this very crowded space (don’t believe me? check out the SI Source-to-Pay+ Mega-Map with 666 clickable logos) making these same old, same old mistakes, the company is never going to grow and reach its potential, and this is a shame considering there are some really great solutions that should be market names but are not (and will not be) because one or more of these mistakes are preventing these companies from growing. the doctor wants your well intentioned innovative start-up to grow. Think about it. Why else would he cover 50 to 75 vendors a year FOR FREE? It’s because he wants to educate potential buyers on the value of these new solutions and ensure the message gets out there.

So please, please, please read this series carefully, admit the mistakes you are making (if only to yourself), and stop making them.

1. Assume that because you were a CPO, you don’t have to do your market research.

the doctor has talked to too many founders / CXOs who believe they know almost everything important with respect to what their product needs to do, how, and why and don’t need to do any market research or engage with any expert analyst or consultant because they did the job at 1 to 3 companies for X to Y years and know what those companies needed to do and, also, what the products they used were missing. Nothing could be further from the truth.

Yes, you know intimately what the companies you worked for needed, but do you know why Coupa brags about their millions of configuration options? It’s because every single company does things a bit differently. There are also more variations between what a company classifies as “indirect”, “direct”, “services”, and “[complex] project” spend, as well as even more variations by category and even Procurement size than you think. the doctor the guarantees you don’t know everything.

Futhermore, as the doctor recently stated in a LinkedIn comment, just because the two or three big name companies you looked at didn’t solve your problem, that doesn’t mean one of the other 20 to 200 companies already out there delivering solutions don’t. Over the past five years, the doctor has heard statements like:

• we started our AP/Payment company because bill.com didn’t solve our problems
• we decided to build a new supplier management solution because supplier on-boarding sucked in all the solutions we used
• etc.

And while

• bill.com and other, simple, payment platforms don’t do detailed I2P/AP, there are over 100 platforms that do
• first generation suite providers had very clunky supplier on-boarding, some have improved but, more importantly, over the past few years, we’ve seen a few dozen SXM players start or re-focus their offering because of that
• etc.

Your experience only means you have the capacity to understand what your customers need, not that you know everything or what is out there on the market (and how to effectively compete). That’s why recommendation #2 was to do your market research, focused on identifying more than just the top 10 companies on the Gartner or Forrester maps or the first few solutions that popped up in a Google Search (likely as the result of paid advertising).

However, as hinted at above and made clear in yesterday’s article, this is just the first of many mistakes. Stay tuned over the next couple of weeks as we work our way through at least 15 mistakes (of various levels of criticality) that the doctor has seen over and over and over again for almost two decades.