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.