Jason M. Lemkin

Two-time entrepreneur Jason Lemkin just closed a debut venture fund with $70 million called SaaStr Fund. It’s an impressive feat and the latest in a string of interesting opportunities that Lemkin has created for himself since selling his most recent company, EchoSign, to Adobe four years ago.

"And there’s one thing we now know after Box’s recent SEC filings on its run up to an IPO: Box will be at a billion dollars in revenue before we know it. In fact, probably right around 2019."

"To return 4x on "just" a $250m fund, you're going to need many nine figure+ exits and/or multiple unicorns ($billion+ exits) out of a fund that maybe does 30-40 investments."

Jason M. Lemkin talks carrots and sticks when negotiating retention during your startup's acquisition.

"Lemkin says founders erroneously think of customer success as a cost center instead of a source of increased profits."

"You'll be in the Founder CEO club if you have any success at all. And it's a fun club because it lasts for life as long as your startup is at least somewhat successful."

The thing is, though, once you sell, It’s Not Yours Anymore.

I'm Jason M. Lemkin, aka SaaStr, CEO and co-founder of EchoSign (acquired by Adobe). Was VP Web Biz Services at Adobe. Now Enterprise/SaaS VC. AMA!

"From the standpoint of a founder, the life of a venture capitalist can seem very, very different. It certainly did to me when I was an entrepreneur ..."

"In my first startup, where I was a co-founder, our investors pulled out after giving us a signed term sheet. We had no money in the bank, and I didn’t have two cents to my name. And I had to make payroll in 10 days. We already had eight full-time employees. How do you cope?"

"The traditional wisdom has been that too many investors is a problem because it brings too much overhead management, disinterested investors and a signaling risk if your early VCs don’t lead the next round of funding.

The conventional wisdom remains true, to some extent, but it doesn’t mean you have to follow it if it doesn’t work best for you."

"The bottom line is if you want to go big, you’ve got to play the game. Part of that game involves getting core patents, if for no other reason than defensive purposes and to be a player in the space."

"For a startup selling a product or service to businesses, measuring progress in the first 18 months can’t be done by looking at revenues.

In most cases, your revenues are too small in an absolute sense to predict the future ..."

"Before we get to the solutions, let’s understand how founders get into this pickle. Many people are very attracted to the idea of being a founder. Whether it’s the title, the chance to be in well-known publications or the idea of getting rich without working for The Man — it’s seemingly glamorous."

"One of the biggest mistakes that founders is make is going without a salary for too long. If you aren’t getting paid, then doing your best becomes good enough after a while."

"The simple fact is the labor market is so extraordinary tight for talented internet developers and engineers that virtually every startup and larger technology company is forced to hire off-shore talent."

"The hard part is figuring the right amount of both integration and nurturing."

"So net-net, whatever the price is, you’ll probably get 60-70% of it upfront, with the rest staggered out over several years thereafter."

"When I sold my first company, I used a banker, an M&A advisor. When I sold my second, I did not. It was a mistake not to."

But the thing is, in SaaS you have to love the Business you’re with, the business you grow into, not the one you thought you’d have on Day 1. Because I can almost guarantee you it will change.

A friend of mine who heads business intelligence at a public web company taught me a little hack that does seem to work pretty well to figure out the revenues of any pre-public SaaS/web services company.

Ok, given that you have to talk to VCs if you want their $$$, and you have to take some risk to get some reward, what’s actionable here? My only suggestions are don’t do the following without a term sheet (even if the term sheet isn’t really binding as 99% aren’t):

If you are in a reasonably hot and/or interesting space, and you have a modicum of traction (or perhaps even perceived traction), after X months or X years (likely years in SaaS), you’ll probably have a day when you get an M&A nibble. And later, two or three or four ...

Entrepreneurs often speak of their startups as if they were beloved children. The infant business must be protected, nurtured and loved. Its owner must be willing to feed it late at night, to fend off hurtful strangers, to sacrifice in multiple, unexpected ways. And often, those business owners must find a way to let go.