Sampo Accelerator

Why Startup Founders Fail: (based on my own failures & 100+ founders in my network) 1. Solution looking for a problem. This one accounts for over 50% of failures I've seen & done. Founders build a solution first and then go to users, pitching it and trying to convince them they have such a problem. The problem often isn't serious enough to change their habit. 2. They like it, but won't pay. Happens in b2b. You start with a generous free tier or a long trial. Later, you see nobody upgrades to a paid tier. You think you must massage the pricing model, but the product isn't usually worth paying. Often happens to "vitamin" products. 3. Failed to monetize b2c. Once, I built an app with over 100k users, and was 1st on App Store with an award. But once I wanted to monetize it, I realized it was impossible to make good money here. FB makes money on its users because of their time in the app (hours daily). 4. Raised VC money for a non-unicorn idea. VCs make 100 bets. You're just one of 100. The chance you fail is 99%, because for VCs anything is a failure except unicorns. You could turn it into $10m/year biz in a bootstrapped mode, but VCs will force u to bankrupt such company. 5. Wrong cofounder. When 2 people start a company, and 1 quits, the other one isn't that crazy about working their ass off for this startup to succeed. Most startups I know that lost one of their cofounders early failed. I think cofounders bring more risk than upside. 6. Small market. In Norway, where I spent most of my life building my startups, most would first start with a local market. I thought it was smart, but the aftermath of the last 15 years shows that it was the reason for the downfall of the Norwegian startup ecosystem. 7. Outsourcing. Think of it as hiring someone to raise your child. This is a terrible idea in most cases. Same for a startup. The single best predictor for a startup's failure is the fact that they outsource their tech. Even worse: they outsource their marketing (before PMF) 8. Building a vitamin, not a painkiller. Many founders don't have ideas. So they squeeze the idea out of the air, which often is a vitamin. It makes sense, but people can perfectly live without it. A painkiller: u pitch someone & they nag you every week asking for access. 9. No passion for an audience & field. The founder must understand the audience really well. As well as themself. To do so, one must have a deep interest and be able to become an expert in the area. Can't build a tool for SEO people if u have no passion for SEO. 10. Lack of focus. 11. Not using their own product. 12. Not validating. 13. Growing on non organic channels. 14. Didn't plan for a marathon. 15. Out of money for bootstrapped. 16. Not willing to learn, fixed on delegating. * see details for 10-16 in the comments 👇

I often see founders give up too early. Especially Techstars founders (at least lately). They go through their cohort. They incubate an idea. They validate with other folks within the Techstar community (first mistake). They maybe get a couple customers in the process. Then they get told by advisors that they're not "venture-scalable," so they get discouraged and give up. Here's the thing, you need to get to $1m ARR before you worry about being venture scalable. The clock for venture scale is usually from $1M to $100M ARR in 7 years. Michael Ho has great content about this. At $0 in ARR, venture scale isn't your biggest worry. The other bad advice that founders often get at the very early stage is "go find product-market fit." The thing is - product-market fit doesn't matter at the start. Most folks try to find PMF from day 1, and get discouraged when revenue's not growing quickly. In the very early days, the focus should be on problem-solution fit. Do people have a problem that they would pay money to get solved. And does your solution solve that problem well enough that you have happy customers. That's the focus of the early days. Sell > build > sell. You'll land a couple, they won't renew because of XYZ. You go make XYZ better, they come back, they're happy. You go find a couple more, they're happy. You keep improving XYZ so they stick around and find a few more customers. Etc. And keep doing this until the handful of features you started with end up looking like a product that people would use for a while. You get a handful of happy customers that are renewing. That is the very first milestone to worry about. And will get you to a few hundred K in ARR. Then it's about replicating the use case in one segment, with one GTM motion (PLG, sales assist, sales led, self-serve, etc). And when you get that one segment + 1 use case + 1 GTM motion to about $1M ARR, you're at product market fit. Then you work on 10x-ing that motion, either through adjacent use cases or adjacent segments, and getting more of the original segment. So a lot of founders I talk to are focused on PMF when they haven't even got their first 10 customers yet. It's the wrong focus. Which leads to being discouraged. And often wanting to pivot or give up. Make sure that your thoughts and action match your stage. Building a SaaS startup is hard. Don't make it harder on yourself. I help founders work through these things in 1:1 coaching. DM me if you want to learn more.

<12 months of personal cash? Fundraising is a waste of time for you. Shift to a consulting revenue model. Here is why. It can take 6-18 months for you to close significant pre-seed to seed funding. The odds are very high that you will run out of personal cash before you raise any money for your business. Assuming you even raise $500,000 in 6 months, you will find it tough to get a salary from your investor. They will ask to see a budget, set milestones, and expect serious cash flow generation to justify serious salary payments to you. Even a $50,000 salary can be perceived as financial mismanagement. You need to have a business that generates cash flow and generates it immediately. That is a consulting business, not a product business. Put product plans on hold. Shift to a consulting revenue model. Live like a lean mean machine. Save up 2 years of cash flow. Then start your fundraise. Never fundraise without personal cash. That is a nearly suicidal decision for you.

Founders - everything you read says a 'strong team' is essential to influencing investors in your raise, but from there it's a bit vague. Which of these attibutes could be most important? Diversity: A diverse team combines different perspectives, experiences, and thinking styles, as well as cultures and backgrounds. They'll give you better problem-solving, broader market understanding, and more innovative solutions. They'll outperform homogeneous ones in spotting both risks and opportunities. Compatibility: Strong personalities are valuable, but you want the ability to work together in some harmony. Constructive disagreement - good; sharing core vales - better. Look for chemistry between founders, and working effectively together under pressure. Competence: Raw skill in core areas is non-negotiable. Each member needs proven ability in their domain - whether it's technical, commercial, or operational. But beyond that individual expertise, look for people who can execute effectively together. "They're All Rockstars": Having impressive resumes or past successes probably catches an investor's eye, but it isn't enough. Sometimes teams of "rockstars" fail because of ego clashes or inability to adapt to startup conditions. Can they prioritise team success over individual glory? What's really important? When does the magic happen? Look for competent people who can work together but also bring fresh thinking. The team needs to complement each other's strengths while sharing a unified vision and have the humility to learn together. #AngelThink #angelinvestors #angelinvesting #startups #entrepreneurship

5 mistakes in the psychology of fundraising: ▸ Equity is not a commodity, fundraising is not a marketplace. The power dynamics are closer to a dating app: the top 10% chase the top 1% (whatever that means), the top 50% chase the top 10%, and then it trickles down. Everyone wants to "date up", but few are self-aware of their market value. Maybe you would have better luck with your local angel club than with a Tier 1 fund. ▸ Don't be obsequious to investors. Negging is real. ▸ Fundraising can turn founders bitter and angry. If you feel that's the case, stop raising, take a break, and focus on improving your fundamentals first. ▸ Don't believe investor feedback, it's widely meaningless. At early-stage, the investment decision is emotional first, and then rationalized ex-post. But investors won't admit it. :) A VC might say "market size is too small". But if they liked you, this wouldn't really matter. ▸ Investors are NOT your teachers/managers. They have no duty to provide feedback or help you get better. Some will be helpful, sure, but you're not entitled to anything from them. They are money allocators first, looking for a return for their LPs. ▸ If you have poor mental health, you probably shouldn't start a VC-backed startup. #startup #venturecapital #funding

Private equity buyers (and PE-backed strategics) are the most likely home for your SaaS business, if and when you try to sell it. They now make up 70% of all software company acquisitions. This change started to grow 10 years ago and is now the default path for successful software founders when they sell their companies. Did you know that? Is anyone telling you the old way isn't coming back? Strategic buyers and IPOs with crazy valuations used to be the likely exit paths for successful software companies, but those are almost non-existent now. Here are a few significant realities of the PE-exit reality for SaaS founders: 1) Don't expect a crazy valuation when you sell your company. PE investors and PE-backed companies don't overpay for software companies. That's not their game. Great SaaS companies get acquired by PE for multiples of 5-10x revenues. Mediocre SaaS businesses (slow growth, slightly profitable) get 3-5X revenues. Others with more services get 10-15X EBIDTA. No "greater fool" exits here. (On average; your mileage may vary.) You can't win raising big VC funding with these end-game multiples. 2) Healthy SaaS business = good multiples Starting around $5M ARR and up, SaaS businesses with healthy growth (20-50% YOY), decent profits (10-30%), low churn, good revenue retention, and predictable customer acquisition get good multiples. This is a win for SaaS founders if they didn't raise too much outside capital and can sell it when it makes sense for them. Most SaaS companies are not that healthy. 3) Unhealthy SaaS business = lower multiples or no exit No growth, burning cash, churning customers, high CAC, losing market share, off trend software companies are either not bought, sold as "distressed" fixer-uppers at 1-3X, or not sold for a premium. 4) There still needs to be serious growth potential. Savvy PE-typ[e buyers want to grow your business and sell it in 5-7 years to make their ROI on buying/investing in your company. This business needs to grow 3 times or more in revenues--after you sell it. 5) You don't get a pile of cash and then walk away. PE buyers almost always buy majority or minority positions in your company, but not all of it. This is the new reality for PE-led acquisitions: It's almost never a 100% purchase of your total equity. This also means you're sticking around to run it for a while with new bosses and new rules. You win your "second bite of the apple" prize when it is sold again, and your PE investors win. So you have to play nice whether you are still on the team or not. This PE end game is very different from the old "raise as much as you can" VC funding game with a crazy IPO or big strategic exit. That still happens, but so rarely that it's not worth betting on for most SaaS founders. The game has changed. We're not going back to the crazy tech boom days with silly multiples for B2B SaaS companies. What other implications of the new game of PE acquirers do you see? #practicalfounders

We're moving away from charging for *access* to software and toward a model of charging for the *work delivered* by a combination of software and AI agents. Let’s dive into what’s happening and what it means for you ⤵️ 1. The rise of disruptive AI pricing models Tech companies are realizing they can't solely rely on seat-based subscriptions in an age of AI, automation and APIs where value is disconnected with how many people are logging in. Perhaps Salesforce going all-in on Agentforce (and charging $2 per conversation) was the push the industry needed. Each product category has its own flavor of disruptive pricing. - Legal AI products might charge for a demand package generated by AI or an AI-generated summary. - Creator AI products might charge for the content that gets produced such as a video generation or amount of video created. - GTM products might charge for specific tasks completed or workflows executed by the AI. 2. Selling work, not necessarily success As a customer, I wish I only had to pay for software when it delivered results. But the reality is that true success-based billing won’t work for the vast majority of today’s products. Most products should charge for work output instead. The issue is attribution. You want the customer to get a fantastic outcome — and you want them to recognize that your product powered that outcome. As soon as you start charging for success, the customer begins to rethink the results. 3. Goodbye ARR as we know it? Shifting to these newer value-based pricing models isn't a simple pricing change you can just announce in a press release. It's a business model evolution that looks a lot like the shift from on-prem to SaaS in the first place. These new AI pricing models might mean greater volatility in both usage and spend. Variable margin profiles across products and customers. Seasonal revenue fluctuations. The potential for project-based, non-recurring use cases. Put simply, annual recurring revenue (ARR) continues to get dethroned. — Full post in today’s Growth Unhinged newsletter: https://lnkd.in/ea5eTrVD Things are about to get interesting 🍿 #ai #pricing #saas

Fix Your Co-Founder Issues First Hard truth: Your product won't find market fit if your co-founder relationship isn't solid. Why co-founders fail: • Unclear equity splits • Mismatched expectations • Hidden resentment • Poor communication • Assumed alignment The real cost: • Slow decisions • Divided teams • Lost opportunities • Wasted resources • Dead startups Signs of trouble: • Passive-aggressive emails • Separate team loyalties • Avoided conversations • Silent disagreements • Solo decisions Fix this first: • Clear role definition • Written agreements • Regular check-ins • Honest feedback • Aligned vision Remember: Product issues can be fixed. Co-founder issues kill companies. Simple framework: • Weekly 1:1s • Monthly reviews • Quarterly alignment • Clear decision rights • Written expectations Real talk: Upekkha rejects great products with broken founding teams every single batch. The math: Bad co-founder fit = No product-market fit What's your best co-founder advice? Share below 👇

Dear bootstrapped founders: set aside 2% equity and build an advisory board. Here’s how and why. Why: it turns out boards (when done right) are helpful. They put people in your corner who have seen the game played 100 times and can help you see around corners, avoid mistakes, etc. There are lots of great things about not having a formal board, but lack of experienced advisors is a huge downside. But you can fix this. How: - set aside a small pool of equity. We did 2% at stacker. This is for advisors, all time. - think - what are your blind spots? Where do you wish you had someone to call with burning questions, or poke holes in your strategy. This is different for everyone. For stacker we wanted someone with media operating experience, someone with corp dev experience, etc. - start networking. Do not meet someone, like them, and immediately grant them equity. Find people that are excited about your business. Be upfront you’re looking for advisors. Work on problems w them. The right people will be excited to work on problems at the start without pay, becayuae they love your business and are passionate about what you’re solving. - pick some advisors. We used the FAST framework to help choose the right equity and time commitment. Google this. - use them well. I meet w each of our advisors for 30 mins monthly(separately), and then as a group once a quarter. They hold no power, but call me on my bs. It’s so great. We didn’t do this until two years in, and we would’ve avoided so many mistakes had we started earlier. Swallow your pride, go get some amazing people in your corner.

As a startup founder, just don't do this 🧵 : 1. B2C. Most wish-washy stories and movies are made after b2c unicorns, so naturally most founders start with b2c ideas. I did that too. But the harsh truth is that 99.9% of b2c fails. You either make it to the stars or you fail. Nothing in between. Same odds as a lottery. 2. Partnerships. I've wasted years on it. I've seen others do the same. It just never works. Founders are such high on EGO that it's counterproductive to try to cooperate. It only works when both are successful. But it never works if one is big and the other isn't. 3. Paid ads. Many think: I'll build a product and then pay for ads to bring users. Ads only work if you have functioning organic growth and near PMF. Otherwise 0*ads=0. 4. Paid influencers. If my tweet gets 100k views, I get 300 signups. If an influencer gets 100k views for my product, I get 15 signups. (I did many tests). Often, influencers had more followers than me. Most have an inflated follower base. Maybe tiny influencers might be better. 5. Newsletter ads. I tried producthunt, indiehackers. Didn't get even a single paying users. Paid a lot for it. I had a way better experience with a few tiny newsletters. 6. Conferences. 99% of the people going to conferences go there to find customers. It's like when you go to a night club to see 1 girl and 99 dudes. It's fun for making friends and having fun, but it brings nothing to the biz. 7. Outsourcing marketing. I have never yet seen a case of someone finding their PMF while outsourcing their marketing. Not a single case. It just doesn't happen. Outsourcing is okay after PMF when you give them precise instructions. But it's a waste of money before PMF. 8. Cold Email Outreach. There are two myths on founder twitter: kids making millions via tiktok influencers and the outreachers. I tried myself. I hired pros to do it. Maybe I didn't hire the best, but I can say: you won't hire the best either. So, I'd not bother with outreach 9. PR. Buying articles in Forbes and doing PR activities. It isn't just a waste of time & money, but it's also cheating. 10. Sponsoring. The ROI is negative. I do it for the "brand awareness". But I expect no signups from this. It's just a bonus & rather me supporting others with my sponsorship. Don't do it unless you are an altruist like me. 11. Hiring sales/marketing team. Not at the start. Only u know ur product. Get to $10k rev on ur own and only then think of hiring more help for marketing. Cuz the only people u can hire are the juniors who know little & u need to teach them. So learn 1st, so that u can teach. 12. Hosting your own podcast. It takes tons of effort and energy that you shouldn't waste on it at the start. Podcast is great when you scale, but not when u're looking for a PMF. Unless u start with an audience and spend all ur time building an audience.  --- Applies to - pre PMF startups - targeting startups & small biz - b2b - run by a 1 or 2 founders