Every SaaS startup adds staff in Phase-2 (gaining initial traction), but it’s never enough unless you’re not concerned about the burn rate. Jason Lemkin discusses the #1 challenge of Phase-2-- insufficient scale.

Transcript

The main challenge in that sort of 1 to 10 phase from initial traction to initial scale, is there aren’t enough people. Every single founder that I meet is in that 3 to 4 to 5 million revenue ARR range is just like dying. They’re dying because what ends up happening in that range, from 1 to 10 is that you end up having a new problem. You have more customers than you can service. Up to 1 million in revenue, you never have more customer, but you always do whatever it takes to make your top customers happy.

​As you get to 3, 4, 5 million, but you only have 20, 30, 40 people in your company, there’s simply aren’t enough people to take care of all your customers. From future gaps to customer success you’re just buried, just buried.

The main challenge in that sort of 1 to 10 phase from initial traction to initial scale, is there aren’t enough people. Every single founder that I meet is in that 3 to 4 to 5 million revenue ARR range is just like dying. They’re dying because what ends up happening in that range, from 1 to 10 is that you end up having a new problem. You have more customers than you can service. Up to 1 million in revenue, you never have more customer, but you always do whatever it takes to make your top customers happy.

​As you get to 3, 4, 5 million, but you only have 20, 30, 40 people in your company, there’s simply aren’t enough people to take care of all your customers. From future gaps to customer success you’re just buried, just buried.