S3E16 – The Unsexy Truth about Startup Success with Cristobal Alonso
What is the unsexy truth about startup success? Building a successful startup isn’t easy. Founders face tough challenges while trying to make their vision a reality. It’s commonly stated that founders face the heat in their kitchens but keep cooking nonetheless, and as a result, we primarily see the final product presented without actually knowing what it took to come up with this final product. In this exciting episode of The Grow your B2B SaaS podcast, host Joran Hofman talks with an expert in the field about what it really takes to start and grow a SaaS business. As the CEO of StartupwiseGuys and the author of “Perform: The Unsexy Truth About Startup Success,” Cristobal Alonso shares practical advice from his experience in investing and starting businesses. He focuses on what works rather than flashy strategies. Join in as he spills the secrets to making your startup thrive.
What is Success?
Cristobal defines success in the startup world as achieving the freedom to choose and pursue one’s goals. He highlights the significance of sustaining a startup by focusing on continuous growth and establishing a strong market presence over time, emphasizing the journey of success as a long-term endeavor.
Unsexy Truth About Startup Success: Book Insight
Cristobal delves into the core concepts of his book “Perform,” which focuses on seven key aspects of startup life essential for increasing the chances of success. These include purpose and values, effective planning, roles and responsibilities, optimal energy, robust communication, and mental toughness.
Common Mistakes in Building a Startup
During the discussion, Cristobal points out that one of the most common mistakes startups make is related to hiring practices. He stresses the importance of hiring based not just on skills but also on shared values and culture fit, underscoring the critical role of team dynamics in a startup’s success.
Implementing the “Perform” Framework
Cristobal explains that his book offers a practical approach for startups to apply the principles outlined in each chapter based on their specific needs. He suggests using the book as a guide to address challenges systematically and improve different areas of the startup gradually.
The Difference Between European and US Startups
Cristobal highlights the differences between European and US startup ecosystems, emphasizing the European focus on care for people and building resilient cultures. He stresses the importance of relatability and personal connection in fostering successful startup communities.
Advice for Startup Founders
Cristobal shares valuable advice for founders at different stages of growth, emphasizing the importance of hiring well, testing quickly, listening to customers, and maintaining a resilient company culture. He encourages founders to focus on differentiation, customer feedback, and profitability as key drivers of success.
Challenges in Accelerator Programs
Discussing changes in accelerator programs, Cristobal emphasizes the shift towards a more holistic approach that combines pre-seed investments with early-stage funding. He underscores the need for longer-term support for startups and a focus on guiding them towards profitability and sustainable growth.
Key Insights for SaaS Founders
Cristobal provides insights for SaaS founders, stressing the significance of having a plan for growth and a vision for long-term success. He advises founders to focus on differentiation, customer-centricity, and building a company culture that values both customers and employees. Learn how to achieve customer-led growth with Katya Ryabova
Reflecting on the Journey
In a personal reflection, Cristobal shares that while the startup journey may present challenges and pressure, enjoying the process, taking care of oneself, and staying focused on the core values of the company are essential for long-term success. He underscores the importance of resilience, adaptability, and self-care in navigating the complexities of startup life.
Key Timecode
[00:00:00.000] – Show Intro
[00:00:37.270] – Guest Intro
[00:02:06.050] – Joran introduces the topic of startup success
[00:03:06.450] – Cristobal defines success in startups
[00:04:21.900] – Cristobal explains the key aspects of startup success from his book
[00:06:01.620] – Common mistake in building a startup: hiring
[00:07:44.480] – Importance of resilient culture in startups
[00:08:59.420] – Implementing the startup success principles
[00:09:44.300] – Differences between European and US startup examples
[00:11:52.220] – Commonalities among successful European founders
[00:15:51.110] – Implementing the startup success framework
[00:17:09.770] – Transition in Accelerator programs towards funding and support
[00:18:33.900] – Advice for founders reaching 10K MRR
[00:19:36.900] – Advice for founders approaching 10 million ARR
[00:30:29.070] – General advice for SaaS founders
[00:35:18.850] – One thing Cristobal wishes he knew 10 years ago
[00:37:44.370] – How to contact Cristobal
Transcription
[00:00:00.000] – Show Intro
Welcome to the Grow Your B2B SaaS podcast. In this podcast, we cover all topics on how to grow your B2B SaaS, no matter in which stage you’re in. I’m Joran Hofman, the host of this show and the founder of Reditus, which is a B2B SaaS that helps other B2B SaaS companies to set up, manage, and grow an affiliate program. Being a founder myself means I’m going to the exact same journey as you are, experiencing the exact same issues, and probably have the exact same questions. And this is why I started the podcast in the first place. Get advice from industry experts on how to grow my B2B SaaS. So if you like this content, make sure to subscribe, follow, give it a thumbs up. Let’s just dive in.
[00:00:37.270] – Guest Intro
In today’s episode, we’re going to talk about the unsexy truth about startup success. My guest is Cristobal Alonso. Cristobal is mostly known, first of all, as the CEO of Startupwiseguys. But next to this, he also wrote a book called Perform: The Unsexy Truth About Startup Success. He’s writing the sequel right now, Perform in Times of Crisis. He’s also writing a third book called The Dark Side Startups, explaining more about the VC world.He’s an early-stage investor, did over 400 investments via Startupwiseguys, filled roles like COO, CEO, Chairman, Chief Transformation Officer, and has been a founder himself. And on a personal note, he has been a professional basketball player.
[00:01:18.810] – Joran
Welcome to the show, Cristobal.
[00:01:20.240] – Cristobal
Hey, good morning. How are you?
[00:01:21.610] – Joran
Good, thank you. If people are not convinced after this introduction, we’re going to start off with a Dutch blunt question. Why should people listen to you today?
[00:01:30.240] – Cristobal
Well, I’m getting older. We seem these days, we call it being wiser. I think the fact that I’ve been around almost a thousand founders’ journeys, apart from my own journey, I think make it worth it for anybody wanted to go through this. It’s a life to be scared of, a life to aspire to. I think also from an investor point of view, the fact that you’re doing 400 investments means we point of view about 12,000, 14,000 startups in the last few years. It’s probably also interesting to say, you want to get there, how these people do it, that type of volume.
[00:02:06.050] – Joran
Today we’re going to talk about the unsecular truth about startup success. We’re going to go towards success, right? How do we even define success? What is success for you?
[00:02:16.490] – Cristobal
For me, it’s actually a funny part because for me, it’s freedom. It’s actually to choose to do what you want to do. But in the startup, that means to keep the startup running and chasing growth. That’s the startup life. The startup is all about growth. If you don’t want growth, you want something else, you need to build another type of company. In the startup, it’s basically keep having the means being funded or being revenues, cash at the end of the day, to keep chasing growth and becoming a dominant player in whatever market or field It just took like that. I think that is at the end of the day, success in the startup life. I think the one thing that makes clearly, we just talk about a decade in that small sentence, because success in a startup in a bigger level, both impacts and growth only happens really over a decade. It’s not something that happens fast, almost in what it means.
[00:03:06.450] – Joran
No, indeed. It will take time. I think that’s what we’re going to dive in today as well. And regarding your book, it’s called Perform the Unsexy Truths About Startup Success, and perform is in capital. So you basically already indicate that there’s something behind it. What does perform stand for?
[00:03:23.480] – Cristobal
At the end of the day, we divided the book in each letter meets something, P for purpose and values, D for effective planning, and so on. Basically, seven areas, seven aspects of a startup life that if downright, it can increase the chances of success. But all of them, there is nothing there about pitching, about the fancy things. It’s just about from as much as mental toughness and energy to eating well, to basically define the culture values of the company, the capacity to plan properly. Again, that’s the unsexy side. People go see and think, This is all going to be a lot of pizza on the stage, being a TP, running to airports, et cetera. I think when things are down constantly and effectively as any other company, I think the chances of success are incremental, if not exponential. That’s what we try to explain in the book.
[00:04:21.900] – Joran
Yeah. To maybe tell the full seven. I think they’re seven, right? Yeah. Purpose and values, effective planning, roles and responsibilities, optimal energy, robust communication, and mental toughness.
[00:04:36.770] – Cristobal
Correct.
[00:04:37.590] – Joran
You just mentioned it, you spoke to or you work with a thousand founders. What is the most common mistake companies make while building a startup?
[00:04:47.040] – Cristobal
I would say there is different elements, but I would say if I had to choose one is hiring. It’s hiring broadly. And that has many dimensions. So for example, just maybe two or three quickly. One This is the whole idea of purpose and values. It’s hiring without having defined the values of the company, the type of company you want to create. So it’s basically hiring based on skills and not thinking about what people I want to be working with or what company I want these people to be landing in. I think the hiring, the certain mentality of hiring and the skill base is actually fundamental. Everything that has to do about HR management, I was just today with a founder This was his key question. I’m 27. My co founder is 50. I need to make two hirings with my first round. That’s it. If I get them wrong, it’s game over most likely. He has never hired. We spent 20, 25 minutes just talking about simple things. But I think it’s the lack of understanding. I think the fact that we have gone into soon world in which you don’t even have, in many cases, physical contact with these people before you hire makes it even more difficult in the process.
[00:06:01.620] – Cristobal
Because I remember when I was in the AI, go for a walk, go for one hour walk with the person and just talk about life. Because I think, again, we focus too much on the technical aspects of hiring and not understanding the people within the people that we are hiring. I think that’s the fundamental in a startup with a level of intensity, with a level of stress or pressure. I think people, especially the first two, three years, is all that matters. Everything else, if you get the right people, everything else will work. If you get a lot of people, everything else doesn’t matter.
[00:06:32.090] – Joran
Yeah. This is probably why you have the purpose and values at the top of before. That has to be in place. Then based on that, you can hire the right people because if things happen, stressful situations are going to happen, then you know that you have the right people. Then you might have somebody who’s less skilled, but at least he’s there.
[00:06:50.780] – Cristobal
Correct. When we are now right in performing types of Crisis, one of the chapters is how does a resilient culture help you go through these times? How If you have treated people right, you have just the right people, when the bad moment comes and people have some best, you’re not able to pay salaries for a number of months, et cetera, people is there for you, people is there backing you. I’ll say, We are going to do it together. We’re going to go through it. They’re not looking out at all. I think it’s fundamental to do it from the beginning, but if you build it upon, when the past times and past times were always come in one state to another, that culture is what is going to keep the people united and fighting together. Being a CEO is quite lonely. You have a team that believes in what the company is doing, not just believe in you, but in what the company is doing. I think it is one of the best or easiest ways. Everything is difficult to surpass a crisis.
[00:07:44.480] – Joran
Yeah. And I think that’s a really good point. I think we can say perform is like almost a process or a mythology. How would you go about implementing it into a startup?
[00:07:55.150] – Cristobal
I think there is two ways because the way the book is written is you can’t take any the chapters on this on. Sometimes yesterday, we are terrible at planning. Let’s start there. It’s actually thought through, Hey, you have a problem and you want to go through it and you want to see good examples, some potential exercises you can do to get there, just go to the chapter that you need. I will say that if not, the order makes some sense in a way. But to me is that we even have at the back of the book a wheel exercise. We say, Can you measure your company? The way you will actually your company might tell you, Hey, let’s start in these two areas. It might be planning and communication. It is a way to actually measure where the company is at and where the focus can be. You can be working on all of them. I don’t think you can really focus on all of them at the same time. I think there is a certain process, but I don’t think there is an order. I will say, as you well mentioned before, that if you have not started working on your purpose and values, you need to start from there.
[00:08:59.420] – Cristobal
That’s for But maybe you have to look at those areas. But the book is written in a way that A is practical. There is always about six, seven, eight startups cases there. You realize this is not guys in the US. This is anybody in your garage in Europe that can be your neighbor. It can be you. I think that was a very important factor that wanted to put in the book. Secondly, that you can take one chapter at a time in the area that you feel most needed for the company, or you need to refresh yourself, or you want a different point of view.
[00:09:27.840] – Joran
I think one question I wanted to ask, like you mentioned now already, it’s indeed like European examples. I guess if you just… Why should we not look at the US examples? What is the difference between the US examples we keep seeing a lot of the times versus what we do here in Europe?
[00:09:44.300] – Cristobal
I think we’re different. I think the markets are different. The capital allocation is different. The mentality is different. I tend to think I admire many things in the US and in the startup space. But I think the whole idea of building on people and caring about people is very different in Europe. I remember when COVID started, I was in a DC panel, and the advice from the two American guys was, fire everyone, save cars and start. No contemplation. I think the European is a bit different. I think we care about the people way more. I think we bring the people in the journey. God, it’s also listen, whatever you want. But I think there is that element of care, and I think that’s different. I think the way we look at people is different. I think the way we get satisfaction through our relationship partnerships with people is very different because it’s just business, mafia, talking in the movies. I don’t think so. I think we spend one second of our life, at least, usually with these people. I want to enjoy that third of my life. I think it’s all about the people you’re working with.
[00:10:46.550] – Cristobal
We mentioned before, this is a 10-year process. You’re going to spend a lot of time with these people in your life. I think that’s a fundamental change. I think it’s also the European market. It requires traction, revenues, It proves way more than the American. At the same time, maybe it’s a bit more patient about things don’t need to happen tomorrow. The Americans are having six months, quit almost in a way. I think the patients, the resilience in the market is different, and especially in Eastern Europe, This is what we have been investing 50% of even more at the beginning. The resilience level is much, much bigger, and I think that has to be taken into consideration. But I think the American thing was about, apart from the samples might be different, was also about when you see them in the US, it’s very far away. There is always mental excuses why you cannot meet that person. When you see somebody that is your neighbor, there is no mental excuses. It’s the yes just not to do it. I think That was part of the idea. I got a guy from Estonia, I got a guy from Lysonia, I got a guy from Denmark, I got a guy from Spain, from Italy, from the Balkans.
[00:11:52.220] – Cristobal
Anybody can do this. This is not about heroes. This is about successiveness, mentality, and desire to do Yeah, because in the end, it’s a lot more relatable if it’s somebody really close to you instead of on the other side of the world, of course.
[00:12:07.830] – Joran
I do agree. I think employees want more than just money. They’re not saying that US employees want purely money, but people want to have a purpose. They want to actually know what they’re going for. Also, it’s not easy, especially here in the Netherlands, to lay off people. You have a lot of rules where in the US, it’s often in some states, it’s a lot easier. Here, you can’t just fire fire, but it has to be legitimate reasons and a lot of good reasons to actually fire people in bulk. I think that’s also maybe a big difference, like the legislation around that. You mentioned you have a lot of examples from founders, a lot of examples from EU founders. What do they have in common? Is there any takeaway we can take out of what do these people have in common? Why are they doing well?
[00:12:54.740] – Cristobal
I would take more of this. You allowed me the Central Eastern European, which is what we have, I would say, the core there I think one of the key examples of community commonalities is the lack of role models. Because in a way, the economies have been working the way they look right now for max 30 years or 33 years now. The startup world is something that has at the most a decade. I think the lack of role models within the families, within the close circles is something that we sense and is why I think the best ecosystems have been those which has been a very strong mentality to give back. People, even after five years of their mentoring, even putting a small ticket. I have seen so many founders also they’re investing. But again, it’s not just for money. It’s about the time, put your experience out there. The ecosystem is doing really well. I have seen this mentality of give back very early on. I think in a way, it’s also the openness of people to talk. I wouldn’t say that Europeans are not for talking about failure. Let’s not say that because it’s not the truth.
[00:14:01.210] – Cristobal
It’s something that we are learning. But I think people is more and more open to talk about their personal experience. To tell it as it is, you were mentioning the Dutch being the director. I think we are in Eastern Europe, we have that I do not think. People is quite direct. It’s quite straightforward. I call it… I don’t want poetry here. Poetry is for something else. It’s not for this world. For this world, that’s not the point. I love poetry, I love playing music, but it’s my relaxation side. I think this tell it as it is, don’t be us. I think it’s very important why we can actually be very different but also very united in the way we actually operate. It might even be because people don’t speak great English. In a way, they are very simple explaining their problems, that they don’t put flashy things around it because we always speak, I almost speak 100% of our time in a second language. That makes an interesting world, I think, in which we operate in the startups in Europe, which is, I think, very different US, which everyone is speaking in their own language in a way.
[00:15:05.450] – Cristobal
I think that also changes the communication. But I make it a bit, in my opinion, more sincere, more direct, more straightforward. I think that’s quite common in good funders, at least, and funders who say that I’m the path to success.
[00:15:20.620] – Joran
Yeah, I love it. It’s quite funny. It’s interesting that they give back early on their openness to talk, their personal sharing personal experience and telling it how it is. I like the English approach indeed. We don’t use a lot of fancy words, or at least I don’t. I really just try to keep it as simple as possible and as straightforward as possible. It could be with the English that we don’t know all these words, I guess. We can’t hide in them either. We just tell it how it is. I have never thought about it like that.
[00:15:51.110] – Cristobal
I had recently one of our companies in portfolio said, I know that they were sat down and said, Dude, how can it be that until last month, the reports They were fantastic, amazing, everything is on track, and next week, next one, they said, And there was an American founder. You were not really between the lines. We’re saying here and there. They said, No, I can’t read you the sentences. There’s no being really between the lines. This is what it says. And it was interesting. There was an American founder So I do think that the whole thing there is a tell it as it is and don’t put too many wheels. Bels and wheels actually is probably one of the reasons there, but they’re doing this part of it.
[00:16:26.630] – Joran
This podcast episode is sponsored by Reditus. Reditus helps B2B SaaS companies to set up, manage, and grow an affiliate program. In short, it means you’re asking other people, affiliates, to promote your SaaS. You would only pay the affiliates a kickback fee when they deliver you paid clients, making it a very cost-effective and scalable way to grow your MRR. See more at getreaditus. Com. And if we go back to the framework or the process, if people want to start implementing perform, and again, you can probably start with P, and then you can take out any chapter you want. Is there going to be any challenges you think they’re going to face? Then any ideas on already how to overcome those?
[00:17:09.770] – Cristobal
Yeah, I think you cannot think that you’re going to go to a book and have a cooking recipe right here. I think what the book tells you is many things you need to try and you need to find what works for you. In a way, I would almost say it’s a methodology of what to try until you find your own answer. I don’t want to talk about leaders in our communication style. It gives four different areas and four different balance. You need as a leader to find your own balance. There is people who writes better than it speaks, but you cannot just live in one of the two as a leader. You need to complement those. That’s a good example. I think the book is basically about giving opportunities or giving things to try in an organized manner, which, by the way, in a way, to me, that resembles the accelerator a lot. The accelerator is not going to give you the answer. It might tell you were not to do a certain case, but it’s going to give you a very organized manner of how to go through the steps as fast as possible, as cheaply as possible.
[00:18:10.670] – Cristobal
While testing, you find the answer, next, you find the answer, next, you don’t find the answer, you need to give it, and you need to go. I think that’s in a book is established. There is certain things you have to do, but most of them is how to do it with a process that saves you time and money while finding the answer, your own answer in your It’s one company because every company is different and every leader is different.
[00:18:33.900] – Joran
You have to give your own twist to it. I guess you took the cooking example. I had to think about Hello Fresh. They give you the ingredients, they give you the exact steps. That’s not what this is. It’s more, it’s giving you the ingredients and almost like the end goal. Because your company, your cooking style is different, you need to come to the end conclusion yourself.
[00:18:53.260] – Cristobal
That’s what happens with recipes. The best recipes are when you take an idea and then you make it your own way. You make it with what is fresh in your kitchen, what do you feel today, what are you good at? Then you come up with your own touches and your own ways to do the things. Sometimes with your terrible recipe, then you need to do it again because you fail. I started in the right place. I added the wrong ingredients. I have to time again until you get it, right?
[00:19:19.840] – Joran
Yeah. I think the timing of the ingredients, the timing of what you do is going to be important as well. You invested in a lot of startups, right? What criteria do you typically look at, use when selecting early-stage startups to invest in?
[00:19:36.900] – Cristobal
We do about right now, about a hundred investments per year. We do invest a lot. People might think that, Oh, we just get into a room and make a decision. But I think there is still a very thorough process, which before they even get the GPs, there is three or four people involved. They’re looking at a technology, they’re looking to do the AES, they’re looking at the founders. But they get to us, to the general partners, let’s I think we’re looking mostly in the early stage to the teams. We say, Yeah, I’d like to talk about teams, people. Yes, that’s all it matters. When you have 5,000, 7,000 euros in my app, the product might become pretty different in two years from now, and nobody cares. What we care about is this team capable to do that. I think my biggest focus is on the team. A, I try not to focus just on the CEO. I try to understand everybody else. We try to get everyone in the conversation. We try to have difficult questions, and I want to see how the different people in the team react. This is the team that only the CEO talks.
[00:20:40.970] – Cristobal
You can see it. I like to try to test through not easy questions in a way that the team cohesiveness and decision making, the roles and responsibilities within the team. The second one is I like to test the ambition of the team. Is there an ambition to make something really big and it’s it fundamental on something? Have they built a mental map of how they’re going to get there? We know it’s BS. It’s like Excel can support everything, but you need to have a map. I want to be a unicorn. How are you going to do that? It is fascinating how most people cannot think 100X. I think even a lot have a 10X problem. They’re here and they’re, How are you going to be 100X bigger? How are you going to be 100 times bigger? They don’t know it. To me, that’s a signal. Something is there. The third one is the purpose. I really want to explore in those calls. Is there an inner why to do this? It’s just not the money, it’s just not the ego, it’s not just the dream. It’s really something powerful there. We do that one. I think those three things are things.
[00:21:54.950] – Cristobal
Of course, we understand the product. Is there any differentiation? Is there a market? But it’s just too early. I also think my team has done most of that work. Most of those things we can coach. I cannot coach a bad team to become a good team. I can’t coach a good team to do things much better or we can coach them. I think that’s really spend time on the team is the fundamental part of our job, I would say. When we do this across many nationalities, many cultures, because that’s what we do very differently, we do 25, 30 every single year through the investment. Being able to read people with that culture of backgrounds, I think that’s simple. I think that’s one of the things that we can probably say, This we do well. Other things, But this we do well.
[00:22:45.600] – Joran
It’s interesting because you have the cultural differences, but then you also have the role differences where a business person is completely different than a tech person in many different ways. I think that’s quite interesting.
[00:22:58.890] – Cristobal
You cannot read the same way in an Espanier, in a Dutch, in an Estonian. It’s not, you will never see that in an Estonian in your life. It’s like these pocket players, the party has called them the poker players. You need to go a bit deeper. You need to be able not to judge, but to ask questions to get to the answers that you want to find, not prejudge quickly. This is in your own mentality, in your own way, I think, because we’ve had the background seeing so many different things. I think we are a bit less biased, because we’re all on judging people, not to be like us, not to be like our previous examples, our previous investments, but to be what they are and then to find out how they are.
[00:23:40.250] – Joran
To conclude, the biggest focus is going to be the team. You’re basically talking to anybody, testing everybody with in-depth questions, look at the different roles, different responsibilities. Is there a vision? Is there an ambition to become big? Even how do they know or do they know how to get to 100X bigger? Then in the end, coming back to the book, is there a purpose? Why are they actually doing this? Is there an inner why?
[00:24:04.290] – Cristobal
Yeah, I wish that this was summarized.
[00:24:07.660] – Joran
Maybe go towards a bit of startup-wise, guys. I might be wrong here if I say this, but often a lot of Accelerator programs are focused on getting funding, right? Do you think that’s changing now in 2024 and beyond because the world is changing there.
[00:24:23.560] – Cristobal
I think one of the things that when people ask me, what are the recipes to have a successful accelerator, because you’ve seen in the last two, three years, every day, one more day is we need to invest ourselves. So don’t think an accelerator can be successful if in itself is not a VC fund. Because you cannot buy something you are not doing. You cannot talk to people if you’re not putting your money. So I think one of the difference is that, and I have seen this not, I guess, 2024, but the last two years is we are mingling everybody into the pre-seed. An accelerator is much as a pre-seed as a the same year was an early-stage fund. It’s these combines that work together. I think you need to recognize that and you need to recognize that you’re almost, I would say, I don’t like the option of lead investor, but you are the one who is leading and putting these things together. You’re bringing in a year investors or you’re bringing yourself another fund, but they come because you cannot see that we put all these things together. I think that’s the difference on the maybe five, six, seven that we globally We established that when we come in, it does guys sell in, if otherwise they sell in, I’m putting my money also.
[00:25:36.660] – Cristobal
I think it’s this putting things together. I think the second change, which is partially or the first one is also that We are not investing for six months. We need to make sure that people is going to have 18 months to get to the next level because the market has changed. Maybe in 2025, ’36, I think we’ll go back to what it was in ’21, maybe, or maybe continues slowly up as it’s doing right now. But I think you cannot invest in something that in six months is going to die. If that means you need to bring more money from other investors, if you need to say, We need to reduce our spend, et cetera. But companies need more time to raise these things. I think our biggest job, apart from putting all these things together, is also helping companies to describe a path to profitability, which is something that I talked before. It doesn’t mean that you need to be profitable with 10K. But companies need to know, Hey, with €40,000 a month is a current, I can be profitable. Good. Let’s work on that plan. Hey, if in the middle, that traction gives you more money and you keep going, great.
[00:26:41.750] – Cristobal
But if it doesn’t, you’re profitable, you take your time, You have time, you have earned your freedom to get successful to keep going. I think that is a fundamental discussion. I always am amazed about… I don’t think people on the sub break even. I think 90% of the founders did not understood break even, did not understood cost management. Now it’s a fundamental… That’s how everything starts.
[00:27:09.900] – Joran
You look back to the entire beginning of the conversation where I asked, what is success? You said it’s freedom. This is what you’re mentioning here as well. If you become profitable, you earn your freedom in a way that you don’t need to go down the path. You can choose to accelerate growth, as you mentioned, but there’s no real need. Because at least you have your freedom where you can decide how Or do you want to grow the company.
[00:27:31.290] – Cristobal
You can do it at the right time. So if the market is down and the demand are there are outreaches, then you don’t do it. Then you wait. I’ve seen basically, I would say, 50% of our pre-sit-to-sit rounds that we have seen in the portfolio have been rich rounds towards profitability. How much money you need to become breakeven? Some of it has been a half a million, Marrara has been 150. But I think that understanding understanding and working towards that is fundamental. Then what are the levers? But if you have more, then you apply. If not, keep going. It’s also teaching you about that’s okay because I think there is too much ego about getting the next round. That is not the objective. I don’t know, people have gotten this business confused. The objective of this business is not the PR or the LinkedIn post on your next round. The objective is actually profitability. It’s impact, It’s a hundred million AAR. There is the objective. Then that’s how you transform the industry. That on the first place you wanted to get into. It’s not telling your mom, look at me in the press, I got a round.
[00:28:42.140] – Cristobal
Because the next day after the round, you just give away another 10, 15% of your company. That’s the only thing that has happened. I think that is a healthy change. I think that is something that even if it’s hard to go through this time for many of the founders, and we feel it, and I feel it. I think it’s a good change. I think it’s going to help us create better companies in the future, or invest in better companies in the future.
[00:29:05.890] – Joran
Yeah, better and profitable companies. I fully agree here. We’re going to switch over to the final four questions. When we talk about the unsexy truth about startup success, what advice would you give a founder who’s just starting out and growing that 10K monthly recurring revenue?
[00:29:23.790] – Cristobal
Hire well. Really put a lot of effort in hiring. Test quickly. Ask many things as you need, but with focus. So don’t test four things at a time. So test one thing quickly, also doesn’t work next. So until you are 10, 15K, 20K, the errors, the mistakes are very cheap. So you are in a moment in which you can test a lot of things. So do not set into what is working right away. Try to find and test them as many things as possible. I think that is a fundamental thing. And the third one I will say is, ask your customers, why are they buying your product? Stop making assumptions while they’re buying it and ask them. I think it’s funny because most corporates don’t talk to the customer. They’re too big for the market research. I think the status are different because they are built by talking to customers. I think you need to make sure you’re not losing that early on. There is so many tools right now. You can actually get way more content, but keep asking your customers, why are you buying us? I think that’s a fundamental piece of advice that needs to be done in that one.
[00:30:29.070] – Joran
Yeah. Hi, you mentioned before, based on value, test quickly, errors are cheap, and talk to customers like, why are they actually buying from you? If we go past the 10K monthly recurring revenue, and we’re going to make a big jump, what advice would you give founders who are now going towards 10 million ARR?
[00:30:47.500] – Cristobal
One of the biggest surprise is when people ask me in this business, what is my biggest surprise? It’s always been that whatever I was working doesn’t work anymore. When you go to priest to see it, to see it, to see it, to say, the way you have grown doesn’t mean that’s the way you’re going to grow. I think the biggest piece of advice to CEO is, do not think this is a cookie cutter recipe. Really measure everything you are doing, because most likely, the way you’re going to grow to the next stage, the 10 million then to the 100 million, it’s going to be very different to the way you grow until now. The only way to do that is to measure. I think when you are at that level, you have enough metrics and numbers and you need measure it. I think we’re very intuitive on the first stages, and it makes sense because there is not that much data, even if you still have opportunities. I think we need to go into measuring much more, having that data to make decisions. Then I would say two things at the same time is, one is keep listening to the customers, find ways to keep listening to customers.
[00:31:49.510] – Cristobal
You think you have 10 million, you’re big. The corporate is making 150, 200 million. So your difference is, can you keep talking to the customer and be more agile as they are? To me, it’s that don’t start being afraid of making mistakes because now the mistakes have become more expensive. But you cannot be afraid to make mistakes. Keep maintaining the culture of the company as much as you can. It’s going to be very difficult. 50, 100, 200 people, 300 people. There’s a different type of animals. But I think make those places still special to work out. You have to grow. That’s your focus. But keep building a great company no matter what. I think that is still is going to make a difference because best talent is at the end of the day is still the best recipe to keep growing.
[00:32:40.450] – Joran
Yeah. I like it. I guess to summarize, things will break. It’s not going to be a written recipe. Measure, use data to make decisions. Keep talking to your customers and don’t be afraid to make mistakes, even though they are going to be more expensive than in the early stages. We’re just going to zoom out and the listeners are SaaS Any general advice which you can give towards other SaaS founders who are now on their journey wherever they are?
[00:33:10.290] – Cristobal
We talk about the 1 million and the 10 million AAR, right? I think those are the golden measures. You need to understand them. You need to understand how you’re going to get to the first one and then to the second one. I would say, you need to have a plan to get to the first. You have to have a vision to get to the second. To me, that is fundamental. The second one is you need to understand Why are you different? I think there is too many people just doing something in their brain is very different, but the reality is not. Differentiation, how do you build differentiation? How do you explain differentiation? To me, it’s something that is SaaS these days. Because again, SaaS, you put a website, you put a credit card, and you build an MVP, here we go. Everybody can do it also, not the ICU. How did you build differentiation? How did you maintain I think in sales business is that level. Then be obsessed, but don’t too obsessed about MRR. There’s so many people who is building revenues. Say, Well, it’s not subscription-based. Except they say, Hey, It’s good, we need to get there.
[00:34:16.830] – Cristobal
But if you’re making money, you’re making money. In a way, don’t make it the Holy Grail of everything has to be a subscription. Just because the VC ask you, Oh, we need to see the subscription. In a way, build your company for customers, not for investors. This is one of our best sayings in startup-wise guys. They don’t need subscription. They’re doing just a different way of payments, but it’s still product-based company. Good. Listen to your customers. Keep building the company, keep getting them, keep getting data, keep making the proposition more different. I think have a plan to 1 million, have a vision to 10 million, build a company for your customers, not for your investors. I think that are fundamentals way to get there.
[00:35:02.600] – Joran
Yeah, good summary. Then the final question, and this is more of a personal question, what is one thing you wish you knew 10 years ago?
[00:35:18.850] – Cristobal
I wanted that to knew, but let me put it. I think I knew it, and I think it’s about the execution of it. I was reading the book from the Phil Knight about the Shoe Dog. He’s talking about how in year seven, eight, the guy is still making 50 million, and how he can go back up next day anyway still. He still goes and buys a big house because he has two kids, and that’s what life calls for. To me, I knew it and I know it, but it is a very difficult journey. I think you need to enjoy the journey because it’s never going to be easy. Even when you grow, even when you make many investments, even we’re lacking the society with our family, our kids, et cetera. But it’s going to be a hard journey in any element of growth. It’s enjoying the journey and it’s doing it with people that you like. That’s the thing that makes the difference for you to keep going. I think I knew it. Sometimes we forget about it. It’s never going to be easy because the growth will come with the next element of pressure.
[00:36:26.260] – Cristobal
The way we are, the way I am, you’re never going to be That’s my nature. They all want to more. That’s fine. Just leave with it. Accept it, move on, keep doing it. As long as you’re enjoying it, it’s fine. You’re never going to be satisfied, unlucky, But if you are enjoying it, keep going. It is still fine because you’re going to enjoy the next and the next and the next. Take care of yourself. I think that’s fundamental piece of advice. Maybe I knew it, but again, I know it better now is you need to take care of yourself, of your health, of your habits. Nobody knows your body as you do. You can try to fake your body, but at the same time, body will come and hunt you. We live, we have one body, so you need to take care of it. But I think that’s a fundamental piece that I knew it, but I know it better right now. I will remind myself if I go back to age, I remember this.
[00:37:22.400] – Joran
I won’t say this comes with age, but I do think it has something to do with the older you get. You’re going to listen more towards yourself and take care of yourself a lot better than early on. Nice. This is probably going to be the most easy question. If people want to get in contact with you, how can they do? What’s the best way?
[00:37:44.370] – Cristobal
I Can you allow me there? You’re a small anecdote. People say, This guy is full of himself, El Patron, blah, blah, blah. No, my name is Cristobal. But I don’t know, for years, I always fascinated how people can write Cristobal in so many different ways. I never got the email. So now it’s elpatron@ startupwiseguys. Com. I don’t even need to spell it. Everyone said, Okay, good, go. So maybe startupwiseguys, if you are not English speaker, it might give them a bit of a problem. So to me, just send me an email, all the stuff in that sense. I’m very active on WhatsApp and then LinkedIn. I do pride myself that I respond every LinkedIn message to me that is not selling me websites to be made, but personal message for people. Sometimes it takes a bit longer, but I do answer every email, and I do answer every LinkedIn request. I think those are the two easiest methods to catch up with me.
[00:38:37.060] – Joran
Fun fact, when I sent out the invite for the recording, I did have two emails on there, elpatronas. Awiseguys. Com, and then the email from Cristobal. He does have two, so you can try both. But El Patron, you probably indeed know how to spell it. So reach out to Cristobal like that. What we’re going to do is we’re going to link back to the book, and depending on when this goes live, we’re going to link back to the second book and the third book. We’re at least going to add them in as soon as they’re live. We’re going to add a link to your LinkedIn profile. So if people don’t know how to spell Cristobal, they can just click the link. And then for people listening, make sure you fill out the poll, which we’re going to launch right now, and then review the podcast to make sure that we can grow this podcast even further. That’s it. Thank you for coming on El Patron, a. K. A. Cristobal.
[00:39:25.240] – Cristobal
That’s good. It’s been a pleasure. It’s been fun. It’s been fun. It is for the matters, right?
[00:39:29.320] – Joran
Exactly. Enjoy the ride. Thank you for watching this show of the Grow Your BDB SaaS podcast. You made it till the end, so I think we can assume you like this content. If you did, give us a thumbs up, subscribe to the channel. If you like this content, feel free to reach out if you want to sponsor the show. If you have a specific guest in mind, if you have a specific topic you want us to cover, reach out to me on LinkedIn. More than happy to take a look at it. If you want to know more about where it is, feel free to reach out as well. But for now, have a great day and good luck growing your B2B SaaS.
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