S3E6 – How to prepare your SaaS for an exit? With Dirk Sahlmer

How to prepare your SaaS for an exit

What is a SaaS exit and how can you prepare for a SaaS Exit? This is one of the topics that has been extensively discussed on the Grow Your B2B podcast, with an in-depth coverage by Nathan Latka, Thomas Smale and Andrew Gazdecki. In this podcast episode, Dirk Sahlmer, the head of origination at the SaaS group, shared valuable insights on preparing SaaS companies for successful exits. With 17 acquisitions under their belt, the SaaS group has established itself as a key player in the industry, focusing on acquiring SaaS companies with a bootstrapper mindset and driving their growth. Dirk’s journey into M&A began with a background in engineering and co-founding a company, eventually leading him to his current role as head of origination at the SaaS group. His extensive experience and expertise in the industry have equipped him with unique perspectives on preparing SaaS companies for exits.

What is bootstrapping?

Dirk provides a broader perspective on bootstrapping, emphasizing that companies that initially raise some seed funding or a pre-seed round and become profitable can still be considered bootstrapped. He suggests that being capital efficient, rather than solely relying on no external funding, is an essential aspect of bootstrapping.

What is an Exit in SaaS?

Dirk challenges the common misconception of an exit being a complete departure from the business. He broadens the definition to include scenarios where founders can partner with others to scale the business or take a partial exit, emphasizing that it’s not solely about leaving the company entirely.

How to Valuate a company

How does Dirk evaluate a company?and Is Multiples a factor? Dirk sheds light on the process of valuing a SaaS company, addressing the common misconceptions around valuations and multiples. Dirk highlights the significance of core KPIs such as revenue growth, capital efficiency, and net dollar retention. He cautions founders against relying solely on publicly traded multiples for valuations, emphasizing the importance of focusing on core KPIs for a sustainable business.

How to prepare for an Exit

Dirk stresses the importance of preparing for an exit well in advance, suggesting that founders should maintain transparency and organize their data to avoid last-minute clean-ups. He also emphasizes the need to track metrics from the start to maintain a clean and organized structure for the potential exit process.

Navigating the Exit Process

In detailing the exit process, Dirk highlights the critical steps involved in engaging with potential buyers and emphasizes the importance of open and honest communication. He underscores the value of aligning with buyers who can accommodate the founder’s preferences and objectives Dirk provides insights into the critical steps involved, including initial discussions with founders, soft due diligence, and drafting an LoI (Letter of Intent). He also points out that a signed letter of intent is like a  handshake that will eventually lead to a deal being closed.

The Key Factors Leading to Higher Valuations

Dirk shares key factors that contribute to higher valuations for SaaS companies, including maintaining top quartile metrics, balancing profitability and growth, and having a strong product with the ability to commercialize it effectively. He also stresses the significance of peer structure and the impact it has on valuation.

The Future of SaaS Acquisitions

Dirk provides a forward-looking perspective on the future of SaaS acquisitions, highlighting the evolving landscape and the increasing prevalence of strategic exits. He also addresses the emerging trend of building and selling smaller SaaS products, reflecting the shifting dynamics within the industry.

Advice for SaaS Founders

Drawing from his experience and interactions with SaaS founders, Dirk offers insightful advice, urging founders to stay resilient, listen to their customers, and prioritize self-awareness. He underscores the importance of aligning personal preferences with business goals and objectives.

Dirk Sahlmer’s in-depth insights provide invaluable guidance for SaaS founders and entrepreneurs looking to navigate the complexities of preparing for a successful exit. His expertise, combined with practical advice, offers a comprehensive understanding of the strategic considerations and best practices essential for achieving successful exits in the SaaS industry.

Key Timecodes

  • (0:37) Show and guest intro
  • (1:28) Why you should listen to Dirk Sahlmer
  • (2:05) Dirk’s definition of what bootstrapping is
  • (2:55)  What an Exit is according to Dirk
  • (4:30)  How Dirk evaluates a company. Is Multiples a factor?
  • (6:11) The Key Elements Founders Should Have in Place When Preparing for an Exit
  • (7:30)  Understanding the exit process
  • (9:18)  What role does a Letter of Intent (LOI) play in the exit process?
  • (10:39) The common mistakes founders or companies make during an exit process?
  • (12:26) The ideal place to have your numbers
  • (13:52) What companies and founders should do to get a higher valuation during an exit process. 
  • (18:48) The future of acquisitions in SaaS
  • (21:56) How to grow towards 10K MRR
  • (23:17) How to grow towards 10 million ARR
  • (25:03) Dirk’s crucial advice to B2B SaaS founders

Transcription

[00:00:00.000] – 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 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] – Joran

In today’s episode, we’re going to talk about how to prepare your SaaS for an exit. We did touch this already with Andrew Gazdecki, Thomas Smale, and Nathan Latka in previous episodes. If you’re interested in this topic, make sure to listen to those episodes when you finish this one. Today, my guest is Dirk Sahlmer. Dirk is head of origination at the SaaS Group. The SaaS Group acquires SaaS companies with a bootstrapper mindset and are growing them afterwards.

[00:01:01.920] – Joran

So far, they acquired 17 companies which have over 200 employees in 30 different countries. Before going into M&A, Dirk started his career as an engineer, co-founded a company, and worked his way up from analyst to head of origination within the SaaS group. Next to this, he has his own newsletter called SaaS FYI Newsletter, and he posts a lot of SaaS content on LinkedIn. Welcome to the show, Dirk.

[00:01:26.060] – Dirk

Yeah, thanks for the intro, and thanks a lot for inviting me.

[00:01:28.770] – Joran

If people are not convinced of my intro, why they should listen to you, really Dutch blunt question, why should people listen to you today?

[00:01:35.240] – Dirk

I think there’s still a misconception in the SaaS space around valuations, exit multiples, how to prepare for an exit, how an exit actually looks like, what can What do you expect potential lead instructors? I’m coming from an engineering background, so I had to learn it myself. Now I’m just trying to share my learnings and trying to educate founders to be aware of these topics when they are pursuing an exit.

[00:01:57.570] – Joran

Yeah. Today we’re going to talk about preparing your SaaS for an exit. We are going to have a bit of focus with bootstrap companies to dive into the basics first. What does bootstrapping mean to you? Can you explain in your own words?

[00:02:09.770] – Dirk

I think if you take the precise definition, it’s like you grow a company without external funding. I would maybe see it in a bit broader sense. There are also a lot of companies that raise some seed funding or pre-seed rounds, so a few hundred K from business angels or investors, and they became profitable or break-even and continued from there in a bootstrap I would still count them in as bootstrappers. At SaaSuite, we also sometimes tend to say capital-efficient rather than bootstrapped because you can raise external funding and still become a sustainable business and a capital-efficient business. I would say instead of just saying no funding, I would say a bit of funding to get started, but then grow sustainably.

[00:02:52.280] – Joran

Yeah, makes sense. Then the next one I want to cover as in what does an exit in your words mean?

[00:02:58.680] – Dirk

Also a very good question. I would say if founders think about an exit, thinking about the sale of the business like 100%, get out as quickly as possible and just move on. I would see it as an exit from the current status quo. An exit doesn’t necessarily mean you have to leave or you have to hand over the company to someone else. An exit could also mean you take a decent amount of chips off the table, partner up with someone who has scaled to higher levels. I can help you grow your business while you stay and benefit from the growth you achieve together with that partner. Different scenarios. For some, of course, there are health reasons why they want to quit or other things. Then it’s totally led to say, okay, hand over the keys and take a break. But it can also mean that you just exit the current stage because you hit the ceiling or you don’t feel comfortable growing a company any further and then partner up with someone.

[00:03:55.000] – Joran

Often an exit indeed means you’re not going to just take your hands off right away. You You often have to stay on, of course, to do the transition. There’s often a period where they want you or force you to stay at, maybe.

[00:04:07.060] – Dirk

That’s why I would encourage founders to start talking to buyers when they think an exit could be in the next one or two years. Exit meaning they getting out of the business because a lot of buyers require you to stay on board for a certain period.

[00:04:23.130] – Joran

We’re going to just jump right into the big elephant in the room, valuations, as you called it also on the LinkedIn you did. Can you just explain how do you evaluate a company and can you say anything about multiples?

[00:04:35.980] – Dirk

Funnily enough, I just did two posts about it this week, and it was controversial discussion in the comments. I think some confused it with VC multiples. Others thought valuations are much higher. As I said, there’s a misconception, in my opinion. You see publicly traded multiples. So these companies have to report their metrics. Everyone can see the numbers and everyone sees where they are trading. And a lot of founders think they could just take their business and compare it to a business in a similar segment, which is not really comparable practice. Same with the overall SaaS M&A markets, where you would also include Adobe buying Figma, basically. A lot of very strategic acquisitions or at least in buying Loom, which happened recently. This might be closer to the actual acquisition multiple, but still you have to factor in a footer discount if we’re talking about smaller companies. Smaller companies are usually being valued based on historical traction and not so much on future outlook and strategic value. It happens that strategists are buying very small businesses, but it’s very rare. I think hoping for a strategic exit with your two million AR business is like buying a lottery ticket, basically.

[00:05:46.640] – Dirk

I would really focus to keep the core KPIs work, to work on the core KPIs to be as good as possible, talking about revenue growth, talking about capital efficiency, net dollar retention, and others. That’s what we also look at when we evaluate businesses at SaaS group.

[00:06:03.670] – Joran

I think it was one of my questions as well. Before you even start thinking about it, you mentioned like one to two years, then already pair of things. But besides the KPIs that you just mentioned, so the net dollar attention and the other one you mentioned, is there anything else they should already be preparing to get themselves ready for an exit?

[00:06:20.650] – Dirk

I recently had a chat with a VC, and they had a conversation with one of their portfolio companies, and they said, Okay, we are slowly looking for an exit now. They prepared a data room and they updated it every month while talking to buyers. I think that would be the perfect thing. If you have really everything ready for a potential buyer, I think what doesn’t make much sense is to try to clean up the mess on short notice when you think you might be looking for a sale in the next six months because it will just be hard. It will distract you from your day-to-day business and from your core business, and it might not have a positive impact on your KPIs. Your KPIs may get worse while you’re trying to clean up your organization. Tracking KPIs in the first place, I would say, preparing numbers and trying to keep your org as clean and organized as possible right away from the start, basically. If you’re trying to build up an organization, try to track metrics and everything, and try to not have like, skeletons in the closet.

[00:07:22.150] – Joran

Yeah, because in the end, build up a good business, make sure you track everything, and then from there, things become a lot easier when you’re ready for an exit.

[00:07:30.000] – Dirk

Yeah, definitely.

[00:07:30.920] – Joran

If somebody wants to do an exit, can you walk me through the process? How does it work?

[00:07:35.600] – Dirk

I can only talk for us. It may be different with other buyers. We at SaaS group have a very short process because everyone hates spending six months in a due diligence process, and so we have to streamline it. In the first step, we are trying to solve that elephant in the room problem, which means we sign an NDA, we ask for numbers. But even before that, we would talk to the founders what they are looking for. I encourage Every founder listening to this to be as honest as possible. If you, for example, have any health issues or something, why you want to get out, you shouldn’t say, I’m open to staying on board for three years, because that’s not what you’re aiming for. You should really share your preferences with us. Then we can talk about earn out versus cash versus maybe equity swap. If you want to sell everything, when are you going to get out? Is there someone in your team who could take over just to see if there’s a fit and how we can offer something that fits your preferences? In the second step, we would take this into account, take the numbers and give you a price indication outlining the terms we think fit best.

[00:08:38.500] – Dirk

If you say, Okay, this is great, let’s move forward, we would already start a soft due diligence process where you would talk to people from the central team to figure out how we would work best together and what are the biggest challenges we could help you solve over the next 12 to 24 months, maybe. In parallel, we would draft an LOI which takes the terms from the initial offer. It into account, and then we decide on concrete deal terms. Once that LOI is signed, we start with the real due diligence where we look at all contracts, your whole organization, HR, your team set up, and everything. This takes another three to four weeks. Usually, before we close the transaction and start with the integration.

[00:09:18.060] – Joran

Loi means letter of intent. What does it do? I guess then other things still can go wrong because you’re starting the real due diligence after you mentioned. I guess what does it do? What is it for?

[00:09:28.490] – Dirk

The initial proposal is what we think would be an appropriate price and what would be an appropriate yield structure based on what you told us in the initial call. But sometimes you may request some small changes or you say, okay, I want more upfront, less earn out. I would be looking for a longer transition period because sometimes also the price is not right immediately and you could play around with the numbers to see if we can move some money from earn out to initial or the other way around. We try to figure out the exact terms we can agree on. For For us, I know it’s not every buyer who does it this way, but for us, an LOI, like the letter of intent, is a handshake. If there’s no major red flag identified in the due diligence process that follows, these are the terms we are confident we can agree on and where we can keep our promises. Then I think we have a 90% plus LOI to closing rates. Sometimes it happens that the founder bails out because they came to the conclusion we should keep the business, or we really find a red flag.

[00:10:29.060] – Dirk

But in In the vast majority of cases, signing LOI for us means getting to a deal.

[00:10:34.560] – Joran

It’s just doing the final check, basically, just to make sure there’s indeed no hidden bodies in the closet. Are there any common mistakes founders or companies make during this process?

[00:10:44.250] – Dirk

I would say Maybe already starts by being vague in the intro call. That’s why I mentioned earlier, you should really try to be honest and share your preferences because it doesn’t really help if you say, Okay, we’re open to basically anything. Just come up with something and then we start a discussion. I can understand it because maybe some founders have never talked to buyers. They don’t know what to expect and what they can request. But since we are that flexible, you should think about your preferences first and then start talking to buyer to also filter out the ones that really can accommodate to these preferences. What other mistakes? Not having prepared the numbers. For us, it takes more time to, for example, calculate NDR or like net dollar retention or other metrics if you are not tracking them in a proper way. We would have to We request transactional data from Stripe or so to calculate it ourselves. In general, I would say the more hiccups there are throughout the process, the more bias you create on buyer side, which could lead to a buyer say no. If there’s a strong sign that you’re a micromanager or that your team is not happy or that you’re not tracking numbers or that your whole organization is a mess because it takes you three weeks to send us stuff we are requesting, which is very basic.

[00:12:00.560] – Dirk

I would say the better you are prepared and the better you know what you’re looking for, the less hiccups throughout the process and the higher the chances that it will lead to a deal at the end.

[00:12:09.990] – Joran

That makes a lot of sense. In the end, you have to have it already as being a good business. But I guess to summarize it, make sure you have your preferences ready, prepare the numbers, don’t create any hiccups, so build a good business, make sure you have everything organized so you can quickly send things over and be prepared for it. Regarding the numbers, do you have any preferences on where they have it? Because there’s a lot of free tools where you can get it. I think a lot of SaaS companies use Stripe, they get connected to Profitwell. Is that already enough or should they be doing more?

[00:12:39.070] – Dirk

No, for us, it would be enough if they are using a matrix tracking tool like Profitwell, JartMogul, or any other tool. It’s fine. I think a lot of companies use it, and if they just send us a CSV export, it’s fine. But maybe something that also should be mentioned, you have to show full transparency if a buyer looks at your business, because if you’re hiding something and they will find out at a later point in the process, this is pretty annoying for everyone. Sometimes, for example, founders are hesitant to send me metrics like everything, and they then send me screenshots of their KPI dashboard or something. This doesn’t help at all, and this doesn’t help us come to a conclusion in terms of valuations. We try to be transparent. We sign an NDA, we’re not sharing stuff publicly or with other companies. I would say founders should be transparent and send over these. We usually need spreadsheets because we are working with these numbers. My two colleagues are familiar with converting PDFs into tables, but it’s an additional step, and it also creates a small hiccup and more work on our side.

[00:13:38.670] – Joran

Yeah, you probably know exactly how this is within Google Sheets or within Excel, so it’s just easier. I think, as you mentioned as well, you want to know everything behind the numbers, send over to CSV export.

[00:13:49.880] – Dirk

Yeah, correct.

[00:13:51.010] – Joran

We talked about valuations a little bit. If we look at the companies who are getting the higher valuations, and maybe indeed, let’s not go to the strategic exits, but to the ones which are comparable to our listeners, what are they doing right, the companies who are getting the high valuations right now?

[00:14:06.650] – Dirk

It’s a good question. On the one hand, like you said, let’s not look at strategic exit, but it truly helps if you are prepared and if you keep a Rolodex of potential buyers, because as a founder, you’re probably getting a lot of messages from potential buyers saying, Hey, can we talk? Blah, blah, blah. If I talk to founders, they tell me, I’m getting five of these messages every week. Keep them in your Rolodex and use them. If the time has come and maybe manage relationships, people are buying from people still in that space. A lot of strategic acquisitions happen because both teams have been in touch for years before they eventually work together. Then It’s a matter of KPIs, of course. If you have top quartile metrics, you can expect, of course, a better valuation than businesses that don’t have quartile metrics. You can see in my posts the priorities in terms of valuation drivers. You have revenue growth still at the top, you have retention, you have roll of 40. I think it’s also a matter of balancing profitability and growth. To give you an example, a company that is not growing and break even, for example, is not very attractive to buyers unless you can happily cut costs or unless it’s heavily under-optimized and you can accelerate growth immediately.

[00:15:21.330] – Dirk

But this is not a good state of the business. So you should either be growing, doesn’t have to be 50% but growing, or you have to be more profitable. But in any case, I I think the rule of four is a good indicator there if you’re on the right path. For buyers like us, KPIs are definitely more important than your disruptive IP because usually the IP or the strength of your product is reflected in KPIs. So you can tell us you have the best data scraping technology ever in the market. But if you’re just doing 500K after 10 years, you’re not very good at commercializing it. It should be a good mix between you have a good strong product, a strong product, but you’re also able to commercialize it.

[00:16:03.620] – Joran

As you mentioned, the numbers have to speak for itself. If the numbers are good, then you are building a good business and focus on profitability or focus on growth, basically.

[00:16:13.050] – Dirk

Maybe just one last comment. Deer structure actually can have a significant impact on your valuation. You have to think about the risk a buyer has. If you say, Okay, I’m looking for a short transition period. After three months, I want to get out, and you have to find a replacement for me. That’s not a very good sign for a buyer because basically already at the due diligence process, you have to look who can replace the founder. Can we really take over this business? It’s definitely riskier. Then if you would say, I’m happy to stay on board for not a year or two, and I’m open to having a certain earnout component where you participate in the success we would achieve together, because then you have a shared risk and buyers are able to go a bit higher.

[00:16:57.480] – Joran

Makes a lot of sense. And regarding the first thing you said, regarding the Rolodex. Nathan had a really good point in his podcast where he said, give them also an update. So keep the Rolodex, as you mentioned, and if you also do them the update, then they’re going to be engaged with the growth of the company. So if you, as you mentioned, be profitable or are growing and you keep sharing those numbers, then you’re just going to keep them engaged. At one point, you have a really engaged Rolodex of potential buyers. Yeah.

[00:17:23.700] – Dirk

Not only that, you keep engaged with buyers. Speaking about myself, I’m trying to follow up on a regular basis with companies I have on my watch list. If buyers are interested in your business and it fits their criteria, they hopefully follow up with you themselves. But if they don’t, you could still send a regular update to them with update on KPIs, et cetera. Because, for example, we see funders also have to send investors update on a quarterly or monthly basis to their investors, and you could basically to send to potential buyers. It also has a positive side effect that you are aware of your current numbers and you are forced to look at them at a regular basis and compile them and send it to investors. It also forces you to look more closely and to try to improve them rather than having no one to look at it from the outside.

[00:18:12.430] – Joran

Yeah, it’s always keeping yourself accountable because if you’re going to send it to the outside world, then you know that people are going to look at it, and then you also know already if you’re going to be an interesting company to be acquired or not. This podcast episode is sponsored by Redditus. Redditus 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. When we look at the future of acquisitions, how do you see the future of acquisitions in SaaS?

[00:18:55.440] – Dirk

Good question. I don’t have a crystal ball, but talking about the near to mid-term future, I would say currently it’s more of a buyer’s market. We all know it, the market environment is definitely not as it used to be in 2020, ’21, when startups with worse traction could ask for steep multiples and were able to exit them. I think this doesn’t happen anymore. We at SaaSMove Aussage are sailing with tailwinds, I would say, because you have a lot of companies that are VC-funded, that are maybe nearing the end of their runway currently, are not getting any more capital because they haven’t been able to grow into the valuation. Now, founders may be tired, but also investors might be pushing them to look for an exit or other options, which is good for us. I think next year will be a year of a lot of acquisitions. I think we’ve already seen an increase this year, and I think we may see another increase next year in terms of yield volume. I also see that more and more competitors of SaaS grew up hoping up, not necessarily looking at the same targets, but also in the vertical market, targeting smaller SaaS businesses.

[00:20:00.910] – Dirk

As a founder, you may not have a problem in finding a buyer, but you may not get your last post money valuation or the best outcome ever. Yeah.

[00:20:10.540] – Joran

The more axes are basically coming from the new normal and VCs for We’re seeing founders to exit their company.

[00:20:17.000] – Dirk

Another movement I’m seeing, and I talked to Andrew Gesteki a while ago about it, is that due to platforms like acquire. Com and flipper and so on, it became a more popular approach to just build something from zero to one and then sell it and go from zero again because you are maybe a passionate indie hacker, but you’re not the one who wants to manage a company that has 100 employees. You’re limiting yourself in company building. You make it deceiving at some point. It’s just fine if you’re the type of guided or the founder that just wants to build something to 100K AR, sell it and go again build a new product, that’s totally fine, I think. But you don’t need to build something to 10 million and beyond. I really like that development because it allows entrepreneurship on a lower level and you’re not forced to become the next Salesforce.

[00:21:06.580] – Joran

There’s two benefits, I think. The more technical people can quickly find a buyer, but also maybe the non-technical people, they can actually pick something up which already has proven track record is not as huge yet. They probably don’t charge that much money for it yet. From there you can actually start scaling it and you probably would be able to afford to hire a developer who can take it forward from there again.

[00:21:28.460] – Dirk

I think that’s totally fine. It’s great to see that someone who’s good at building initial traction and to code something that attracts customers can just focus on the things he or she is passionate about. Then someone else comes in who’s maybe not passionate about figuring out product market fit, but very passionate about scaling companies. If they find each other, that’s great.

[00:21:51.930] – Joran

We’re going to go to the final four questions, and we’re going to start off with when we talk about preparing your SaaS for an exit, what advice would you give somebody who’s starting out and growing to 10K MRR?

[00:22:04.060] – Dirk

It’s a good question, and I fail to do it myself with my startup, so we never really got traction, to be honest. I’m not speaking as a founder, but speaking from experience from my sellers. Listen to your customers. Don’t talk too much to investors and other people and your friends, where you may get confirmation for your idea. Talk to customers and listen to them. I think that’s also what a few VC-funded what SaaS founders are doing wrong. Really try to listen to your customers. You as a founder should have these conversations yourself. Thinking your first hire should be like a salesperson who talks to the customers is also not a good idea. I would say, iterate quickly and don’t hold on to your initial idea because pretty sure potential customers may tell you that’s not the thing they are looking for. But if you iterate, if you listen to them, if you iterate quickly, I think you will ultimately get to a Nice.

[00:23:00.730] – Joran

The only thing I can add to this, listen to the customers who are paying you on a monthly level because, for example, we did a lifetime deal when we got started out. That is not the advice as well you want to listen to us. That’s a big mistake we made on our side, but we had to fix the an X story with our marketplace.

[00:23:16.920] – Dirk

Yeah, good point.

[00:23:17.880] – Joran

When we go forward, so we’re now past the 10K MRR, what advice would you give somebody who’s going to 10 million ARR? I know it’s a big step.

[00:23:26.530] – Dirk

Also a very good question. Take an example from LinkedIn comment of someone below my posts. A lot of acquisitions we do are rather like products, not companies, because you cannot speak of a big organization and everything is like clean processes, et cetera. Everyone knows what he or she is doing. It’s more like a product with some people around it. I’m not saying this in a negative way. It’s just fine. They’re great companies still. But I think if you want to be at like 5 million AR and beyond, I think you You have to build a company. I’ve rarely seen that these small bootstrap companies are getting beyond 5 million because the founders don’t want to manage a large team and build a second line of management and they want to be involved and stuff. I think one thing is you have to build a business and an organization around the product. This is one thing. The second thing is you have to make yourself more obsolete from day-to-day operations because then you’re the shepherd, you are the visionary, and you are driving the direction of the business. But you shouldn’t be involved in coding the product or other operational tasks.

[00:24:35.550] – Dirk

I think this is pretty important. It also prepares your exit because if buyers are buying a 20 million ARR company, they don’t want to have it heavily depending on you as a founder.

[00:24:48.150] – Joran

You’re preparing your sofa that by doing that as well and making your life easier in the same way.

[00:24:53.540] – Dirk

Yeah, ultimately.

[00:24:54.430] – Joran

Guys, if we zoom out because you talk to a lot of SaaS founders, right? You also, as you mentioned, make some mistakes yourself by growing and trying to grow a business. Would you have any general advice towards other SaaS founders who are now on their journey?

[00:25:07.870] – Dirk

Don’t hesitate to keep going and don’t quit too early and always be aware of your own comfort zone. Of course, you can push beyond the limits, but don’t feel forced to build a company or forced to sell early or whatever. I would say while a lot of people try to give you valuable advice, including me right now, I think at the end of the day, you should listen to yourself, your preferences, and take care of yourself. Yeah, that’s what I would suggest to founders.

[00:25:39.970] – Joran

Nice, because you’re the only one who knows your own limits. Then the final question, what is One thing you wish you knew 10 years ago?

[00:25:47.560] – Dirk

That maybe mechanical engineering is not my ultimate passion and that it makes much more fun to work with Woodshop SaaS founders. That’s maybe something. If you look at my CV, it was zigzag, and I started with my career in the automotive sector. I always thought it’s great to work at a big automotive company like Mercedes, Porsche, and so on. But I finally figured out that a lot of entrepreneurs, all very humble. It’s great because I can learn a lot from them, and it’s great to help them with their exiting their baby, basically. If I would have known 10 years ago, maybe my career would have taken a different path, but it’s fine. I had good learnings, and I finally found my place.

[00:26:29.100] – Joran

It always takes time. I think for everybody has their own journey and you come to the place where sometimes you need to be, right? I think I already know the answer, but I’m going to ask if people want to get in contact with you, Dirk, where should they do?

[00:26:40.820] – Dirk

I’m an email person. If you want to reach me, to be honest, my LinkedIn inbox became a mess. If you’re expecting a reply piece, reach out via dirk@sars. Group. That doesn’t mean you cannot try to reach out via LinkedIn, but it may take a bit longer to get back to you. I would appreciate to get you as a subscriber to my newsletter. If you’re free to follow my content and if you need to reach out if you have any ideas on how to collaborate or if you need help in terms of M&A, if you just need advice, always happy to help.

[00:27:10.320] – Joran

Nice. What we’re going to do is we’re going to add a link to your LinkedIn because I do recommend people start following you, even though they message you, you might not respond. If you want to get in contact with Dirk, email him at dirk@sas. Group and definitely start following his newsletter. For the ones who are listening on Spotify, we are trying out the polls and the Q&A’s on Spotify. I have no idea which question we’re going to add, but look at the screen right now and there should be something there. Thanks again for coming on to the show, Dirk.

[00:27:37.060] – Dirk

Yeah, thanks again for having me. It was a lot of fun and great session. Likewise.

[00:27:42.220] – Joran

Cheers.

[00:27:42.610] – Dirk

Cheers.

[00:27:44.280] – Joran

Thanks again for listening to the Grow Your BDB SaaS podcast. If you found value in today’s episode, please leave us a review, follow us, thumbs up. You know what to do. If you want to sponsor this show to reach SaaS founders, just ping us on LinkedIn. And if you’re experiencing any specific challenges right now, let us know as well. We’re always looking for topics to cover in our show. For now, have a great day and keep growing your B2B SaaS.

Joran Hofman
Meet the author
Joran Hofman
Back in 2020 I was an affiliate for 80+ SaaS tools and I was generating an average of 30k in organic visits each month with my site. Due to the issues I experienced with the current affiliate management software tools, it never resulted in the passive income I was hoping for. Many clunky affiliate management tools lost me probably more than $20,000+ in affiliate revenue. So I decided to build my own software with a high focus on the affiliates, as in the end, they generate more money for SaaS companies.
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