Dan Martell - March 28, 2022


How To Attract The Perfect Investor To Your SaaS Business

Hosted by
Dan Martell
Mentioned
Perry Matheson Anne
You’re 100% wasting your ad budget if you don’t know this. #shorts BOOM! Failed so many times before I landed this one. What a feeling! #shorts #snow #snowboarding

Episode Stats


Length

23 minutes

Words per minute

172.27

Word count

4,021

Sentence count

115


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode of the Startup Life podcast, we're joined by Anne Bergstrand, CEO and Founder of MyGenation, a startup building a virtual workplace for remote and hybrid teams. We talk about how Anne and her team are building a metaverse for work that helps teams manage and grow in a hybrid environment. We also talk about the challenges of scaling a startup from an agency to a SaaS company, and how to get the most out of your startup.

Transcript

Transcript generated with Whisper (turbo).
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.160 Startups are like the whole time it's you're fighting against a headwind, right?
00:00:05.600 Like you're not supposed to win.
00:00:20.480 What is up, Anne? How are you doing today?
00:00:23.280 I'm doing great. Thank you. And thanks for having me. I'm delighted to have this opportunity.
00:00:28.160 Yes. Well, I'm excited. Why don't we start off with you sharing what your startup is and then
00:00:36.500 the story. But if we just think about what's the product called, who do you serve and how does it
00:00:42.940 work? How would you answer that? Yes. So we're building MyGenation, which is a metaverse for
00:00:51.140 work to help remote and hybrid teams to drive and to help their managers manage with empathy,
00:01:00.420 basically.
00:01:01.420 So Metaverse for Work, is this kind of like a virtual workspace?
00:01:06.740 Correct, indeed. A digital office. We start off 2D, we'll build it out to 3D with specific rooms where
00:01:15.780 they can co-create collaborate chill out play together so basically everything we've been
00:01:22.500 building for years in the agency but all wrapped into a digital office space well tell me how you
00:01:30.100 came up with the idea uh well actually it's a long time bro brewing so we we had the agency
00:01:38.980 we had a lot of work done through the gamification agency and yeah the pandemic fastened up our
00:01:46.500 process to um build a sas and basically from being a remote manager myself i saw a problem
00:01:57.060 where you don't know who's doing what when where and how are they performing do they need support
00:02:04.420 do they not need support so to give a bit more help to all those managers that are struggling
00:02:10.500 in a hybrid environment that we're all living in now uh and to sort of say hey here we have
00:02:16.820 a solution for you we've worked it ourselves this way uh for years and now we've put it into
00:02:24.020 a package as a sauce i love it so this is super cool so uh definitely trend like working on trends
00:02:31.380 in the market your experience domain experience consulting um and where are you connecting from
00:02:36.580 just so that everybody gets a sense of your accent and where you're building the business
00:02:41.060 actually stockholm sweden and the company is both in london and in stockholm so
00:02:46.020 we have two offices international sas um how can i help well actually um we've been building
00:02:55.540 alongside the agency so one of the things that is always a challenge is managing the double hats
00:03:02.420 and we're raising investment because we want to really get into the metaverse and be seen as a
00:03:09.780 player alongside some of the others so raising investments while running so many hats as a
00:03:17.220 founder i find really challenging so is to yeah which hat am i wearing how can i attract investors
00:03:24.420 who know me from the agency space i don't have a track record in sas and i still want to convince
00:03:31.620 them to go on the journey with me so there's probably three questions in one is there's an
00:03:38.180 element of managing my responsibilities as a founder attracting investors and selling the sas
00:03:47.700 we do want to shut down the agency operation altogether. So that's very clear for me. It's
00:03:56.180 just, yeah, for the short term, whilst we're building, we need the income all the same.
00:04:02.260 So there's two parts to this. There's the transitioning of the services into the SaaS,
00:04:09.620 and then there's the narrative of the services to the SaaS for investors, right?
00:04:15.540 right? So let's break these apart into separate problems we're trying to solve.
00:04:21.300 On the agency to the SaaS, obviously somebody writes you a check for $2 million tomorrow,
00:04:26.720 problem solved, right? But let's say that doesn't happen. The process typically that I recommend to
00:04:33.320 people is figure out what that amount is. What is the amount of revenue that is going to be
00:04:41.540 required for you guys and your core team to support itself because like there's always the
00:04:45.920 option to wind down and wind up right and sometimes team members from the services side and it's a
00:04:53.420 framework i teach called services to sas sometimes the team members may not be the right team members
00:04:58.480 and the mistake people make is to try to bring people with them that are not the right fit for
00:05:04.720 the sas they could be great for consulting great for services not great for startup world as you
00:05:09.440 imagine those are sometimes two different personalities so what i would say is yeah
00:05:15.040 totally so figure out what it is that the team needs to look like and then figure out what the
00:05:20.800 revenue needs to look like and try to keep your most profitable customers get rid of the noisy
00:05:25.680 ones and and try to get them on maintenance mode so you can focus on this and then obviously if
00:05:31.280 the funding comes in it's a non-point that's just like a high level the way i think of like
00:05:36.000 transitioning from services to SaaS. I've done this myself. I had a consulting company called
00:05:41.760 Sphere. We did a couple million dollars a year in services and then slowly transitioned into more
00:05:49.040 product-led sales process. And the way I did it when it comes to just even thinking through
00:05:56.560 like where do I focus my time, I use theme days. And I do this today. I actually run,
00:06:01.440 I'm the CEO of two companies today. One of them is called SaaS Academy. The other one's called
00:06:05.360 high-speed ventures right so sas academy is for coaching largest coaching group in the world for
00:06:10.640 b2b sas founders and then high speed is essentially my family office where i deploy my own money to
00:06:16.800 buy software companies and take all the things that i've learned scaling them as myself and as
00:06:22.880 a coach yeah so it's but i i they're separate teams like literally i have a complete separate
00:06:28.560 you know co-founder partner matt on the high speed side totally different team operational
00:06:34.160 executives on this side and i run both but the way i do it is i use theme days so monday tuesdays
00:06:39.840 and fri monday tuesdays and wednesdays are one company and wednesdays and fridays are a separate
00:06:44.720 company and that way when like opportunities come into my world i know where to put them my assistant
00:06:50.240 knows how to schedule them i know where to put my block time for projects yeah so like and then what
00:06:55.360 you can do is just start with like two days on the startup three days on the services and then
00:06:59.920 slowly migrate your way over and this is good for anybody trying to start a side hustle it's like
00:07:05.360 can you give up fridays to your side hustle and then can you give up maybe fridays and tuesdays
00:07:11.200 and then eventually maybe fridays and thursdays and and tuesdays and then eventually it's like
00:07:16.400 i'm only doing one day a week on the old stuff i'm doing most of my time on the new stuff
00:07:20.880 so that's that's that's uh just a for me the way my brain works where i'm like a very much
00:07:25.920 a block time kind of guy. I want to block it out. I want to just have clarity in where I spend time.
00:07:32.000 That's what works for me. Some people can manage multiple things. My brain doesn't work that way.
00:07:36.240 And then I would say on the investor side, here's the best way for me to answer this,
00:07:40.960 because I've had to think through this a dozen times. I've helped probably 300 friends, clients
00:07:48.560 migrate a funding round while they were the CEO of a service company and move over.
00:07:55.920 and what I'll share with you is there's a perfect narrative, okay? So I'm going to give you the
00:08:03.540 perfect narrative, and then to the degree that you can fit your story to that narrative arc
00:08:10.520 is the degree that you can like easily raise, or, and I always say to people, it's not like,
00:08:16.220 can you, you can, everybody can raise money, right? But do you raise quickly from high-quality
00:08:21.240 investors, or do you raise slowly from low-quality investors? Low-quality investors are like,
00:08:25.920 real estate investors, high net worth people
00:08:28.260 that have no idea of tech,
00:08:29.320 like they're just pains in the buyout.
00:08:31.860 The narrative arc is this,
00:08:34.220 because of our background in services
00:08:36.580 and the previous years of domain experience
00:08:40.440 and all this stuff, we seen this opportunity,
00:08:44.380 metaverse in your case, right?
00:08:45.820 So we see there was this like things that we noticed.
00:08:48.900 And when we started talking to the market,
00:08:51.840 knowing what we know about what we've done,
00:08:53.380 because we've been doing this for a decade,
00:08:55.480 they started asking us to build them this thing.
00:08:59.100 And then we went and we like talked to a lot of people.
00:09:03.360 And as we were talking to them, they all agreed,
00:09:06.080 this is something we want.
00:09:07.980 And that led us to product, right?
00:09:12.220 Or early commitment or signed contracts
00:09:15.120 or like insert the thing it led you to.
00:09:17.400 But it's like, because we were in this world,
00:09:20.720 we saw this thing that told us we should try to figure out
00:09:24.880 if there's a they're there, if the dog, you know, what is it, right?
00:09:27.640 And we've built this thing.
00:09:29.540 And now with this thing, we're showing it to people
00:09:32.000 and they're just blown away and they want it.
00:09:35.080 And that's the reason why we're raising capital.
00:09:38.280 Okay.
00:09:38.820 See, that's what, as an investor, investors want to be sold, right?
00:09:45.120 Like, you know, I tell this to people often, it's like,
00:09:49.580 an investor wants to take risk, right?
00:09:52.660 They just don't want to take risks with things that can be mitigated, like product market fit,
00:09:57.540 like the team, like, you know, but they want the story. They want to feel like they found the deal.
00:10:04.440 They found this thing in the market that was like not a lot of people knew about and this person.
00:10:10.860 So it's always like, is this the right team to do this? Meaning what's their background? They're
00:10:14.320 doing the main experience in pedigree. A service company is actually like the best, right? Shopify,
00:10:19.400 Shopify, FreshBooks, Basecamp, they all came from consulting and building tools for themselves.
00:10:26.680 Like pretty much, yeah, most people don't know this.
00:10:29.240 I would say if I had to guess, 60 to 70% of SaaS companies were built and pulled out
00:10:38.520 of consulting because it's in consulting.
00:10:42.740 That's why when people say you can't pre-sell enterprise every day, I'm making this number
00:10:47.340 but it's probably like 50 billion dollars a year of custom softwares built custom software is
00:10:55.020 pre-selling right when when procter and gamble hired tata consulting to build a custom erp solution
00:11:03.900 that does this unique thing that they can't find in the market that's pre-selling because if you
00:11:09.900 were any company that had a product that was going to do what tata said they would do or got paid to
00:11:15.020 spec out and your product did that for a fraction of what this consulting company is going to charge
00:11:21.420 you could have got the contract so to me yeah it's actually a really great story to say
00:11:30.300 we know how to do this we've been doing this and we're going to go build this and we already have
00:11:34.060 an audience in a market and all that stuff so and and i think yeah i don't think there's any
00:11:39.500 negative to it like i think there's a undertone of the question that says well does our investors
00:11:45.740 wanting to fund a services company that's got this sas and 100 like i would love that because i know
00:11:53.420 that like i was looking at a deal recently and the founder got paid i think it was like 400 grand
00:11:58.700 in the last year to do the the custom the script that he built to manage infrastructure as a dev
00:12:05.340 devops SaaS company, he got paid 80 grand a client
00:12:09.700 to deploy the script and he's saying,
00:12:11.160 hey, I'm just taking this thing
00:12:12.320 and making it available in the cloud.
00:12:13.980 And then people have to pay me 80 grand,
00:12:15.400 they can pay me a thousand bucks a month to do the thing.
00:12:18.440 Like he just proved that there's a market there
00:12:20.320 by the consulting.
00:12:21.620 So that's where I think investors will 100% support that.
00:12:26.620 Support that, yeah, because I mean,
00:12:28.700 we have found a few investors,
00:12:31.520 but we're nowhere close to what we require to, yeah,
00:12:35.320 basically get the service part to close
00:12:38.220 and move everything forward.
00:12:40.560 But yes, we have done.
00:12:41.640 And don't underestimate customer financing.
00:12:44.360 Like to me, you know, as you know,
00:12:46.800 we've been working together for a while
00:12:49.180 in my Growth Accelerator program.
00:12:50.700 Thank you.
00:12:51.720 Yeah, yeah, no, it's been super fun seeing you show up
00:12:54.140 and like continue to pivot and iterate.
00:12:56.960 To me, like-
00:12:57.900 Yes, it's been a journey and a half, I have to say.
00:13:01.240 Well, and that's normal.
00:13:03.000 Like that's the entrepreneurial journey, right?
00:13:05.320 I think finding customers that have the pain that are willing to pay a premium to have early access to something, that's the most beautiful form of funding you can find, right?
00:13:19.820 Yes.
00:13:20.200 You know, and that's the way I've always done it.
00:13:24.040 Because it's why I always tell entrepreneurs, if you want to start a business, the best business to start is an events business.
00:13:30.020 And the reason why is it costs nothing to get started.
00:13:34.280 all the lessons you'll learn to build an event so i have a friend chris who's producing this
00:13:38.440 web3 event and i'm involved like i mean i try to say i'm not involved but like we went for a hike
00:13:43.640 i was like somebody should create this chris you're not busy right now because you exited your
00:13:48.360 company you should do it and i'll recruit the speakers yeah so like i'm not involved but i
00:13:53.320 am but chris runs it anyways the the event itself will expose you to every aspect of um
00:14:01.640 of building a company. Yeah. Like you literally, like, I got to convince a stranger to speak at
00:14:08.560 my event. I need to manage logistics. I need to negotiate contracts. I need to sell. I need to
00:14:16.440 promote. I need, so it's just, it's just, but there's no commitment long-term. So it's this
00:14:21.560 beautiful little world of, so like, the more I say this and like, you could even consider it for
00:14:27.280 your stuff. If you created this one-day virtual event for the buyer, and I actually have a
00:14:35.220 framework called the Virtual Summit Creator, which is the same concept. So, if you knew who your
00:14:40.260 buyer was in the enterprise and you organize an event, you can use the event to attract them
00:14:46.680 to build the list of... Yeah, like if I was selling a Web3 retail finance tool,
00:14:54.200 I literally am going to have 150 people attend this event that I could then at the end or in
00:15:00.300 the middle at lunch, get on the stage and go like, here's a problem that you're probably
00:15:04.080 experiencing. I've built this tool that helps you solve that. If you guys are interested in learning
00:15:08.060 more about that tool, I'll be at the back of the room. Come talk to me. We're looking for early
00:15:12.560 adopters and the room would flood to me and I would pre-sell my product. So yeah, it's just
00:15:18.460 another strategy there's a yeah and and that is something that i could do because yeah i have a
00:15:25.100 history in speaking so i definitely think that's that's a really fantastic opportunity and hosted
00:15:31.740 on the platform we're building maybe yeah i mean this is like you know like every business decision
00:15:39.180 there's there's risk right so it's like you could do that but like how how many people are not going
00:15:45.020 to be able to join how many people got technical difficulties and which is great it's just like
00:15:48.860 do you want to put the risk of the sales process in front of the risk of the product technology
00:15:55.100 risks right um right yeah yeah i mean there's always like in everything in startup world
00:16:01.100 there's always a bit of magic right like yes nobody wants to talk about it but i will tell you
00:16:07.340 i mean some of the stories i i've done my own what i'm really proud of but like some of my
00:16:12.380 favorite is like one this guy terry matthews out of canada he uh back in the day he was trying to
00:16:19.260 sell to like this big company and when i say magic it's a little like hand waving like it's
00:16:23.900 you know it's perception right like right if you have a photo on your website with a logo
00:16:29.900 your logo on the side of a building even though you don't have an office but people's perception
00:16:34.540 is that that's your building you know sometimes in the early days i always say in the early days
00:16:40.300 you got to do stuff that doesn't scale and and honestly sometimes it's not legal like you can't
00:16:45.820 follow every letter of the law like just hr laws like and you know this like it's like i'm not
00:16:52.700 saying break the law everybody should do what they want to do but i'm just saying like we got to do
00:16:57.740 we got to create magic sometimes so so terry matthews needs to to sell this like enterprise
00:17:02.620 customer and he convinces a dentist to lend him his office change the sign on the outdoor plaque
00:17:12.140 like the little slip thing to the company name and then put the logo in the waiting room and
00:17:18.140 then made sure that they like it was his friend that was a dentist and then the people came they
00:17:22.460 did it on a saturday because he said like i'm traveling i can't meet with you but i'll i'll
00:17:28.140 go to the office on saturday if your executives could fly in they flew in waiting room sat down
00:17:33.740 came into the boardroom had the meeting and ushered them out i think that the dentist opened off uh
00:17:39.100 opened at like 10 a.m and they had to get everything like turned back over and i just
00:17:44.380 love i know i love that kind of stuff you know like hey this doesn't make sense but we're gonna
00:17:50.860 do what we need to do to give ourselves even a fighting chance of succeeding because the truth
00:17:54.540 this is startups are like the whole time it's you're fighting against a headwind right like
00:18:01.340 you're not supposed to win i mean unfortunately that's just the truth the odds are against us
00:18:07.100 you really think so yeah i mean i have to say the last two years have been um basically an exercise
00:18:14.940 in resilience and pivoting from yes this works no we don't get traction next part we don't get
00:18:21.900 attraction so it's it's part of learning when to spot the signs that something's good enough
00:18:28.060 and with this one we finally have a lot of interest probably also because it's a metaverse
00:18:35.580 which is totally topical right now but it's actually what we've been building all along
00:18:43.980 it's just yeah packaged differently so that we're hitting the team manager rather than the hr person
00:18:50.460 which was great advice you gave me when we met in Canada. So yeah, that may be the person with
00:18:59.980 the purse is not HR. Turns out that's not HR. So totally good advice. So the lower hanging fruit
00:19:08.460 is actually the team lead. But you made a good point. As we wrap up, I want everybody to hear
00:19:14.220 this is people need to understand that it's the entrepreneur's decision on how we package something
00:19:22.220 right yeah and sometimes people take too long to do this and they they just feel because it's hard
00:19:29.740 i'm supposed to do it it's hard there's also this concept of like being pulled into a market
00:19:36.140 like you know and this is why i've always loved about living in san francisco for five years was
00:19:42.140 on a daily basis i would get to practice my perfect intro you know my buddy clay taught and
00:19:48.060 i teach all you guys uh or or just your elevator pitch like dozens of time and because you have
00:19:54.220 dozens of time to practice by the second and third week it's pretty good because you're tweaking
00:19:59.740 you're saying we do this for this it's like oh that didn't work we do this for this oh okay that
00:20:03.500 makes sense and then how does that work well it works like this didn't understand it uh it works
00:20:08.220 like this it's kind of like that and then and i feel like that's a part where i see sometimes
00:20:13.500 founders struggling with traction in their market right they're just i've been at this for two years
00:20:19.020 and it should be going yeah and i just i tell them it's like the the the core idea might be
00:20:27.820 great but the way you're positioning it and packaging it is the challenge because a product
00:20:34.300 needs product market fit it needs to resonate with the gap like i always say like who has your
00:20:40.540 biggest unmet need and if you feel like you're pushing then that should be feedback for the
00:20:46.300 entrepreneur now it but you got to be honest like how many conversations did you have did you have
00:20:50.380 two conversations that's not enough right but if you had 20 yes if you do 20 and only one out of
00:20:56.620 20 was mildly interested there's something wrong iterate iterate iterate and it sounds like that's
00:21:03.100 the journey you've gone through and now there's finally a thing that the market is now saying,
00:21:09.020 oh, we're talking about this in our meeting, so can you please come into our world and help us
00:21:15.260 with this? And I think that's something that every entrepreneur needs to understand is a decision
00:21:20.700 about the business. I hope they understand that it's a strategic business decision that they
00:21:28.780 should be considering it doesn't mean because i used to call it pivot or persevere do we keep
00:21:34.060 doing this and persevere or do we pivot and that was a meeting we had every second friday when i
00:21:40.060 was building clarity and it was just yeah simple idea i think it was it was a call you had with us
00:21:48.060 at the beginning we're in the middle of the pandemic in the growth accelerator which was
00:21:53.100 exactly that what you just said and that really helped and stuck with me that sometimes you have
00:22:00.940 to give up on some of your babies and that's okay you know and you just pivot and move away and i
00:22:07.340 think that's what we've been doing yeah for the past two years the idea of having the meeting
00:22:14.300 yeah the meeting idea is so that nobody thinks that you're uncertain it's this this beautiful
00:22:19.660 like hey every two weeks we're going to reassess and if we all agree we're going to keep going
00:22:23.660 but we're not going to do it blindly because we said we would and i think that's that's the
00:22:27.900 entrepreneurial art that sometimes people have a hard time with that i try to give these little
00:22:33.740 mechanics to help people think through but and based on everything i've shared what's what's
00:22:38.700 the one thing you're going to commit to moving forward um from our conversation actually i'm
00:22:45.420 taking the narrative and pushing it straight away into our decks towards investors so it's taking
00:22:51.740 that yeah agency narrative combining it because i often forget where we've come from i've sort of
00:22:58.060 feel well that's done and you know need to move forward so taking that putting in our deck and
00:23:03.820 yeah the next investors will be hit with it so it will be a straightaway impact i love to hear that
00:23:09.740 well it's been fun really appreciate time and i hope you have an amazing rest of the day
00:23:13.660 likewise and thank you so much for having me on this call all right talk soon cheers thank you