Insight
Benson: Early-stage founders must abandon work-life balance and personal relationships
“Forget about your hobbies, you're not gonna be a good friend, son, daughter, mother. You gotta ruthlessly prioritize, identify the things that really matter to you, and only do those things. It's not a good time to have a work-life balance.”
Prediction Not checkable as stated
Benson: COVID-19 disruption is definitely not a two-year problem
“This is a, this is likely a shorter term bump. Is it a three month problem? Is it an eight month problem? I'm not sure, but it's certainly not a two week problem and it's certainly not a two year problem.”
Insight
Benson: Founders should vest the bulk of their equity upon exit
“The way I would suggest would be a better way to do it is take a small slice of it. Like the amount that you would give like an early VP or someone who's, who's, who's high up in the organization, but not, not a founder and give and invest that portion over fo…”
Assertion Not checkable as stated
Benson: Lighter Capital required full 4-year interest on early exit
“They had a term that if we wanted to exit the loan early, like after two years, it was a four-year loan, if we want to pay it off after two years and take our money somewhere else, We had to pay them all the interest as if we had been there for four years”
Insight
Benson: Engineering delivers higher long-term ROI than sales but takes longer
“Sales or marketing or anything on the revenue side pays off at a pays off faster, but at a lower ultimate rate engineering resources and actually making the product better, creating that extra feature that wins you extra deals pays off at the highest rate, but…”
Insight
Benson: SaaS startups should always take debt before equity once generating revenue
“I think that the rule is debt before equity. If you can get it, it's cheaper. Equity capital is super expensive. You can't get debt until you already have revenue. Once you can get debt, you should get debt. You stack equity on top of it. But even if you just …”
Opinion
Most SaaS companies are a bad fit for venture capital economics
“I don't think that SaaS companies are always a good fit for venture capital. And I'd say a lot more often than not, they're not a good fit for venture capital. There's so many small problems in the world that don't have, aren't, just don't have the explosive g…”
Insight
Zoho customers are significantly less likely to buy software add-ons
“So if someone who's purchased Zoho is, is showing that they're more cost conscience, they're willing to take shortcuts. They want the cheaper thing. And so it, they're less likely to purchase add-ons of this nature.”
Opinion
Steve Benson argues venture capital is wrong for over 90% of startups
“For the vast majority of SaaS founders, they're not the right fit, right? They only want to invest in a very small slice of the world of SaaS, right? The super high growth, you know, huge companies you know, and there's the, that 90, I don't know, you might kn…”
Insight
Steve Benson warns founders that one-year SaaS debt deals are highly risky
“The reason they assume this is because a lot of the SAS debt providers are doing year long deals. That's really risky because you're basically You're saying you're going to pay their debt back with more debt, but you know, we're standing on the barrel of a rec…”
Disclosure
Benson: Badger Maps secured $308K upfront via 3-year competitor exclusivity
“I traded for three years, paying three years up front it was like 308,000 dollars or something. I traded away, not, I promised not to sell the product to their two biggest competitors for that three year period”
Opinion
Benson: Three quarters of SaaS lenders offer 1-year deals unusable for headcount
“Three quarters of the SaaS lenders are like, they want to do one-year deals, which you can't invest in, in human capital over one year.”
Insight
Benson: 15-minute onboarding calls are viable for $420 annual SaaS plans
“We do reach out to even as just someone who looks like a single seat deal will at least reach out to them and ask them if they have questions about how to use the product. You know, we'll set it up for them, get them successful. That call usually takes 20 minu…”
Disclosure
Benson: Badger Maps pays sales reps straight salaries without commissions
“It's a salaried role. Even, even so all, all these roles are salaried roles, including the sales role.”
Disclosure
Benson: Badger Maps pays around 22% to 23% interest on Lighter Capital debt
“I think it was like 22, 23%.”
Insight
Benson: B2B SaaS podcasts should target micro-niches over audience size
“You don't have to have a huge podcast. You have to have a podcast that is very specifically valuable in some way to a very specific group of people, your ideal customer profile. And, you know, some people have larger TAMs than others, and so it can be more bro…”
Insight
Warrant-backed venture debt becomes drastically more expensive for successful startups
“The trade-off being there that, that often, if you're doing well, that ends up being a much, much more expensive debt. If you're, if you don't do well, then that ends up being cheaper debt because the exchange in exchange for the warrants, you don't, You pay a…”
Assertion Supported
Benson: Early SaaS debt from Lighter Capital was capped at 3-4x MRR
“What didn't exist, well, I mean, the products that exist were more expensive, for starters, but they were also, they weren't willing to loan very much, right? So I think Leiter would do, like, three, and I'll get into this in my slides, I don't want to blow my…”
Disclosure
Benson retained 65% equity in Badger Maps while his co-founder held 20%
“65.
And the other co-founder owns like 20.”
Insight
Benson: Software sales drop severely across November, December, and early January
“There, I've got a seasonality problem, problem being that people don't buy software in November or December and hardly in the first half of January.”
Disclosure
Benson: Lighter Capital RBF cost Badger Maps about 18% interest
“I think for me, it worked out to be about 18%, because we weren't that good at growing, but if we had been good at growing, it would have been a lot more expensive.”
Assertion Partly supported
Benson: Founderpath lends up to 8x MRR versus Scaleworks at 4x MRR
“Scaleworks is at four XMRR, he's at eight XMRR.”
Insight
Benson: Debt lenders often demand faster repayment when business slows down
“That, that providers love to give you an umbrella when it's not raining and take away the umbrella once it starts raining. Perfect. So they, when times are bad, they'll often demand you pay back faster and they'll have terms in your contract.”
Disclosure
Benson: Badger Maps will pivot to home-visit healthcare workers
“So that's where we're going to be looking for, to pivot towards things like that and Bring in new business from that instead of to make up for the lost business in other places.”
