Jason Lemkin turns blunders into boons
How one founder’s mistakes helped the next generation of startups succeed.
Written by Angela Brock
Illustrations by Mercedes DeBellard
By 2011, Jason Lemkin had successfully scaled his e-signature startup, EchoSign, to more than $100M in annual revenue. By the summer of that year, he negotiated its nine-figure sale to Adobe along with a VP role for himself. At the time, he was one of a precious few to scale a B2B software company to that level and one of fewer still to see it through to a successful exit.
It was an impressive feat. It would also be the biggest mistake of his entrepreneurial career.
When Lemkin was building EchoSign, SaaS companies hadn’t yet reached the massive scale that would become typical in the late 2010s. Never mind the multi-billion dollar acquisitions that would come a decade later. Even from the inside, Lemkin hadn’t yet imagined the potential that companies like his held. EchoSign had traction. It was cash-flow positive. It was growing 120% year over year. It seemed like a great time to sell.
But the SaaS market would continue to take off. EchoSign’s closest competitor, DocuSign, would reach a $4.5B valuation when it IPO’d seven years later.
“No one in their right mind today would sell a business like that,” says Lemkin, “That's my biggest entrepreneur learning, and if I'd known, I certainly never would have sold our startup for any amount of money.”
A successful acquisition like EchoSign’s hardly sounds regrettable. And now, looking back, Lemkin realizes that it was this so-called stumble that led him to founding SaaStr.
"The whole point of SaaStr, if you go back to our first blog posts in 2012, is if someone ahead of you shares their mistakes in the just the right way, at the right time, in a way that’s digestible — that can be so powerful over time. It can compound so much."
Today, SaaStr is not only the world’s largest community for business software, but also an annual event that hosted more than 12,000 people this year, a robust content hub, a podcast, a repository of free resources and masterclasses for SaaS businesses, a venture fund, and a company that brings in tens of millions of dollars in revenue.
But when Lemkin first started hitting the publish button on the SaaStr blog, it was little more than a corner of the internet where he shared his unvarnished reflections on what it takes to be a founder. Every evolution and iteration of SaaStr since has been built on that original premise: mining hyper-valuable lessons from the mistakes made along one’s entrepreneurial journey.
“This is how you learn. You don't learn from the victory laps. You don't learn from the tweets telling [you] how [someone] created a $10 million course in 60 seconds. You don't learn from the trite speaking session at a boring event where someone talks about their product,” says Lemkin. “You learn from the ten mistakes [a company] made getting to scale, getting to traction. That is magic. And that's what SaaStr has been doing for a decade.”
After EchoSign’s acquisition, Lemkin worked as a VP at Adobe for a year before moving on. He was eager to support the next wave of startups as a VC and to give voice to the things no one was talking about at the time. It was a tough road to navigate, and not many had come far enough to share directions.
“Way back in 2010, SaaS was hard. It was so hard. No one ever thought you could have an IPO [in SaaS]. I decided we needed some sort of cathartic community,” says Lemkin. After surfacing from the experience of scaling and selling his company, Lemkin had his first opportunity to reflect. He wrote 100 blog posts — but shelved them until he was free to publish without the review and approval of Adobe’s content team. “So I just left them in a WordPress queue. And then the day I left Adobe, the first post went out.”
These were posts on frank topics like how startups actually improve people’s lives, how non-public SaaS companies are lying about their revenues, or how many startup teams aren’t really as agile as they think. Many in SaaS might have been contending with these things, but Lemkin was the first to actually say them out loud — for all to hear.
“It hit a chord mainly because there was no one else doing this stuff back then,” says Lemkin. “I was the first founder of my group, of the Yammer’s and Box’s and Bill.[com]’s to have an exit. At least a good exit. So I was the first one that could share their learnings.”
In a space where founders and VCs alike often share guidance on the nuts and bolts of startups — the metrics to shoot for, how to gauge product-market fit, when to raise vs. bootstrap — one of Lemkin’s key learnings revolves around a different kind of asset: people.
“I felt that as a founder, I had let my team down by selling at that point. I didn’t know it at the time. So I asked myself, ‘What can I do to celebrate my team?’” says Lemkin. Now that he was out, he wanted to help them build enduring legacies. And it worked. Members of his team at EchoSign went on to become some of the next leaders in SaaS. People like Sam Blond, the former CRO of Brex. Or Jameson Yung, now the SVP of Sales at Gong. Or Tony Benvenuto, SVP of Sales at Seismic — the list goes on. That was the start of Lemkin devoting the remainder of his career to helping the next generation of startup founders and leaders succeed.
This year’s SaaStr annual event hosted more than 100 talks, 250 speakers, and thousands of networking opportunities. That’s a lot of faces, a lot of voices. And that’s because center-stage in what SaaStr offers is the transformative power of learning from people’s experiences. Namely, the experience of getting something wrong — of failing.
One of the biggest mistakes a startup can make, according to Lemkin, is not investing in the right people at the right time. He believes a founder’s duty is to recruit the best people — or unicorns, as he calls them. What are human unicorns? “Exceptional people that will own it. And they're rarer than they used to be because it's not all pirates and romantics today doing startups,” says Lemkin.
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This rare breed isn’t extinct though. And, according to Lemkin, the footprints they leave behind in the startups they traverse are game-changing. And when you spot one, you have to wrangle them right away, vacancy on the org chart or not. After that, give them the range to do their best work. “Sit down with them, give them an honest budget, and get the heck out their way,” he says.
A common error Lemkin sees founders make is becoming too attached to control — not hiring a management team and eventually burning themselves out. This is one that Lemkin says is quicksand for early-stage startups, unsure if they’re ready to begin investing in leadership. “Where I see so many founders stall out,” says Lemkin, “[is when] they don't hire those executives by ten or 20 million [in revenue], and they're still the VP of Sales or the VP of Marketing or Product themselves. The whole engine gets gummed up. You can't do it. There's no time.”
Even today, as the CEO of SaaStr, he wonders how much faster the franchise might have grown if he had enlisted more help early on.
When founders know they have to let go of control, Lemkin says that they still might be overly precious about filling leadership roles on a specific timeline. On whether to hire a VP of Engineering, or a VP of Product, or a VP of Sales first, Lemkin says emphatically, “A VP of whatever! This is another mistake founders make.” He believes that a truly remarkable leader, in any department, can propel a business forward. “What if you don’t think you need a VP of Marketing but that VP of Marketing increases your leads by 20%?” Lemkin continues. “I see way too many founders doing sequential hiring. It’s a trap we fall into.”
Even when founders are flexible on hiring timeline, they still might hire the wrong leaders. Now as a VC at SaaStr, making four to five investments in late seed-stage startups per year, Lemkin sees this unfold all too often:
“I find 90% of VCs give founders bad advice when they interview executives for them. They love the logo. They love the smooth talker. They love Mr. or Ms. Acronym. They love the one with fancy charts who brings a great set of slides to a meeting. But that doesn't put points on the board for startups.”
He recently met with a potential VP hire that a founder was really excited to onboard. After the meeting, he advised that they keep looking. This candidate would not be the unicorn for the job, Lemkin determined. “You can settle for the eighth person on a team if you have to. But when you settle for leadership, you're settling for deceleration,” Lemkin says. He believes that both mediocrity and excellence are contagious — and founders should devote themselves to finding exceptional talent for those foundational roles.
So much of the wisdom Lemkin has to offer comes in the form of tough pills. The advice startups may not want to hear but need to hear, delivered with an encouraging smile. He’s not one for self-congratulatory back-patting or doling out participating trophies. He offers constant challenges instead, pushing the next generation of startups to become great. Since the start of SaaStr, he’s penned thousands of blog posts, responses on Quora, tweets, and videos — telling it like it is, without pulling punches. Lemkin often plays the contrarian, sharing the views earned by his years of building, investing, and mentoring SaaS companies. It’s no surprise then, that he’s earned the nickname “the Godfather of SaaS.” Or that his LinkedIn lists “telling it straight” as a skill.
His brand of honesty might come as a surprise to anyone accustomed to the unrelenting optimism that pulses through Silicon Valley. More surprising still, given his track record, is that his takes come from a place of deep humility and a desire to see others make it. Reflecting on the early days of the SaaStr blog, Lemkin says, “the only thing I truly know is what I screwed up.” He’s never afraid to admit what he got wrong. And those errors are the foundation upon which SaaStr was built. A foundation that a wave of SaaS startups sprung from.
Today he looks to invest in companies piloted by people he believes outgun him as a founder. In these pitches, he first gauges whether a startup has early traction. “Is she better than me, adjusted for time?” is the next question he asks himself.
“I have no ego around this. I want to build something — there’s only so much ego you can have as a founder because you’ve got to recruit people to your team. You’ve got to be self-aware and honest.”
In this way, Lemkin lives up to his moniker as the industry’s Godfather. Not just because he helped pioneer it. But because he’s helping to usher in the next generation of leaders, through honest-to-goodness mentorship. People come to him and to SaaStr for guidance.
“The whole point of SaaStr, if you go back to our first blog posts in 2012, is if someone ahead of you shares their mistakes in the just the right way, at the right time, in a way that’s digestible — that can be so powerful over time. It can compound so much,” he explains.
If hindsight is 20/20, you could bet that Lemkin has a pretty lucid view into the challenges companies are facing today. Recent chatter may have founders worried that the fundraising landscape for software companies is all scattered bones and tumbleweeds. He waves this off as today’s most fashionable mistake. “Everyone gets this wrong,” says Lemkin. “To me, these are pretty darn good times. Yes, there are categories that, for the moment, are deeply impacted. But this is not even a downturn, it’s just a pullback.”
He reminds founders not to be dissuaded or overly reactive in the short term. Recalling the mistake that started it all — believing that he had reached the finish line with EchoSign when the industry just fired the starting pistol — Lemkin challenges founders to take the long view. He advises companies to be patient. Grow your revenue year over year. Recruit great people relentlessly. Go for decades.
“If you have the trifecta there, you just can't be stopped in business software. You really can't be stopped — that's my meta lesson.”
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