Episode 843 | Success Patterns of $1M+ SaaS Founders

0:00Welcome back to another episode of Startups for the Rest of Us. I'm your host, Rob Walling, and in this episode, I talk with Julien Marzouk. He's a former SaaS founder and now a SaaS coach. He's been coaching for 10 years and has coached hundreds of founders. And in this episode, we dive into the success patterns that he's seen across the seven - and eight-figure entrepreneurs he's worked with. Before we dive into that conversation, If you are a seven or eight figure ARR SaaS founder, you might be interested in an event we are hosting this December. It's called Tiny Summit. It's a two and a half day high level knowledge sharing event exclusively for seven and eight figure ARR SaaS founders.

0:44And while this event will primarily be for Tiny Seed Institute founders, we are opening a limited number of tickets to qualified founders who are outside of Institute. If you're doing millions in ARR, it is hard for you to find a group at your level. And this event will be just that. It's a very small group retreat focused on founders sharing real behind-the-scenes knowledge on what's working, building relationships with other successful entrepreneurs, and taking a step away from the day-to-day to figure out the next big picture moves. It's going to be at one of the top resorts in Cancun, December 5th through the 7th.

1:19If you're already part of SAS Institute, hit us up in Slack. But if you're listening to this and you think, you know, I want to get together in a room, I'm going to be there. There'll be a few folks you have heard on this podcast. And we're going to have a great time masterminding, talking, troubleshooting. If you are not in SAS Institute, you can email tracyattinyseed.com to get on the wait list. And with that, let's dive into my conversation with Julian about success patterns of 1 million ARR founders.

1:59Julian, welcome to Startup to the Rest of Us. Thanks, Rob. It's a pleasure to be here. I want to talk to you today about coaching SaaS founders. We're going to cover a few topics, why a SaaS founder, especially someone doing seven or eight figures, might need a coach. We're going to talk about how to be coached well, what to look for in a coach. But I think the meat of this episode and the part that I'm most interested in hearing and that I think the listeners will be as well, is to dig in to your experience having coached dozens and dozens of seven and eight-figure founders across the decade, the patterns that you see.

2:34And I'm assuming there's some success patterns, maybe some anti-patterns here, but I really want to hear that out of your knowledge today. Sound good? Absolutely, sounds great. Yeah, I'd be happy to. I think that's a good opportunity for me. order what I've seen. It's actually hundreds of founders over the year. I'm ashamed to say that. And yeah, happy to get started. Awesome. So I want to dive in, starting with founders doing more than a million. And this is specifically SaaS, folks. We're not talking about folks with e-com. And it is the focus of this podcast and my whole ecosystem. Why do founders above a million seek coaching?

3:16Why should they consider finding someone to help them? Absolutely. Fair question. Usually they're like done going about it alone. At this stage, they usually feel pretty lonely if they're around one to three million isolated and they want a thinking partner. They need help because usually their lives has become miserable. And overall, they need to change something. They realize that the way they've been doing it is not working anymore. In one sentence, even though they don't say it like that, but what they feel is, what got me here won't get me there, to 10 plus million. And another thing that I've seen, I'm curious what you think about this, is there's so much content for people starting up, for people doing$5 ,000 or$10 ,000 a month, for people doing a little less content if you're doing$50 ,000 a month,$600 ,000 a year.

4:21when you get into seven figures, and I'm guilty of this too, that the audience is just so small for that content. So the stuff that I've created or we at Tiny Seed MicroConf have created for later stage folks, whether it's on YouTube or whether we create actual products we sell, they just don't get nearly the uptake because there's so few people that want that content. So as a result, there's not a lot of content for folks at that stage. And it seems like customization. It feels to me like everyone in the early stage has very similar problems. How do I find an idea, validate it, do blah, blah.

4:54Do you see this, that the problems themselves get further and further apart, such that a generalized course is potentially a lot less valuable to someone doing a million, five million ARR? Yeah, absolutely. It's also a much, much smaller group of people who get there, right? As you said, the content is also according to the audience. And yeah, I think we'll get into it. I'm happy to talk a little bit about what I'm seeing. You do see different scenarios, different cases that play into the different strengths of the founders. So you do have like a range of different scenarios and different challenges that arise.

5:38Though I do think that we can extract, as you said at the beginning, key patterns that are very helpful to be aware of when you get to that stage. So answer me this, because I can imagine someone thinking, well, I'm in a peer group, right? I'm in EO or I'm in a microconf mastermind or a mastermind of my own making. Why isn't that enough? And what does a coach offer beyond that structure? A coach, ideally a good coach, someone who's actually going to help you at this stage, has both domain expertise and coaching expertise. Meaning that they are able to both ask you the right questions based on what's going on in the business, but they're also able to recognize patterns.

6:30Patterns that they've seen because they've talked to dozens, as you said, or hundreds of people in that same situation. that's number one number two is a coach is not an operator not just an operator meaning that usually when you know you're mentored by an operator they're super strong technically and you know they're going to be able to help you basically do what they did but if you want to help someone play to their strength then that's a little bit of a different game because the path that worked for you might not work for someone else because we have different strength and you come to entrepreneurship from different journeys.

7:14Some are sales experts, some are great marketers, some are amazing product people and developers. So if you have someone that is exactly like you, then great. But for all the other cases, having this actual skill of coaching is actually going to unleash much more. Yeah, and we've seen that with the SaaS Institute. For folks who don't know, obviously I've mentioned SaaS Institute on the podcast before. It's our premium coaching program for seven and eight-figure ARR SaaS founders. And we have both masterminds and one-on-one coaching. You are one of our coaches at Institute. And there's a very specific reason that we structured it that way.

7:58Because I've been building software. Geez, I've been building software since I was eight years old. I've been building SaaS for almost 20 years, But I've been building audiences for 20 years and I've been building communities for like 16. And I've been in masterminds, one is still going, that's like 15 years old. And the difference between, that I've seen both across our accelerator when we launched it seven years ago, and my experience of being in masterminds versus having a coach one-on-one who's really digging in with me, asking the questions, often not even giving me direct guidance, but asking me the questions that make me guide myself.

8:34Asking, how do you get more data out of that? The coach may not know how I get more data to make this decision, but they know when to switch that topic and go pretty direct. Sometimes you can get in a mastermind with someone who's a good coach and you've lucked out. It is by far the exception. And that's, I think, the difference. I love the way, I just wanted to take the opportunity to say I love how the SAS Institute is structured, because I do believe that you need both. You need the community with peers that you can relate to that are going through the same things. It's not the same type of conversations, right?

9:10It's both, you know, you're going to get value from their journeys and things that they have worked out. And that's great. But the community is extremely valuable. I mean, I'm not going to have to convince you here. The combo with the coaching is, I believe, a great combo that the SaaS Institute nailed. Well, that's good to hear. Because we feel like we've been doing this for a while, you know, and helping a lot of founders, obviously with 350-something founders in our accelerator and then the tens of thousands of founders that have found community in microconf. So before we dive into the patterns that you see across or you've seen across these hundreds of founders you've coached, I just want to briefly talk about if you were to look for a coach, and obviously you and I believe in the SaaS Institute, but if someone's listening to this, they know me well enough to know that I don't just shill my own stuff.

10:01I think what we've built is great. I always try to build the best thing on the market, but sometimes people might want to go somewhere else to get a coach. So we're keeping this general of if you're a SaaS founder and you desire to find a coach and you want to be coached well, What's the mindset shift that founders need to embrace, I guess, to get the maximum benefit? That's a great question. I don't think you go into coaching to be validated, right? Or even to be just told what to do. Like, that's not really the way to start. I think getting into coaching, you need to be willing to be uncomfortable.

10:38You need to be willing to be challenged. and yeah, you need to be able to act in between sessions because eventually the coach is not going to do the work for you. The founder still has to do the work. So if you want to really leverage the relationship with your coach, you need to be ready to execute in between sessions because those are the ones that make the most out of it. You know, like after six months engagement between a client, a founder that has been executing consistently and someone who is just getting started, you know, you see the difference. It's important that the founder understands that they still own the agenda, even though the coach will help them, you know, prioritize and identify, you know, the biggest bottlenecks and then zero in on the priorities.

11:23What happens in between sessions matters so much that they need to come back and say, you know, this is what happens. This is what's on my to-do list and, you know, take it from there. And, you know, maybe last but not least is also like being okay with being wrong. It's important. I mean, obviously both for the coach and for the founder. I think those are good things for founders to do, whether they have a coach or not. Willingness to be wrong, you know what I mean? It's just good advice. Absolutely. All right, let's dive in. You said you gathered a few patterns for me. I think maybe we'll get through six or seven, depending on time.

11:58But let's just dive into the first pattern that you've seen across folks that you've coached. The first one, which is really like at this stage, The defining moment is the operator who hasn't become yet a leader, right? Basically, at one to three million, the founder is the growth engine. They're the ones who've built the growth, who've been doing it all. The problem is that in order to get to 10 million, it needs to change. They need to be able to remove themselves from the equation, to build the system, to empower their team in order for the business to run without them, ideally. That's the goal.

12:44And so what's tricky is you have very often an identity shift that needs to happen. because what got them here, being a great salesperson, being a great developer, being a great marketer, there is self-worth tied to it. And so you're basically asking them, what's been your greatest strength? What got you all this success? Now, actually get rid of it. We don't want it anymore. You need to be able to put your focus on a different system. and to your people and to build a machine that can run without you. And that's a big deal. That's a big deal for them because it's basically who they are at this point.

13:32And it takes a second. This is something that you can surface very often. In the first session, I do a time audit. Very big picture, you know, but like I take the six functions and I'm like, okay, how much of your time do you spend in each function? You know, just a rough percentage. Every time there's a function that's beyond 40 % in time spent in sales, product, marketing, you know it's going to be a topic and it's going to take some work for them to actually let go. Love it. I've seen it myself. I echo it. Let's talk about number two. I think a lot of people will recognize the pattern and not just founders, but founders at this stage specifically is doing too many things at once.

14:15right so you get on a on the session one of the first sessions and you realize that founders run five growth initiatives in parallel and when you start questioning like but are are you sure that you will be able to bring them all to fruition and how come it's taking so long you know it's very difficult for them to let go because they realize that they think that it's saying no no no, I'm not going to do this. And actually the reframe is we're not saying no, we're just saying not now. It's about sequencing, right? And, you know, very often you see like many different ICPs, different type of clients that founders are pursuing, even sometimes different sales motions, different acquisition channels.

15:06And there's one tool that I want to share with your audience that I found very helpful to help them focus. And the way it's useful is because there's no subjectivity about it. It's basically math. It's the sales velocity equation. I don't know if you've used that before, but basically you take every segment. So let's say like I have this client, for example, compliance SaaS that sells into banks. It was going after national banks, regional banks, and community banks, and like mostly regional and community. And the thing is, when we compare the sales velocity, the pipeline, the conversion rate, the sales cycle, and the deal size, he spent a lot of time on the regional banks because they were 70k per deal versus the community banks that had, I think, like something like 30k per deal.

15:57The thing is, the sales cycle for the regional banks was seven months versus one month for the community banks. So basically, spending more time on the community banks after six months means basically 10 times the revenue. It's just math. And so we're not saying we're never going to do the regional banks. We're just saying right now, the best use of your time is on this channel, this ICP, this motion, and these are the numbers to back it up. So as a coach, let's say that you see this and you can see that there's an issue. How do you help or do you? Do you help guide the founder? Do you do it through questions?

16:34Is it the Socratic method? Or are you kind of like, hey, there's a blind spot over here and you're just direct like, have you considered this? What would it be like to be in a session with you and have you realized that? I think there's the myth of the coach is not supposed to give guidance. they're supposed to only ask questions i believe that for founders at this stage it's actually very important to be able to wear both hats to be able to be really asking questions getting them to clarity and to their own understanding of the problem but also in some situations give your own opinion and experience basically on something and share what you think but labeling it as such right Being very clear, here I'm going to tell you what I think.

17:22You should do this because these are all the reasons and I've seen it before and you're going to get faster. This is, I would say, you have to balance both hats. But overall, I wouldn't say it's a problem in session. I would say founders welcome the guidance very often. I would say the trap is indeed to not allow for the space for the founder to actually be creative and find their own solutions based on all the amount of information that they have. Because the founder has many more information than the coach. They're in the business. They have more data points. So I think you have to kind of hold both those truths at the same time.

18:08All right, let's dive into our next one. Am I counting right? Is this the third? It is the third. Number three. Yeah, talk me through it. The rescuing founder. The rescuing founder is basically team members come to him with problems, him or her, and they think it's faster, and very often it is, short term, to just take the problem and solve it themselves. They are not going to take time to actually work the problem with the team member in order for them to still own the problem. And the thing is, when you do that, what you're actually doing is you're teaching your team members, bring me problems instead of solutions.

18:57And so you cannot grow like that. Basically, you are just in this loop where you are still the bottleneck. And so a few things that are extremely helpful here. The first one that I love, that I use very often, is the 10-80-10 rule. Basically, just get involved in the first 10 % of the task and the last 10 % of the task. The 80 % in the middle are your team member's responsibility. So be there to help frame, scope it out, share, be clear on the standards of expectation, and then be there at the end to actually get the project, the deliverable, where you want it to be. This one has been helpful with clients.

19:40The second one is basically creating a system that fosters accountability. You know, that requires an operating rhythm, right? So weekly cadence. I like the model of one priority per week, three commitments on this priority, and then a scorecard to measure it. Very simple, very clear. And, you know, you do need tools in order to create delegation. Otherwise, it's very hard for a founder, you know, from nothing to create a new system. So those tools actually, I very much rely on them in my work with clients because it gives them something that they can do to start, you know, the transition. I was so guilty of this one.

20:24So guilty. Of all the ones you've mentioned, and my guess is of all the ones that you mention, this is probably the one that I did the hardest as I was coming up. It was very much, because here's the thing, I like helping people. I like solving problems. I enjoy it. Even in my personal life, one of my kids, the battery on their car ran out the other day, and I just loved being like, oh, here's the AAA number. You call this, and they'll come charge you, and then come to the house, and I'll look at it. And then their phone broke, and I would just come to the house, and I'll figure, you know what I mean?

20:51That actually gives me juice to help my friends and my family and my stuff. And business is not good. It's not good. And I was Mr. Swoop in and I was like, well, obviously I'm a founder, so I can solve all these problems. And it really burned me out. And as you said, it taught my team to just come to me with everything. And it was not good for growing the org by the time we were 10 people with Drip. I was basically still making all the decisions and everyone, well, let's see what Rob thinks about it. Like everything. And that was my fault. So it really resonates for me to hear you talking about this.

21:24I hear you. I think we all can to a different level. It's just, you know, you get finally in a place where you can do things. And as you, I do love to be helpful and to be of service. But yeah, that's the path, pattern three. Let's do number four. This one is actually maybe the, actually, I think it might be the most common one I see. Let's see what you think about it. Have you seen it before? It's the visibility problem disguised as a lead problem. Let me tell you more. How many clients come to a session and say, we need more leads? Most, yeah. Most, right? And then you ask a few questions and you realize they don't know which channel produces the best customers.

22:15They don't know the percentage that converts. They don't know where prospects drop in the funnel, who expands, who churns. So they actually don't know where is the bottleneck, what's to fix. And it's understandable when growth slows, the instinct is just to add more marketing, more sales, more tools. Actually, in most cases, it's getting the information, where things break, where do we need to focus. And just today, talk to a client and we've been working together for many months. But he came, same thing, I need more leads, growth has stalled. We start working together and realize that he has a churn issue, turnover issue within his sales team.

23:06sales conversion rate. And, you know, we start, you know, popping up the hood and he actually needs more technician to deliver on his product to avoid churn. He needs to, like, the scripts of his sales teams are not good. You know, they need to be improved. And the compensation of his sales team is not ad hoc. So, you know, in just six months, because I've actually asked him to find out those data recently, you know, the LTV to CAC ratio went from like high twos to four in six months just by doing the work on those. And so those were actually the highest priorities for him, not more leads. Yeah.

23:49And that is something that often as a founder, when you're so close to the metal, you may not be able to see that yourself. And that's where having a co-founder, having a mastermind, having a coach, having a therapist, depending on the type of therapist they are. Usually not a therapist because they're not going to know business well enough. But that is where you can't see the forest for the trees when you're so close to it. I still do this today. I have my network of really close founder friends who really understand me, who I can go to and say, I know that I need help with this thing. And here's the thing, here's the reason it works for me.

24:26I don't have a coach right now, but it works for me because I feel like I'm pretty good at identifying. I've been a founder forever. And I'm pretty good at identifying when I do actually need the outside help. For a lot of people, they aren't good at identifying when they need the outside help, right? So unless you have that monthly or twice monthly meeting with a coach, you're not really asking yourself the whole time, do I need advice on this? Do I need a different point of view? And you can be stuck without knowing you're stuck. A hundred percent. And I'm obviously sharing this from a place of love.

25:01And it's not about pointing fingers here. I've done all those things. I had my business in New York for six years. I've been the bottleneck, been focused on the leads, been registering teammates. I've done them all. So it's exactly how you said it. When you're close to the action, when you just have your nose in it day in, day out, the pressure, you know, the expectations, it's difficult to have that visibility. Almost impossible if you don't have the right forum for it. Let's dive into number five. Number five is the emotional reality of it all, right? something that comes up very often I don't know if you've heard it before but like founders tell me most days I feel both encouraged and discouraged like this is something that comes back very often and I think that's a very important reframe is you don't solve uncertainty with more thinking You solve uncertainty through action.

26:12The founders who keep moving, they try to stick with momentum, keep executing, and that's how the emotional regulation happens in the best way and the fastest way. The ones that stop executing because of uncertainty and just get caught up in the thinking loop, it's usually getting worse. And I thought, yeah, that was worth actually one spot in this list. Yeah, this is, I mean, the number one thing Anar and I talk about when we're asked about tiny seed founders, who succeeds, who doesn't. And generally, the people who succeed, they do a lot of things and they're right more often than not. Not all the time, but they're right.

27:02They can be right 60 % of the time, but they just do a lot of s**t. And the founders, and they're not flailing. I mean, there's people that do a lot of stuff on their ADHD launch in 12 products in 12 minutes. And that's not what I mean. I mean, focusing, having some type of game plan, but it's like everything they do with a sense of urgency. And they don't sit around analyzing everything to death. they take action to gather more data to then take action to gather more data to then take action. And oh, I just discovered the data now is that the YouTube channel is working, that LinkedIn is working, that that lead, cold outreach via whatever avenue, via Twitter DMs, is working because I didn't sit there and talk to ChatGPT about it for three hours and then think about it and ask everyone for advice for three days.

27:45I just started sending some cold DMs one day and suddenly I realized that one out of 20 that I sent got a response. It's this bias towards action over sitting around. Analysis paralysis is something that strikes so much of us, especially builders, especially makers, especially developers, because action is scary. And the safe, secure, comfortable thing is building, writing code, another feature. I want to think about the product, I want to build a product, because it is fun, that's my favorite part, that's why I get into this. But the scary part, the hard part, is taking action and getting out there.

28:19100 % short learning loops, short learning loops, right? Do something, result, let's iterate. And it's very useful. Like, I think founders at this stage, they don't want like general, you know, advice, they're drawn in advice. They want to be able to have something actionable, and usually to identify like, what the highest leverage path to their next stage. And that's usually like action, short learning loops. All right, last one. Let's look at number six. Number six, I wanted to pick something that was related to this new AI era, right? And it's tricky because obviously there's so much going on and it's in every conversation that I have.

29:07one thing that I wanted to highlight is the shiny object syndrome so very often the response to AI with the founders I work with is I'm going to build a ton of agents I'm going to build agents to do this to do that agents agents make no mistakes agents are great I love them but it's just like there are a number of things that can that sometimes need to happen before and And the first biggest challenge that I see at this stage is if you don't have clarity on your ICP, the use case that works for you, how your GTM is designed, you're going to be crushed by AI. The AI punishes fuzzy positioning, rewards clarity, rewards ROI, clear deliverable.

30:03and some founders don't have that yet and they can't capture the right data if they don't have clarity on their icp on their use case so they cannot leverage ai for their own product so there are a lot of there's a lot of work already there to be done gtm first number two like a lot depend on seo still and you probably saw seo is declining like across the board so usually before setting up a new agent, what channel do you want to develop to counterbalance the decrease of SEO? This needs to be intentional. And then last but not least is really like the information flow, right? So there is an opportunity to simplify everything with AI before adding more agents.

30:54You know, a lot of how I go to GTM organizations, how they're structured is, you know, you will have SDR, AE, manager, you will have some rev up, some enablement. The thing is, if everybody is connected to the same information in real time, and leveraging AI, well, there's a lot you don't need anymore, actually, because information is just flowing. And so I think it impacts how organizations work. And that's a big deal. You know, it's really like you can really keep a tight team and get a lot done. And agents, they're there for everybody. Just make sure that those fundamentals of your business are secure before adding complexity.

31:41Awesome. Thanks for sharing those today, man. I think they're going to be really helpful for the listeners. And listener, if you found value in any one of those or all of them, feel free to reach out to us on X Twitter. I'm at Rob Walling. And Julian, what's your handle? I'm at Julian Marzouk on LinkedIn. Perfect, on LinkedIn. Yep, and we will get that in the show notes. One final question before I let you go. What does working with you at SAS Institute actually look like, if someone was wondering? Yeah, it's one session every two weeks, plus the community. We get started with the first priority that's going to have an outsized impact on your business.

32:25We create one priority, three involvements until the next session. And if we need to add more, if we need to involve more team members, we can do that. But the relationship with the founder biweekly, that's the foundation of the coaching, together with, obviously, the community of the SaaS Institute. Very nice. Folks want to keep up with you. Julian Marzouk on LinkedIn. Thanks again for joining me today. It's my pleasure. Thank you for having me.

33:25Thank you.