Hi everyone, I'm hoping someone can provide some advice on a situation I'm in with my B2B SaaS start-up.
Here is a bit of background before get into the current scenario:
- I'm involved in a SaaS startup which has 4 x shareholders
- Each shareholder has a 25% stake each in the biz
- The product was my idea (not that that means too much) and I was essentially the driving force behind the product in the early days. i.e got the other shareholders excited about it, enough for them to want to pursue the idea. I also found our CTO (who is now one of the other 4 equal shareholders) and I worked really closely with him on all of the product development (not actual coding but all the thinking/logic/UX, wireframing each and every element of the product and fleshing out features etc.) I also found all of the freelancers that were used on all elements of the product and managed all of that (logo/branding, marketing website, user interface designs, marketing collateral, product videos, setup all the user onboarding systems, CRM, tracking etc. i/e setting up essentially everything outside of actually coding the product.)
- We are 100% bootstrapped have have each contributed about 5-10k into the business to date
- 2 of the 4 shareholders are not involved in the business day to day. They are effectively strategic partners and have committed to fund the business if we get to product market fit, or at least prove that we are on to something. Currently we have only 4 paying customers, they all really like the product and use it in their businesses daily we have good feedback but the data sample size is way too small.
Now to the issue:
There was a mutual understanding that once our CTO had finished building our v1 of the product and it was stable enough to get our first external customers (we were using a beta version of the product at another business where we tested, iterated and improved it based on real world feedback and usage), it was then over to me to hussle to try and sign up lots of customers!
Although it's SaaS, our product has a very manual sales process as we're dealing with real world biz owners as our key target customers. Restaurant owners, cafe owners etc. My specialty is producing and product management and I've really struggled with the sales process. I've also gotten lazy over the lazy few months. I lost my fulltime employment a few months ago and had the luxury of allowing myself 2-3 months to focus on trying to drive sales and customers with the product. However, it's safe to say I haven't really gotten anywhere. My attention recently has turned to trying to find a paid job for myself so take away all the stress I have with that (living expenses, rent etc.)
The 2 other shareholders (not the CTO) have made it clear they are extremely disappointed with my progress on aquiring customers. I’m the first to admit and agree that my efforts on this front have been terrible.
They have suggested that we can’t keep going the way we are and need to change things up. They suggested we bring in another person to try and drive the business with a strong focus on sales. This person will need to be incentivized in order to commit to the business. I agree with all of this.
However, they are suggesting that I solely should dilute my shareholding by 10 or 15% to allow for the new person to take part. The new person would only get a piece of the pie if they first prove that they can sell the product and acquire customers.
I somewhat agree with the premise – however it’s a real kick in the guts that rather than everyone diluting, it would just be me doing so.
Both the CTO and I are on the same page that we could not have built the product without each other for sure. The other passive shareholders are non-technical – so they don’t really understand what goes into building a great product.
They assume you can have an idea, hire a dev and bam you've got a product! So from their perspective they are looking at me as though I have added zero value at all to date, even though I feel I’m 50% responsible of where the product is today.
Although I know they could not have built a product without me, they are essentially going to be personally funding the product if it gets traction. Funding (most likely in the form of loan notes) would be covering basic salaries and other expenses. Myself and the CTO would not be putting extra cash into the biz.
I’m the first to admit that I’ve really dropped the ball on the sales side, but should it be me that is the only shareholder to dilute down to allow another person to enter the business? I think I'm an essential core part of the operations & product owner/development side of the business.
At the end of the day, I want the product to succeed and I would rather have a smaller piece of a bigger pie – than 25% of nothing. The product would essentially die out if we continued as is.
I’m just keen to hear others thoughts on the situation I’m in and hopefully some ideas on what I can go back to them with.
Thanks and sorry about this long post!
[link] [comments]
