Top 10 SaaS Go-To-Market Mistakes: A Founder’s Guide to Success

Launching a startup can be an exhilarating journey, but it’s fraught with challenges, especially in the go-to-market (GTM) phase. SaaStr, a leading source of insights for SaaS companies, recently highlighted key pitfalls that founders often encounter and provided strategies to navigate these hurdles successfully. Here, we distill the top ten GTM mistakes that startups should avoid, illustrated with real-world examples and contextualized by key revenue phases.

1. Hiring a Head of Sales who can’t independently demo the product
2. Misaligning marketing hires with company needs
3. Founders exiting sales too early
4. Cutting marketing budgets to zero
5. Ignoring disruptive AI trends
6. Prioritizing short-term profitability over growth
7. Hiring fractional or contractor roles for key functions
8. Hiring based on prestigious logos rather than skills fit
9. Expecting instant ROI from marketing efforts
10. Weaponizing customer success teams for revenue generation

1. Hiring a Head of Sales Who Can’t Demo the Product

In the early scramble for growth, a costly mistake for startups can be hiring a VP of Sales who can’t demo the product. This is non-negotiable. If the VP of Sales can’t demo your product, they likely won’t succeed. SaaStr shares an example of a startup with a hybrid Product-Led Growth and sales-led motion where the sales head hadn’t closed a deal in 12 months because he couldn’t demo the product without a sales engineer’s help.

The Importance of Demo Skills
You never, ever, ever get the time back. So never step out of sales. I always see sales plummet when founders say, I’m just going to be a product guy now.

The takeaway?
Ensure your sales hires can independently demo the product before extending an offer, especially crucial at early revenue stages (e.g., $1-10M ARR): don’t do it!

In the initial stages of a startup, it’s vital to avoid the mistake of overburdening the VP of Sales with the entire product demo responsibility. Relying solely on sales engineers to conduct demos can create a bottleneck, diverting them from other crucial tasks. Without a confident sales leader to showcase the product, a startup may miss out on early sales opportunities, which is especially damaging during the crucial initial growth phase. To optimize limited resources, the VP of Sales, even in a startup with a hybrid PLG model, should be adept at effectively demonstrating the product and advocating its value proposition.

2. Misaligning Marketing Hires with Company Needs

Hiring the wrong type of marketer can derail your Go-To-Market strategy. SaaStr recounts a situation where a startup hired a product marketer from GitLab, expecting them to generate leads. Product marketers often excel in creating collateral and segmentation but aren’t typically focused on demand generation. Instead, startups need growth marketers with a proven track record of driving pipeline. Look for candidates who have concrete commitments and results in their previous roles, a crucial consideration as you scale from $10-40M ARR.

3. Founders Exiting Sales Too Early

Many founders can’t resist the allure of stepping away from sales to focus solely on product development, but SaaStr issues a bold warning against such complacency.

Common Scenario: I asked this question so many times to founders that are decelerating at $5 or $10 million. It’s more common today because even though fundraising is harder, when you do fundraise, folks raise bigger rounds. Even today, they raise bigger rounds. So they’ll raise $10 million or $20 million. And the CEO will be like, thank God, I don’t have to do sales anymore. I hate it.

Founders possess a unique passion and knowledge that are simply irreplaceable in the sales process. Even with a seasoned VP of Sales on board, founders should resist the temptation to fully withdraw, especially during the pivotal middle stages of deals. Their continued involvement guarantees that prospects benefit from the invaluable insights only founders can offer, leading to a significant boost in conversion rates—particularly crucial during the $10-40M ARR phase when the company is experiencing rapid growth. It’s astonishing how many startup founders find themselves still needing to seal the deals, despite having enlisted the expertise of an experienced sales leader.

4. Cutting Marketing Budgets to Zero

In challenging times, startups frequently resort to slashing marketing budgets in a misguided attempt to conserve cash. Surprisingly, even some of the big-name companies where I served as VP of Marketing fell prey to this detrimental tendency.

Example from the Field:
I talked to so many founders whose growth has slowed. And I said:

• “How’s your pipeline looking?”
• “Well, it’s really slowed down.”
• “Ah ha, and how much are you spending on marketing?”
• “Nothing.”

Talking to a public cloud company doing billions in revenue and actually generating over a billion in free cash flow, one of the senior managers there said, “We cut all events last week. We cut all spending on events.”

However, let’s be clear: this shortsighted approach can be disastrous. Marketing plays a crucial role in maintaining pipeline and fueling growth. SaaStr boldly advises startups to strike a balance and place trust in their marketing team by providing a reduced, yet still substantial budget. Eliminating marketing spending altogether not only puts future growth at risk but also hampers any chances of recovery. This blunder can prove particularly costly during the $40-100M ARR phase, where sustained growth is absolutely imperative.

5. Ignoring AI Trends

AI is profoundly reshaping the B2B and SaaS landscapes, with its disruptive influence permeating every aspect of business operations. Startups across the industry spectrum can no longer afford to ignore this transformative trend, as failing to achieve feature parity with competitors who are readily adopting AI technologies can lead to significant losses in deals and market share.

Ignoring the Inevitable:
I see startups that are arguing with AI, that are arguing against this tsunami that is coming. And they’re arguing that it doesn’t work. And you know what the competition is going and doing? They’re saying, we can automate this with AI. And the competition is exaggerating. Sometimes they’re at the edge of lying. But you cannot fight this trend of AI.

In this rapidly evolving landscape, it is imperative for startups to not only acknowledge the power of AI but also to strategically integrate and leverage it within their own products and services. To remain relevant and competitive, startups should prioritize matching, if not surpassing, their competitors’ AI capabilities. This imperative is particularly pronounced during the $10-40M ARR phase, a pivotal period where differentiation becomes crucial for sustaining growth and securing a strong market position in the tumultuous realm of SaaS and B2B business.

6. Prioritizing Profitability Over Growth

SaaStr observes that many startups are mistakenly prioritizing profitability over growth, especially in today’s efficiency-focused environment. While profitability is important, growth remains the primary driver of valuation and market success. This is reflected in the concept of the Rule of 40, a financial metric suggesting that healthy SaaS companies should have a combined growth rate and profit margin of at least 40%. Maintaining a growth rate north of 30% is crucial, even if it means sacrificing short-term profitability. This growth focus is especially crucial during the critical $40-100M ARR phase to attract investors, establish market leadership, and ultimately achieve long-term financial success.

Real-World Example:
Think about companies like Dropbox, which have focused on profitability at the expense of growth, leading to lower market valuations. Unlike companies that prioritize growth over profitability, those that are not growing but profitable, such as Dropbox, are trading at two to three times revenue. However, this is not an ideal position. This emphasizes the significance of sustained growth in driving higher valuations and achieving long-term success, while profitability ensures short-term stability.

7. Hiring Broken, Bitter, and Fractional Talent

In the current market, many experienced professionals are disillusioned or seeking fractional roles. SaaStr cautions against hiring these individuals, as they often carry baggage from past experiences and lack the full-time commitment startups need. Instead, focus on hiring passionate, full-time employees who are fully invested in the company’s success.

The Pitfalls of Hiring Part-Time Talent:
I’ve seen this stumble again and again. There was a VP of Sales at another company. And he just went from a product that was somewhat complicated to one that was very enterprise. And the workflows were very complicated and very competitive. In six months, he raised his hand at the board meeting when they were struggling, when sales had not gone up. And he said, “listen, my number one mistake is I didn’t know how complex this product was”.

This example highlights the pitfalls of hiring someone who is not fully committed or invested in understanding the nuances of your specific product and business. The VP of Sales came from a different company with a simpler product, and within just 6 months was already making excuses about the complexity rather than diving in to master it. Fractional hires in particular often identify problems well but are unwilling to put in the hard work to execute solutions themselves.

For a startup at the $10-40M ARR stage, building a cohesive, all-in team is critical. Bringing on hires with baggage or a fractional, part-time mentality can be incredibly detrimental and disruptive during this vital growth phase.

8. Hiring Based on Logos Rather Than Fit

Another common mistake is hiring executives based on their previous company’s prestige rather than their fit for your startup. SaaStr advises founders to assess candidates’ skills and fit independently of the impressive logos on their resumes. This ensures that hires can adapt to the startup’s unique challenges and contribute effectively from day one, especially critical during the early scaling phase.

Logo vs. Fit :
Another client fell into the trap of hiring a VP of Sales from a prestigious SaaS unicorn, solely based on the brand name. As I cautioned them, “You can’t hire just for the logo on their resume. You have to ensure they truly understand the dynamics of an early-stage startup.” Sure enough, this VP of Sales struggled from day one. As the founder admitted to me: “He took the job, but in our interviews, he never articulated a real strategy for our specific market and sales motion. I think he just assumed since he came from successfulunicorn.com, we should mirror their huge enterprise sales model.” For a startup still scaling from $1-10M ARR, they needed a scrappier sales leader who could roll up their sleeves. Hiring for pedigree over founder-stage skills set them back months before course-correcting.

9. Expecting Instant ROI on Marketing Efforts

Many startups expect immediate returns on their marketing investments, which is unrealistic. Marketing efforts, particularly those involving brand building and content marketing, often take time to yield results. Focusing on short-term metrics like lead scans at events can be misleading. Instead, startups should invest in longer-term strategies that build sustainable growth. This is particularly important as the company scales from $10-40M ARR.

Unrealistic Expectations:
One client became impatient after their first few demand gen campaigns didn’t instantly fill the pipeline. The founder vented: “We hired this hot-shot growth marketer who promised to ’10x’ our leads. But after spending a ton on paid ads for 3 months, we still had barely any SQLs to show for it. I was ready to pull the plug on marketing entirely.” I had to rein them in from this rash decision. While paid marketing can drive some quick wins, brand-building and content marketing efforts take longer to compound. Expecting an immediate ROI is unrealistic and short-sighted. Instead, we rebalanced their marketing mix and KPIs to focus on long-term, sustainable growth.

10. Weaponizing Customer Success

Lastly, I consulted with a client who had turned their customer success team into an upsell machine in pursuit of profitability. However, this aggressive monetization tactic backfired, as the founder admitted: “We armed our customer success managers with all these pricing tiers and upsell tactics. But then our NPS scores just tanked. Customers felt nickeled-and-dimed and like we cared more about money than their success. We lost a bunch of logos because of it.” I advised them to realign customer success as a retention function first. While upsells are fair game, the primary focus should be driving adoption and long-term value – not squeezing customers for every last dollar.

While upselling and cross-selling are important, the primary role of customer success should be ensuring customer satisfaction and retention. Aggressive pricing tactics and pushing for more revenue can lead to a significant drop in customer satisfaction and loyalty. Maintaining a customer-first approach in customer success is crucial for long-term success, especially during the $40-100M ARR phase when customer churn can severely impact growth trajectories.

Rethinking Go-to-Market Strategies for Sustainable Growth

Avoiding common go-to-market pitfalls is crucial, but simply checking boxes misses a deeper opportunity for startups to fundamentally rethink their approach to growth. While hiring the right talent, staying sales-focused, balancing marketing investments, embracing AI, prioritizing growth over profitability, and putting customers first are all wise principles, truly exceptional companies transcend these basics.

The real challenge is cultivating a growth mindset and culture of continuous innovation throughout the entire organization.

Key questions to consider:

• How can startups embed customer-centricity so deeply that it permeates every decision, beyond just the customer success function?
• How do you foster an environment where every employee feels invested in driving sustainable growth, rather than being siloed in narrow roles and short-term metrics?
• Rethinking antiquated sales and marketing motions is also key. Why default to traditional demand-gen tactics when more creative, authentic approaches could better capture attention and build deeper relationships?
• How can startups reimagine their entire user journey to be a remarkable end-to-end experience that turns customers into passionate advocates?

Most critically, founders must have the courage to buck conventional wisdom and forge their own innovative path. The startups that truly reshape industries aren’t the ones checking boxes, but those unafraid to challenge assumptions and rewrite the rules of the game. SaaStr’s insights are a great starting point, but the most successful founders will be those who use them as a springboard to imagine an entirely new way forward.

The opportunities have never been greater for startups willing to rethink go-to-market through a fresh, transformative lens. Avoiding mistakes is the bare minimum – the real winners will be those unafraid to be boldly, remarkably different.

Call to Action

Ready to fine-tune your go-to-market strategy? Schedule a complimentary strategy session to avoid these pitfalls and drive sustainable growth. Together, we’ll ensure your go-to-market engine is finely tuned for maximum traction and sustainable success. Simply reach out to schedule a time that works for you.