I’m on a mission to uncover the founding stories behind SaaS startups and their first $500k in ARR. Initial grind, scrappiness and grit is essential to any startup’s success, but I find most people blog about scaling from $1M – $10M+.
By interviewing SaaS founders who fairly recently hit the $500k in ARR milestone, I hope to extract key insights and commonalities that other early stage SaaS founders can learn from. Previous interviewees include Sean Thorne, co-founder and CEO of TalentIQ — read his insights here. If you’d like to share your story, please reach out.
I recently spoke with Viko [Bhakta], founder of BOOKSTAYGO. BookStayGo is a SaaS-based hotel marketplace featuring an entire suite of mobile functionality for hotels, including mobile room keys with IoT hardware, and a complete mobile user experience for travelers (from booking and check-in to room selection and check-out). Viko and I discussed their roots, early-stage challenges as a B2B tech-focused company, and how to build and develop new markets.
Read on to see key learnings I pulled out from the conversation, and see the full interview below that.
Viko explained that BookStayGo was created in response to the onslaught of online distribution innovation that quickly plagued hotel owners and investors after the Great Recession.
As smartphones (specifically iPhones) consumed customer attention, Viko saw immense opportunity to monopolize the mobile marketplace to deliver a superior mobile experience for travelers, and consequently relieve hotel owners’ online distribution pain points — enter BookStayGo which features mobile booking, check-in, room selection and digital keys.
Hotel innovation is also in Viko’s blood, as he grew up with parents in the hotel industry and Viko’s father developed the first new-construction Best Western within the Indian community in 1983. Watching his parents start and grow a successful business as well partnering with them in 2000’s to develop Hilton-branded hotels has led to Viko’s unique perspective and domain expertise within the hotel industry.
As the CEO, Viko booked the first $400K in ARR himself before bringing on their first sales hire! It’s important for the founders to lead early sales to learn from customers, which can be applied directly to product development, as well as validate the sales process and product-market fit before making sales hires.
Once he hired his first sales rep, Viko had them prospecting and leading customers through each stage of the buying process, so early sales reps learned the entire lifecycle of the sale and took ownership of the process.
Viko emphasized that developing customer advocates within your industry is essential for success. One of the hardest challenges BookStayGo faced was publicly-traded, global hotel tech companies’ resistance to technology partnerships, which included API access, to deliver mobile functionality to hotels.
Viko’s early hotel partners helped him overcome this challenge by demanding their existing hotel property management system partners, including Oracle Hospitality, allow BookStayGo to integrate with their API. Fostering such partnerships and advocacy through clients enabled BookStayGo to validate its mobile software technology for prospective clients, says Viko.
Many vertical SaaS companies within industries that are known technology adoption laggards, such as the hospitality industry, will inevitably face a Law of Diffusion effect, which requires a standardized go-to-market allocation for any product, Viko explained. Creating new markets requires you to educate existing markets, including content marketing, newsletters, local and regional events, and customer conferences.
Importantly, Viko advises to keep perspective when innovating. “Understand that you will hear more No’s than Yes’s, but that’s perfectly normal,” Viko explains, “You can not expect the entire market to buy your product the first time you introduce it to them.”
Creating new markets takes time and early traction often takes longer than you think it will. If you are passionate about what you are building and confident in the market opportunity, don’t quit! Founders need to be persistent, resilient and patient.
Our interview dove deeper on many of these ideas. If you’re interested, definitely read our full conversation below.
1. Why did you start the company? What was the inspiration?
My parents have been in the hotel industry since they came to America in the late 70’s, and I was raised in hotels my entire childhood, so naturally I returned to the industry and excelled in hotel development, construction and ownership during the real estate cycle from 2003 through 2009.
Post-Great Recession my focus turned to operations as the onslaught of online distribution innovation began to plague hotel owners and investors. In addition, as smartphones, and iPhones in particular, began to capture the attention of the consumer, it became apparent the best way to solve hotel owners and investors pain points with online distribution, as well as deliver a superior “10x” experience to consumers, would be to win the mobile platform with a mobile marketplace featuring mobile booking, mobile check-in with room selection and digital room keys. As Elon would say, that was (and still is) our “Master Plan”
From my operational experience having been raised in the industry, we started with mobile check-in & room selection — we were the first company in the world to digitize the check-in and room selection process through API integration in 2014. Since then, we have grown the product to include mobile room keys and mobile bookings.
2. You are now on a run rate of well over $1M in ARR. How much in ARR did you book as the CEO before you brought on your first sales hire? Was your first sales hire focused on prospecting, closing or both?
During my time at Cornell University School of Hotel Administration, Masters program, I was fortunate to connect with trustees and leading hotel ownership groups to secure our first batch of beta hotels to develop mobile check-in & room selection. We publicly launched in January 2015 with 15 hotels and quickly grew to 30 hotels, about $400K ARR, before our first sales hires. Our initial sales team hires were focused on prospecting and leading the customer through each sales stage, with founding team assistance for closing. You learn best through experience, when winning & losing the sale.
3. What did you do early on to hustle or be scrappy even if it wasn’t scalable long term?
Being a B2B tech-focused company in our earliest of days required us to hustle in the form of advocates. Our early hotel partners demanded their existing hotel tech partners, for example, Oracle Hospitality, allow us to integrate with their API to deliver room selection, mobile check-in and an entire suite of features directly to consumers in a native mobile app.
At that time, publicly-traded, global hotel technology companies had very little interest in partnering with ‘mobile-first startups’, much less granting us read/write access to their API. The early partnerships we formed allowed us to validate our technology to the global hotel software technology community and provides the basis for our continued thought leadership in the hotel industry as the only mobile marketplace offering mobile check-in with room selection and digital room keys.
4. How long did it take from idea to first revenue? How long from first revenue to $500K in ARR and beyond?
Ideation and building product: 2013 – 2014
Public Launch: January 2015
Hit the $500K mark: July to August 2015
It took about 24 to 30 months. Though the timeline for the idea is tricky, as it can go back to 2012 almost. Our development timeline is an idea that became a side project, which grew into a product, that ultimately became a company.
5. What are the top 3 products (sales, marketing, hiring, productivity, etc.) that you use for your business and could not live without?
Hubspot, Salesforce and Slack.
6. What have been your biggest challenges so far?
You can lead a horse to water, but you can’t make them drink it. As obvious as mobile booking, mobile check-in with room selection, and digital room keys may sound to consumers, there is always a Law of Diffusion effect, which requires a standardized go-to-market allocation for any product. When you’re creating new markets, be prepared to educate the market, which includes content marketing, newsletters, local and regional events, and customer conferences.
Understand that you will hear more No’s than Yes’s, but that’s perfectly normal. You’re job as a seed stage or Series A company is to penetrate at least 2% of the market, the innovators, up to 20% of the market, the early adopters, at best. You can not expect the entire market to buy your product the first time you introduce it to them. If some people still don’t buy iPhones — why would your product be bought the first time, by every customer?
7. Any other advice you would give to founders just getting started with a SaaS company?
This is my first software SaaS company — so here’s a tip I read from Jason Lemkin some time ago that I can confirm in regards to creating new markets and SaaS traction/early success:
SaaS companies usually take even longer to gain “traction,” but once the SaaS recurring revenue — with 80%+ gross margin! — starts to compound, the process becomes much more rewarding.
My advice: I don’t wish (SaaS) entrepreneurs good luck. I tell them don’t quit.