I’ve seen it a dozen times, and it’s always the same story. A founder has a brilliant idea for a vertical SaaS company. They’ve identified a niche, they’ve talked to potential customers, and they’ve even built a solid MVP. But then they hit a wall. Growth stagnates. They’re burning through cash, and they can’t seem to get any traction. They’ve fallen into the classic trap of thinking that a good product is enough. It’s not. Not even close.
I learned this the hard way. My first company, MovieLaLa, was a social network for movie lovers. We had a great product, a passionate user base, and we were even featured in TechCrunch. But we couldn’t figure out how to monetize it. We were burning through cash, and I was on the verge of giving up. Then, we had a breakthrough. We realized that our data was incredibly valuable to movie studios. We pivoted to a B2B model, and within a year, we were acquired by Gfycat.
That experience taught me a valuable lesson: in SaaS, the product is only one part of the equation. You also need a powerful growth engine. A flywheel, to be exact. For my next company, RemoteTeam, we focused on building a self-sustaining growth engine from day one. We built a flywheel that allowed us to acquire customers, keep them happy, and turn them into advocates for our brand. It wasn’t easy, but it worked. We grew to a billion-dollar valuation in five years and were acquired by Gusto.
So, I’m going to share my playbook for building a vertical SaaS flywheel. These are the 10 most brutal, non-obvious lessons I learned about growth, leadership, and survival. This isn’t your typical startup advice. This is the raw, unfiltered truth from the trenches.
1. Niche Down Until it Hurts
The first mistake I see founders make is going too broad. They try to be everything to everyone, and they end up being nothing to no one. In vertical SaaS, you need to do the opposite. You need to niche down until it hurts. Find a small, underserved market and build a product that solves a very specific problem for them. I’m talking about a market so small that your friends and investors will think you’re crazy.
For RemoteTeam, we started by focusing on a very specific niche: remote companies with 10-50 employees that were hiring internationally. We knew that this was a market that was underserved by the big players like ADP and Gusto. We built a product that was tailored to their specific needs, and we were able to get a foothold in the market. Once we had established ourselves in that niche, we were able to expand into other markets. But we never would have gotten there if we hadn’t started small.
2. Build a Moat with Data
In vertical SaaS, data is your most valuable asset. It’s what allows you to build a moat around your business and protect yourself from competitors. The more data you have, the smarter your product becomes, and the harder it is for someone to replicate what you’ve built. It becomes a virtuous cycle.
At RemoteTeam, we collected a ton of data on how remote teams work. We used this data to build features that helped our customers be more productive and efficient. For example, we built a feature that automatically scheduled meetings based on people’s time zones and availability, and even suggested the best times for cross-functional teams to collaborate. This was a huge time-saver for our customers, and it was something that our competitors couldn’t easily replicate.
3. Your First 10 Customers are Your Sales Team
In the early days of a startup, you don’t need a sales team. You are the sales team. You need to be out there talking to customers, getting feedback, and closing deals. Your first 10 customers are your most important customers. They’re the ones who are going to give you the feedback you need to build a great product. They’re also the ones who are going to be your biggest advocates.
I personally closed our first 50 customers at RemoteTeam. I would get on the phone with them, I would do demos, and I would answer their questions. It was a lot of work, but it was worth it. I learned so much about our customers and our market. And those first 50 customers became our biggest fans. They were the ones who helped us spread the word about RemoteTeam and get our first 1,000 customers. I still remember the name of our first paying customer: a small design agency in London.
4. Pricing is a Growth Lever, Not a Cost Center
Most founders think of pricing as a cost center. They set their prices based on what their competitors are charging, and they never think about it again. That’s a huge mistake. Pricing is a growth lever, not a cost center. You should be constantly testing and iterating on your pricing to find the sweet spot that maximizes your revenue and your growth.
At RemoteTeam, we tested a bunch of different pricing models. We tested per-seat pricing, we tested usage-based pricing, and we tested a freemium model. We eventually landed on a model that was a combination of all three. It was a bit complicated, but it worked. It allowed us to capture the full value of our product, and it helped us grow to a billion-dollar valuation. For example, we had a free plan for small teams, a per-seat plan for growing teams, and a usage-based plan for large enterprises.
5. The Best Marketing is a Great Product
You can spend all the money in the world on marketing, but if you have a crappy product, it’s not going to matter. The best marketing is a great product. A product that people love to use. A product that solves a real problem for them. A product that they can’t live without.
At RemoteTeam, we focused on building a product that was so good, people would tell their friends about it. We obsessed over every detail of the user experience. We made sure that the product was easy to use, that it was reliable, and that it was beautiful. And it worked. Our customers became our biggest advocates. They were the ones who helped us spread the word about RemoteTeam and get our first 1,000 customers. We had a waiting list of over 10,000 companies before we even launched.
6. Build a Community, Not a Customer Base
In vertical SaaS, you’re not just selling a product. You’re selling a solution to a problem. You’re selling a way of life. You’re selling a community. The more you can do to build a community around your product, the more successful you’ll be.
At RemoteTeam, we built a community of remote leaders. We hosted events, we created content, and we built a Slack community where people could connect with each other and share best practices. This was a huge value-add for our customers, and it helped us build a loyal following. It also helped us get a ton of great feedback on our product. We even had a customer who met their co-founder in our Slack community.
7. Your Team is Your Most Important Product
As a founder, you’re only as good as your team. You need to hire people who are smarter than you, who are more talented than you, and who are more passionate than you. You need to create a culture where people can do their best work. And you need to give them the autonomy to make decisions and take risks. I always tell my team: I’d rather you ask for forgiveness than for permission.
I’m incredibly proud of the team we built at RemoteTeam. We had some of the smartest, most talented, and most passionate people I’ve ever worked with. They were the ones who built our product, who sold our product, and who supported our customers. They were the ones who made RemoteTeam a success. We had a policy of hiring for culture fit first, and for skills second. It worked.
8. Don’t Be Afraid to Break Things
In a startup, you need to be constantly experimenting. You need to be trying new things, and you need to be willing to fail. If you’re not breaking things, you’re not moving fast enough. As Reid Hoffman says, ‘If you’re not embarrassed by the first version of your product, you’ve launched too late.’
At RemoteTeam, we were constantly running experiments. We were testing new features, we were testing new pricing models, and we were testing new marketing channels. Some of our experiments failed, but some of them were huge successes. And the ones that were successful were the ones that helped us grow to a billion-dollar valuation. For example, we once ran an experiment where we offered a lifetime deal for our product. It was a huge success, and it helped us get a ton of cash in the bank.
9. The CEO’s Job is to Keep the Company Alive
As a founder, you have one job: to keep the company alive. That’s it. You need to make sure that you have enough cash in the bank to make payroll. You need to make sure that you’re not burning through cash too quickly. And you need to make sure that you have a plan to get to profitability.
I’ve seen too many founders get distracted by shiny objects. They get caught up in the hype of a new technology, or they get obsessed with a new feature that no one wants. But at the end of the day, none of that matters if you can’t keep the company alive. Your number one priority should always be to make sure that you have enough cash to survive. Cash is king.
10. Enjoy the Ride
Building a startup is a marathon, not a sprint. It’s a long, hard journey with a lot of ups and downs. There will be times when you want to give up. There will be times when you think you’re going to fail. But if you’re passionate about what you’re doing, and if you have a great team around you, you’ll be able to get through it. And when you finally reach the finish line, it will be one of the most rewarding experiences of your life. So, enjoy the ride.
I wouldn’t trade my experience at RemoteTeam for anything. It was the hardest thing I’ve ever done, but it was also the most rewarding. I learned so much about myself, about business, and about life. And I’m incredibly grateful for the opportunity to have been a part of it. I hope these lessons will help you on your own journey.
Frequently Asked Questions
What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 200+ startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.
How can I apply this thinking to my own situation?
Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.
What's the most common pushback you get on this?
People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.