Felicis Ventures partners share the four pillars of scaling a SaaS startup – TechCrunch

For investors, a will almost always be above the rest: your TAM (total addressable market) must exceed at least $1 billion.

But alongside a massive addressable market, investors are also looking to see that you have existing customers, even if few, who really like your product.

However, communicating the steps between your existing users (wedge) and your long-term potential as a business (TAM) can be incredibly tricky.

At TechCrunch Early Stage this month, we sat down with Viviana Faga and Niki Pezeshki, partners at Felicis Ventures, to talk about scaling, product-market fit, and why it’s crucial to to be “10 times better” than the incumbents.

Product-market fit

Startups must be able to demonstrate that they have users who love their product. But what does “love” really mean?

Faga and Pezeshki believe startups need a framework to measure their initial push to a niche audience. They suggest conducting a survey with your first cohort of users to ask them how they would feel if the product no longer existed. Anything below the 50% threshold – in other words, one in two users would be upset if this product ceased to exist – is not enough to take the next step.

Even then, they caution, it’s important to stay focused on the niche you’re building for before moving on.

Faga described a founder she currently works with who is building in the beauty space, and they are interested in applying what they are building to the CPG market.

“We had to take a step back and say, ‘Let’s own beauty,'” she explained. “Let’s do this very well. Let’s say it again. Let’s scale it. And then it gives you the right to move into the CPG space, because what will happen is that the CPG space might take you in a totally different direction. You can eventually get there, but your own beauty first. Do it really well. This gives you that graph which is up and to the right and which a lot of investors are excited about. »

While staying focused on your niche and striving to hit the 50% threshold of users who couldn’t go on without your product, start paying close attention to your Net Promoter Score (NPS). Using this, find the group of users who give your product a nine out of 10 rating and charge for it. If your NPS drops to two, you are not suitable for the product market.

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