[00:00:00] Alexander Theuma: It's kind of hard to do something completely new, but there are still things out there that haven't been satisfied, right? And people are finding them, and these are the things that are interesting, but what's less interesting and harder to raise from a venture standpoint is if you're just coming in and doing something that has a thousand competitors, and you're just doing the same thing.

[00:00:25] Andrew Michael: This is Churn.FM,  the podcast for subscription economy pros. Each week, we hear how the world's fastest-growing companies are tackling churn and using retention to fuel their growth.

[00:00:42] VO: How do you build a habit-forming product? We crossed over that magic threshold to negative churn. You need to invest in customer success. It always comes down to retention and engagement. Completely boosts strategy, and growing.

[00:00:56] Andrew Michael: Hey, Alex, welcome to the show.

[00:01:08] Alexander Theuma: Hey, good to be here, Andrew. Thanks for having me. Good to see you.

[00:01:10] Andrew Michael: It's great to have you for the listeners. Alex is the general partner at BackFuture VC fund and the founder of SaaStock, helping B2B SaaS founders on the journey to 10 million ARR. Alex is also the podcast host of the SaaS Revolution Show, prior to back future and SaaStock, Alex was the founder and editor of chief of SaaScribe. So my first question for you today is, what is it about SaaS that has driven you to build your life around it?

[00:01:36] Alexander Theuma: I kind of fell into it a little bit. I had 11 years of selling, let's say, IT, and then sort cloud computing, equipment, and then software. Initially, it was kind of on-premise stuff, and then moved into the cloud. And sort of like in the latter years of those 11 years, I was just getting a little bit more interested by all the new cloud and SaaS applications that were coming through. I wanted to be better at my job in sales and so wanted to learn more about it. And I thought one way that I could become better at my job and achieve more sales was to start blogging about it and try to become a trusted advisor to some of the large companies that were either with my accounts or that I was looking to sell to.

[00:02:18] Alexander Theuma: But very quickly, when I was looking into this and I'd never been a blogger, never been really a writer before, and also I didn't know huge amounts about SaaS, right? So there's a lot of limitations there in terms of how successful this could be. Again, just with the context, I wasn't thinking about of this is going to be something that's going to turn into SaaS. I was like, how will this just help me within my current job? But as I was kind of like looking into it, I sort of realized that there were a few blogs out there, you know, in SaaS and generally they were written by vendors, you know, like HubSpot that was, you know, had a particular angle and also their objective was that, you know, they're looking to get customers, you know, from what they were doing. I felt like I saw that actually there wasn't really a blog that was coming from like a community space, community voice, a neutral standpoint, no objectives, nothing to sell. And I thought, oh, this could be interesting, right? Maybe there's an opportunity there.

[00:03:15] Alexander Theuma: And also with the context, there is that I always wanted to be an entrepreneur, always had entrepreneurial ideas, right? So I think I just kind of quickly saw what I thought was an opportunity and started this blog, SaaScribe. But with my limitations of not being a writer, never having run a SaaS company, who am I to tell people, this is how you do it. So I positioned myself as an editor and reached out to a bunch of people who were at the cold face, knew what they were talking about. And I asked them to contribute content to SaaScribe. And lo and behold, to my surprise, pretty much everybody said yes.  And they didn't ask for payment. And so they got brought into the why of what we were doing in this community blog to help SaaS companies grow very quickly and this kind of like took off.

[00:04:06] Alexander Theuma: So then I got excited about this. So this is like early 2015. And then I started my podcast, The SaaS Revolution Show. And I guess from there, we sort of built into it and started connecting with SaaS founders. I started doing in-person SaaS meetups. And I just kind of found that I really loved this space. And it was more exciting than what I was doing before. Aren't SaaS founders great people? And everybody's paid forward.

[00:04:33] Alexander Theuma: They're wanting to learn what was essentially a craft business, right? And they're just, everybody was sharing, and we were adding value. And from there, that just kind of built, and that sort of proceeded. This was about maybe a year before we ran the SaaS conference. And again, never having run a conference before, but we kind of pulled it together, and our timing was good.

[00:04:57] Alexander Theuma: The first one was in September 2016 and really just being on site in Dublin at the RDS at that first SaaS conference, seeing people flying in from 34 different countries and just the value they were getting just from talking to each other and people that they'd never met, you know, kind of showed to me that what I was doing really mattered, right? And ever since then, you know, 10 years later, it still matters, right? It matters a lot. We change people's lives, companies' lives. And for me to have found a job and a company you know, created a company that creates so much value. You know that, that's why I'm now, you know, for 10 years, you know, eating, sleeping, breathing in the SaaS world.

[00:05:41] Andrew Michael: And so like the, obviously, I think SaaStock is very well known in the SaaS space. It's one of the leading events, and to hear that that sort of came out of just this initial wanting to learn for industry, provide value to begin with, and then things slowly evolving over time. It's actually like, I think a lot of podcasts and a lot of blogs sort of end up evolving, like starting from this point of just curiosity and wanting to learn and then evolve into something a lot bigger. And that sounds like exactly what's happened for you at SaaStock. I never knew that the podcast came before the event. I always thought it was somehow related

[00:06:17] Alexander Theuma: Yeah, no, no, no. That's been doing the podcast over 10 years, and it preceded the event almost by sort of like 12 months. So yeah, just keep it on going with that.

[00:06:27] Andrew Michael: And you're still going with the show. Haven't actually checked lately the latest episode, but 10 years is a long time.

[00:06:33] Alexander Theuma: Of course, still going and 10 years is a long time, right? And I do like podcasting and it's been a real crucial part of the SaaStock journey, but my own journey as well, as you said, you talk about curiosity, right? I've learned so much, and I'm sure I was pretty terrible for the first few years, and I've just gotten a bit better, sort of now in terms of podcasting skills, but I've interviewed so many amazing founders. I felt I had imposter syndrome for a long time and less so these days, but having run the SaaS Revolution show for 10 years, now I often think about, well, that's been going for 10 years. Is it time for something new, different podcast, and different angle?

[00:07:18] Alexander Theuma: You know I also have, whilst I'm still very much in love with SaaS myself personally as an entrepreneur and what I've learned over the years as an entrepreneur, there are many different areas that I'm really interested in, including let's say health and wellbeing, know, like biohacking and stuff like that. And I've thought about, you know, should I branch out? But I've only got so much time at the moment, and that time, given that I'm VC and CEO of SaaStock, I'm not sure where I could fit that in.

[00:07:46] Andrew Michael: Yeah. It doesn't sound like there's much time in that schedule to fit another podcast. I've also contemplated, so ChurnFM is being open for now for six years or almost six years, I think. And also, it's like some point of me is like, ah, is it time to maybe try something else? Cause I think it's that genuine curiosity point that sort of got me hooked, and the amount of learning has been next to none. And like for me, what I'll often treat is like, might be going through certain challenges in a business or in specific things, and I'll just try to find the best people in the world at that specific topic and interview them.

[00:08:15] Andrew Michael: So a lot of times my questions are even a little bit selfish in a way, but hopefully they provide value because they're real use cases of what's happening at a time in a specific company. So obviously, you've been in SaaS now for a very long time. You have probably one of the best views, I would say, of the changing landscape and how things are adapting over time. Where like a different, I'd probably even like a turning point in SaaS at this stage with the way things have been going on.

[00:08:42] Andrew Michael: How have you seen the market evolve over the last one to two years? And what are some of like maybe the biggest surprises that you're seeing?

[00:08:49] Alexander Theuma: SaaStock has been very successful and been a growth business, you know, for the majority of the 10 years, and because there's been great tailwinds in the market, and you know, VCs have loved the SaaS model, right? But over the last two years, ‘23, ‘24, you know, the market's been pretty, pretty bad, right? You know, we've had, since the start of the collapse of Silicon Valley Bank and so on, just the macro and economic environment, what's going on in the world. And just additionally, just seeing a lot of VCs just holding onto their cash after the crazy years of COVID and this era as such. And so the last couple of years have been not so great. When I've seen founders come, I think it was 2023, SaaStock 2023.

[00:09:38] Alexander Theuma: And, you know, the very first event, so we do a lot of side events, and the founders, the founders that I know really well, were like coming into the event and how downbeat, downcast they were. They couldn't sell anything. Marketing budgets were closed. I was almost, and I shouldn't have been taken aback a little bit about how downbeat everybody was compared to like the previous year. And then like last year, you know, I just saw again, a lot of founders and through, you know, all my interactions at various different events. Really kind of struggling.

[00:10:09] Alexander Theuma: Some were growing, but the majority were not growing. There was, like you know, flat growth. We can't grow. We're getting this many new customers, but we've also got such high churn, and getting tired of running the businesses. The talk of M&A was really just rising in terms of people just wanting to sell their business. Again, think just in general, the mood wasn't super high.

[00:10:33] Alexander Theuma: And we still had like, we had headwinds in the market, you know, effectively for two years.  And so it felt that there was definitely this turning point in SaaS where it wasn't all gravy and VCs had started to lose interest. And also on the VC side, you know, a lot of VCs were, I would say, like struggling, struggling to raise funds. You know, there were just a lot less capital in the market, and SaaS wasn't really the exciting kind of thing anymore.

[00:11:05] Alexander Theuma: What we've kind of seen is, I guess, kind of recently,  and with AI, know, generative AI, now, know, agent AI coming in, whilst there was some talk about, you know, AI, is it going to be killing SaaS? I think ultimately,  it is right now,  perhaps saving the VC industry somewhat. They're in another perhaps sort of bubble, but you know, huge amounts of money are now back into the market being thrown at AI companies. I think everybody must know by now what an incredible innovation AI is, how cool all the generative AI apps are, how it really enables us, if we use them in the right way, to become more productive and superhuman. Ultimately, a lot of these AI companies they're really SaaS companies and the SaaS model.

[00:11:54] Alexander Theuma: It's breathed new life into the SaaS industry, it's made SaaS applications. So if we look at AI, you've got your foundational models, but you also got the application layer, right? And effectively, almost everything at the application layer is SaaS, right? And they're all just that much better to use than previously. And it's helping so many companies. And I think right now it's an exciting time. We're seeing Tailwinds certainly in AI, it's kind of, you know, it's blending into SaaS, right? Because, effectively, all new SaaS companies are AI-first today. If they're not, then I'm not sure what's up there, but effectively, it's just breathe new life into the market. So it's an exciting time. So many more new companies are being born. So much more money is in the market. I feel like it's a boom time again.

[00:12:50] Andrew Michael: I think it's very interesting what's been happening and what's been changing. I find like it's interesting to hear as well from your perspective, where you heard over the last, like previous two years, a lot more founders like wanting to sell. And I think the sad thing is that like business aren't sold, they're bought. I think I like that sentiment in the market is a little bit worrying as well, when people start to feel all these pressures. AI came along, it did sort of like boost life into it. It gave VCs another place to spend money.

[00:13:21] Andrew Michael: My concern or like still unanswered question, I guess, in my mind is how does the VC model evolve now in this generic? Cause there's obviously like a certain number of companies where you can pour this money into in the foundational level, and a lot of has gone there. At the application level, though, I think at least at the early stage, investing like Seed and Series A, you need a lot less capital now to get started. Like before, the biggest expense was engineering, and was hiring engineers. Whereas now you can get by with so much further with just a founding team. And I'm keen to hear your perspective on this, like how you see this evolving, like both from a VC side, but also from what you're hearing from other founders and how they're approaching getting off the ground these days.

[00:14:05] Alexander Theuma: I think there's a couple of things. So the barriers to entry for building a SaaS company, I think, even sort of pre-AI, have just been getting lower and lower, right? You know, kind of each, each year, and they're even lower now, right? It's just easier to build a much leaner, cheaper startup from the ground up. So we are going to see, and it's already happening, a lot more bootstrap businesses out there. And I think that's a good thing. So I think that's one thing. And then the AI companies that we'll be raising, they have to be super good. And then the ones that are going to get VC money, and that's going to be very competitive. And then what we're seeing also is that whilst you said it's correct that you need less money, the companies that are raising venture are raising bigger pre-seed and seed rounds. We're seeing seed rounds at 10 million, where a few years ago,  the seed round was 2.5 million, maybe 3 million was a high seed round. That becomes very competitive and difficult because of the way that it's priced to enter.

[00:15:11] Alexander Theuma: I think for us at BackFuture, typically would be priced out of any of those super hot deals that are raising at that amount. So you would see the tier one VCs and index and Accel probably investing in a 10 million seed round, but everybody else probably couldn't afford to do so or would sit out. But it's not to say that there aren't good opportunities still to invest in, and that we're seeing. And for us at BackFuture also, we don't lead deals. I'm a solo GP. We co-invest only.

[00:15:42] Alexander Theuma: So we're writing smaller checks at Pre-Seed and Seed. And we're finding these new opportunities, very exciting deals, but just participating with smaller checks coming into those. But I think ultimately, even on the VC backside of things, we're seeing companies like Lovable, for instance, that have grown very quickly. I think there ARR, something like 20 million after four months or something like that,  insane growth.

[00:16:09] Alexander Theuma: And doing it whilst having raised venture capital, but with a much leaner team. So we'll just continue to see that. I think that AOA has enabled that, but we were also in the previous two years where we had this downturn, where the talk of capital efficiency was the mantra from VCs and run your company like a bootstrap business, right? Try and become profitable. I think ultimately that's sort of still there. That mindset is still there. Companies are seeing that they don't need to bloat the headcount; we don't need to hire two years out. They've seen how that's impacted companies like Planner and so on over the last few years. So everybody's going to try and operate leaner and with AI, and now we're seeing all the talk that's being shared on LinkedIn and so on, the CEOs and Toby from Shopify saying, well, look, before we hire anybody else, can we prove that AI can't do the job?

[00:17:04] Alexander Theuma: And there's going to be a lot of those not necessarily entry-level jobs, you know, whether it's SMB sales that could be done by agents, you know, customer service done by agents. So we'll be seeing a lot more leaner teams, but a lot more AI running or operating roles that could have been done by humans in the past.

[00:17:22] Andrew Michael: I think that's a little bit crazy. think definitely like the sticking lean, think probably like in the past, planetary metrics were like how many team members you had, and you were like a hundred or 200, 400 person started. Now I'd say like, probably the vanity metric or not even vanity, because in this case, it is a valuable metric is like your revenue per head. And the greater you can grow, that it seems to be like one of the North Stars nowadays of like these new startups that are emerging, which is like, how far can we go with these little resources as possible and build like a cash cow business in the same right. And I think it does, like you say, like pose a little bit of challenges at that earlier stage.

[00:18:00] Andrew Michael: And I think one of the things I've also started noticing a little bit now is like, VC is looking to shift more into M&A and consolidation and building sort of these like SaaS groups, I guess, if you want to call it something like that. How are you seeing this play out in the landscape? I don't know, it's maybe just my perception, but I'm seeing a few more of these popping up every day now.

[00:18:21] Alexander Theuma: Yeah, I think it's a fair point. So I guess VC is a form of private equity, right? And what we're seeing is a rise in private equity groups that are just acquiring SaaS companies, either finding that, as an example, there's a group or company called Canberra Partners. I think they are. They came to SaaS USA, I think, last year. They met User Flow, was this PLG has been bootstrap business. They got to 4 million in revenue with three employees. So great revenue per head. This was like pre-AI, they were running in that model. It was pretty good statistics. Canberra met them.

[00:19:06] Alexander Theuma: They also met Beamer, and they merged the two companies in a 60 million M&A deal. I think now the company will be operating under the brand's user flow and so on. We're seeing these examples, but I think ultimately the rise in more M&A deals of that sort, finding growth-stage SaaS companies and acquiring them, either like acquiring a stake or a majority stake or merging them with another company. That is on the up and up. Additionally, as you mentioned, there are now these groups like SaaS Group and others that are doing almost like this Andrew Wilkinson type model, where they have a holding company and then they're just acquiring lots of companies and putting in an operating system within that and growing this way. I think this is on the rise as well.

[00:19:54] Alexander Theuma: Interestingly, I guess like for us or for SaaStock, historically, we've been known as the place to connect founders and VCs. We're very strong on the venture capital front, very strong on the founder front, and SaaStock is not only, also a great place to get all your VC meetings done across two days.

[00:20:17] Alexander Theuma: But now with this rise in private equity, this is, I would say, almost a whole new market that we haven't really targeted but actually is probably more on the up and up than VC, right? So I think we'll be seeing a lot more of that in our space, which then I think is reflective of the overall market as well.

[00:20:38] Andrew Michael: I think it's very interesting because I think there's like a few other things that come as a result of this is one with this consolidation and acquisition play that's happening now at the moment. I think more and more companies are becoming more of the same. So I think you can pick any industry, but let's say like, I know the like product analytics space well from our time like at Hotjar, it feels almost like every company in that space that used to be in their own lane now is sort of merging and everybody's doing heat maps, recordings, product analytics, like tours and slowly everything's becoming the same. So in that light, I think one it's like, it becomes a little bit difficult, let's say for newer entrants to enter this market because it's a red ocean in to one degree. And then the other side of things is like typically in the past when you used to say...we used to get questions from VCs like, "What if Google does this" or "what if Apple does this?" And the answer would be like, "They're a large organization. There's no way they're going to do it. They don't have time.", whatever. Like we have focus, these sort of mantras.

[00:21:38] Andrew Michael: I don't think that's no longer the case anymore because now it isn't like the time isn't an issue for these larger companies and they're also moving at more of a breakneck speed, so I'm keen to see like how you view like competition and startups moving into markets. Like, how are you evaluating opportunities when they come to you and are speaking to you? And maybe also what are you seeing from other founders in this space and their concerns in this area?

[00:22:02] Alexander Theuma: With the sort of BackFuture has on, right? When we... We've done 13 investments, right? And as you said, there are more and more SaaS companies out there than ever, very hard to do something new that hasn't been done - you know, to create a new market. But it is something that we try and look for, right? You know, in terms of the way we invest. I mean, first of all, it's pre-seed and seed stage, right? So there isn't a lot of metrics there to be judged on. So ultimately you're backing the founder. "Is this an exceptional founder? Can they build something incredible?" If they're pre-seed likely, they could go through a couple of pivots, right? So that initial idea may not be the one that actually kind of breaks out. But we are, and we have done a number of investments where people are coming up with something innovative that hasn't been done before and that's really hard to find. So if somebody comes to us with like, "Okay, well, this is another software review platform and you know, there are already a whole bunch out there and there are market leaders." It's generally not interesting for us as something for us to invest in.

[00:23:10] Alexander Theuma: So we do try and look for something a little bit new whether it is a new market, which is really hard, or they're entering an existing market but doing something in a completely new and challenging way. So, for us, we look at that. So, first of all, backing: "You know, is this an incredible founder? Are they doing something brand new that hasn't been done before, which is really hard to find or are they entering this existing market and doing it in an entirely new way?" We look at that. Then we have a look at, in terms of the vision, is there a vision big enough, but one that we can also get behind, right? So we've seen a lot of great visions and big visions, but if it's things that I don't really get or I can't really feel like I can support, then again, for us, it's not something that we would participate in. That's the way that we look at it. As you say, just the market and each vertical within the market is just more and more saturated, very hard to break out within that as a new player.

[00:24:08] Alexander Theuma: So in that sense, it does become tougher and tougher and it's hard to do something completely new, but there are still things out there that haven't been SaaS-ified, right? And people are finding them and these are the things that are interesting, but what's less interesting and harder to raise from a venture standpoint is if you're just coming in and doing something that you know has a thousand competitors and you're just doing the same thing.

[00:24:33] Andrew Michael: Yeah, which always was the case, but it feels almost more now like we're going back to the original roots of VC and being forced to like in a way that the unit economics won't make sense if you're like entering into a space where tomorrow you can be copied and things can be changed. You really need to be able to stand out. I think for me in this next wave, there's only really like three things that you can stand out. I'm keen to hear if there's anything more on your side, but I think it's like brand distribution and user experience are still like the things that we have control on for now. I think that's going to change in the future, but in the past it was like engineering and product and stuff. But I think a lot of this is becoming like resolved now, but still like that crisp user experience. It creates a lot for users, like that brand affiliation that you get and then if you have a way that you have an unfair advantage with distribution, I think those are the things for me that feels like...are there any other things that you're looking at or maybe you would disagree with those three things?

[00:25:31] Alexander Theuma: No, I don't disagree, right? As you said, it's kind of less about the... People expect the table stakes are like, you've got to have a good product, right? But it's less about that now - as you said, it's more around the distribution, right? And the success of the business and I see and I'm sure you see - and I won't name names - average products with, you know, pretty average UI/UX but excellent distribution, really excellent brand thriving and you know, kind of winning in the market. So it's not always the best product that wins. There's a whole host of those examples kind of out there. So distribution is key. If you can nail that, then you know, this is a path to winning and we would provide an example, maybe that can sort of like speak about, let's say on the brand side of things where they've always probably, you know, had a good product, but you know, it's like if we look at Intercom, for instance, they've been around a long time, I don't know, like 12 years or something like that, a little bit longer than SaaStock. And I think they've always been like, big on product, strong on product.

[00:26:31] Alexander Theuma: But I remembered in the early days of SaaStock and something that I thought was really interesting about Intercom was that they had this blog that a lot of people in SaaS were reading this blog and DesTrain was writing a lot of the content and they invested heavily in that. Then they got an editor of the blog and they built a real brand out of it. And they started doing all these events and going on tour and you saw these Intercom fans, right? Ultimately, okay, back then it wasn't just a customer service product, right? It was a multi-functional kind of product, but they had a brand and they had super fans, right? People excited. I remember queuing up to one of their events in London and just all these fans there looking to see Des Traynor and so on and so forth.  And then I think for a while they lost their way a little bit. They didn't focus on that as much and I kind of remember not seeing their content or maybe just because the market just got so saturated in content marketing that they stood out less.

[00:27:30] Alexander Theuma: But what I've noticed and observed of late, you know, Des is getting back to blogging, right? know, getting back to doing their content in a newer way, but with some parallels as to how they used to do it and kind of going back to their roots and building that up again and then doing these Intercom events and really focusing on brand. And ultimately now it's a customer service product. But the way that maybe they're winning over, say Zendesk or trying to win over Zendesk is building that brand and just an interesting use case to see.

[00:28:01] Andrew Michael: Yeah. I think the Intercom is an interesting cause. I definitely feel like I think they built this cult-like fandom as well, especially with early stage startups and they were very friendly. I think for me it felt like where Intercom lost the plot was when they started going super aggressive on their pricing and packaging and alienating like the market where they got started in the brand that they'd built. And I think they pushed things too far, like I love any company, I'd say probably their pricing and packaging was the most aggressive jump from where it started to where it is today, especially with the audience. And that sort of felt like then they started disappearing into obscurity because the other like competitors started emerging. I'm also keen then on the distribution front, because something like I've also been thinking a little bit about is that like, if money becomes less of the currency, that's important to startups and distribution is like one of the edges you can have, I feel like there's probably a space in the VC market for people with big distribution to be able to use that as a currency along with capital.

[00:29:03] Andrew Michael: So like you're a good example in this case where you have SaaStock, you have access to thousands of SaaS founders. And this is like an edge, I think that you'd probably say that you have to provide, and I'm not sure how you use it, but do you see this? Have you seen this? I know if I'm looking now, cause I also do a few investments myself. And whenever I see cap tables, it's always like the same familiar people, same familiar faces. Like there's definitely like a group of angels that work very closely together because they're always on the same cap tables and they tend to have quite a lot of distribution as well through their content that they create and these sort of things. So can you see like, is this a model that you've seen like…

[00:29:41] Alexander Theuma: A hundred percent. Right. Uh, I think if you, you, you mentioned seeing these kinds of familiar names on the cap tables, right? And what you'll typically see is that a particular startup will have a lead investor, but they'll have multiple people on the cap table. They'll have a lead investor, have a couple of other VCs, and then they'll reserve strategically an allocation for people that are sort of relevant to them and whether it's companies or people with distribution, other people that can add value in other ways, right? But there will be this strategic portion on the cap table that is reserved and often, as you said, you'll see some familiar names around that. And for us, I think this was one of the reasons since 2018, I've been encouraged to build a VC fund, right? Go out and start a VC fund and it took me until really 2023 to really think that I can do this and focus on this.

[00:30:08] Andrew Michael: Perfect timing.

[00:30:09]  Alexander Theuma: Now, yeah, it was the worst timing. But ultimately, if you look at it and like what is our edge or what is BackFuture's edge, right? One is SaaStock and it is our distribution, and  not a lot of VCs have that. We built it organically and then built a VC fund on the back of that rather than building a VC fund and then trying to build something like SaaStock, which a lot of VCs don't necessarily do. So we have that and it is attractive to some, but not all of the startups that we've invested in. And in terms of like, how do we support with that? It's also not necessarily the easiest. There are some straightforward things, but ultimately if we think about we invest in pre-seed companies and then a lot of them may want to come on the podcast, but actually, you know, they haven't really built anything yet. And then what we want to share on the podcast is stories from founders that have built great companies.

[00:31:31] Alexander Theuma: And so they're not quite really at that mark yet. So whilst it's interesting that we have a podcast, it is also quite challenging perhaps to get somebody at that stage to come on and share something. And similarly, we do get folks that want to speak at the conference and we're like, "Okay, well, you're a pre-seed seed stage company and we're founders that are building a hundred million dollar companies on the stage and again, just thinking about how that makes sense." But another edge that we have from our LP base is that they're pretty much all SaaS founders or operators, there's a few VCs within our LP base. We've got about 55 LPs at the moment, some quite familiar names. And so with that, that is  attractive. It's becoming a little bit more common now that a lot of VC funds will just have a lot of great LPs on there. But for us, we have the SaaStock platform, we have our LP base, which is a network in itself that can help our portfolio companies.

[00:32:28] Alexander Theuma: We have me as well. I have my own personal, I guess, sort of network and distribution, and we find that the founders that come onto BackFuture like the fact that I'm a founder myself and that we're speaking founder to founder and that sort of resonates as well.  But in general, there is this trend where folks that have a lot of distribution, a lot of network are finding that they have an opportunity to start a fund and yeah, like that's growing or they'll just be like strategic angels on a cap table.

[00:33:04] Alexander Theuma: It's definitely interesting because I think like both sides, as a creator with a podcast, I've had discussions as well over the last couple of years where people said, "Would you want to do this? Like, we'd be interested to work with you on it." It wasn't, I think the timing or like an interest for me then at some points maybe, but I think the inverse as well as like, if I was starting a company again today, I would think like, do I want to go get VC money or would I rather try to find like seven or eight, like very good influences in my space and say to them, "Hey, I'm raising money but instead of capital, I want distribution." and like working out a deal that way to say, "Okay, this is the thing and you get investments in the startup, whatever." So it's not very well-structured today and I think for most creators as well, they would be like, 'Ah, like... I just want the cash." Like a startup so extremely risky and stuff that that's not their model. But I think there probably is something in that finding a good way for this work to make it seamless, that you can enable this distribution through it.

[00:34:01] Alexander Theuma: I have liked the thinking that there's probably a model there where people would want to opt in and say, "Okay, yes, I'll give you X number of hours, whatever, from my distribution or thing and that would be my contribution as an investment or whatever." But it's been something that's been on my mind.

[00:34:15] Andrew Michael: I want to ask a couple of questions I ask every guest because I think we're almost up on time here, yes. First question is, and this is specifically, we haven't really talked much about channel retention today but I think in the context of the show and the SaaS evolving landscape, it obviously has a big impact on channel retention. But what's one thing that you know today about channel retention that you wish you knew when you got started with your career?

[00:34:35] Alexander Theuma: From my own personal SaaStock perspective,  or when  looking at the lens for SaaS companies?

[00:34:43] Andrew Michael: Up to you. How do you want to take it?

[00:34:44] Alexander Theuma: Yeah. Okay, well, I'll look at it from the SaaStock perspective, right? Because we have sponsors  that exhibit  at our conferences and there are certain benchmarks in terms of retention rates, which we strive to get to, but it's always very difficult around that. I think what I know now and what we do now, and actually there's probably many things, but just one thing is that in the past, we would have sponsors that you always get each year, somebody that's looking just to test out. We haven't done this conference before. We sell to CFOs of companies that are over... I don't know, 500 people, right? We know that this is not the best fit. This is not our ideal ICP. But we would take the money and lo and behold, that company would churn the next year and affect our churn rates. So think, whilst it is hard to do for a startup, you've got somebody that's offering you money.

[00:35:47] Andrew Michael: You take it?

[00:35:49] Alexander Theuma: You often take it and then it affects the churn because you don't deliver the value to them. So I think we've learned just to kind of get better at that and to say, "You know, this is not the right fit for you." Certainly in the past. Now we've changed our products and our model sort of this year, which is more focused around meetings and more connecting. So more focus on quality over quantity and getting you in front of 10 of the right people instead of having 200 people that are not the right people come up to your booth. And so we've got a better way of managing this now.

[00:36:19] Andrew Michael: I'd say that definitely like the ICP sort of thing at the early stage. In the beginning, I was like, very fair value. "Oh, you should only like have your best customers, best for the customer." I think in the early stages, like you just need that inkling to start the fire. So I like the analogy as well. Like you over slowly over time, you'd like you'd start out with less than ideal and you'll burn through that a lot faster, but you then start to figure out who the ideal is, which tend to be the bigger logs that keep the fire going. And there is a necessity at the early stage, but then later as you evolve, you really need to narrow in focus because at some point it starts to cost you more than you're making. But in the early days, it really drives the revenue.

[00:36:56] Alexander Theuma: There's a very well-known SaaS company that I know that told me this story that one of their biggest customers that represented a huge amount of their overall revenue just wasn't the best fit for them, but they took the money and then in the end it churned and they lost like 30% of their revenue or something like that. They wish they hadn't done it, but they took the money like we were.

[00:37:18] Andrew Michael: Yeah, because it costs. Because then it's support and product requests and changes and like it impacts the whole business. But like, when you don't have a choice in the early days, you're just like, "Yes, let's take this and then figure out the next hurdle when we get there." Maybe last question then for today is... We'll take it in the context maybe of founders looking to raise capital today in the markets. What's one thing that founders are not asking you, but you wish they would?

[00:37:48] Alexander Theuma: Not everybody that we have or like I have a call with, they can often come in and you know, just kind of go into like pitching themselves, pitching their product, but not always like, you know, really asking about, "Why take BackFuture's money?", right? I think the good ones do, but I think we also get a lot and even because we have a process of... I really come in at the final stage. I'm monitoring throughout. I've got a colleague that's having the initial calls, taking the companies through, and I come in at the final stage and it's suddenly like, "Yes or no?" But really just understanding beyond the money, why should they work with BackFuture or take our money?

[00:38:32] Alexander Theuma: I don't know what the percentage is, whether it's kind of like 50-50, but I think like sometimes these calls and the time we have on the calls just get taken too much on them and their products and kind of less about actually that the "Why BackFuture?"

[00:38:45] Andrew Michael: Flipping it on you, yeah.

[00:38:46] Alexander Theuma: Yeah, exactly.

[00:38:48] Andrew Michael: They are still in the selling mode versus closing mode. Yeah, definitely. I think from my side as well, I think because we were chatting recently about [inaudible] raise capital again and stuff. I was like, "At this point it doesn't feel like it would be same, would need to be very strategic investment to like want to take money." At least at the early stages now to get to that initial product market fit and asking those questions. And I think it becomes critical in these meetings as well. Alex, it has been an absolute pleasure chatting to you today. Wish you best of luck now going into to SaaStock USA as well and into the future. Thanks so much for joining today.

[00:39:24] Alexander Theuma: Thanks, great to be here. Thank you, Andrew.

[00:39:26] Andrew Michael: Cheers.