193. SaaS Acceleration, Sales Savvy Founders & the Rise of Tech-Enabled Services (Michael Cardamone)

193. SaaS Acceleration, Sales Savvy Founders & the Rise of Tech-Enabled Services (Michael Cardamone)
Nick Moran Angel List

Michael Cardamone of Acceleprise joins Nick to discuss SaaS Acceleration, Sales Savvy Founders & the Rise of Tech-Enabled Services.. In this episode, we cover:

  • What is Aaron Levie like to work for?
  • Backstory and path to Acceleprise
  • When you started Acceleprise a lot of folks told you not to — the world doesn’t need another accelerator. Why did you proceed?
  • Why an Accelerator and not a traditional VC fund?
  • Check size then and now?
  • The biggest criticism of accelerators that I’m hearing from investors is that accelerators admit companies that need a lot of help and can’t figure things out on their own — and those are not the companies that one wants to invest in. What’s your response to these folks?
  • You’ve mentioned your interest in working w/ founders that have a “willingness to sell.” How specifically do you develop the sell-skills of founders that are willing but green w/regards to sales.
  • What are some the best demand-gen techniques that you use?
  • Talk to us about how you think through pricing models and strategies at early-stage SaaS businesses
  • ACV initial vs. expansion rev opportunity
  • Lemkin.. TAM… initial traction in SOM/Beachhead niche market is most important. Any company that gets traction here can find a $1B market. Agree, disagree?
  • We talk a lot, on this show, about either why SF is the best place to build a company or why any place but SF is the best place to build a company. You’ve done both — Objectively, can you break down the biggest advantages to building in the valley vs. the advantages to building outside?
  • Let’s talk a bit about pedigree — most investors have simple heuristics here. If the founder didn’t study at a Stanford/Ivy level institution… pass. If the founder didn’t work for a FAANG tech company or fast-growing private tech company… pass. At New Stack, we like to say we’re in the business of exceptions (deals that have all the right ingredients for success — except these optics of provenance). Michael, where do you stand on pedigree and how do you define it?
  • What percentage of the companies in the cohort to you invest in at completion?
  • In terms of measuring success — what key metric do you measure that you’re most proud of?
  • Over the past few years, what trends or major changes have you seen with regards to SaaS that founders and investors should be aware of?
  • Tech-enabled services – a real trend or not? Venture fundable?
  • There has been some recent issues in the Tech space with employee options — what have you witnessed and what would you like to see change?

Guest Links:

Key Takeaways:

  1. Michael began Acceleprise because he saw the opportunity to have a meaningful impact on many companies, while still getting a reasonable amount of equity, rolling up your sleeves and getting involved with founders from very early days.
  2. It’s important to set yourself up to get lucky and take certain risks to give yourself a chance in this industry. What’s helped Michael throughout his career is figuring out how to leverage that luck and execute it well, in order to catapult himself to the next level. 
  3. Starting an accelerator was the best happy medium for Michael, of being able to invest but also getting the opportunity to be very hands on with founders. He also knew the size fund he’d be able to raise would be more conducive to the accelerator strategy than a more traditional venture fund.
  4. At the time, Michael was very new to investing, therefore his strategy was to build a highly diversified portfolio, writing relatively small checks. 
  5. He found that the best way for him to build a diversified portfolio was through an accelerator model because if you can truly provide a lot of value to your startups, the accelerator model lends itself to being able to gain a good amount of equity relative to the amount of cash you’re putting in.
  6. At Acceleprise their main focus is helping companies with go to market strategies, sales and intros to customers. 
  7. In general with accelerators, you often won’t get highly successful repeat founders, which can often de-risk the investment, however that doesn’t necessarily mean you can’t get impressive founders.
  8. It’s important that founders have clarity of vision around how their market is going to evolve and how they can grow the market opportunity over time, even if they’re going after a much smaller subset of the market initially.
  9. Being that San Francisco is expensive and highly competitive for talent, Michael advises his companies to take a hybrid approach. He believes that if companies can at least tap into the Silicon Valley network to extract knowledge and specific learnings from that ecosystem, it can be very helpful in the long run. 
  10. Michael’s opinion on pedigree is that it should not be defined by what school a founder went to or what company they previously worked for. He believes that this mindset has contributed to the the lack of diversity in the industry.
  11. From a pedigree standpoint, Michael looks for founders with a proven track record of success and overcoming adversity, a deep understanding of the problem and the market, and being able to talk about it with conviction and clarity.
  12. An interesting trend that Michael has recently noticed is a number of SaaS companies are actually building the services businesses from the ground up with tech and are tech enabled, instead of selling software to the incumbents.
  13. Early employees at companies make a huge difference on the success or failure of the company, therefore they should be rewarded.  Michael predicts that in the next 5 years or so we will see an increase in transparency and flexibility around how and when employees have to buy options.