The Handbook
Introduction
This handbook is meant to be a summary of our preliminary results. For more detailed info, we'll link you the respective full guide. Within each meta-category, we order each SaaS category by rough order of importance.
We intend for this handbook to be most useful for startups up to around 20 people; it may still be informative if you're a later stage startup, but our testing and recommendations are, for now, solely from the perspective of an earlier-stage company.
Initial Formation
Essential, and typically needed early in your startup's life
Formally incorporating your company reduces liability, allows the company to pay taxes on revenue, and enables ownership (which in turn enables founder vesting, outside investment, and employee equity grants). While the actual incorporation is important, a lot of important legal setup occurs post-incorporation, which should be handled by the incorporation service.
When we tested ourselves, we thought Clerky had the most error-proof formation process and high-quality guidance through each step of the formation process. No formation errors were reported in our founder survey. We think this is due to its focus on startup incorporation, which comes with a downside: it only incorporates C-corps.
Lawyer-led process: The route to go if you need special provisions, which doesn't happen too often. We found that Clerky is otherwise faster, cheaper, and generally more reliable.
Gust: Has a robust incorporation process with parity to Clerky's, but the pricing model (subscription) isn't well-aligned.
LegalZoom/BizFilings/etc.: Cheap, with support for many states and company types. However, doesn't deal with any post-incorporation matters, which is arguably more important than the incorporation itself.
We believe there is no reason to keep your startup's fundraise in a zero-interest bank account. A 1.00% annual yield account would be thousands/tens of thousands of dollars for a typical early-stage fundraise. That said, yield rates are currently depressed due to COVID-19. We don't think it affects our overall recommendations, for reasons we discuss in-depth in our guide to Stores of Money, but it does mean that there's less incentive to switch accounts if you already have a bank account.
- SVB: Good default yield through SVB Edge and high yield on higher deposit amounts were quite easy to attain. Our main qualm, however: SVB seemed to have more dark patterns than the other banks we tested (e.g. making it extra difficult to close an account).
- Traditional Big Bank (e.g. Wells Fargo, Chase, Bank of America): In general, they have comparable yield to more startup-friendly financial institutions, but aren't as user-friendly.
- Fidelity: Quite powerful in terms of micro-optimizing yield, but we think it is way distracting for startups — enrollment and onboarding takes an exceptionally long time.
Understanding Your Users
Essential and typically needed early in your startup's life
Without using an event-based analytics tool, which tracks the interactions your users have with your product, you won't know how your users are using your product. Michael Seibel would argue that this just as important as actually building out the product. You can read more about this in our full guide to web analytics tools.
Gave us auto-tracking functionality, which we think is an exceptionally good safety net, although we think many startups use this functionality wrong. It lacks some of the extensibility and more advanced analysis capabilities of its competitors. That said, we think this tradeoff best suits an early-stage startup.
Mixpanel: Jack-of-all-trades, but which we think is better for larger companies than early-stage startups. Requires more discipline to maintain than Heap, and its startup deal, while quite good, isn't as generous as Amplitude's. Its main differentiators come from extensions and advanced analytics, but this mainly benefits larger companies.
Google Analytics: Has poor event-based analytics support, but can provide good demographic/referral information. We'd recommend GA as a complement, not a replacement, for a bona-fide event-based analytics tool.
PostHog: Free and open-source (i.e. able to be self-hosted), although it's still decently far from feature parity with other event-based analytics tools, and usability could be better.
Non-Essential, but often quite useful early on
Drift: Some of the best end-user UI/UX apart from Intercom and free/affordable. Unfortunately, we've seen it repeatedly suffer from engineering issues (e.g. being flagged as malware by Adwords, css
positionissues causing the widget to disappear, etc.), and can't recommend it as a result until we see greater technical stability.Olark: The most pure live chat tool, in the sense that unlike most other competitors that have extended functionality (e.g. customer support CRM, email outreach, etc.), only offers live chat. In practice, however, it isn't as optimized for synchronous communication as other tools (e.g. it's abnormally difficult to respond to chat from a mobile device).
Day-to-Day Operations
Essential, but can usually delay adoption for a bit
Rippling: Rippling is more geared towards making HR work at scale — many of the problems it focuses on (e.g. creating accounts for new employees, IT setup/management, etc.) aren't that relevant for a typical early-stage startup.
Zenefits: Payroll plays second fiddle to other HR work, notably employee benefits. Yet the opposite tradeoff (better payroll, worse benefits) is better-suited for earlier-stage companies.
ADP/PayChex: The large, established incumbents in the space. They have the most functionality, but aren't focused on early-stage startups, which causes the experience to suffer.
Non-Essential, but often quite useful early on
Non-Essential early on, but can become quite useful later
Getting Customers
Essential, but can usually delay adoption for a bit
Airtable isn't a bona-fide CRM, but we found that for many of the early-stage startups that we talked to, Airtable was a better fit. By nature, it is flexible enough to support an early-stage company's changing requirements as they're figuring out their sales process. This flexibility also means that there's no weighty, unused functionality, which means that your much more likely to keep your CRM up-to-date, and therefore, actively use and reference it.
SalesForce: Very likely to become the default choice once you start scaling your sales org, but you won't have to worry about that for a while as an early-stage startup. Is powerful to the point of being entirely overwhelming for a typical early-stage startup (analogous to Fidelity w.r.t. stores of money).
HubSpot: Better UI/UX than Salesforce, but lacks the integrations and more innate salesperson familiarity of Salesforce. Otherwise suffers from the same problems as SalesForce.
Copper: A quintessential startup-for-startup CRM with a focus on end user-experience. However, we found that Copper still enforces too much structure to the point of overwhelming a lot of early-stage startups.