I had the pleasure of speaking with Kjael Skaalerud, seasoned sales executive, investor, and President of Skaling Ventures. He has found success in acquiring and growing micro SaaS companies.
Kjael's contrarian approach focuses on small, profitable, and enduring businesses rather than chasing larger, venture-backed companies that often prioritize growth over profitability.
Kjael shares his insights on why micro SaaS companies can be just as safe and stable as their larger counterparts, despite conventional wisdom suggesting otherwise. With lower valuations and less competition from institutional players, these businesses present a unique opportunity for investors like Kjael.
We dive into his first acquisition, a vertical niche SaaS for photographers and creative professionals that had been profitable for years and boasted impressive retention rates - a clear indication of the product's usefulness and the founder's deep understanding of their target market.
Kjael also discusses the role of SaaS marketplaces like Acquire.com in providing visibility into the micro SaaS landscape and enabling faster due diligence through direct APIs into systems of record. This transparency has been a game-changer for investors looking to identify and acquire promising micro SaaS businesses.
Throughout our conversation, Kjael emphasizes the importance of founder-product fit, focusing on vertical niche SaaS companies, and identifying the right buying signals. He also shares his approach to the first 90 days post-acquisition, which prioritizes visibility, documentation, transition, and validating diligence assumptions before moving into growth experiments.
Kjael's commitment to building transparently and maintaining open communication with users post-acquisition is refreshing, as he strives to preserve the human element and avoid the common pitfall of going silent after an acquisition.
We also explore Kjael's guiding principles, including the idea that simplicity equals mastery - if it takes a complex 200-page deck to explain why you're acquiring a business, you probably don't fully understand it. Kjael also touches on the concept of systems over goals, which involves establishing reasonable incremental growth targets based on baseline performance rather than arbitrary numbers.
Finally, Kjael emphasizes the importance of fostering a culture of care and respect, which enables honest feedback and allows teams to move faster through a shared commitment to truth-seeking rather than sugar-coating.
"In our context and for the founders that are listening, like usually business performance is a function of your own performance. So if you're able to grow the business in new and meaningful ways, you kind of have to grow your competence. You have to grow your aptitude. You have to constantly level up."
06:14 Why You Should Prioritize Systems Over Goals
11:08 The Right Approach to Testing Acquisition Channels
14:38 Kjael's Strategy to Find Your Best Acquisition Channels
17:14 Build a Culture of Honesty and Transparency to Move Way Faster
21:26 Kjael's First Micro SaaS Acquisition
23:20 How SaaS Startup Marketplaces Accelerated the Process of Acquiring a Business
25:05 Kjael's Rationale for Focusing on Vertical Niche SaaS
26:10 Analyzing 500 Deals and Why You Need to Be Carefull with LOIs
27:35 Why Retention Is the Number One Thing in SaaS
28:04 Skaling Ventures' 50 Dimension Deal Scorecard
28:47 The Importance of Founder-Product Fit
31:00 Kjael's 90-day Plan After Acquiring a Micro SaaS
32:11 The Four Chapters in Kjael's Playbook to Drive the Business
35:54 Understanding Kjael Operating System and Tech Stack
39:15 How to Translate Vision Into OKRs and Daily Work
46:46 Typical Mistakes SaaS Founders Make
49:39 Kjael's Definition of Success vs. the One He Inherited from Society
Where to find Kjael:
Where to find Michel:
