The Contrarian Path to SaaS Success

The Unconventional Founder

In Silicon Valley's "grow at all costs" culture, Ram Menon stands out. He's building Avaamo, an AI-powered enterprise SaaS company, with a refreshingly old-school approach: focus on profitability and paying customers.

This isn't a strategy born of necessity. Menon, who previously took Tibco public, could easily raise hundreds of millions. Instead, he's chosen a path that most modern founders have forgotten – or were never taught.

The Power of Paying Customers

Menon's core philosophy is disarmingly simple: "The only founder metric I would suggest to you is... paying customers."

Not MRR growth. Not TAM. Not even ARR. Just customers who value your product enough to pay for it.

This sounds obvious, but it's revolutionary in a world where many startups optimize for growth and worry about revenue later. Menon argues that a paying customer, even at a low price point, is worth infinitely more than a thousand free users.

The Enterprise Focus

Counterintuitively, Menon targeted large enterprises from day one. Conventional wisdom says to start with SMBs and move upmarket. But Menon saw three key advantages to enterprise:

a) Larger deal sizes fund growth without constant fundraising b) Enterprise customers rarely churn if you solve real problems c) The high barrier to entry keeps out less committed competitors

Yes, sales cycles are longer. But one enterprise deal can equal hundreds of SMB customers.

The Profitability Advantage

"When you become profitable, it sets you free," Menon says. This isn't just about financial stability. It's about control.

Profitable companies:

• Choose their own destiny
• Aren't beholden to investor whims
• Can invest in long-term bets
• Attract better talent with stability

Menon owns 57% of Avaamo and has no plans to raise again. Compare this to many unicorn CEOs who own single-digit percentages of their companies.

The Multi-Product Approach

Instead of endlessly adding features, Menon built multiple products early. Why? Because upselling existing customers is far cheaper than acquiring new ones.

This strategy led to a net revenue retention of 140% – meaning existing customers generate 40% more revenue each year.

The Value Obsession

Avaamo doesn't just deliver value; they measure it obsessively. They build value dashboards directly into their products, showing customers their ROI in real-time.

Result? Renewals and upsells become nearly automatic.

The Funding Paradox

Menon's biggest regret? Raising too much money early on. He raised $25M and wishes he'd only raised $10M.

More money seems better, but it can be a curse. It leads to:

• Dilution of founder ownership
• Pressure for unsustainable growth
• Loss of discipline and focus

The Future of SaaS?

As interest rates rise and the era of cheap capital ends, Menon's approach may become not just viable, but necessary.

Building a real business that generates actual profits? It might just be the most disruptive idea in Silicon Valley.

Note: This is article #4 in a series based on my recent participation in the Amazon Web Services (AWS) and TiE Silicon Valley APJ-US SaaS Delegation. The series shares key insights for SaaS companies expanding from Asia-Pacific-Japan (APJ) to the US market.