Hey Reader,

Welcome to The Middle, your midweek rundown of the most interesting things we've read this week.

Summer is in full blaze, and it's hot here in Charleston. I'm talking foggy glasses when you walk outside hot.

Wherever you are, it'd be great if you forwarded this to one person.

Let's jump into The Middle.

Jeff

The shrinking size of Series A companies

​Peter Walker’s analysis of Carta data reveals a significant trend in the SaaS startup landscape: Series A companies are getting smaller. This shift highlights changing dynamics in the startup ecosystem, most likely related to the ending of the Zero Interest Rate Policy (ZIRP), which has come to a halt in the last few years.

Key points:

1. The current average of 17 employees at Series A (counting only full-time, equity-receiving staff) is a notable decrease from the 2022 and 2023 figures.

2. This trend reflects an increased focus on efficiency in the current economic climate.

3. The actual headcount may be slightly higher when including contractors and non-equity staff.

What does this mean for SaaS leaders?

1. Lean Operations: There’s a growing emphasis on doing more with less. SaaS startups are expected to achieve significant milestones with smaller teams.

2. Efficiency is King: Investors will likely prioritize companies with high productivity and capital efficiency.

3. AI and Automation Impact: The reduced headcount might partly reflect the increasing use of AI tools and automation in various business functions.

4. Funding Preparedness: SaaS companies approaching Series A should be prepared to demonstrate solid metrics and growth with relatively small teams.

5. Scalability Emphasis: Ensure your product and operations are designed to scale efficiently without proportional headcount increases.

This trend underscores the importance of building lean, efficient operations from the ground up for SaaS startups.

Leveraging AI in your workflow

Kieran Flanagan, your resident AI expert around marketing, highlighted a specific approach to using Claude AI to create high-quality, personalized content.​

Critical components of this approach:

1. Post Style Template: A structure for the type of content you want to create (e.g., “The Personal Achievement Story” for LinkedIn).

2. Writing Style Template: A guide for the specific voice or style you want to emulate (e.g., Gary Vaynerchuk’s style).

3. Claude AI: The AI model that combines these inputs to generate the content.

How to implement this strategy:

1. Select a Post Style template appropriate for your platform (e.g., LinkedIn, Twitter).

2. Choose a Writing Style template based on a successful creator in your field.

3. Input both templates into Claude AI along with your content brief.

4. Review and refine the AI-generated content.

Benefits of this approach:

• Consistency in high-quality content creation

• Ability to experiment with different writing styles

• Time-saving for content creators and marketers

• Potential for improved engagement by emulating successful styles

There's a ton of talk about AI, and I figured this was a great example of how your team could use it starting... well... today.

For SaaS leaders, this technique could be used by any team that needs to create customer-facing material. It allows for creating compelling, platform-specific content that resonates with your target audience, potentially increasing engagement and reach.

It certainly isn't the end all, be all, but it should help your team start with V1.

Selling transformation

Every so often, I think of We Don't Sell Saddles, the infamous letter written by Stewart Butterfield.

It strikes a chord because it reminds us of a fundamental truth we often forget in the SaaS world: we’re not just selling software; we’re selling change.

Why this resonates so strongly:

1. Feature Fixation: We get caught up in the minutiae of our product’s capabilities, losing sight of how it fits into a user’s workflow and transforms their processes.

2. Job-to-be-Done Oversight: We forget that our solution is being “hired” to perform a role in someone’s job, not just to exist as a standalone tool.

3. Transformation is the Real Value: Our product’s true worth lies not in its features but in how it changes and improves organizations’ operations.

4. Beyond the Software: By focusing on transformation, we shift our perspective from being software vendors to partners in our customers’ evolution.

For SaaS leaders, embracing this mindset means:

• Aligning product development with transformational goals, not just feature checklists

• Framing marketing messages around the change your product enables, not just its capabilities

• Training customer success teams to focus on driving organizational change, not just software adoption

• Measuring success by the impact on customers’ businesses, not just usage metrics

By focusing on transformation, we can ensure that our day-to-day work remains connected to the larger purpose of our products and the actual value we provide to our customers.