Top 10 in Tech A WEEKLY NEWSLETTER

Top 10 in Tech - What to know for Week ending December 3, 2021

12/3/2021

SaaS METRIC OF THE WEEK: ZCP: Repeat this metric five times as fast as you can: "month zero cash-on-cash payback"- this tongue twister is best referred to as ZCP. It's a cash-based metric because cash-in-the-bank is THE critical number for a SaaS company to monitor in my experience. ZCP answers the question: if we invest $1 in sales costs (such as salaries and commissions), how long does it take to recoup that dollar spent and welcome it back to our bank account?
BURN RATE: Speaking of #1 - because cash is king in SaaS. Here is a very bookmarkable link on how to best calculate cash burn rates - both gross and net - with some great ideas on things you can do to bring that burn rate down.
WRITING: Being able to write well is a life skill that needs to sit with founders. So here is 3 step guide: Step 1. How to position your startup and achieve your unique value prop; Step 2. how to write well and one more version for good measure; and Step 3 top tips for telling stories.
SALES: This week, Jason Lemkin lays down a great discussion on how sales efficiencies in a high growth startup get worse at scale...........so we all got to plan for it.
HIRING: #4 above leads into this next question of hiring to succeed in B2B Sales. Transitioning out of founder-led sales - When should you hire your AEs and SDRs to make sure you can deliver on your growth targets? This article is a little introduction to the tool, and the tool itself is a Google Worksheet and needs your ACV and sales cycle length metrics to work.
PPG: Grab your tech dictionaries, everyone! I have a new acronym for you: PPG or People Powered Growth. PPG is a derivative of Product-led growth consisting of a cross-functional team with both customer-facing and non-customer-facing members. It's a People + Product partnership that develops and tests solutions searching for ways to scale human interactions/intervention with a product. Some examples of PPG companies are Drift, Dropbox, and Loom.
CI/CD: Continuous improvement (CI) is not just a process that dev teams use to iterate and ship software quickly. The method identifies opportunities to reduce waste and streamline work within any department or team. CI can easily be confused with Continuous Deployment and Continuous Delivery - but they are not the same. This article from Angel.co helps clarify the differences and makes the case why CI is the optimal dev strategy for delivering outstanding customer experiences.
DEMO: This one is interesting to me - as the path to Demo is precisely the primary call to action my website is designed around. I assume it is the same for many of you B2B people, so..... "Should Your Website Drive Prospects to a Demo?" Take a read of the article to determine if this is a problem at your startup.
PITCH: Pitch Decks won't be replaced anytime soon, even though people are trying some nifty ways to bypass them. So, according to TechCrunch, these are the five most critical pitch deck slides most founders get wrong, and here is a monster collection (139!) of funded pitch decks here (including the neo-classics: AirBnB, LinkedIn, Intercom, Transferwise, Canva, and Sendgrid).
CASE STUDY: HubSpot's turn because I use them - this is another SaaS company that has managed to cross $1b in ARR (and growing at about 30%!!) even though I renegotiate lower rates with them YoY :-). They have been around for 14 years but didn't really get started until about 2011. You can watch the $0 revenue to IPO breakdown here too.

WAIT A MINUTE - BONUS: This is a cool one sourced from the FKA Newsletter focused on what happens on the internet in a given minute in 2021 now that the global internet population is 5.2 billion (up from 4.5 billion last year).
POD OF THE WEEK: Are you still a bit confused about #6 above? As in" "isn't that just describing Customer Success?" Well, no. Take a listen to this podcast to help clear things up a little by describing PPG from an agency perspective.

Top 10 in Tech - What to know for Week ending November 26, 2021

11/26/2021

SaaS METRIC OF THE WEEK: MRR: Subscription revenue is powerful. It accumulates and compounds over time, and MRR, or Monthly Recurring Revenue, is a predictable (..get it?) SaaS Metric Classic - so this is a deep dive article into everything you ever wanted to know (and much, much more) about these standard metrics, covering different MRR types, differences between MRR and ARR, etc.
PRICING 1: As mentioned in last week's report - only 41% of SaaS Companies price their product by seat in 2021. TechCrunch also notices that more and more SaaS companies are shifting to usage-based, not seat-based, pricing. They reference OpenView's annual Financial and Operating Benchmarks survey noting that startups that adopt product-led growth and UBP outperform their peers. With the more recent additional complexity introduced by B2D (D for Developers) models and Data/AI/Intelligence-based products, traditional pricing no longer works for many of us - and how do you even price intelligence as a product per seat?. Tomasz Tunguz breaks down pricing in Per-seat vs. Usage-based scenarios. Bessemer Ventures also reports that UBP sees best-in-class net-dollar retention results.
PRICING 2: Speaking of that OpenView report - you can download that here. It's a survey of almost 600 SaaS companies, and it's fantastic, measuring a 2x adoption of usage-based pricing in companies surveyed since they started the study back in 2018. There is also a great slide (#16) with a decision tree to decide if usage-based pricing is right for your business.
EMPLOYEES: Here is a great question: How many employees should you have based on your ARR? David Sacks has a great slide from his SaaStr presentation on optimal SaaS Org Charts - Series A is 40-50 at 1m ARR. Yup, that's only $20-$25k ARR per employee - full report here, which expands into what roles you should hire and how the org chart looks.
VALUATIONS: We are currently somehow here. The Information wrote a great article almost a year ago on "The 100x Club," a group of SaaS startups raising money at 100x revenue multiples! This is not just a US valuation thing - India's Postman landed in the 100x club earlier this year, and according to Tomasz Tunguz, the 100x club might be the fundraising meme of 2021.
EQUITY: I highly recommend any founder read this three-part deep dive into the equity terms that matter to them - as not all startup equity is equal. 'Dilution' is one of the most feared words- so let's benchmark it - what is the average ownership percentage by SaaS Founders at the time of IPO? Sammy Abdullah takes a review, and the median level of founders ownership is 14% while the average is 23%, with VCs owning about 54% on the median. There is a significant difference in Bootstrapped vs. not in this dataset. As a bonus, take a read of this article from Heavybit that discusses Cap Table management in relation to growth and how to manage that Option Pool.
AHA: This is an excellent read on product design centered on discovery - what the author references as "Aha moments" - through a customer journey from first encounters through to deep adoption that focuses on the concept of long-term retention.
TECHNOGRAPHIC: Add this doozy of a Portmanteau to your dictionaries and spell checker. You should read that whole article also, as I don't know about you, but the number of tech vendors we use to run our tech business stresses me out, with services flopping in and out all the time! This leads nicely into the article: How Many Technologies Can a Company Adopt at Once? Answer - there is always one more (JK, but not really).
T3D3: No - this is not a reference to a droid in Star Wars. It's an update to the much referenced T2D3 metric that Neeraj Agarwal of Battery Ventures wrote about back in 2015. T2D3 is an acronym for "triple, triple, double, double, double." It refers not to In-N-Outs secret burger menu but to a company's annualized revenue growth performance path towards becoming a unicorn. T3D3 is the updated version of that acronym: "triple, triple, triple, double, double, double." Jason Lemkin argues that this change is the "cost" in the explosion of valuations and market caps.
CASE STUDY: Expensify is an overnight success over a decade in the making. It actually took Expensify 13 years to hit 140m ARR but is now growing at 60% year-on-year with only 140 employees (compare that to #4 above) - it's a lean + PLG story.

POD OF THE WEEK: If you liked the slides from #4 above - take a view of the actual presentation from David Sacks.

Top 10 in Tech - What to know for Week ending November 19, 2021. SaaS Survey Special

11/19/2021

Nerd Alert: Yeeeeeeeee! It's my fav post of the year, and the most challenging part is choosing only 10 highlights, so I'm taking it to 11. My buddy David Skok and KeyBanc Technology Group are back again for their (12th) annual SaaS survey for Private Markets (download the PDF here). This report includes responses from senior executives at more than 350 companies, and we are seeing a rebound in growth as companies recover from the economic disruptions caused by COVID-19. Prior versions can be read here and here.

PRICING: Only 41% of SaaS Companies priced by seat in 2021 (You may have seen my "occasional" posts on Consumption-Based pricing from time to time in this newsletter). Interestingly, this survey now includes varying segments beyond B2B and B2C - such as B2d (D for Developers) and API companies. Which reflects the evolving tech/SaaS landscape.
VALUATIONS: New metric measured for this year - The median enterprise value of companies surveyed sits at 8.4x ARR (at the time of the liquidity event). But there is quite a bit of variation and a strong relationship between valuations and top-line growth.
SALES: The primary mode of Sales and Marketing efforts remains Field Sales based in 2021 at 55% for companies with more than $5 ARR, with Inside Sales taking the second-largest chunk (29%). But the complimentary slide to this is the distribution of method by deal size. Anything greater than $250k is still Field Sales - but I'm getting no data yet on how many of those "field sales" are now remote/Zoom-led. Here is the expected sales cycle length based on ACV.
MARKETING SPEND: Figuring out how to optimize marketing spend and growth rate is a crucial question, and this study doesn't show the benchmarks marketers want to hear: While the median sales and marketing spend maybe 36% of revenue, to really ramp ARR growth, you gotta blow a lot more, - the percentage of revenue in isn't much more than percentage growth spend out.
GROWTH: Last year, 39% growth was expected in January. By the end of June, it was reduced to 20%, and in 2019 was 36%. Those 2019 growth levels are back up to a healthier 31% as the COVID disruptions start to settle, and forecasts are back to the same 36% seen in 2019.
CAC: This one needs nuance, so the report has broken it into blended, new, and up-sell/expansion. The median blended CAC comes at $1.20 for every $1 of revenue realized, which sits slap bang in between 2019 ($1.10) and 2020 ($1.32). New Customer CAC is up against 2019 ($1.34) and 2020 ( $1.60) - SaaS is increasingly competitive. Upsell/cross-sell still sitting in cheap at $0.63 per $1 of ARR earned.
CAC PAYBACK: CAC is also a measure of cash profitability per customer - and this negative trough is long! According to this survey, new customers, on average, take 2 years and 2 months to become profitable. This really highlights what will be a deepening dependency on Capital to fuel SaaS companies' growth.
ANNUAL DISCOUNT: If like me, you are part of the great SaaS Ponzi Scheme, it may come as no surprise to you that annual contracts are discounted. But how much? 10% is median - and the range is tighter than I thought - 6%-14%.
CROSS SELL/UPSELL: This is pretty much the same as last year: 36% of new ARR bookings are attributable to cross-sell/up-sell activities. Larger companies use this strategy more heavily than their smaller counterparts (2x more). This is likely due to not being so reliant on new acquisition focused as the business matures.
CHURN: It's still a problem, folks. The report for this year recognizes a dollar churn decrease from 13.9% in 2020 (20% of which was attributed to Covid) back to 12.6%. This is back to similar levels from 2019 (12.5%).
BURN: The average SaaS company burns $52m to get to $100m in ARR, and it takes under 9 years (8.7 to be exact).

Top 10 in Tech - What to know for Week ending November 12, 2021

11/12/2021

SaaS METRIC OF THE WEEK: CAC payback (and accounting for the upsell) Often time many of the base metrics (CAC, CAC/LTV, etc) are in service to VCs and operationally don't tell us enough to make great decisions. This article takes an operator view on CAC Payback that includes (and celebrates) the value of net revenue retention and Tomasz Tunguz chimes in this week on the need for two types of payback period calculations - because Cash is the bigger driver.
BLOCKCHAIN 2.0: aka Web3. The crypto hype of 2018 is back and legit to the point where CB Insights has produced a State Of Blockchain Q3’21 Report. Blockchain startups have raised $15B of cold, hard FIAT so far in 2021 which is up 384% from last year and there were 12 blockchain unicorns added last quarter. SIDE NOTE: NFTs have JUMPED to friggin' $11B this Quarter.
VENTURE: Hands up if you thought that the Pandemic could be a great equalizer of Venture Capital distribution? I certainly did. Well here are some truths for us all to mull on: Startups in California, NY, and Massachusetts commanded over 3/4 of all venture capital dollars dished out in the U.S so far this year, venture funding going to female-only founders dropped to 2.2% in 2021 (lowest it’s been in five years) and in 2020, Black founders received only 0.6% of venture funding!
FIRST PRINCIPLE THINKING: Want to be more like Elon (but without the Twitter dramas)? Take a read here on the concept of First Principles Thinking. Not gonna lie, I've re-read it again this week and it still makes my brain hurt. Want more? Fine. Here is a full guide/website. Now that you are an expert on this principle, here is how First Principle Thinking can be applied IRL - in this example towards a Product Lead Growth business.
CUSTOMER SERVICE: In this current age of the customer, enhanced by COVID, SaaSx makes the argument that in the SaaS world, Customer Success is actually the product. Want to start building out that product? Check the HubSpot guide on getting started with your Customer team.
MARKETING: Add this one to your SaaS dictionary: Buyer Intent Data. I have posted all kinds of articles in this newsletter on Marketing strategies and tactics - but there is never a one-size-fits-all channel for a company. So how does a business find out what are the best marketing channels for them? This article suggests that everything needed to answer that question is already within the data a business generates every day. (you're gonna need Personas - so don't skip #5)
FRAMEWORKS: Beyond metrics, a successful framework can distill complex processes or models to make execution more of a simple recipe. Kinda why OKR's exist. Sarah Tavel has compiled a great list of compelling Frameworks covering: The 10x model, The hierarchy of engagement, Hype cycles, and more!
MRR LEVERS: OK -so what are the best ways that SaaS companies can grow their MRR? Check this article that looks at two (of the five) elements of MRR growth that often fly under the radar of acquisition (expansion and reactivation).
PLG FLYWHEELS: As a refresher, read this to understand the 4 basic principles behind PLG and then check this article out that goes into lengthy detail of how to design for PLG across the customer journey (and creating a flywheel). This is different from a sales funnel, as the flywheel model is designed to build momentum from one phase to the next, which also gives you a good way to segment users
CASE STUDY: OKTA - who earlier this year acquired Auth0 for a mere $6.5B - are an under-the-hood Tech company ("one of those" SOMA 2nd Street Tech Companies is the SF reference) but surpassing $1B in ARR. So check this SaaStr Case Study on the growth of the OKTA business on how they got there.

POD OF THE WEEK: Scott Farquhar (co-founder and co-CEO of Atlassian) on how he built Atlassian (and used Smart pricing)

Top 10 in Tech - What to know for Week ending November 5, 2021

11/5/2021

SaaS METRIC OF THE WEEK: USER ADOPTION - measuring which new users could turn into paying customers (and which are going to drift away). Everything you need to know is in this article - it’s a comprehensive and very deep dive (because these metrics differ between businesses and between cohorts of users).
SDR SALES: Chorus.ai has built a great report of what high-performing outbound sales teams are doing to close deals (this is an analysis of over five million sales calls!). You can add in the kind of business you are (SMB, Mid, Enterprise) on this page to see how you measure up. Key nuggets: An SDR dials, on average, 106 people to schedule just one meeting and the typical win rate of a sales qualified lead (SQL) is 19%.
BUSINESS SPEED: First Round Capital always has a good perspective on speed at the business level. This is because top tech companies and are market differentiators in part because they operate at a cadence that is faster than most. It’s all about execution and heartbeat, which requires a fierce focus and prioritization. This kind of adaptability is something we all need after last year.
VENTURE CAPITAL: Significant news came in late last week from Sequoia Capital (specifically its U.S. and Europe business). In this blog past Sequoia Cap have announced a massive change to its business model by ending the traditional 10-year fund cycle and setting up a single permanent fund called the "Sequoia Fund" that will contain other funds in it and also will become a registered investment advisor (RIA) which will give them access to different asset classes such as crypto and seed investments. This will also give LPs the flexibility to pull their money out anytime (vs. traditionally waiting for distributions) and proceeds from the various sub-funds will return directly into the overarching Sequoia Fund.
MARKETING SPEED: Guess what? Your marketing team is slow!. Take a read of this article on frameworks to make your marketers speed up. Tech companies are market differentiators in part because they operate at a cadence that is faster than most. Speed is a competitive advantage that your marketing teams need to leverage!
E-COMMERCE: Shopping from home and a massive move to online shopping behavior has been one of the most significant shifts due to the Pandemic: About 40% of Millennial consumers say they didn’t miss shopping in person during the pandemic, Shopify announced earnings so far this quarter of $1.12 billion (up 46% from a year ago) and the 3 big retailers (Walmart, Target and Amazon) are really seeing the lions share of this increased spend. So given we are close to the end of the year (how did that happen?), here is a list of 13 eCommerce trends to look out for in 2022.
CRYPTO-SECURITY: My crypto posts a couple of weeks back on the crypto-future of the internet were more popular than I thought. So here is an expansion into crypto-security for all of your newly acquired NFTs and DAOs with new strategies for storing these assets safely while also allowing holders control and access.
TEAM MANAGEMENT: Ouch - I seriously need to make an infographic of this and put it on my wall - I've got some work to do as I'm guilty of more of the DO NOT's in this article than I want - it's discussing how to hold employees accountable without micromanaging them.
PLANNING: For many of you your financial end-of-year is fast approaching, so question: How Dynamic Is Your Revenue Plan this year? 2020/2021 may have forced multiple re-forecasts for your business and who knows what BS 2022 is going to throw down (although hosting a Taco Tuesday on 2/22/22 will be my highlight). Anyway - who knows what could stall or even reverse your growth aspirations, so it's time to pull operational techniques from other departments (ie your Dev squads Agile ways) to create a more dynamic revenue plan - take a good read of this article from SBI for hot tips on avoiding poor Sales-based strategic planning. It even comes with an (OK-ish) downloadable planning tool (which I took the liberty to snag and sacrifice my email address for you) and First Round Capital feels the same way - Annual Planning is Killing Your Growth - but take a different tack - building a three-year plan!
CASE STUDY: You may have already forgotten but last month Facebook (and Instagram and WhatsApp) all went offline (so Meta). It was 7 hours of high drama at the time FYI. The team at Cloudflare has run a full postmortem on this event to help us all understand how facebook disappeared from the internet. TL;DR it was DNS, it's nearly always DNS.

POD OF THE WEEK: It's the podcast version of #7 above - a16z's Crypto Security Podcast.

Top 10 in Tech - What to know for Week ending October 29, 2021

10/29/2021

SaaS METRIC OF THE WEEK: CLTV: This metric represents the average revenue that a customer generates before they churn - Customer Life Time Value. ChartMogul has a great online calculator here. Go to 'advanced mode' as this calculator references the traditional formula as well as the David Skok version (which is the advanced one, but viewed as being more realistic)....and check here for a thought-provoking read of why your LTV may be lower than you think.
SECOND ORDER REVENUE: Doubling down on LTV this week and a little contrary to the last link above: Jason Lemkin claims that CLTV isn’t the whole story and often references a term called "Second-Order Revenue". He states that traditional CLTV analyses underestimate true revenue generated by customers by 50-100% (whaaaaat!!!) in most SaaS models selling to any businesses larger than SMBs.
PERSONALIZATION: Did you know that marketing personalization can reduce acquisition costs by as much as 50% and 87% of companies see a lift in key growth metrics when they employ personalization? SaaS marketers have been leveraging personalization to increase conversion rates, improve customer success, and increase the quality of sales/marketing funnels for some time so here is a great article from Chart Mogul on the (modern-day) personalization fundamentals.
SCALE: This is a must-download. Mark Roberge, the founder of Stage 2 Capital and member of the founding team at HubSpot, has launched this incredible playbook for scaling. In this detailed book, Mark has defined different stages of scale, established a quantifiable measure for each of these stages, structures the sequence and signals of when to move from one stage to the next, and explores the optimal go-to-market design of each one.
TRIALS: Are a proven funnel method for a solid go-to-market strategy. Check this article on 9 ways to optimize your SaaS trial and then take note from Tomasz Tunguz on how long should your customer trial period be?: TL;DR: Longer trials do not convert customers at greater rates. Two weeks, two months, same results.
FINTECH: CBInsights released their fourth annual Fintech 250 earlier this month across payments, insurance, crypto, digital banking, etc. Excel sheet of members here for download, the pretty infographic version here. About 65% are based in the US, with the UK being home to the 2nd most.
PRICING: It's been a while - so time for another pricing bit (because a 1% increase in price can generate up to an 11% increase in your profits). This one is interesting as the author explains how his startups approached pricing at the early stage (for their SaaS product)
CYBER: According to this 2021 State of Ransomware Survey & Report, 64% of those surveyed had been victims of a ransomware attack in the last year, 83% of those paid the ransom and 50% experienced a loss of revenue. Ransomware is everywhere and has got the CEO of Google to ask governments to do more at a Geneva Convention for Cybersecurity.
$100M ARR: I know - weird title. But this article from Bessemer Ventures is cool (and honestly also a little depressing). It's a benchmarking report, complete with a downloadable PowerPoint for what it takes to reach $100m ARR - asking the big questions: What should your gross margin be? How much should you be spending on R&D as a percent of revenue? How does your companies growth rate compare to peers?
CASE STUDY: This one is for all of you interested in Product Led Growth - How Ahrefs (an SEO product) scaled to $100M ARR with a team of 69 and 0 salespeople. (hint - it required a team of 10 marketeers)

POD OF THE WEEK: An interview from Profitwell with Mark Roberge - creator of the playbook listed in #4 above - The Science of Scaling.

Top 10 in Tech - What to know for Week ending October 22, 2021

10/22/2021

SaaS METRIC OF THE WEEK: Net Dollar Retention is an important metric in the new world of Product Led Growth. It’s used to help answer the following: "Does my startup need to increase customer acquisition/marketing spend?" Tomasz Tunguz writes in detail about this and Crunchbase does the work to calculate what good NDR benchmarks should look like.
THE FUTURE (of the Internet) part 1: Two significant reads this week (and one in 2 parts) - the first one is from a16z who are proposing an agenda for the future of the Internet. The firm envisions a post Web 2.0 article and discusses "web3" (which is mainly all things crypto. blockchain, De-Fi (see below), NFTs, and DAOs). Their positioning is that this isn’t just a new wave of innovation — it’s an opportunity for a reset.
THE FUTURE (of the Internet) part 2: This two-part series goes beyond an agenda and describes what could await us in this more decentralized future. Change is coming! Part 1 here (taking us through Web 1.0 and 2.0, 2.5 and 3.0) and Part 2 here on how to create that future.
DEFI: Open source is coming to the fintech world, and a real possible future within that is leveraging blockchain ledger capabilities beyond cryptocurrencies such as Bitcoin and Etherium via Decentralized Finance (Defi) - here is a little 101 intro on what Defi Infrastructure is.
CRYPTO CAP TABLES: While I'm in the crypto mood this week, have you ever wondered how the funding and cap-table of a crypto/token-based startup works? Tomasz Tunguz explains how the equity and token cap tables work.
CHAOS THEORY: OK - hear me out on this one: There has never been a more significant time for a different way of thinking about change in modern organizations. Digital Transformations are important, strategically. But the mindset needed requires a certain kind of improv style to get there - as the systems in place that are needed to change or pivot are usually very complex - change IS chaos. So take some time to read this article to understand more of what this is about - I also aspire to have the title of "Chaos Manager" one day...
AI: Now it's its fourth year (which is like 28 Dog AI years) the State of AI Report is out for 2021 and it's a 188 page Google Slide deck! AI has been pretty clutch in the last year with faster simulations of human machinery such as proteins and RNA - starting at Slide 24; 88% of top AI educators/faculty have received funding from Big Tech (MSFT, APPL, IBM, et al); and a record amount of funding this year into AI startups with over USD $115B raised (slide 141)
IDEAS: This is a framework for managing them - I found this a really helpful article with a template that is now on my wall! An HD version of it is here. A little bonus is a compilation of mental models that entrepreneurs and investors leverage to develop new startup ideas & venture theses from the same author.
MARKETING - Here is a list of 9 great marketing tips for B2B SaaS businesses and BTW - 2022 is coming. It can't be worse than 2021 (can it??) so here is a planning guide for all you B2B marketeers.
CASE STUDY: Contrary to traditional startup lore, not every founder is a domain or industry expert (and I've got my hand up here). Here are 6 lessons from founders who (successfully) founded a startup in a space they are not an expert in.

POD OF THE WEEK: From SaaStr to compliment #1 above: Churn is dead. Long live Net Dollar Retention (NDR) with David Kellogg

BONUS: Here is a free online pass to TechCrunch's SaaS event next week (Oct. 27). Use the code "techstarsfree".

Top 10 in Tech - What to know for Week ending October 15, 2021

10/15/2021

SaaS METRIC OF THE WEEK: DAU/MAU. The DAU/MAU ratio is a popular metric for companies that need to measure user engagement. Rule of thumb: Apps over 20% = good, if you have 50%+ - you’re world-class.
MARKETING: In early-stage start-up land, often time marketing is an after-thought. The Founder Coach lists seven things he wished he knew about Marketing early on and HeavyBit has a great article and video on early-stage positioning - one of the best things you can do starting up. Not sure how you rank? Go take the Tomasz Tunguz Marketing Scorecard.
VENTURE part 1: The State Of Venture Q3’21 report was released by CBInsights late last week - PDF version here. The run continues! Global venture funding reached $158.2B this quarter which is a 105% increase YoY compared to Q3’20 ($77B). The last 2 quarters have been the best ever in terms of total venture funding. The average deal size is up from $16m in '20 to $25m in '21.
VENTURE part 2: Crunchbase analysis shows that Tiger Global and the SoftBank Vision Fund are ahead of the rest of the field by a wide margin in terms of capital contributions for Q3 2021. SoftBank led 48 rounds and participated in 16 more. Tiger led 53! and participated in an additional 29. US VC firm a16z was the most active multi-stage investor in the U.S., yet with 46 investments (8 of which were outside of the US).
VALUATION: The public SaaS valuation listing a couple of weeks back created a bit of forward-multiple discussion - so I'm adding practical-private valuation-value this week with a downloadable sheet for ya: This SaaS-Capital Index worksheet (Excel) can be used as a starting point for a comprehensive valuation analysis for a privately-held SaaS business (from the SaaSCFO). Check the whitepaper PDF here as the starting point to work through this Excel sheet (especially the bit on how revenue should be measured). SaaS-Capital also reports quarterly on how this valuation index is performing overall. From a forward multiples perspective, the gap is widening between public and private SaaS - it sits currently at 50% on average.
SEO: If you are new to SEO you can consume this comprehensive starter-guide from Google on the topic but if you are just looking for a comprehensive guide of SEO best practices (like 180 of 'em) - take a bookmark (as it's constantly updated) and read of this page.
GROWTH: Back in 2017 I attended a HeavyBit conference with a mind-changing presentation from Patrick Campbell of Profitwell. I reference it all the time in this newsletter. This data has been updated for 2021 and the perspective hasn't changed too much: Acquire users, monetize them, keep them around as much as possible. This updated article re-iterates the point of the original pre-Covid presentation - SaaS companies seem addicted to solely acquisition-based growth, which is dangerous as competition is getting harder and more prevalent.
DATA: I don’t think I have more to add than the title of this article: "You Cannot Be Data-Driven Without Experimentation”, well OK fine, I do: The opposite of that is also a truth to hammer home "You Cannot run experiments successfully without being data-driven”. We all overestimate our experimentation skills AND our Data collection skills.
LINK BUILDING: This kind of seems like an SEO tactic of the past, where businesses build links to create a more organically positive Search rating. So is it still a relevant practice as we head toward 2022? Well......yah! But the rules have changed quite a lot. Check this article on how to optimize (by careful curation and intent) what to link.
CASE STUDY: Upwork - I have awesome full-time staff that came from shorter term gigs on Upwork, who is now worth $6 billion and at $400m+ in ARR. 2020+2021 gave them a chunky Covid boost and they are only just getting started with the good ol' fashioned "move-upmarket" strategy, with an absolute classic 80/20 rule in effect. 80% of clients are SMB's but 80% of the revenue comes from 20% of clients.

POD OF THE WEEK: Customer churn is the bane of SaaS businesses - data can help understand the causes of churn and take action to reduce it.

Top 10 in Tech - What to know for Week ending October 8, 2021 - SaaStr ANNUAL Special

10/8/2021

SaaStr Annual 2021 came to an end last week and many of us could not be there in person. So I've snooped the internet and put together a list of 10 key learning for us absentees

CONSUMPTION BASED PRICING: I have been known to talk about this from time to time (but I call it usage-based) so watch BCG pricing practice experts affirm EVERYTHING I say :-). 20-25% increase in ARR by changing pricing models anyone?
CHURN: Repeat customers are likely to spend 67% more than new customers and increasing customer retention by just 5% can increase your company's profitability by 75%. These are just two knowledge bombs dropped by Verifone's VOP of client success in this presentation of 7 strategies to reduce Churn and give retention rates a boost. Watch here.
STATE OF THE CLOUD: I've already written about this one - but the Bessemer Venture Partners presentation every year was always my favorite and this year's presentation is well worth watching all the way through - so check their State of the Cloud 2021: The Age of Cloud Unicorns presentation that covers the state of the industry, future trends, and provides a deep dive into a how-to guide to get to Unicorn status. Cloud is almost at a $3 trillion market Cap with a post FAANG index called MT SAAS. But that is just the start of this report - stunning metrics of the industry (and dry powder).
ENTERPRISE BUYERS: G2 conducted (a somewhat self-serving) Software Buyer Behavior Report and presented the highlights at SaaStr this year - you can download the full report here - but there are some great nuggets of insight: Buying is happening faster and becoming more frictionless - 48% of enterprise software purchases are made on credit cards and security was the top consideration for buyers with 88% reporting security as very important when making purchasing decisions with 83% requiring a security or privacy assessment when purchasing software. Complementing this report is another SaaStr Annual 2021 talk that covers how B2B buyer behavior has changed.
TRUST: Watch here - That last comment in #4 above leads nicely into this next one. Given the state of breaches worldwide selling trust is just as important as selling your product. How - Sydney Archer of TugBoat logic recommends a well-documented InfoSec program. But it's not just about your customers - so also watch this presentation covering trust in your brand across a variety of stakeholders.
CATEGORY CREATION: I know we all want to be up and to the left on one of those Gartner/Forrester Quadrant reports. So take a watch of this presentation on category creation from Neo4 and another version from Gett.
DEVELOPERS: Watch here - Stack Overflow's SVP presented the results from their 2021 Developer Survey, which is full of insightful nuggets: Developers primarily learn online (60% of respondents learned how to code via online resources) - sop L&D is a big requirement - but not as expensive an investment. Technical certs are important - but don't underestimate the power of StackOverflow, Podcasts, and the like. AWS is the most widely used cloud platform, but GCP and Azure made some gains, devs are still mostly men, and this year React.js surpassed jQuery as the most commonly used framework.
INTENT: Watch here - From the CMO at Marqeta comes a great presentation on how buyer intent is the new marketing buzzword to qualify and nurture prospects when they demonstrate an interest in you. It's about reaching out (far from your website) to where prospects show intent (and how to discover that).
REVENUE GROWTH: This one is from the archives as I consider it one of the best presentations at SaaStr Annual - it’s from Mark Roberge of Stage 2 Capital and Harvard Business School. Providing a handy step-by-step guide to revenue growth (downloadable PDF!)
CASE STUDY: Toast. For many of you, this is the Point of Sale system you have probably never heard of. It's only 9 years old but listed on the NYSE last month and is currently valued at about $27 billion with approx $475m in Revenue (that's about 56x according to my math). Why so hot? 118% growth and pretty much a half bill in revenue is not too shabby but check here for some detailed notes from under the hood.

Top 10 in Tech - What to know for Week ending October 1, 2021

10/1/2021

SaaS METRIC OF THE WEEK: If I've told you once, I've told you a thousand times, the Nag Metric is one of the more obscure ones. This one is fun (but not for everyone). A call to action within a site or customer journey is kinda like a parent trying to get their kid to clean up their mess. It just gets a bit naggy after a while. This can impact your brand/NPS over time or just irritate people into churn. The Nag Score - outlined in detail here, is an attempt to quantify this.
VALUATIONS: Inflation concerns are once again making the stock market jittery for tech this week and Tomasz Tunguz got into this a while back looking at the Inflationary pressures within the Tech Industry regarding valuations. It's quite a wild valuation ride and the market is making it clear that valuations need a cool off. This new article in Tech Crunch is following the same theme tracking the evolution of valuations from 5x valuations in 2016 to this week where the median SaaS valuation multiple for public companies stands at 22.8x! I say this week because it was 21.1 x when I referenced it not even a month ago.
PRODUCT LEAD GROWTH: You may have heard me talk about this category from time to time. But here is a sub-category term for you: Product-Led Storytelling. PLG isn’t for everyone, some people, like the author of this article, call it hype, but probably so he can hammer home his agenda/story: That Product-Led Storytelling is way cooler.
PRODUCT MARKETING: Marketing is a very broad practice, see here for a list of the separate marketing functions that can exist. So here is a very helpful dive into Product Marketing and specifically what the roles and responsibilities are of a Product Marketing Manager.
RENEWALS: Existing customers are the lifeblood of growth in a SaaS business, so making sure they renew is an exercise in revenue efficiency. New customer acquisition costs average about $1.10+ per $1 of ARR. Compare that to the cost of retaining or up-selling existing customers (about 12c-15c per $1ARR) - that’s 8 times cheaper. So take a peep at this article that not only lists 5 SaaS Renewal Best Practices but also explains how best to go about calculating renewal rates.
SDR RAMP: According to past studies, time-to-ramp for an SDR averages about 3.2 months. From Saleshacker here are some tips and tricks to make this ramp time as effective and successful as possible.
CSM ATTRIBUTION: How do you account for or budget the cost of a Customer Success team? The team at Gainsight dive deep into this question and come up with some fantastic insights - even though the question itself is complicated and the answers end up being more non-monetary than you would probably like. Owning the renewal, up-sell, cross-sell are key delineation points between expense attribution to different departments who CSM teams may sit under.
BUYERS vs USERS: The person writing you a check is not necessarily the same person getting value out of your business. So take a read of this insightful article from HeavyBit on differentiating messaging based on this premise and the different profiles.
SAAS ELDERLY: Fun facts to help determine those SaaS companies that are on the elderly side of startup land: 1. The average SaaS IPO takes 12 years and 2. It took on average 10 years to get to a $1B+ acquisition/exit in SaaS.
CASE STUDY: SaaStr 2021 is underway! So be prepared for an upcoming onslaught of SaaStr links starting right here with a great 10-learnings deep-dive on Vimeo at $330m+ in ARR, and especially, on how they do self-serve and enterprise at the same time.

POD OF THE WEEK: The video version of #10 above on how to run a SaaS business that has both a large self-serve component and a free edition (ironically a story about Vimeo hosted on YouTube).

Top 10 in Tech - What to know for Week ending September 24, 2021

9/24/2021

SaaS METRIC OF THE WEEK: Landing Page Metrics - you may not need 25,000 landing pages as Zapier does, but a well-designed and personalized landing page can make a huge impact. ConvertKit lists the 5 key metrics for measuring the success of landing pages (and how to track them). To back that up, IceBreakerVC lists best practices for good landing page planning and strategy and Google is always up for listing ways to optimize website landing pages for lead generation this page also has some good inspiration.
WEBSITE: To compliment #1 above, optimizing the user experience (especially on mobile) can significantly boost the bottom line of a business, for example, improving site load times by just 0.1 seconds can increase conversion rates by up to 8%. Check this page from Google to review your site (and also your competitors' sites) to see how you measure up and review what changes can be made.
CONTENT MARKETING: Heavy Bit makes the case that now more than ever is the time to double down on content. Also, spot quiz hotshot - how long should a Blog Post be? Hypothetically this long (but also literally not that long - it's a long-ass blog post).
MVT: Here is another one for your tech dictionaries: MVT or Minimum Viable Testing which is about creating hypotheses and conducting tests that allowed you to predict if a market is going to appreciate a product before even launching an MVP.
MARKET SIZING: The dreaded slide on everyone's pitch deck. What's the size of the market. TL;DR if the market is not huge, same with your startup. Understanding the nuances of TAM, TOM and SOM is a great way to get started understanding market sizes as it applies to your business and the business problem your startup solves.
COOKIES: Love them or hate them, the reality is that browser cookies have headed the way of the Dodo. This means that conversion tracking via cookies being phased out has created new attribution problems to solve in people's sales and marketing funnels. So check out this article on advances in ad-tech in a post-cookie world - or the PDF of the report here. Conversion modeling is a way forward, so if attribution is a necessary part of your business or your channel/partners Business, take a read of this article from Google on why conversion modeling will be crucial in a world without cookies and Advances in ad tech
STORYTELLING: Last month I made a popular post discussing Emotional Moats as a competitive advantage: And anecdotally I feel like my way of storytelling has shifted from my pre-pandemic ways and Google seems to agree with my sentiment suggesting a reboot of our storytelling fundamentals.
PRODUCT ANALYTICS: Product Analytics enables teams to develop a holistic, well-rounded understanding of how users engage with their digital products and experiences and totally complements Google Analytics. Check this article for a deeper than deep dive.
ZERO TRUST: An emerging phrase for your cybersecurity dictionaries - heck it's even an Executive Order for the US via President Biden. With 2020’s widespread shift to #WFH life, successful IT and security teams have leveraged Zero Trust initiatives to address some coarse-grain and fine-grain access control challenges - all at the edge because that is where we all are these days, and perimeter/fence based protection just won't work. Identify based and zero-trust strategies and architecture are where we need to be so start with this primer on Zero trust from ZDNet and move here with this State of Zero Trust Security report from OKTA for the APAC region.
CASE STUDY: Zapier. I like 'em and I use 'em. Zapier is now a $5 billion company based on the premise that we should all just get along because we are greater together. This is why they have the astronomical number of landing pages I reference above in #1. Integrating into and between apps using clicks is a strategy that put Zapier on the top of the No-Code/Low-Code movement and was fully remote long before the pandemic made it fashionable.

POD OF THE WEEK: The podcast version of #10 above. No-Code wasn't a thing when Zapier started, so they kinda created the category and only raised $1.3 million in VC capital.

BONUS: Its SaaStr next week and for those of us with no intention to travel they are hosting a streaming version - sign up here.

Top 10 in Tech - What to know for the week ending September 17, 2021

9/17/2021

SaaS METRIC OF THE WEEK: TTV - Time To Value: Time to value is similar to ROI (return on investment), but instead of realizing the financial success of an investment, it implies achieving the effectiveness of an investment or for a customer to realize value out of your product. There is also a corollary “trough of disillusionment” your customers may need to navigate before they get there though.
DEADLINES: Author Douglas Adams once wrote “I love deadlines. I love the whooshing noise they make as they go by”. It’s funny because it's true. So when it comes to software development, how do you make peace with that whoosh? Check this article from Free Code Camp that discusses the art of managing the deadline - part of it is complementary to a reference to the sub-art of saying NO from a couple of months back.
VALIDATE: I'm sure you have heard it time and time again that validating a product is a make or break part of a startup's product process - but how do you do that properly? Check this list of techniques and tools - starting with Market Research - but get more into that starting here.
MVP CANVAS: OK - this is interesting (because visual frameworks are my jam). Y’all have heard of the Lean Canvas and the Business Model Canvas right? Well check out this spin on applying the framework focused on designing and launching MVP’s (just don’t burn the Pizza)
UN-SCALE: Sometimes, while building a repeatable scalable business model, there are things that have to be done that are un-scaleable. This article highlights three specific non-scalable things sales teams should be doing right now.
TRUST: According to Godard Abel (Co-Founder and CEO at G2, who know a few things about trust), SaaS buyers are increasingly more skeptical, suspicious, and unconvinced in this current post/current pandemic world, making it harder to market and sell software and services than ever before.
USAGE-BASED PRICING: Many SaaS Companies are shifting to usage-based models (Including me!). Charging per-use makes the product more affordable and accessible (and take advantage of the features they need), so check out this usage pricing guide from Baremetrics. Usage-based pricing is not a good fit for every SaaS business though - so here are 6 questions to ask yourself before adopting usage-based pricing.
ENTERPRISE SALES: Moving upmarket into larger organizations is a pretty standard SaaS growth strategy. Increasing ARPU (Average Revenue Per Customer) is good! But there is a lot to learn and a bunch of time, learning, and effort required to be successful in this market segment. It's not easy, but it can be done. Here is a great guide from Outreach on breaking into deals over $100k ARR.
GETTING STARTED: There are plenty of SaaS ideas out there and getting started is hard. Take a read of this article on experiences starting a SaaS company from scratch and here are some great startup advice and Essentials from Y-Combinator.
CASE STUDY: Expanding on #1 above Time to Value is something that is front of mind for me right now - so of course I found a case study on it (its' a LinkedIn post) - but gives great examples of what quality TTV looks like.

POD OF THE WEEK: Selling into Enterprise is no joke (see #8 above) and for this week's podcast, Asana's head of engineering has some great tips for ta on how to manage infrastructure needs to support those big old Elephants. Video version (with Slides) or audio version.

Top 10 in Tech - What to know for Week ending September 10, 2021

9/10/2021

SaaS METRIC OF THE WEEK: DAU/MAU. The DAU/MAU ratio is a popular metric for companies that need to measure user engagement. Rule of thumb: Apps with over 20% = good. If you have 50%+ - you’re world-class.
WEBSITE: Do you ever ask the question “Is Your Website Stressing Out Visitors?”. This line of questioning hadn't occurred to me before so how do we know if our website sucks or not? Well first up - focus on the jobs you want the website to do. GrowthInsider has released a great and comprehensive list of the biggest mistakes made on websites also take a read here on how to conduct an audit of your content.
PERSONAS: SaaS B2B Marketing is a pretty unique beast - and getting into the minds of an idealized customer often requires going through the practice of creating personas - you should try it - it will def make you a better SaaS marketer. For most SaaS companies creating multiple personas is often a strategic necessity. So here is an additional differentiator (and what the difference is compared to a persona) of an ideal customer profile.
MARKETING: More for your SaaS dictionary: Buyer Intent Data. There is never a one-size-fits-all marketing strategy and channel for a business. So how does a business find out what are the best marketing channels for them? This article suggests that everything needed to answer that question is already within the data a business generates every day. (you're gonna need Personas - so don't skip the links above)
CUSTOMER DATA: Looping together 3 and 4 above - Customer data management is a practice, not a technology. I love that simple message. Bluconic give the crib notes/5-steps in this article about how to develop a strategy to optimize and improve customer experience using good data management practices.
PRODUCT MARKET FIT #1: I talk about PMF a fair bit - but never with a true VC lens, even though it's a really important metric for earlier-stage investors. So AirTree (an early-stage VC) has just published this article taking a look at what metrics VCs like them look at for signs of Product-Market Fit - and also what the red flags are.
PRODUCT MARKET FIT #2: Asking the PMF question IMO is always the more noble focus (as opposed to being focused on answering the question). But sometimes - you just gotta know (see above) and here is a case study on how Superhuman did it. Also, this article has some great PMF definitions. PMF was called “the only thing that matters” to early-stage startups by Marc Andreessen 12 years ago. Now his team gets a little more nuanced suggesting focusing on Product-User-Fit as an indicator towards achieving PMF. A similar nuance is also true post PMF with repeatable-scalable revenue models as a precursor to a repeatable-scalable business model (you know - the one with actual profits).
FUNDRAISING: Hitting the fundraising motherlode this week with this downloadable PDF from IVP (DataDog, Coinbase, Slack, Twitter, et al) on how to be fully prepared for your company’s next fundraising round. This 25-page article has sections covering financials, go-to-market strategies, market sizing, valuation, and storytelling.
HYPERLINKS: Probably a read for your coffee/Pomodoro break as we are breaking out the way-back time machine for this one (back to 1993). This newsletter is jam-packed with hyperlinks. So here is a question, not necessarily helpful for your business, but one I never thought to consider before: Why are hyperlinks blue?
CASE STUDY: I love myself a good transparent (warts and all) SaaS growth story. This one is a keeper from Tom Hunt on how ConvertKit took a very wobbly path over 5 years to eventually unlock $1.7m MRR - this was in 2020 - they are now at about $2.3m MRR

POD OF THE WEEK: Unpacking Product Market Fit - the podcast version - this episode references different examples and strategies to understand what kind of PMF would work for your startup.

Top 10 in Tech - What to know for Week ending September 3, 2021

9/3/2021

SaaS METRIC OF THE WEEK: Cohort Analysis ( with a Cohort Analysis template for download). GoPractice has a Product focused article on how to forecast key product metrics through cohort analysis and The Startup takes a look at this metric from a VC Due Diligence perspective.
FORWARD MULTIPLES: This is a preferred metric used to value SaaS companies, who generally carry very few assets, little to no profitability, but all kinds of potential. That number is wildly variable and currently increasingly bonkers at a quarterly rate - as of the writing of this, the median SaaS valuation multiple for public companies stands at 21.1x, and check out Snowflake at 84.5x!!!. So how is that number calculated? .....it depends: But a companies revenue growth and sales efficiency dominate the model. Cash flow margins, net income margins (profitability), gross margins, and many other metrics are largely irrelevant.
GROWTH: Looking at those bonkers forward multiple numbers above, that metric represents an increase of over 150% in the last five years. Why? SaaS Growth rates that don't quit - the average is 40%
CUSTOMER PROFILE: Here is a great tool for anyone. Sales can be a real uphill battle when sales teams don't truly understand their ideal customer, building out customer profiles is an incredibly useful way to identify your best customers. So download this Profiler kit pdf and use these questions and survey generator to quickly generate the ideal questions and template for your customer profiles. The rest is all on you.
CAPITAL: Here is another term for your dictionaries - Entrepreneur Capital. It's a nuanced take on traditional VC - but one that is much more human-centric where the author differentiates VC and EC as Venture Capital = Companies + Money vs Entrepreneur Capital = Teams & Companies + Resources & Money. Seems superficial at first glance - but the more I sat with it, the more I realized it's all about assembling the right team.
A/B TESTS: Every path towards growth and revenue is a hypothesis in startup land and A/B testing is something to embed across your company and culture as you experiment towards growth - it's why failure is key to not failing. When conducting experiments such as A/B tests, get started with this refresher and then this Step-by-Step Guide. Go Practice has some great advice on how to make these experiments run faster. On the extreme end of A/B testing is booking.com who often runs over 1,000 tests simultaneously! But here is the payoff: That flywheel enabled Booking.com to compound at healthy growth rates while maintaining ~30% EBITDA margins and scaling Google ad spend to approximately $4 billion per year!
WHAT TO SAY: For outbound messaging, how can you make customer communications effective, balancing business objectives with empathy, authenticity, and value for the recipient during these times? Here are some great templates from Close.com and Wordstream has some great copywriting guidelines in the time of Covid.
CUSTOMER REFERRALS: Last week I referenced/suggested putting some effort and focus on Churn and optimizing ways to keep that number low. Let's take it a step further this week by leveraging those frothiest of customers into a referral channel. Here is a playbook from SaaStr.
REAL ESTATE: What the heck does this have to do with startups and tech? And no this isn't about WeWork - so hear me out: Due to the massive (and likely fairly permanent) shift in work from home culture, Q1 2021 saw the subleasing of vacant office spaces surpass the 2008 financial crisis and Dot Com bubble-era levels (this is in North America). Prop-tech is finding a new gear and a boatload of startups are retrofitting unused space with companies providing indoor farming, micro gyms, and local storage services.
CASE STUDY: Some of you have signed up for this newsletter by a snappy little plug-in on the website. For a while, it was powered by Privy - and it worked really well. I had to bail once they monetized downstream because I'm a cheapskate and I now use a different product - but my whole Privy onboarding experience was something I took note of - as it was so easy. But they didn't start that way. Before the team discovered the power of an integrated app store discovery and distribution strategy, they were relying 100% on outbound!

POD OF THE WEEK: Don't want to read #10 above? You can just listen to the podcast version. Great notes on achieving scale via App Stores

Top 10 in Tech - What to know for the week ending August 27, 2021

8/27/2021

SaaS METRIC OF THE WEEK: THE ROSE METRIC: People are the most important (and expensive) metric for any company, especially SaaS (I would argue more important than the actual product). Revenue per FTE is one metric to measure when it comes to people efficiency, but a better one perhaps is something called the ROSE Metric, which is a return per Employee. This metric highlights the tradeoffs between headcount, recurring revenue, and the EBITDA growth of a SaaS company.
CLOUD 100: Cloud computing powers pretty much every industry now so Bessemer Ventures/Forbes created a “Cloud 100” list a few years back, which is an annual ranking of the world’s top private cloud companies. This is the sixth year of this list and the number 1 atop of the list for 2021: Stripe (again! but now worth $95 billion). They were temporarily off the #1 spot last year due to Snowflake - which didn't last long as they IPO'd at the same time. Combined, the top 10 companies in this list are worth a staggering $190 billion and about 25% of the Cloud 100 top private SaaS companies are growing at 100% YoY or more at $100m ARR.
MARKETING: From Kyle Tibbitts - Marketing lessons learned over more than a decade growing startups. It all starts with the Product - 'Great marketing emanates from a great product.'
CONTENT STRATEGY: Hey - now is a great time to get writing everybody (I need to drink my own cool-aid here, so this is a bit of self-service) - CopyBlogger gives some tips on how to create content that resonates. Great complimentary user story for this on how Leadfeeder used Content marketing to increase their monthly signups.
PITCH DECKS: Why recreate the pitch-wheel? Alexander Jarvis has compiled a monster collection (139!) of funded pitch decks here (including the neo-classics: AirBnB, LinkedIn, Intercom, Transferwise, Canva, and Sendgrid).
DESIGNOPS: Another one for your Tech Dictionary: Listen up! Design isn't a thing, it's a process - the principles of which can be used and adopted across all lines of business (which is why design thinking is a very popular thing). Take a read here to get a much better rundown of what I'm trying to say. And then how to use design thinking (and OPs) in product teams to build better products and experiences.
ONBOARDING: Doing this well is key to increasing value, lowering churn, and creating advocates - so here is how some of the best do it: Leveraging email ZenDesk document their comms flow, and ChartMogul have a guide to their non-email version too. From HeavyBit here is a 4 phase plan and this article covers 5 Tips to Speed up Sales Onboarding without Sacrificing Quality.
CHURN: In our current tech and economic climate, crisis-driven product churn combined with saturation of choice are legitimate growth pressures, especially as many businesses are continuing with a more austere strategy facing uncertain economic recovery indicators. As I’ve mentioned quite often in the past acquiring new customers is much more expensive than retaining an existing one. Creating a culture of customer retention is one of the best things to do. This article discusses ways to make that happen.
DOCUMENTATION: A couple of weeks back I complained that building a comprehensive and useful customer Knowledge Base platform is difficult. But here is something to really consider (it's certainly a helpful article for my mindset) - there are probably stakeholders/purchases of your product who do not respond well to traditional marketing and, in fact, may actively hate it. These people are like me and while I may moan about how difficult creating good documentation is - it may be one of the best anti-marketing-marketing tools you have available, especially if you have an API.
CASE STUDY: You ever heard of Avalara? I certainly had not until I read this article and as of Q1 '21 (as they are already publicly traded) they were generating $600m in ARR!!! All via selling directly to SME's and growing 38% year-over-year. Jason Lemkin has 5 interesting learning from their Q1 report.

POD OF THE WEEK: It's CloudTV week! Expanding off of #2 above is the full playlist of the video version of the Cloud 100 2021. Reese Witherspoon even shows up (as the founder of HelloSunshine)

Top 10 in Tech - What to know for the week ending August 20, 2021

8/20/2021

SaaS METRIC OF THE WEEK: RULE OF 40: What is the 40% rule for SaaS companies? This video explains more but basically, when a VC-backed SaaS business (of over about $2m in ARR) adds profit + growth rate, the total should be equal to 40% or more. This helps calculate the cadence of a business: The faster they grow, the less profitable they need to be. Rule-of-40 stocks have outperformed the broader indices and IT benchmarks over the last 15 years.
GROWTH: Five ways to build a $100M business - just follow this simple video, or read this article, find your target market animal spirit, and you are good to go. This is a fantastic way to think about customers, segments, pricing, and cohorts.
STRATEGY: As an expansion on above, because there are many different ways to build a SaaS business, it depends on the “animals spirit" of the target market as to which strategy is best.
MARKETING: There is a multitude of marketing strategies organizations can deploy that are relevant for their line of business and target audiences from pay-per-click to content marketing. Bloom list the differences between the three main categories. Cutting to the chase though, creating a solid marketing strategy is no walk in the park, so take a look here on how to create a solid one in 7 steps. (BTW - benchmarking budget - Marketing teams spend 5-10% of a companies ARR).
TEST TEST TEST: Evaluating the functionality of a software application at every stage is critical to shipping something awesome. Take a good read of this PDF guide (along with real-life examples) and then bookmark this Google Site page for a comprehensive list of the Stages of Test Development. That's list is kind of old school though - so take a read and sprinkle some of this more modern (ie Agile) take on testing. into your QA world.
CUSTOMER SUCCESS MODELS: Just like customers, not all CSM’s are built the same either. And it depends, based on stage and strategy, as to how your CSM teams will evolve…...but they will. Gainsight proposes 5 basic kinds of CSM, along with a corollary org chart. But keep in mind IRL they all will be different hues. SaaSx has this model. Which one best resonates with you?
DEVELOPERS: The results from the Stackoverflow 2021 Developer Survey are out and the report is full of insightful nuggets: Developers primarily learn online (60% of respondents learned how to code via online resources), AWS is the most widely used cloud platform but GCP and Azure made some gains, devs are still mostly men, and this year React.js surpassed jQuery as the most commonly used framework.
TIKTOK: Significant news in the social media circles and perhaps the end of an era: TikTok surpassed Facebook as the world's most downloaded app. And here is a fact that blew my little mind: Users spent 2.8 billion hours on the app, which equates to nearly 320,000 years last year.
STARTUP SALARY: How much should you pay yourself as a founder after raising some capital? There are lots of good answers and also lots of different situations. A good rule of thumb according to Nathan Latka is if you’re a two-co-founder business and just hit $1m in ARR, you should each be making about $100k per year and increase to $150k at $2m in ARR.
CASE STUDY: Excuse me while I clutch my pearls but this is a story about <gasp> a pivot from being a Product Led business to an Enterprise Sales based organization - but it's a well-documented story and a really important change in narrative focus from ‘Sell & Forget' to ‘Sell & Nurture'.

POD OF THE WEEK: Expanding on last week's popular post on Moats I'm delivering the Podcast version of Jason Lemkin's article on Top 10 Moats in SaaS.

Top 10 in Tech - What to know for the week ending August 13, 2021

8/13/2021

SaaS METRIC OF THE WEEK: PQL: Product Lead Growth is a relatively new SaaS strategy and there are all kinds of metrics that tie into this new category - Product Qualified Leads (PQL) being the lead indicator that the PLG stray a company is investing in is legit.
OUTBOUND SALES: Forget about Netflix, do you want to binge some Outbound Sales TV???? Yeah, that's the spirit!! The team at predictable revenue has been running over 50 outbound sales experiments using good ol’ scientific methods to find out what works best (and what doesn’t.). Watch the whole series on YouTube!
RECRUITMENT: It's always been a challenge but anecdotally, oh my word! Finding good people is so very, very, hard right now. Take a good read (and an even better bookmark) of this page from Heavybit - which is a comprehensive process and guide to developing a successful (and founder-led) recruitment strategy for those of us at the early stages.
ESOP: Employee Share Option Plans are a wonderful idea to incentivize and retain great staff. Not yet figured out your employee stock ownership plan? Check this cheat sheet or here’s a video version if you prefer to watch it. Obviously working out the dilution factor of an ESOP is an important metric to know - so check this page for more on that and finally here is a 9-part video post of the most common questions about startup options.
WRITING: Being able to write well is a skill that needs to sit with founders. So here is 3 step guide - Step 1. How to position your startup and achieve your unique value prop; Step 2. how to write well and one more version for good measure; and Step 3 top tips for telling stories.
KNOWLEDGE BASE: This is very relevant to my pain right now. Building a comprehensive and useful customer Knowledge Base platform is difficult. Keep in mind that 67% of customers prefer self-service (if executed well) and almost 90% of customers now expect a company’s website to include a self-service application.
SECURITY: The ever-increasing adoption of cloud-based software exacerbated by Covid also creates more exposure and risk to bad actors looking to exploit vulnerabilities. Tech companies should be continually concerned about the security of the software being built. OWASP can help you out here - it’s a foundation working to improve the security of software and maintains a Top 10 list of the most critical security risks to web applications. All of this makes Due Diligence for both raising capital and Enterprise based sales a lot trickier to navigate (there is a growing need for chief compliance officers for example). Take a review on what investors are looking for in a team's response to security and also how to pass that awkward, sales-friction-inducing, Enterprise Security Audits/Reviews….and finally how to get started as a startup.
SPEND: How much money do SaaS companies spend on everything? Well, check the first chart on SaaS company spend - remarkably to no one bootstrapped companies are being outspent by venture-backed companies - but the average is 80% of ARR to 115% ARR!! (operating at a loss to support growth - because growth is a Moat). Keep scrolling through - way more goodies in there (such as spending by ARR levels).
MOATS: Moats are one of the best ways to provide a competitive advantage for your business and moats come in all kinds of different flavors (such as speed, Brand, or growth). But here is a great one that conceptually covers b2b and b2c: Emotion. When it comes to B2B this post lists some popular and effective ways companies create moats for their products and Jason Lemkin is way better at this than me and lists 10 of them in this article - so what floats your Moat?
CASE STUDY: Netflix as I mentioned in the past they have (amazingly to me) de-prioritized uptime in favor of speed and also become their own CDN as part of their speedy-experience prioritization. Their recent deceleration in subscribers has created a bit of negative press but they are still over 200 million paid subscribers - here is how they got there.

POD OF THE WEEK: Nothing but rapid-fire VC jibber jabber this week from the team at the All In Podcast (Chamath Palihapitiya, Jason Calacanis, David Sacks, and David Friedberg) - discussing (among other things) their own funds, the rise of venture studios, deep tech challenges risk, Theranos (and fraud), etc, etc, etc.

Top 10 in Tech - What to know for the week ending August 6, 2021

8/6/2021

SaaS METRIC OF THE WEEK: EARLY STAGE BENCHMARKS - Metrics are only good if you know what to benchmark yourself against and Chartio has a list of 20 benchmarks for Growing Startups all handily broken down by department (such as Sales, Marketing, Product, Revenue) to make sure that the business is ready for scale
EXPANSION: This is a bit of a deep dive and check/bookmark here for benchmarks. Expansion revenue costs pennies on the dollar vs net new customer acquisition costs and also demonstrates that a business can deliver increasing value to customers (and monetize that value!). On average 37% of new ARR bookings are attributable to cross-sell/up-sell activities and improving retention or monetization can impact growth 2-4x more effectively than improvements in acquisition. (see slides 41-46 for the real nuggets). Tips on how to optimize this via renewal are available here. But I enjoyed reading this working example of what that means to a companies growth and revenues from a product perspective from the company Buffer.
GROWTH MARKETING: Want some solid pro-tips on growth marketing ideas that just plain work? Here are a bunch collated from Intercom - a lot is centered around being user-focused and if you don’t like that one, try this: Notion’s marketing secrets for those of us with small teams.
DO IT!: It's easy to get caught up in the debates, details, and troubles that work or projects throw our way. As a leader, keeping the beat and progressing the business forward during this time takes some help. So read this from Henry Ward from Carta on how to create a continued Bias for Action.
CUSTOMER SUCCESS: (Positive) Customer relationships are at the core of every SaaS and subscription company. Negative experiences lead to churn that has a direct impact on the bottom line (duh!). Getting started isn’t as obvious as that last sentence though - check this Profitwell article on how to get started with a solid customer success strategy.
ONBOARDING: Onboarding success is often de-prioritized with scrappy fast-growing business but giving customers all the tools they need to succeed with your product is the best way to ensure that they stick around. Profitwell reviews the importance of good SaaS onboarding and discusses steps to create an awesome program. Userpilot also has a great tactical complimentary post here on the best customer onboarding software options for SaaS companies.
MARKET SIZING: The dreaded slide on everyone's pitch deck. What's the size of the market. TL;DR if the market is not huge, same with your startup. Understanding the nuances of TAM, TOM and SOM is a great way to get started understanding market sizes as it applies to your business and the business problem your startup solves.
EMAIL: DEEP DIVE. When it comes to outbound marketing, email works best. Yes, organic search is consistently the biggest source of traffic (Driving up to 68% of all traffic). Email accounts for less than 5% of traffic, on average, but has an incredibly high ROI, upwards of 3,800%!!! Digital Olympus has a great guide on effective email outreach (HINT: This takes time and effort!), Andrea Bosoni gives an IRL story about how he worked hard to improve email open rates and Gong provides a bunch (43 to be exact) highly effective Call-To-Action templates you can use in email campaigns.
METAVERSE: This is not a reference to DC Comics - Add this one to your tech dictionaries. Facebook (or more accurately, Mark Zuckerberg) wants to reinvent Facebook Inc (Facebook, Insta, WhatsApp, et al) as a ‘metaverse company’. Here’s what that means - TL;DR: It's straight out of Ready Player One, spanning the physical and virtual worlds to represent a fully-fledged interoperable economy.
CASE STUDY: Spotify and its Squads. A few years ago a really inspiring and memorable video circulated (you know in one of those cutesy handwritten animation styles) describing the Agile Squads that Spotify employs in its, apparently cooler than cool, Utopian Developer department. Well, guess what, sorry to burst your Spotify bubble, but they abandoned it. (How Agile of them)…. In this post mortem assessment, the biggest key failure was such a SaaS-based one: It was solving the wrong problem.

POD OF THE WEEK: “Jobs to be done” isn’t a phrase, it’s a methodology for getting stuff done - listen more on the concept here.

Top 10 in Tech - What to know for Week ending July 30, 2021

7/30/2021

SaaS METRIC OF THE WEEK: Customer Renewal Rate measures the percentage of customers who renew their subscriptions at the end of each subscription period. High renewal rates inform companies about lots of things - product-market-fit, market, pricing fit, value, business model viability, etc. The authors of this article from Profitwell describe the formula and also make the point of differentiating between renewal and retention - one is actively renewing, the other is not actively canceling.
USAGE BASED PRICING: v 2.0! Usage-based pricing aligns with customer growth and helps minimize friction during customer onboarding, as customers only pay for what they’re using - it's right-sized. This strategy typically sees best-in-class net-dollar retention results. The cool thing is that the current understanding of ways UBP is being applied in forward-thinking SaaS companies is so fresh that this article is an updated understanding of a UBP Article from November 2020 (but here is that playbook anyway as a downloadable PDF).
CUSTOMER OPERATING SYSTEM: What exactly is the difference between Customer Success and Customer Support? Get started here to understand the nuances, they are both parts of the same customer journey spectrum, and Totango posits, in this recent SaaStr Annual presentation, that we need a fresher look at Success and Support that they coin the “Customer Operating System” (Like the presso? Here are the Google Slides deck).
SDRs: Last week I referenced the varied roles that can sit under an SDR. So this week let's take a look at their Compensation. Once again it's a tricky one to manage and understand - this 'complete' guide (I say that as it's really on 12 pages long) has some great frameworks for you on variable pay structures and the difference between outbound and inbound SDRs - it also included a simple Google Sheets Worksheet to take with you. As part of Betts 2021 Compensation Guide, however - you can interact with the report on actual remuneration stats broken down by US geographic regions.
ROADMAPS: Always seems old-school, clunky, and too rigid to me in today's Agile workplaces. But Agile teams absolutely need them as the teams still need some overarching direction and sense of what’s to come beyond Sprint cycles. Read here on the reasoning why along with 5 roadmap templates to use. I'm personally a fan of how Atlassian has designed its public access roadmap.
SMB vs ENTERPRISE: As a startup - which way to chase? Firstly this obviously depends on the product being built and market size, but in general, the Old Skool guidance was to start chasing the biggest contract values as soon as possible, which is Enterprise. But according to Craft, newer school thinking is to focus on SMB, which has been a sleeper category, as sales velocity is a better strategy than chasing contract size.
SEARCH: Here is a really insightful KB article via Google on causes for various organic search traffic drops and how to categorize them and analyze your own search pattern drops using Google Search analytics. Twitter also liked the article and had some hilarious responses of suggested new category types.
INTERNET: I spent waaaaay too much time cruising around this infographic this week - it's a map of the internet (in high res) and has several thousand of our most visited websites, sorted as distinct "countries" and grouped with others of similar type or category.
TECHNICAL DEBT: This article has made me really think more about my underlying assumption that all technical debt is bad (see page 5 of this report). The authors make the case that all technical debt should not be classified into a single bucket of "bad" and that some technical debt is good to have with real-world examples such as Twitter.
CASE STUDY: Relevant to #6 above. Xero is the SMB master! The accounting software company is approaching $1B in ARR so SaaStr takes a look at how they go there: Nailing a niche and an LTV of 81 months helps! Markgrowth also has a great complimentary article on how Xero acquired 350k SaaS users in 2018.

POD OF THE WEEK: Adding onto #6 and #10 above (and because I didn't listen to much this week, so it's a repeat), Profitwell runs a pricing page teardown on Xero.

Top 10 in Tech - What to know for Week ending July 23, 2021

7/23/2021

SaaS METRIC OF THE WEEK: ZCP: Repeat this metric 5 times as fast as you can: "month zero cash-on-cash payback”- this tongue twister is best referred to as ZCP. It’s a cash-based metric because cash-in-the-bank is THE critical number for a SaaS company to monitor in my experience. ZCP answers the question: if we invest $1 in sales costs (such as salaries and commissions), how long does it take to recoup that dollar spent and welcome it back to our bank account?
SPEND: Figuring out how to optimize marketing spend with growth rate is a key question and this study doesn’t show amazing benchmarks for us all - the percentage of inbound revenue pretty much equals the percentage of growth out, but there is an ever-increasing range of outcomes as spend increases per business. Less mediocre benchmarks are with the Sales vs Marketing spend ratios which stay at about 2:1 regardless of market-facing strategies (although Mixed is a bit of an outlier).
PROFESSIONAL SERVICES: It’s a weird open secret that a lot of B2B SaaS businesses generate a significant amount of revenue from implementation and deployment projects, often captured as revenue from Professional Services, due to deployment and configuration complexity. So what are the revenue benchmarks for a SaaS Business to captured revenue through professional services? On average it caps out at 11% of all annual revenue with Enterprise focused businesses but even at the lower end of town it’s still 5% of revenues with SMB focused businesses.
MISTAKES: A somewhat morbid post-mortem article from Failory who analyzed over 80 startups who have failed and identified some of their common mistakes (some fatal). Marketing problems seem the most abundant (and deadly) - but product-market-fit, market size, and value add are all creeping around too.
SDRs: The answer to the question "what does an SDR do?" is pretty unique to whoever is responding. So here is some good empirical survey-based insight on the things an SDR Team does within a revenue organization to add to your job descriptions. It's way more than just prospecting including research, social media, content creation, and.....watch out all you AEs....closing.
CHURN: I love myself a good infographic, so take a good look at this one on Churn prevention complete with steps to take at every stage in the customer lifecycle and the good old involuntary churn prevention - extra tactics on that here (another infographic!)
PREDICTABLE REVENUE: It's the #1 reason investors love SaaS. I may give Salesforce a hard time occasionally - but over 20 years ago, they launched the methodology of Predictable Revenue, which then became a sales guide published way back in 2011 by Aaron Ross - Crib Notes PDF pf that book is downloadable here.
REVENUE MANAGEMENT: Tagging on to #7 above - revenue management is the system of setting prices and adjusting them based on supply and demand (thanks for the infographic Chargify). In SaaS, which is all about predictability, this is really important, with RevOps being a new category of practice within maturing SaaS companies.
A/B TESTS: Everything is a hypothesis in a startup and testing should be embedded into everything you try towards growth and product. When conducting experiments such as A/B tests, get started with this Step-by-Step Guide. Go Practice has some great advice on how to make these experiments run faster.
CASE STUDY: Product hunt has the metric of being everywhere - so how did it get to be the place to discover the new next big thing?

POD OF THE WEEK: Customer churn is the bane of SaaS businesses - data can help understand the causes of churn and take action to reduce it.

Top 10 in Tech - What to know for the week ending July 16, 2021

7/16/2021

SaaS METRIC OF THE WEEK: Light reading this week (jk, jk, lol, no it's not) - I received a bunch of feedback on posts a couple of weeks back for VC Metrics that matter - it's time to go deeper - this is from Andrew Chen of a16z: An 80-page slide deck of the red flags and magic numbers that investors look for in your startup’s metrics. The article is the best part due to Andrew’s notes - but if you just want the PDF, I got ya, just click here.
VENTURE: Another Quarter has passed, so another State of Venture report is out from CB Insights (Q2 21) - and it 190 slides of Spicy! Global funding hit a record high (again), up 157% YoY ($156B), 136 new unicorns in Q2 - 2020 had a mere 128 in total for comparison, and M&A/IPO exits are up 109% YoY (2,893 in the quarter).
CUSTOMER JOURNEY: What the heck is a Customer Journey anyway and why do you need to create one? Now you know you need one, mapping out a Customer Success Journey via a visual map is a great way to know at what areas a Customer Success Team needs to be involved in (and what their responsibilities will be) via a variety of engagement models. You can also access a sweet customer journey mapping template here.
CHANNEL SALES: Figuring out channels (new, emerging, adjacent, uncertain, etc.) requires experimental rigor and good processes. Reforge.com is never lacking for detail when it comes to addressing topics like this, so take a deep read of their article here complete with a framework, case studies, and even a Worksheet (Google Sheets style!).
BOOTSTRAPPERS: This is for all of you choosing the do-it-without-investors route: Check the State of Independent SaaS Report, which is based on hundreds of non-venture track, revenue-generating, SaaS companies. It has fantastic benchmarks for the bootstrapped: growth rates, demographics, validation approaches, and more.
GROWTH: Reforge gets another mention this week - discussing the industry expectations for SaaS companies to choose either Growth or Monetization strategies. Their perspective is that this is a false choice - ask the bootstrappers above: It's about how monetization feeds growth. Adding a tactical layer to this - building a system for growth is an interplay between marketing, product, and good monetization - everything is related.
PRODUCT DEBT: Product Debt is just as bad as Technical Debt - it's all the decisions that have been made, often tactical and acute, without a clear product vision or sufficient consideration about the long-term effects of that moment/decision. The link above also has a great case study of Google's messaging product evolution.
BOARDS: Great fact: Having a diverse board pays off. Check this report examining the link between companies with multidimensional board diversity and the correlation to revenue. You can also see how your board stacks up by calculating your score here.
APP TRACKING: If you hate Apple's new App Tracking Transparency policy (ATT) - my guess is you are in advertising/marketing or you are Facebook. So here are some interesting stats: Mobile ad spend (on iOS 15) has decreased by about 1/3rd since the beginning of June - while the opposite is true on Android. This is also resulting in 15% to 20% revenue drops for iOS developers - likely meaning a big shift of developer energy into Android coming soon. Fun sidebar - ATT request distribution by Geography
CASE STUDY: WISE (the app formerly known as TransferWise) is now a publicly-traded FinTech and anyone that knows me knows that I'm a big fan. I use it for most of my business and personal life and will enthusiastically tell you given the opportunity....never heard of them before? Well, guess what? Their main channel of growth is word of mouth, so you're welcome. GoPractice have a great breakdown of their growth and an accompanying Podcast

POD OF THE WEEK: This one doesn't actually exist yet but is an expansion from #2 above - it's a future webinar (July 20th at 2pm EDT) reviewing the CB Insights State of Venture Q2 21 report

Top 10 in Tech - What to know for Week ending July 9, 2021

7/9/2021

SaaS METRIC OF THE WEEK: Beyond Customer Satisfaction Surveys or Net Promoter Scores is this idea of a Customer Engagement Score. This is a useful tool for managing a companies customer base and making segment decisions easy, therefore enabling different priorities and engagement strategies - and being able to measure the impact of those strategies over time. Get started reading this article.
SECURITY: As of the writing of this week's newsletter over 1,500 businesses have been affected by a ransomware attack on IT firm Kaseya. This is even bigger than last year's SolarWinds breach if you didn't notice. So time to revisit this (again)- Security should be an integral part of your dev cycle: Know your weak spots and how to recover well - if it is not obvious yet - firewalls and perimeter protection are Old School. Founder Institute discusses 6 points of vulnerability in your tech stack that I bet are a bit leaky and here are 5 steps to get started.
CX: According to this Zendesk report, 65% of enterprise companies are investing more in Customer Experience technology this year. Investing in customers is a pretty obvious payoff, but what to prioritize is the trick.
USP: If done right a unique selling proposition (USP) can be leveraged to build your brand, differentiate your business, and attract your ideal customers - so check this article on how to create a compelling unique selling proposition.
CAP TABLE: Last week I referenced alternatives to Venture Capital and dilution - this week let's focus on dilution from a cap table perspective. Take a read of this article from Heavybit that discusses Cap Table management in relation to growth and also how to manage that Option Pool.
GROWTH MARKETING: If you're responsible for growth/marketing we've hit the motherlode! Dan Siepen has put together a comprehensive list of resources and the lists are updated often, so make sure you bookmark this page.
PROSPECTING: This is part 1 of a Workshop via HeavyBit - focused on helping early-stage startups build predictable prospecting pipelines and repeatable closing processes and Part 1 comes complete with a full worksheet for you to make a copy of.
DUNNING - er: Now that I've discovered this weird-ass name for involuntary churn (aka bad payments), I'm a little obsessed. According to Baremetrics, SaaS and subscription businesses lose around 9% of their MRR due to failed payments on average. So take a read of my new discovery this week - a report documenting the art of mastering Credit Card failures - this is an easily addressable problem that's kinda big - according to Profitwell's study - 20-40% of churn is credit card failures.
SDR SALES: Chorus.ai has built a great report of what high-performing outbound sales teams are doing to close deals (this is an analysis of over five million sales calls!). You can add in the kind of business you are (SMB, Mid, Enterprise) on this page to see how you measure up. Key nuggets: An SDR dials, on average, 106 people to schedule just one meeting and the typical win rate of a sales qualified lead (SQL) is 19%.
CASE STUDY: Contrary to traditional startup lore, not every founder is a domain or industry expert. Here are 6 lessons from founders who (successfully) founded a startup in a space they are not an expert in.

POD OF THE WEEK: This is complementary to #7 above - Predictable Pipelines for building your sales stack, processes, and prospecting.

Top 10 in Tech - What to know for Week ending July 2, 2021

7/2/2021

SaaS METRIC OF THE WEEK: Cohort Analysis (free Cohort Analysis template!). GoPractice has a Product focused article on how to forecast key product metrics through cohort analysis and The Startup takes a look at this metric from a VC Due Diligence perspective.
MARKETING: This is one to save to your bookmarks or add to your ideas/inspiration board. At first glance, it looks like a lightweight article. But just wait. One day you will be looking for ideas on how to elevate your product or business, when you do open up this bookmark for some true inspiration on 52 Low-Cost Ways to Promote Your Business
GAMING: So what's been going in gaming in the past pandemic year (HINT: A lot) Check this new report from AppAnnie on their take on what is going on. Mobile is smashing it (compared to PCs or Consoles) with a BILLION games downloaded weekly (on average) - which is up 30% on last year (and spending 40% more). In-game Ads are still weird though - most people remain not fans.
OKR’s: Pioneered by Google a few years back, OKR’s have emerged as a part of the suite of modern product and company best practices (that include Lean, Agile, and Jobs-To-Be-Done frameworks). Heavybit has a great article on steps to get started for the first time within your organization.
COMMISSIONS: How to pay your different sales channels? Commission levels of sales are pretty stable across sale types at about 10-14%. Commissions on renewals are only 3% and upsell is 9% - however about 50% of the time this is not paid at all. (Bringing up another subject on how much revenue a Customer Service Manager can manage).
RENEWALS (deep dive): To add to the above, I’ll keep banging this drum: Customer Success is CRITICAL to the sustainable growth of a modern tech business. Landing a customer is (obviously) important keep in mind costs - being just acquisition-focused is WAAAY expensive (Costing about $1.10+ per $1 of ARR). Compare that to the cost of retaining or up-selling existing customers (about 12c-15c per $1ARR) - that’s 8 times cheaper. Finding repeatable scalable sales processes is something required to scale. But don’t be a purely acquisition-focused business, give some love and attention toward building out the same repeatable-scaleable process for renewals. Also, both of these revenue teams need to be aligned.
BLOG: Content is kind, so how is your blog content page? After reviewing this article I now know mine needs work: The 13 Best Practices of the Top 100+ Marketing Blogs. But my email sign-up works at least, I got two of these three. Mastering great content writing is also a skill - and I've snagged a great guide for us all here on that topic and along with great info on how to plan a data-backed B2B content marketing strategy. But don't worry - there is no correlation between social shares and people reading anything anyway.
RETENTION: In Q1 of this year, SaaS Capital conducted a survey of B2B SaaS company metrics (they do this every year) - here is the report (downloadable PDF) - no real Covid impact was observed. Bootstrapped businesses have great gross revenue retention compared to their equity-backed counterparts (94% vs 90%). Fun fact though - and why NDR is important: Growth above 40% is associated with 100+% net revenue retention - now what? How about a great article on how to optimize retention.
CAPITAL: In the current tech world, it doesn’t have to always be about Venture Capital or equity (and dilution) when looking to finance. Revenue-based financing is quickly becoming a popular way for startups to raise funds without sacrificing equity, with the rise of significant services such as Lighter Capital and The 20-Minute Term Sheet in the past couple of years. Here is how it works and what these financiers care about. HINT: It’s ARR and growth. From the SaaS CFO here is the Founder’s Guide to Venture Debt with advantages vs disadvantages of Debt vs Equity.
CASE STUDY: Expanding on #7 above is a neat experiment an SEO company took on increasing their monthly organic traffic by 3012%! It was bu focusing on content, improving structure, and link building.

POD OF THE WEEK: Scale-up Marketing - How marketing delivers growth with the Chief Growth Officer of FreshWorks.

Top 10 in Tech - What to know for Week ending June 25, 2021

6/25/2021

SaaS METRIC OF THE WEEK: LTV:CAC - the LTV:CAC ratio is often interpreted as a true value of a companies customers. I say it can be a way to measure the viability of a companies business model. The question is simple: How much money will a customer spend on you versus how much effort is spent acquiring that customer? This ratio needs to be quantified to validate go-to-market strategies, monetization strategies, product strategies. If one of those isn't working - that ratio will be whack. It is almost folkloric now that this ratio has to be 3:1 - but is that true? The SaaSCFO takes a look - TL;DR - kinda yup. It's a good rule of thumb.
VENTURE: From Gabe Kleinman of Obvious Ventures a great article positing that the entire VC industry needs a reset. Gabe makes a strong case that VC's are missing out on the most transformative ideas of our time (opposed to incremental ones). PointNine ask from another angle: If entrepreneurs can come from anywhere, then why do all VCs look the same? There is a reason why the (kinda) parody site VCStarter Kit exists you know.
PRODUCT LED GROWTH: Total banger of an article here this week (thanks for the link Christelle Blanchet-Aissaoui). It's a Product-Led-Growth playbook for B2B startups. complete with metrics, scale-up strategy, and experiments. Want to know how far along your organization is on the PLG maturity spectrum? Check this Product Led Growth Maturity Grader from OpenView.
COLD CALLS: Cold calling and email are increasing as a tool during our new sales regimes but these methods historically have very low response rates (1.48% for cold calls and 1% for cold emails). Jason Bay has some methods to optimize response rates and Gong has some recommendations on cold calling.
ZERO-BASED DESIGN: Another concept for the dictionaries: Zero-based design has emerged as a potent approach for businesses to improve performance and redesign their products, services, and even organizations. McKinsey go even deeper with a look at this from what they call Operations Practice and is the kind of modernization process problem that companies such as ProMapp help solve.
LEGAL DOCUMENTS: In startup land, there is a veeeery long tail of legal documents that need drafting in order to run a business, never mind grow one. Here are some great resources for free legal documents so you can stick to the mission: Avodocs - 3 free per month. Cooley Go has a library of documents for the US and UK, from Penn State Law School - a startup Kit bundle For those of us in NZ, Simmonds Stewart has a comprehensive library of agreements and templates.
MLP: For your tech dictionaries - Minimum Lovable Product. MVP (Minimum Viable Product) is OK but what if no one likes it? FirstRound capital uses the analogy of burnt pizza - pointing out that the fastest and cheapest functional prototype could produce a poor or flawed version of something that people may actually love.
SUSTAINABILITY: There has been a major push throughout this pandemic - of survivability - that's transferring into sustainability in SaaS. Building and growing a SaaS company isn’t a sprint – it’s a marathon and while Growth is a great moat, sustainable growth is ultimately what we all need to be focused on (and this is a Pre-Covid Article) - so here are 5 tips to become more business and environmentally sustainable in 2021.
NO, NADA, NOPE!: Two sides of the no-coin here….a bit of a NO deep dive. This first one was shared by one of my team and it's too good to not share. Learning to say no is the most important skill a programmer can learn - TL;DR - it’s all about keeping the codebase small and solving the right problems/jobs! On the flip side - when it comes to selling, "No" is almost a curse word. So this article goes into depth on ways to be 'Yes', rather than have to say no - it’s a great way to think about how to say yes through the product.
CASE STUDY: Freemium: In a Profitwell report they demonstrate how Trello, Slack, WordPress, and Dropbox leverage Freemium to drive MRR they also dive into Notion's freemium strategy, noting how Notion leverage customer empathy in their packaging model.

POD OF THE WEEK: Expanding on #8 above Sustainable growth in SaaS using data and pricing, with Paul Lynch, the CEO of Chargify

Top 10 in Tech - What to know for Week ending June 18, 2021

6/18/2021

SaaS METRIC OF THE WEEK: Last week I discussed how (often time) many base SaaS metrics are mainly in service to VC's - well here those are: A simple collection of the most common SaaS metrics (Churn, LTV, CAC, etc.) with clickable deep dives into each one AND interactive models - def a great bookmark-able page.
PROFIT: There are myriad opinions on how well software companies perform, especially in public markets. SaaStistics analyze this across two articles. The first asks the question 'Are Software Returns Really That Good?’ TL;DR - heck yeah - I want to temper that by rephrasing as "can software returns be that good?" - only if you don't count margin. The second one asks - cool! So which ones are the best? TL;DR Shopify…..but also Zoom!
GROWTH: SaaS Businesses have been on a bull market for well over a decade and though-out the pandemic. During this time it’s all been about growth and not necessarily profits (which is why Public Markets hit lately with inflation). A16z makes the case that to weather this pandemic storm and the new future, SaaS companies should be focused on efficient growth strategies and metrics. NfX compliments this by discussing the new rules of the historic Growth vs Profitability tension in SaaS.
FINANCIAL MODELING: Fun fact: SaaS financial modeling is uniquely complex and requires careful thought. Luckily for you, there is a boatload of helpful content out on the web to help with financial modeling. Baremetrics are incredible at this and have 1. An overview of why SaaS metrics are different; 2. A Deep Dive on a usable model for you; 3. An actual Google Sheet ready to go (just make a copy).
VALUE-BASED PRICING: It's a tough nut to crack as it makes the most of what the maximum cost customers would be willing to pay for a product or service - this means there is no magic guesswork or thumb-suck number. These prices need to be arrived at Empirically. Paddle.com has a pretty good guide on what this means (with examples) and Profitwell has a total guide on making it happen (and how to go about calculating/measuring it).
VENTURE: Pitchbook released the Q1 for 2021 Venture report a few weeks back (downloadable PDF here): Stuff is NOT slowing down ($69.0 billion USD deployed). The first quarter of 2021 saw record activity from non-traditional investors, which means non-VCs - mutual funds, hedge funds, and private equity. But three-quarters of all these investment dollars (75.2%) were deployed in late-stage deals, which may be setting the scene for a bunch of future exists/acquisitions or public listings. At first stage funding there were 722 deals reported (a historically low figure), but averaged $4.7 million per deal i- which is among the highest on record.
REMOTE SELLING: Hopefully you are fully prepped for onboarding remote AE’s and SDR’s but here is a run down if not of how to onboard WFH SDRs and AEs well. But how can you equip these people to sell remotely both tactically and strategically? Hunt Club has some suggestions.
PERSONALIZATION: SaaS marketers have been turning to personalization more and more in recent years as a way to increase conversion rates, improve customer success, and increase the quality of sales/marketing funnels. So check this great article from Chart Mogul on the (modern-day) personalization fundamentals. As a teaser: Personalization reduces acquisition costs by as much as 50% and 87% of companies see a lift in key growth metrics when they employ personalization.
VIDEO CONTENT: Nailing introductory and Demo videos is a total art form. Don’t know where to start or have a video block? Get inspiration from this curated collection of some of the best and here is a list of 6 videos every SaaS Company needs. (TL;DR Explainers, Company, Testimonials, landing, page, FAQ, and Personalized Sales).
CASE STUDY: Adobe! Remember when Adobe products were just software licenses? This seems like a generation ago - in Tech years it was as Adobe Creative Cloud was launched in mid-2012 and the transition was fast. Creative Closed surpassed product revenues by mid-2013 - last Quarter they are now at a whopping $10.69 billion in ARR for subscriptions. Here are 7 lessons for us all on this transition and from ChartMogul here is a breakdown of the strategy that got them here.

POD OF THE WEEK: To compliment #6 above - it's the podcast version of the VC in Q1 2021 report by Pitchbook.

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