Top 10 in Tech A WEEKLY NEWSLETTER

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.

Top 10 in Tech - What to know for Week ending June 11, 2021

6/11/2021

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.
CUSTOMER SUCCESS - Quota: this is an expansion of celebrating CS's contribution as NRR and CAC payback referenced in #1 above. In past newsletters, I have referenced AE and SDR metrics and quotas. But what about quota expectations in renewal and cross-sell/upsell within a Customer Success Team? Tomasz Tunguz takes a look based on a report a couple of years back from Gainsight. Most Customer Success Managers can handle between $2-$5M in ARR and somewhere between 10-500 accounts (but it varies based on segment/ACMR).
FREE-ER: It’s not necessarily a time to rethink Freemium as a SaaS Go-To-Market strategy. But it’s probably a good time to think about more free-as-a-sales-strategy - according to Jason Lemkin from Saastr - more-free seems to be working well these days. BTW Freemium is not just for B2C businesses like Dropbox and Spotify. Freemium is now a strategy employed in gaming, Enterprise, Cloud, and Online Payments.
SALES: 68% of Companies miss their forecasts by 10% or more according to this report - 2021 Sate of Sales Forecasting (this is from a survey of about 400 B2B enterprise organizations). It's a pretty good report and you can see other benchmarks (such as ARR and ACV) across industry peers. Great! So now what? Well get started by checking this article covering Sales Forecasts and Pipeline Reviews: Why and How from a cash perspective.
AGILE MARKETING: Hold on to your hats Marketers - Agile processes are coming for ya! This is another one for our Tech Dictionaries - it's how to really validate learnings, make mistakes and deliver impactful results. Hubspot covers this concept in detail and outlines how DoorDash hardcore-leveraged this methodology to increase revenues from $885m to $2.89 billion in a YEAR!
DUNNING: Hah - how did I not know this? I just learned about this term via a client who provided a requirement to me to automate a "Dunning Letter" - huh? What? Turns out it's a real term with a weird-ass name for involuntary churn (aka bad payments) - according to Baremetrics SaaS and subscriptions businesses lose around 9% of their MRR due to failed payments on average. Learn more about a successful dunning (and pre-dunning) process here.
CX REPORT: According to Forbes, Customer-centric companies are 60% more profitable than companies that don’t focus on customers. All companies, not just SaaS, are under pressure, especially after 2020, to deliver optimal customer experiences (CX). It's difficult to know where to make investments that are likely to pay off when getting started so download and read this in-depth Report (78% of respondents said that customer-centric agility has increased in importance as a result of COVID-19).
CLOUD: The 2021 Cloud Report is out (from Cockroach Labs) which is a benchmark comparison of performance across the three major cloud providers — AWS, Azure, and GCP. TL;DR. AWS continues to dominate public-cloud market share - but GCP performs the best with impressive throughput metrics.
SALES vs MARKETING: Great (and relatively short) read from Jason Lemkin here for all you early-stage people discussing how a startup's growth problem was misdiagnosed as a sales one (when it was actually a marketing problem).
CASE STUDY: Uber made the call to completely re-write their app in 2016 - with the constraint of this being less than a 100MB download (as that's the max size of an iOS app available for cellular download, which most first time customers need as they often decide to download the app while curbside). This is how they did it - it's a pretty crazy developer ride.

POD OF THE WEEK: Scale-up Marketing listening to compliment Agile Marketing in #5 above - How marketing delivers growth with the Chief Growth Officer of FreshWorks.

Top 10 in Tech - What to know for Week ending June 4, 2021

6/4/2021

SaaS METRIC OF THE WEEK: CHURN: Profitwell has a complete guide to understanding, calculating, and reducing churn, which they call "the silent killer of subscription businesses”. This is much more than a download as it’s pretty much an eBook. After you have read that - head over here to benchmark your Churn based on growth rates and sector sourced by paddle.com (SaaS is overall on average 4.79%).
MARKETING AND SALES: Hubspot continues to benchmark Pandemic-times data for core business metrics like website traffic, email send and open rates, sales engagements, close rates, and more (aggregated from their global customer base of over 70,000 companies). It’s an incredibly useful tool as a benchmark to measure your business against. Explore all the benchmark data here or check this week's summary here.
CUSTOMERS: 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).
DILUTION: Did I scare you? It's one of the most feared words a founder can hear. So here we go - let's make it a benchmark. 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. Obviously, there is a significant difference in Bootstrapped vs not in this dataset.
PRICING: It's a new month - so time for a whole new pricing bit. This one is interesting as the author is pitching a new, better (gasp!), way to decide your product pricing HINT: It's all about how you ask the question and this variant on how to research and implement a value-based pricing model.
UNSHIPPING: Here is another term for your Tech Dictionaries - when is it time to remove or deprecate features and products? We all cheered when Microsoft announced the end of Internet Explorer last week, so how can you and your team make the decision of when to unship something? Check here - a great article covering this topic from Reforge with evaluation criteria and real-world examples from Slack and Mixpanel.
HAMBURGER MODEL: The second (but weirder) one for the Tech Dictionaries this week. It's a modern go-to-market strategy in this PLG (Product Led Growth) SaaS era. The bottom bun is self-service PLG and the top bun is enterprise sales your product is the meat in the middle. Want an example? Check this week's Case Study on Vimeo - 75% bottom Bun - 25% top bun.
SOCIAL MEDIA: When is the best time to post on social media in 2021 (where social media became more important than ever)? This article has your answer for Facebook, Instagram, Twitter, and Linkedin across a bunch of industries - cool stuff!
UNICORNS: 2021 is not mucking around when it comes to these pointy-headed companies. There have been more unicorns minted in the past 5 months (Jan - May) than all of 2020. These aren't all SaaS companies - but most are.
CASE STUDY: Vimeo is now at $330,000,000 in ARR - growing at 56% YoY with just 674 employees, 40% of which are female - and this growth is 75% Self-service PLG driven and 50% occurs outside of the US.

POD OF THE WEEK: Continuing from #1 above - customer churn is the bane of a SaaS business - data can help understand the causes of churn and take action to reduce it.

Top 10 in Tech - What to know for Week ending May 28, 2021

5/28/2021

SaaS METRIC OF THE WEEK: MRR (monthly recurring revenue). In a surprise statement to no one, this is one of the most important metrics a SaaS company has. But MRR is a nuanced metric with a few flavors and this is something that everyone needs a deeper understanding of. There are different ways to calculate the metrics and once nailed, can then be leveraged to easily forecast where you are going as a business and which types of MRR are performing best.
MARGINS: Real talk time - Investors love SaaS because of the annuity-like returns (with prolific growth) - but if we really scratch the surface on what the margins are.........it's not good. Sammy Abdullah takes a look at 42 publicly traded SaaS companies (so this is theoretically companies with decelerating growth) to highlight how anemic (that it is negative) the median operating margin of these companies are (TL;DR - it's minus 21%) -most are operating at an operating loss.
INFLATION: Huh? What the heck does this have to do with tech? Well if you have a tech-heavy investment portfolio you sure as heck know why after the last couple of weeks wild Stock Market (and Crypto) ride - let's assume that the fixed Margin costs (see #2 above) are some of the reasoning - but also Tomasz Tunguz gets into it this week looking at the Inflationary pressures within the Tech Industry in regard to valuations. It's quite a wild ride - especially post 2019 (60% spike)and the market is making it clear that valuations need a cool-off.
PRODUCT MARKET FIT: Everyone thinks they have it (when they don’t). Andrew Chen from a16z is great and his PDF/deck on going from zero to Product-Market Fit is excellent (For SaaS he calls this a 5% conversion rate from free-to-paid, or 3X CPA to LTV ratio, or less than 2% monthly churn rate, or TL;DR.... just a clear path to $100k MRR). He also has an accompanying article with notes
TRENDS: In March 2020 the search term for “how to make hand sanitizer” grew by 4,950% worldwide. Opportunity via search is a real thing. Every google search is a problem looking to be solved - some big some small. So how, as an entrepreneur, can we track these kinds of rapid trends? Google lays down the lesson on how to stay on top of market trends leveraging…..you guessed it: Google Trends.
OUTBOUND: LinkedIn a pretty good source to secure outbound opportunities. From the Predictable Revenue team is a great article on how SDRs can turn 100 LinkedIn profiles into 10 meetings and Forbes gives a view on the pros and cons of cold calling.
CONTENT MARKETING: I bet you have been told that you need to focus on the top of the funnel - but here is something controversial to read: When it comes to Content Marketing - focus on the bottom of the funnel first to drive signups. Whaaaaaaaat? The thinking is - top of the funnel already know their stuff, it’s the bottom part of the funnel that's truly on the learning search.
DEMO or DECK?: When it comes to closing deals the teams at Zoom and Chorus got together to take a look at what works better - a presentation or a product demonstration, or a bit of both? Read away for more (and I don’t want to spoil it as the infographic is full of amazing nuggets!).
GROWTH: Jason Lemkin swooping in this week with a fantastic top 5 tips to grow an extra 10-20% faster this year - he's always looking for ways to squeeze more performance out of those growth engines metrics and here is an accompanying article about what kind of growth metrics you may wanna squeeze
CASE STUDY: I got mobbed by Monday.com adds in 2019 and 2020 - thankfully they are gone but I did evaluate their product for use (so they worked). They have now filed to IPO a couple of weeks back and reporting a whopping $240m ARR with an 85% YoY growth. FYI - they launched 6 years ago. Jason Lemkin has some great insight on their numbers here.

POD OF THE WEEK: Expanding #8 above from Dan Martell - How to give product demos that sell using these 5 tips

Top 10 in Tech - What to know for the week ending May 21, 2021

5/21/2021

SaaS METRIC OF THE WEEK: CPA - cost per acquisition. This is often conflated with the cost of acquisition, but they are different. Andrew Chen dives into the details as to why (and also how to calculate CAC accurately).
VALUATION: Complete with a downloadable sheet for ya: This SaaS-Capital Index worksheet (Excel) can be used as a starting point for a comprehensive valuation analysis of a (your!) SaaS business. 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. An impressive observation specific to growth rate is that every 1% increase in growth rate corresponds to a 0.38 increase in valuation multiple (starting with a flat growth valuation of 5.1x ARR). All part of the growth-at-the-expense-of-profit strategies.
FREEMIUM: Freemium is continuing to gain popularity as an effective growth strategy for B2B SaaS companies. Canva and Slack have contributed to the re-emergence of this growth strategy. So, why is Freemium becoming popular again? Read more on that here, then check the 3 main flavors of Free and then these 3 Famous Freemium SaaS Strategies (And why they’re so good). But perhaps the more pragmatic article is from a company called Chameleon on making freemium models actually work for you.
CONTENT MARKETING: Mastering great content writing is a skill - and I've snagged a great guide for us all here on that topic and here is great info on how to plan a data-backed B2B content marketing strategy
SECURITY, SECURITY, SECURITY: If you didn't notice - a big US gasoline pipeline got ransomwared last week leading to some serious gas shortages. So time to revisit this: Security should be an integral part of your dev cycle and you need to know your weak spots. Founder Institute discusses 6 points of vulnerability in your tech stack that I bet may be a bit leaky. These high-profile breaches are going to make Due Diligence a lot trickier to navigate (there is a growing need for chief compliance officers for example). What should you start focusing on? Start with more detailed Log Management (listen to the Podcast below to understand why in the now infamous Solar Winds case)
SALES TEAMS #1: Betts Recruiting releases a compensation guide every year and the 2021 version is now out (Or check this for the more interactive version if you don't want the PDF). It covers salaries of some of the most important roles at high growth (mainly tech, mainly sales) companies. Big take-home: Covid hit hard in Sales this year. People moved out of the sales hots spots big time (of NYC and SF); AE's had the first year of no overall Compensation increase; SDR's saw about a 3% rise and; Sales leaders saw about 5% rise.
SALES TEAMS #2: Now that you have some great baseline metrics based on the reports above from Betts, take a good read of this article from David Sacks on the simple math you can use to set up a sales team. With Individual plans, team plans, and expansions/renewals considered for a high growth sales team structure.
SMS: Did you know that the average open rate for marketing emails is around 20%, while SMS open rates range between 82-98%. Check this article for this fact and more on SMS-Marketing basics.
BUSINESS MODEL: You will be asked often (especially when pitching) about your go-to-market business model: This is a pretty long, but very high value, read from Alex Jarvis with real-life examples of good business models (with some good humor thrown in). The business model is always more important than the product (but of course they both matter - but so does timing). There is a longer PDF version - so I got that for ya too.
CASE STUDY: Check this complimentary case study to #4 above on how Leadfeeder used a long-term Content marketing strategy to increase their monthly signups.

POD OF THE WEEK: Expanding the security post (#5) this week, take a listen to the a16z tear down of how the Solar Winds hack went down (technically). Really great listening for anyone that loves Serial-style podcast covering super tech issues.

Top 10 in Tech - What to know for Week ending May 14, 2021

5/14/2021

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.
PITCH: The days of mandatory in-person pitch meeting to a VC are mostly behind us (at least for the foreseeable future). Pitching over Zoom is where we are at. Before you focus on getting the perfect lighting though - check these 16 rookie errors founder make pitching to VCs from Jason Lemkin and read here on how you will be Zoom-judged by the VCs you are pitching to.
CODE: Hard truth - some of your code is pretty stinky. Take a read of this for the kind of bad smells your repo may have. Meh - but how much does it really matter? Well here is a report from Stripe that gives you that cold-hard number and also calculates that the developer "community" is valued at about $3 trillion GDP globally.
WEBSITE: Do you have a pretty high churn rate from your home page or landing pages? Maybe you have a trust problem. This article outlining the Trust Pyramid is very much worth a read but TL;DR A website must meet users' basic trust needs before a visitor can be expected to engage meaningfully. With the Trust Pyramid, there are 5 distinct levels of trust-based engagement, each with separate design requirements.
GROWTH: For public SaaS companies there is a wealth of online benchmarks in regard to performance - but it is much harder to scratch the surface of private SaaS (when there is no compliance requirement to share the data). But here is a couple of reference documents for ya (both from SaaS Capital): 1) Growth - here is their latest report on Private SaaS Companies' growth rates. Some snippets: It takes approximately 5 years for companies to reach $1 million in ARR, 87% of those surveyed reported annual revenue growth of greater than 10%. 2) I've posted about this before - but spend is just an important measure as growth - bootstrapped companies are obviously being outspent by venture-backed companies - the average is 80% of ARR to 115% ARR!!
PRODUCT DEBT: This is a nuanced (and more customer-centric spin) on Technical 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 Messaging's product evolution.
CONVERTIBLE LOANS: They are a kind of debt until they are not. But Convertible Loans are a quick way to access money quickly via an interested investor. Point Nine Capital describes in detail what is involved in a convertible loan and what to look out for.
LANDING PAGES: One of the most common reasons why a search engine-based marketing campaign fails is that it does not have optimized landing pages to continue the journey, take a look here at some best practices, real examples, and templates for Google Ad-based Landing Pages. Then also Check this site out - a collection of the best landing pages around the web with a focus on copywriting and design - finally (this is a repeat-post) IceBreakerVC lists best practices for good landing page planning and strategy.
CASE STUDY: STRIPE: Stripe just raised a new round, remaining private. It was a $600 million funding round that boosted its valuation to $36 billion - but how did they come out of nowhere to dominate the payments space? The answer: Developers! They focussed on going after developers — the main group of people involved in integrating payments into all kinds of digital applications.

POD OF THE WEEK: From Invest Like The Best this week is an interview with Michael Seibel - the CEO of Y-Combinator's startup accelerator - he has reviewed literally thousands of applications to YC.

Top 10 in Tech - What to know for the week ending May 7, 2021

5/7/2021

SaaS METRIC OF THE WEEK: Renewal rate: You have to scroll down this article before you get to the informative bit on how to measure this metric but don't because I could just link you to this one). So read the first part anyway: Don't be a jerk when it comes to renewals. If you have to be, maybe it's you, not your customers (keep scrolling again to see the 5 main reasons why people unsubscribe). The difference between retention and renewals is described more in this comprehensive Profitwell article on Renewal Rates.
CUSTOMER SUCCESS: Take a (deep) read of this extensive guide for building great customer success teams - CS is not just about limiting churn, but it also creates a department and practice to convince existing customers to buy even more from you. As Jason Lemkin said back in 2015: "Customer Success is where 90% of the revenue is”. Want a working example? Chart Mogul expands on this and explains its approach to a (successful) success management strategy.
FINANCE: Founders - take a good review of this! How many of these mistakes are you making? (I'm making a few but less than I was) : 8 Finance Mistakes Growing SaaS Businesses Make (and How to Fix Them).
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!
PRICING: Usage-based pricing 2.0. Usage-based pricing helps minimize friction during customer onboarding, as customers only pay for what they’re using. 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 UBP from November 2020 - but here is that playbook anyway (as a downloadable PDF) It's evolving fast as a new best practice. One of my favorite slides in that playbook is slide 324 - a flowchart that helps organizations decide if a usage-based pricing model is for them.
POC’s: (aka Proof of Concepts) are a powerful sales tool and a critical part of a customer journey, especially when it comes to those long-ass enterprise sales. But oftentimes they can be just as big an anchor in sales as an accelerator (hands up if you feel me on that one?). Here are some pro tips if your POC’s get stuck from Heavybit with some pro tips on Leveraging the PoC to Move that deal forward.
CUSTOMER JOURNEY: When it comes to measuring success, clearly 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 design process here.
FINANCIAL FORECAST: Your new financial year is just around the corner! Just kidding, but now is always the second-best time to get started(the first being two months ago). This is a great article with a complimentary excel download here from The SaaS CFO - it's a SaaS Financial Plan for Startups (and also works for most SMB’s). It also comes with a handy complimentary video tutorial to the worksheet.
MARKET RESEARCH: Love it or hate it - knowing how big the market is of people willing to pay for your stuff is kind of a big deal. Here is a pretty comprehensive step-by-step guide for startup market research and this article has a great template for all of us B2B market researchers (which is harder than B2C).
CASE STUDY: Netflix is my favorite case study regarding a speed-focused tech company,. They (amazingly to me) de-prioritized uptime in favor of speed and also become their own CDN as part of their speedy-experience solutions.

BONUS: Bringing this one back from the archives - because of #10 above and also as it's so relevant in our Zoom-dominated world now some are returning to offices: It is a hilarious Chrome Extension featured on Product Hunt called Netflix Hangouts. It basically disguises Netflix in a fake four-person conference call. Such a terrible idea? yeah, but nah, but yeah.

POD OF THE WEEK: You may or may not have heard about NFT's lately and the number of money people who are prepared to pay. You may also squint at this news and still not understand what it is. Me too, but it's not just art - a16z got us all covered on explaining what NFT's are (and why they are seeing these remarkable payouts).

Top 10 in Tech - What to know for the week ending April 30, 2021

4/30/2021

SaaS METRIC OF THE WEEK: PQL vs Activations. In my mind the try-before-you-buy approach to software subscriptions are the best way to get to my money - that is pretty much what PLG is - so put away your SQL and MQL metrics for a second and focus on their newer cousin: PQL (Product Qualified Leads) - this tracks potential customer who has exhibited buying intent based on product interest and usage. Now you know that - measuring PQL vs Activations are the two metrics to measure in unison.
PRICING SENSITIVITY: I do post about pricing a lot (because a 1% increase in price can generate up to an 11% increase in your profits) So this week lets take a more nuanced approach by looking at different concepts within pricing strategies starting with priced based sensitivity: which is basically a measure of the percentage of sales you will lose or gain at any particular price point relative to another lower or higher price point. Profitwell can explain it much better - so take a read of their article about how to measure and optimize it (check the Van Westendorp's Price Sensitivity Meter")
WFH (DEEP DIVE): OK - so here is the big question-of-our-time we all want to be answered: Are we more productive or less productive working from home and petting our cat/dog? Upwork reports that the WFH forced experiment IS working but their platform has kinda consisted of WFH people since those golden days pre-Covid - so they may have an agenda - they say 'empirically,' but in more qualitative not quantitive ways. So let's also look at a more trusted and independent source: The Economist (if you have a sub to their site) and Harvard (if you don't). In their study they unearthed a better metric: Productivity sharply rose by 7.5% when workers went remote with no sacrifice in customer satisfaction reviews. Slack takes a bit of a different path on their study: WFH is not for everyone but if you are an employer: People prefer choice (72%). So if you want to hire good people you need to be flexible about where they will work. Ultimately the winning metric is forecasting that the WFH boom will lift productivity in the U.S. economy by 5% (mostly because of savings in commuting time).
PR: Getting good PR if you’re an unknown startup is hard (and also can be seen as a low priority in the endless stable of things-to-get-done) - but it's not as hard as you think without a publicist. Here is a great 101 article from Point Nine Capital (they call it PR for dummies) on how to get great press coverage. ChartMoguls also have this article late on PR for SaaS - with some sample scripts!
SAAS SPEND: This is actually a really good benchmarking report for your spending habits. I (semi-often) joke that SaaS is just a big Ponzi Scheme - because running a SaaS company requires a boatload of money being spent on other SaaS Companies products (Slack! Zoom! HubSpot! AWS! Google! Microsoft! Adobe! Atlassian! etc etc etc). But 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).
AI TRENDS: Even though we're 1/3 of the way through 2021, this s a fun article on trends in AI for 2021 from Forbes. d\Deep fakes are becoming more and more alarming - but AI for Kids caught my attention the most - but the ones with impressive commercial potential are Advanced Pre-trained Language Models - AI is now writing poetry, you dig??
OPEN STARTUPS: Most Startups are very secretive about their metrics but over the last 6 years Baremetrics has been chipping away at this industry norm to get SaaS companies to be more open about performance; Theorizing that radically transparency can actually be beneficial - it works for me to compare and contrast my own business performance.
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.
ONBOARDING CHURN: This is the sibling to the post above as abandonment can be a signal of poor onboarding. Here are 3 reasons why users abandon the onboarding process (identify verification, slow onboarding experiences, and being asked for too much data) and AppSee has another 8 reasons in this article (adding Privacy and Ad clutter to the list).
CASE STUDY: Datadog - who, you may ask? Well, I use 'em, I bet your platform engineers may too along with a truckload of others because they generate a whopping $700 Million+ in ARR and growing at 61% year-on-year. The top 7% of their customers generate 75% of revenue and 60% of revenue growth comes from existing customers!

POD OF THE WEEK: Scaling Zapier To $140M ARR from The 20 minute VC - it includes 25,000 landing pages you know.

Top 10 in Tech - What to know for the week ending April 23, 2021

4/23/2021

SaaS METRIC OF THE WEEK: NPS: We all like to be liked - Net Promoter Score is basically a way to quantify that for your product. This White Paper from Ask Nicely reviews NPS (among other common customer experience metrics) and explains how to measure and calculate NPS. See this link for some methods to improve the NPS of a SaaS product and Neil Patel then gets into a 3 step program of how to leverage NPS for your business.
TESTING: Everything is a hypothesis in a startup and testing should be embedded in everything you try towards growth and product. When conducting experiments such as A/B tests, Go Practice has some great advice on how to make these experiments run faster.
PLG (aka Product Lead Growth) - 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) - trying to get a user to a point at which they understand the value they can get from your product (aka the AHA moment). Still confused? This is a great article using the hierarchy of needs as an explainer.
SEO: Want More SEO Traffic? Follow this self-guided process to get a 7-week SEO Action plan from Neil Patel for your business! Moz also has a great little guide on keyword research complemented by their other article on Search Intent and here is a pretty good (current) guide from Founder Institute.
REVOPS: aka Revenue Operations is definitely a thing and it needs to be - but do you need it? Well, you may already be practicing this without using the platitude - it’s just a high-impact way to maximize revenues and provide some operational efficiency but the plot twist being that in this Age of the Customer it’s also a way to align this operational excellence around the customer experience. Here is a good introductory article from Chargebee on RevOps and here are 3 nuggets of wisdom from some significant RevOps leaders. BCG also has a great deep dive for you to read here.
GROWTH: Adding onto the above and using real-world companies Zoom and Twilio as examples (both also notable product-led) a16z make the case that the new era of enterprise go-to-market requires growth-plus-sales - which is just a fancy-pants way of highlighting the evolution in customer buying behavior for high-end B2B. Great read.
CONVERSION RATE: There are many, many conversion rate metrics you could track - so which ones are the most important? It really depends on the goals of your business - so let Neil Patel tell you his 8 Most Important Conversion Rate Metrics.
COOKIES: This is an expansion from above, so not the chocolate chip kind of Cookies. Love them or hate them, the reality is that browser cookies are heading the way of the Dodo, so conversion tracking via cookies being phased out creates a new attribution problem to solve. 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.
MACHINE LEARNING: A rather bleak article for many highlighted that AI is set to replace 50% of low skilled jobs in the next 5-7 years starting with a market growth of $112.2 billion (46%) by 2022 - that's next year for those of us like me that haven't adjusted to 2021 yet. Sooooooooo, want to check out something new after that? Well, take a looksie at these 28 Free AI, Machine learning, Data Science, and Python eBooks all ready for download directly to the device of your choice now.
CASE STUDY: Taking a look at Twilio this week as an expansion of #6 above. In August 2019 Jason Lemkin noted the impressive metrics of Twilio as it reached $1B in ARR. Fast forward to January of this year, he's update observations now that they are at $2b+ ARR - yup - a $1B ARR increase in 18 months - now 60B market cap and growing at about 53% YoY thanks to an NDR clocking in at 140%!

POD OF THE WEEK: From 16z Podcasts: An episode about Developers as Creatives with the CEO and co-founder of Twilio, Jeff Lawson.

Top 10 in Tech - What to know for Week ending April 16, 2021

4/16/2021

SaaS METRIC OF THE WEEK: CAC! Understanding customer acquisition cost can help create, measure, and improve a growth strategy that can put a business on the path to profitability. Here is a deep dive into the whys, the whats, and hows of CAC.
MARKETPLACES: 2020 was a bit of a gut punch for many marketplace categories, I even (very optimistically) in a pre-covid newsletter mused what marketplace consolidation will occur in the upcoming year. Little did I know! a16z have just updated their Marketplace 100 and guess what? Consolidation was very much a thing: last year, four startups accounted for 76 % of consumer spending. This year more than 70 % of Market Value can be attributed to just one company (Instacart is the Covid winner) and 10% of companies from last year went public or were acquired. Ed Tech is also the newest category winner.
VENTURE CAPITAL: BOOM! Investments to US-based companies surged to a record high of $62 Billion in Q1 21 according to the PwC and CB Insights Q1 2021 MoneyTree Headline report (that's up 62% from Q4 of last year) - to put this into context, it's almost half of all money raised last year (and 2020 was a historical high). Deal activity is also up 14% YoY (1,735 deals) - great sign, unless you are looking for Seed $$'s, as deal activity is up in all stages except seed (which is down in comparison to Q4 of last year)
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.
PERSONALIZATION: Did you know that marketing personalization can reduce acquisition costs 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.
DEATH TO EMAIL: Just kidding. Email is a long way from going bye-bye, we spend, on average, over 3 hours a day using it, so don't rush out to delete your inbox just yet. Communication platform companies have been making this death-to-email statement for years though - looking at you Yammer. The irony is not lost as I'm sure many of you are suffering from intense Slack/Zoom/Teams fatigue. But guess what? These platforms are absolutely not going anywhere. A new (VERY Slack-centric) report from Slack shows the impact and importance of collaboration platforms in our new post-pandemic workplace environments: 40% of meetings can be replaced, 95% of Slack users say they prefer Slack to video calls when connecting with their team, and 100% of Slack users want to keep using Slack even after the pandemic!
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 about $1.10+ per $1 of ARR). Compare that to the cost of retaining or up-selling existing customers (about 12c-15c per $1 of ARR) - 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.
COMMISSIONS: How do you pay out 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).
CSM ATTRIBUTION This is an extension of the last link above: How do you account for, or budget the cost, of a Customer Sucess team? The team at Gainsight dives deep into this question and comes up with some fantastic insight - 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 across different departments who CSM teams may sit under.
CASE STUDY: Dropbox! I've been a big Dropbox user since inception - I was an early birder! As were they to Product Lead Growth strategies - they have a legendary story of 3900% growth in just 15 months! Just mind-boggling. Check out how they made all that happen.

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 April 9, 2021

4/9/2021

SaaS METRIC OF THE WEEK: Where do you start at the early stages of a startup when it comes to tracking metrics? The most important bottom-up SaaS metrics to track (and how to best visualize them) are in this article and neatly broken out via pre-revenue and post-revenue.
PRICING: Many SaaS Companies are shifting to usage-based models (me too!). 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.
SPEED MATTERS: Yup - I write about speed a lot lately. When I write this newsletter I prioritize speed and prioritize content over spelling, editorial tightness, and grammar. (But big shout to Grammarly who I outsource all that to). James Somers feels the same and Brad Dickason goes a step further - calling Speed the killer feature with firm examples of where speed matters in a digital experience and can be a great UX moat. Google obviously makes speed a priority for their tech stack but Netflix is my favorite great speed-focused tech company, which (amazingly to me) de-prioritized uptime in favor of speed and also become their own CDN as part of their speedy-experience solutions.
MARKETING: 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!
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 (blast from the past) page for a comprehensive list of the Stages of Test Development. That 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.
CLOUD: This is actually pretty big news: Cloud infrastructure spending by Enterprise surpassed on-premise spending for the first time in 2020 - it grew by 35% to reach almost USD $130 billion. I do find this number quite a small piece of the approximate $2 Trillion in total annual cloud spend Bessemer ventures reference for 2021 in their Cloud Index.
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 in 2020? 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.
JAVA: This is actually outstanding news this week (unless you are Larry Ellison). The U.S. Supreme Court ruled that Google was legally allowed to use part of Oracle's Java API while building its Android mobile operating system. This court case has dominated tech industry news for yeeeeeaaaars (about 10)
CORPORATE VC: (or CVC) CVC-backed deals declined from a record high of 3,416 in 2019 to 3,359 in 2020, however corporate VC groups participated in 182 mega-rounds in 2020 ($100M+ deals) — a 48% increase compared to 2019 which bumped up the total funding to record highs (screw you Covid) of $74.1 Billion USD. Full (downloadable PDF) report from CB Insights here.
CASE STUDY: Canva - I'm a big fan (and user). Apparently, I'm not alone as in just 7 years they acquired over 15 MILLION users - this was back in 2019 when they were valued at $3.6 billion. Jumping over to 2021 they are now a decacorn and passed $500 million in annualized revenue, up 130% from last year!

POD OF THE WEEK: I'm a bit obsessed with Darknet diaries - so this is another one from them (or maybe three, depending on how much you get into the story). It's about the massive user-data breach at LinkedIn back in 2012 - which had a cascading effect around the web leading to other breaches at Dropbox and now-defunct FormSpring.

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

4/1/2021

Welcome to another Benchmark special! I get asked for more of this quite often and, as it's Easter, it's a bit of a recycle. So this is a compilation of benchmark data reported from across the webs….

EXPANSION: Just acquiring customers isn’t enough of a strategy for long-term success: Expansion strategies are pragmatic growth practices that any good SaaS company needs to get a grip on as 37% of new ARR bookings are attributable to cross-sell/up-sell activities. Here is what good expansion looks like. OpenView Partners have gone to town to benchmark this metric with an extensive Expansion SaaS Benchmarks report. Product Led Growth businesses leads the pack!
RETENTION. To compliment #2 above, retention is deeply related to expansion as it relates to sustainable growth, and here is what good retention goals should be benchmarked against and how to optimize them.
CAC: This one needs nuance, David Skok, the godfather of SaaS Metrics has broken it down into i) blended, ii) new, iii) up-sell, and iv) expansion. It's getting hard out there though - Every dollar of new revenue in 2020 costs $1.60 (compared to $1.35 in 2019). Up-sell and cross-sell still remain the CAC bargain, but it’s still up YoY, with each dollar of new revenue costing $0.69 in 2020 (it was $0.61 in 2019). Big impacts on sales efficiency. This chart alone highlights why having a customer-focused strategy is critical for growth.
GROWTH: Median organic ARR growth for the year surveyed (2018) was 36%. Thus is across 424 SaaS businesses distributed globally (but 2/3 of which were US-domiciled). This rate is pretty evenly split across different contract size businesses - so there is no obvious relationship between ACV and growth. Companies surveyed average a median ARR of $8.7m
MARKETING AND SALES: Hubspot continues to benchmark Pandemic-times data for core business metrics like website traffic, email send and open rates, sales engagements, close rates, and more (aggregated from their global customer base of over 70,000 companies). It’s an incredibly useful tool as a benchmark to measure your business against. Explore all the benchmark data here or check this week's summary here. Chorus.ai is doing something similar by benchmarking sales organizations (daily!) across their user base. A recent Tomasz Tunguz summary can be found here.
GTM: Current and pragmatic Go-To-Market benchmarks are presented in this deck from Tomasz Tunguz and the team at Redpoint Ventures. Some good findings from their survey: 1) If SDR/BDR teams hit their numbers, so do Account Executives; 2) Most sales teams ramp Account Executives in about six months; 3) Marketing teams spend 5-10% of a companies ARR. David Skok also observes that the primary mode of Sales and Marketing efforts remains Field Sales based, with Inside Sales taking a very close second strategy for smaller businesses (under $10m ARR)
UX: Optimizing a User Experience is key to the long-term success of any service or product. Google is all over this and just launched Web Vitals, a program that offers developers guidance about best practice benchmarks on user experience. It’s benchmarking very Google-based metrics: loading, interactivity, and visual stability.
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.
SPEND: Figuring out how to optimize marketing spend and growth rate is a key question and this study doesn’t show great benchmarks - the percentage of revenue in pretty much equals percentage growth out, but with an ever-increasing range of outcomes as spend increases per business. More solid 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).
BOOTSTRAPPERS: This is for all of you choosing the do-it-without-investors route: The latest State of Independent SaaS Report based on hundreds of non-venture track, revenue-generating SaaS companies. It has really great Bootstrapped benchmarks: growth rates, demographics, validation approaches, and more.

POD OF THE WEEK: Of course it’s going to be How to Succeed at SaaS with David Skok

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