Top 10 in Tech A WEEKLY NEWSLETTER

Top 10 in Tech - What to know for Week ending May 27, 2022

5/26/2022

1. SaaS METRIC OF THE WEEK: OTMM - aka One Metric That Matters. Another acronym for your Tech Dictionaries. Metrics can be personal, ya' know and sometimes, all you need is a singular focus. To get stuff done. To shift the needle. This excellent article reviews the methodology to uncover your own unique OMTM.

2. 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 (and some good humour thrown in). The business model is always more important than the product (but they both matter, and so does timing. There is a more extended PDF version - so I got that for ya too.

3. CAP TABLE: Last week, I referenced alternatives to Venture Capital and dilution - it was a popular post and a bit of a downer. 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 concerning growth and how to manage that Option Pool.

4. DOWN MARKETS: Nope - not done with the bad news we all need to hear. This is a GREAT article from a16z on frameworks for navigating crappy markets like this - and how to build different scenario plans (Base/Best/Worst).

5. GROWTH: Even in the down market, we still need growth. So adding on from #4 above - here is a great article (with scenarios) on how to avoid nasty surprises when you're planning for fast growth (in a crappy market)

6. WEBSITE: Quick Q: "Is Your Website Stressing Out Visitors"? Read further or TL;DR - remove the noise and focus on the jobs you want the website to do.

7. CAPITAL: Since 2016, Wilson Sonsini (a US-based Tech Focused Law Firm) has published a quarterly "Entrepreneurs Report" that covers a range of data on venture financing transactions that the firm was involved in. Q1 2022 is now out, and Median pre-money valuations in Q1 2022 fell across all rounds compared to the highs reached in Q4 2021 but remained strong by pre-2021 standards - check the graph on page 3. No down or flat rounds (yet) - but they noted that there are storing indicators that this may not be the case in the Q2 2022 report.

8. UNBUNDLING: This was a strategy first thrown out by a16z in 2019. They defined it as a strategy for identifying new startup opportunities by looking at broad horizontal platforms near their breaking point. A case in the example here is Zapier. It's a cool read.

9. BROWSER WARS: Are they pretty much over? Check the video graphic from 2012 to 2022. In just 10 years, Chrome has pushed everyone else off the map. Chrome currently holds 64% of the global browser market, with the 2nd place browser (Safari) at just 19%.

10. CASE STUDY: I run a pretty big Atlassian Shop - so kind of a fan. Scott Farquhar (co-founder and co-CEO of Atlassian) has this presentation on how he built Atlassian (and used Smart pricing). Jason Lemkin also took a look recently - as they are now at $2b ARR - with 121% NRR overall and 130% in enterprise. These are metrics I like!

POD OF THE WEEK: It's actually a webinar - following on from #7 above. My friends at the Nasdaq Entrepreneurial Center are hosting a Venture Finance Trends online event with Wilson Sonsini this coming Friday at 10am PST. They will share insights from their 2022 experience in financing startups so far.

Top 10 in Tech - What to know for Week ending May 20, 2022

5/19/2022

1. SaaS METRIC OF THE WEEK: SaaS Quick Ratio. It's a more modern measure of the 'health' of a SaaS Company (as we must have all learned by now, revenue models are not the same as business models). The SaaS Quick Ratio is calculated by dividing Gross New MRR + Expansion MRR / Downgrade MRR + MRR Churn, which gives insight into the proportion of positive growth to negative growth.

2. CAPITAL: Guess what?? Out of nowhere, 2022 sure is a buyers market in the VC world. So should raising VC money be something you should reconsider until the market settles down? It doesn't always have to be about Venture Capital or equity (and dilution) when looking to finance. Revenue-based financing is becoming a popular way for startups to raise funds without sacrificing equity with the rise of essential 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. Here is the Founder's Guide to Venture Debt with advantages vs disadvantages of Debt vs Equity from the SaaS CFO.

3. DEAD or ALIVE? Time for some reality here. Suppose #2 above is true for your startup, and you want to try and operate with no growth capital for the foreseeable future (18-24 months?). In that case, the question is: Will your business reach profitability before running out of money? Time to read this throwback article from 2015 that dives deep into this question and also has a great visual calculator.

4. SALES TEAMS #1: Betts Recruiting release a compensation guide every year, and the 2022 version is now out (Or this is 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: With the great resignation/great rehiring era underway, the report saw the most significant increase in compensation in 10 years! (5-15%) Which is saying A LOT considering the salaries of the last decade. Also - remote workers stay in jobs on average 1 year longer than on-prem staff. Do you hear that, Apple?

5. SALES TEAMS #2: Now that you have some great base-line metrics based on the reports in #4 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.

6. GROWTH: This week, Jason Lemkin of SaaStr was asked how fast should monthly growth be from $0 to $1M ARR? My personal takeaway from this article is that what really matters is how fast a company grows at $1m ARR (As it is highly predictive of the future, at least within a band).

7. 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.

8. PRODUCT VALUE: The Ying to #7's Yang. The basics of product management and building products that people need are creating value and delivering value. This article dives deep into how these types of product work differ and what conditions each type has a maximum impact (along with what problems can arise).

9. DESIGN: Bringing good design into different elements of a business is nothing new to most modern businesses. But there are specialized branches of design constantly emerging. Growth Design is one of my new favourites - merging typical HCD/Empathy Design but adding in the pragmatism of designing the jobs that need to be done by your customers.

10. CASE STUDY: Amazon's AWS remains, by quite a margin, the most widely used public cloud platform. I'm a big fan and have been tinkering there for well over a decade (hankering back to my Yammer days when AWS was basically two things: public or private servers). In fact, Amazon's profits have primarily been driven by its cloud business in recent years (in 2019: 50 per cent of operating profit with just 13 per cent of total net sales). This case study covers the entire history of AWS and is a fun read - it also puts AWS's current ARR at $70B!

POD OF THE WEEK: "Jobs to be done" isn't a phrase; it's a methodology for getting stuff done - listen more to the concept here.

Top 10 in Tech - What to know for Week ending May 13, 2022

5/12/2022

1. 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 and 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.

2. 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 genuine revenue generated by customers by 50-100% (whaaaaat!!!) in most SaaS models selling to any businesses larger than SMBs.

3. 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.

4. 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 UBP Article from November 2020 (but here is that playbook anyway as a downloadable PDF).

5. PRICING 1: Only 41% of SaaS Companies priced by seat in 2021. TechCrunch also notices that more and more SaaS companies are shifting to usage-based, not seat-based, pricing. They reference OpenView's annual Financial and Operating Benchmarks survey noting that startups that adopt product-led growth and UBP outperform their peers. With the more recent additional complexity introduced by B2D (D for Developers) models and Data/AI/Intelligence-based products, traditional pricing no longer works for many of us - and how do you even price intelligence as a product per seat?. Tomasz Tunguz breaks down pricing in Per-seat vs Usage-based scenarios. Bessemer Ventures also reports that UBP sees best-in-class net-dollar retention results.

6. PRICING 2: Speaking of that OpenView report - you can download that here. It's a survey of almost 600 SaaS companies, and it's fantastic, measuring a 2x adoption of usage-based pricing in companies surveyed since they started the survey back in 2018. There is also a great slide (#16) with a decision tree to decide if usage-based pricing is right for your business.

7. DATA: I don't think I have more to add than the title of this article: "You Cannot Be Data-Driven Without Experimentation" well, OK, fine, I do: The opposite of that is also a truth to hammer home "You Cannot run experiments successfully without being data-driven". We all overestimate our experimentation skills AND our Data collection skills.

8. 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. 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.

9. PITCH: Getting a VC's attention in an initial pitch meeting is incredibly important. So here are 10 tips to help your pitch game from Fran Rotman presented in a 28-part Tweet-storm (and check these 16 rookie errors founder make pitching to VCs from Jason Lemkin). According to TechCrunch, these are the 5 most critical pitch deck slides most founders get wrong. Finally, here is a monster collection (139!) of funded pitch decks (including the neo-classics: AirBnB, LinkedIn, Intercom, Transferwise, Canva, and Sendgrid).

10. CASE STUDY: Upwork - I have fantastic full-time staff that originated from shorter-term gigs on Upwork, which is now worth $6 billion and at $400m+ in ARR. 2020+2021 gave them a chunky Covid boost, and they are only just getting started with the good ol' fashioned "move-upmarket" strategy, with an absolute classic 80/20 rule in effect. So 80% of clients are SMBs, but 80% of the revenue comes from 20% of clients.

POD OF THE WEEK: Financial Reporting for Startups is something every founder has to up-skill at - this webinar (replay) covers operational and financial forecasts. Answering all those hairy questions - how do I forecast ARR when in startup mode?

Top 10 in Tech - What to know for Week ending May 6, 2022

5/5/2022

1. SaaS METRIC OF THE WEEK: USER ADOPTION - measuring which new users could turn into paying customers (and which will drift away). Everything you need to know is in this article - it's a comprehensive and a very deep dive (because these metrics differ between businesses and between cohorts of users).

2. SAAS SPEND: This is an outstanding benchmarking report for your spending habits. I (semi-often) joke that SaaS is just a giant 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 (such as spending by ARR levels).

3. SCALE: This is a must-download. Mark Roberge, the founder of Stage 2 Capital and member of the founding team at HubSpot, has launched this excellent playbook for scaling. In this detailed book, Mark has defined different stages of scale, establishes quantifiable measures for each of these stages, structures the sequence and signals of when to move from one stage to the next, and explores the optimal go-to-market design of each one.

4. BOOTSTRAPPERS: This is for all of you choosing the do-it-without-investors route: The latest State of Independent SaaS Report 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.

5. MARKETING: 11 Marketing Channels That Consistently Work for Founders - an analysis!

6. FAILURE: I think that this is a skill. Prove me wrong. Failure also requires a culture of safety and permission to be wrong. Tall Poppy doesn't help. As many organizations look to best practices from the tech industry, one hard lesson is that innovation needs a lot of failure before success, something they often do not configure culturally.

7. PRODUCT MARKET FIT: I talk about PMF a fair bit - but never with an actual VC lens, even though it's a vital metric for earlier-stage investors. So AirTree (an early-stage VC) has just published this article examining what metrics VCs like them look at for signs of Product-Market Fit and what the red flags are.

8. ENGINEERING TIME: Have you ever wondered what software engineers are actually spending their time on? The StackOverflow memes are true - y'all are copying a lot of code. Also, read this complimentary report on what makes developers happy at work.

9. CSM ATTRIBUTION: How do you account for or budget the cost of a Customer Success team? The team at Gainsight dive deep into this question and come up with some fantastic insights - even though the question itself is complicated and the answers end up being more non-monetary than you would probably like. For example, owning the renewal, up-sell, and cross-sell are key delineation points between expense attribution to different departments which CSM teams may sit under.
10. CASE STUDY: HOPIN - not heard of them? That may be because, in Feb 2020, they were a small team of 8.........Today? Holy Cow: 800 employees, Raised $1b over 5 rounds and $7,75B in Revenue. Here is their Hypergrowth playbook: 19 steps to repeat Hopin's first 6 months of rapid scaling.
POD OF THE WEEK: The 2022 State of Independent SaaS.......the video presentation version.

Top 10 in Tech - What to know for Week ending April 29, 2022

4/28/2022

1. SaaS METRIC OF THE WEEK: PQL: Product Lead Growth is the new SaaS strategy de-jour. All kinds of metrics tie into this new category - Product Qualified Leads (PQL) being the lead indicator that the PLG strategy a company is investing in is legit.

2. ONBOARDING CHURN: This is the sibling to the post above, as abandonment can signal poor onboarding. Here are 3 reasons why users abandon the onboarding process (identify verification, slow onboarding experiences, and being asked for too much data). Appsee has another 8 reasons in this article (adding Privacy and Ad clutter to the list).

3. WEB3: There is a whole new bunch of vocabulary to learn if you don't want to be seen as a big square at all your Web3 parties. Check this Twitter thread from @MishadaVinci, which covers all of the highfalutin' terms.

4. CUSTOMER SUCCESS - Quota: this is an expansion of celebrating CS's contribution as NRR and CAC payback referenced in #1 above. I have referenced AE and SDR metrics and quotas in past newsletters. 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 between 10-500 accounts (but it varies based on segment/ACMR).

5. a16z: Watch out Y-Combinator, Andreessen Horowitz has apparently been stealthily piloting their own early-stage accelerator over the past year and went public this month with what they are calling "a16z START". They are offering early-stage founders up to $1 m in venture capital! Not sure how much equity that will require, and a16z will be accepting founders on a rolling basis.

6. PRICING FEATURETTE: Last week's article on pricing pages was a popular post, so I'm doubling down with more this week. Optimizing Pricing is hard, and it's never (ever) perfect. a) If companies decide to have a pricing page on their site (which is that whole other topic I mentioned last week), Jason Lemkin, the founder of SaaStr, lays out some thoughts on what makes a good pricing page. b) McKinsey gets technical, outlining how to leverage big data to make better pricing decisions. c) Want to look at competitor prices? Computers have a great article on conducting a high fidelity competitive pricing analysis project.

7. PODCASTS: Podcasts will make up nearly 20% of Spotify's US ad revenues by 2024 - whoa! In dollar amounts, that will be $400 million. This is just as well as fake artists are a problem these days on Spotify. Podcasting is a massive business now, with an estimated 120 million podcast listeners in the US last year. Podcasting is forecast to be a $94.88 billion industry by 2028. According to this Annual Report from Edison Research, growth is also corollary to Smart Speaker ownership in households.

8. VIDEO: According to this survey, the use of video Aids 95% Of Enterprise B2B Buyers in Conversion - read more (and how it does this) here.
9. BENCHMARKS: Bessemer VP has a playbook for us all (and a slide deck) describing how to scale your business from $1 to $10mm ARR. Significant benchmark data covering all the classics: CAC, retention, growth, etc.

10. CASE STUDY: Category creation! I know we all want to be up and to the left is one of those Gartner/Forrester Quadrant reports. So watch this presentation on category creation from Neo4 and how they did it, and here is another version from Gett.

POD OF THE WEEK: Complimenting #9 above ( but with the added challenge of doing it without any outside capital), how FastBridge scaled from $0 to $10m in just four years.

Top 10 in Tech - What to know for Week ending April 22, 2022

4/22/2022

1. SaaS METRIC OF THE WEEK: ARRR! "Pirate Metrics" was first proposed by 500 Startups; the great thing about this acronym based grouping of metrics is that it can be applied to non-software products or services as well as traditional SaaS:
2. DECENTRALIZATION: With the Web3 hype going mainstream, the movement from "big-tech" Web 2.0 to a decentralized Web3 can seem a little bombastic. So here are some specific models and principles of decentralization that are a little more palatable.

3. METAVERSE: Are you Meta-Curious? What's the Web3 hype all about? Look here at Hackernoon's top 5 Metaverse projects to explore this year. Fun fact: None of these projects are from Facebook/Meta (but who knows, one or two may likely be theirs by year-end....)

4. ATLASSIAN: If you didn't notice, earlier this month, Atlassian (Jira, Confluence, Trello, etc.) was down for many people, like, for evvvvverrrr! And I don't mean a few hours. I mean, WEEKS! Here is how that shit-show (technical term) went down. (TL;DR, Atlassian accidentally deleted all of their customer's stuff and had a hard time restoring it in bulk!). The article also highlights what Atlassian customers are saying now.
5. MARKETING: SaaS Marketing comes in so many flavours. The team at MKT1 have evolved a framework and org chart of the different marketing flavours you may encounter in SaaS. Along with a description of the roles underneath (and some recommendations of who to hire based on stage). This complimentary article takes it a step further on using marketing to get results.
6. EMPLOYEES: Here is a great question: How many employees should you have based on your ARR? David Sacks has a great slide from his SaaStr presentation on optimal SaaS Org Charts - Series A is 40-50 at 1m ARR. Yup, that's only $20-$25k ARR per employee - the full report here expands into what roles you should hire and what the org chart looks like.

7. SALES: From Predictable Revenue is a little eBook for your files covering Sales Development Methodology (includes a Playbook).

8. NOMADS: I travel on a plane for the first time in 2.5 years next week, and for many of us, the world is slowly unfurling from our Covid seclusions, and Travel is desirable again. A lot of us are also operating under a remote-work new order. Did you know that some Countries (21+) have Digital Nomad Visas for remote workers that let travellers stay longer than more traditional tourist visas? (Antigua, Barbuda, Bermuda, Costa Rica, Iceland, Mauritius). Learn more about the specific rules and requirements for those countries here. If you are serious about creating a remote workers Company Policy, watch this webinar replay.

9. PRICING: FastSpirng has released a new SaaS pricing page report for 2022 - you can read more here (I also like to highlight the great debate of whether SaaS companies should even have a pricing page on their site, but that is a whole other topic). Interesting highlights: Product Led Growth seems to be the strategy for leading companies, and only 36% of companies highlighted their most popular plan.

10. CASE STUDY: WhatsApp. Fun fact of which I contribute Zero daily: 7 Billion Voice Messages get sent on WhatsApp PER DAY! With 2 Billion users, some people are very chatty. Check here for more stats. To reach this kind of volume, good design is a crucial component. So take a read more on how WhatsApp achieved that here.

POD OF THE WEEK: It's been quite a couple of weeks if you are Twitter, the Twitter Board, and/or Elon Musk. So get up to speed (and insider gossip) with the team at the All In Podcast (Chamath Palihapitiya, Jason Calacanis, David Sacks, and David Friedberg)

Top 10 in Tech - What to know for Week ending April 15, 2022

4/12/2022

1. SaaS METRIC OF THE WEEK: CAC PAYBACK: CAC is also a measure of cash profitability per customer, and CAC Payback calculates how long it takes for a customer to become cash-flow positive. Here is how to calculate it (and why it matters). When benchmarking this metric, it's evident in SaaS that the negative cash trough is long! According to this survey, new customers, on average, take 2 years and 2 months to become profitable. This really highlights what will be a deepening dependency on Capital to fuel a SaaS company's growth.

2. CHAOS THEORY: Digital Transformations are important, strategically. But the mindset needed for these changes to happen requires a certain kind of improv style to get there - as the systems in place that are required to change or pivot are usually very complex - change IS chaos. So take some time to read this article to understand more of what this is about - I also aspire to have the title of "Chaos Manager" one day...

3. RYAN BRESLOW: Ryan is the founder of Bolt and is taking zero prisoners this week on Twitter with three SIGNIFICANT threads calling out Stripe for the Fast fiasco and Sequoia Capital for acting like the Mob. Read more on his view on Stripe's impact on Fast (which was a direct competitor to Bolt) here and his teardown of Sequoia here. Finally, wrapping both of those threads up is the third Thread for founders on how to protect their companies from Hostile Takeovers (such as allegedly what happened to InstaCart by Sequoia).

4. INVESTORS: Looking to build a list of non-Sequoia investors for your Cap Raise? Check this new fresh list of 65,000+ Venture capital, Private Equity Firms, Angels and Family Investment Offices contacts.

5. ESOP: Employee Share Option Plans are an excellent 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. Finally, here is a 9-part video post of the most common questions about startup options.

6. ESOP BENCHMARKS: Fast follow from above here to this wonderful site that has compiled a set of benchmark data, comprising over 20,000 option grants from more than 1,650 startups across the US and Europe sorted by Seed or Venture stage.

7. PRICING: Getting pricing right is a big deal because a 1% increase in price can generate up to an 11% increase in your profits, so check this article on a data-driven framework for SaaS packaging and pricing to optimize that increase in profits.

8. WRAP-UPS: Add this to your tech dictionaries. Daily standups may no longer work in our new mashed up work-from-anywhere team environment, but Wrap-Ups are the new asynchronous, remote, WFH workaround. Possible fit? Take a read here of how to try them out.

9. EXPERIMENTS: Every path toward growth and revenue is a hypothesis in startup land, so read how to run a growth experiment (in 4 easy steps!). Testing versions of things 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 making these experiments run faster.
10. CASE STUDY: Complimenting #9 above. On the extreme end of A/B testing is booking.com which 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!

POD OF THE WEEK: From the SaaS Revolution Show - Andy Whyte, CEO of MEDDICC (quite the acronym: Metrics, Economic Buyer, Decision Criteria, Decision Process, Identify Pain, Champion and Competition), discusses how to get ahead of complex SaaS sales.

Top 10 in Tech - What to know for Week ending April 8, 2022

4/8/2022

SaaS METRIC OF THE WEEK: SaaS METRIC OF THE WEEK: NRG - Natural Rate of Growth. Now that I've slow-burn convinced a bunch of y'all to go all-in with Product Lead Growth (PLG), it's time to reference the metrics you need to know. It requires us to get halfway through this article before that becomes clear. But hey - it's worth the scroll. With Natural Rate of Growth (NRG), the assumption is that a PLG business has an organic, self-service growth engine at the core (as they are built to attract the end-user). Keep reading as the article comes complete with benchmarks towards the bottom. Hungry for more best-practice PLG metrics? I got ya!
TRUST (Customers): People trust people over brands when it comes to trust. Chart Mogul has posted an 'Ultimate' Guide to Using Customer Testimonials to Boost Sales, noting that a generic and insincere endorsement is as helpful as not using anything. It's also possible to take it a step further by leveraging those frothiest of customers into a referral channel.
ZERO TRUST (Security): Trust is also a platform play, so expanding on the above and giving you an emerging phrase for your cybersecurity dictionaries - heck, it's even an Executive Order for the US via President Biden. With the widespread shift to #WFH life in the past couple of years, successful IT and security teams have leveraged Zero Trust initiatives to address some coarse-grain and fine-grain access control challenges. This is all happening at the edge because that is where we all are these days, and perimeter/fence based protection won't work. Identify based and zero-trust strategies and architecture are where we need to be, so start with this primer on Zero trust from ZDNet and move here with this State of Zero Trust Security report from OKTA for the APAC region.
PRODUCT TRUST: From my buddy, Ryan Koonce, this is the third part of the Trust deep dive this week, this time focused on product and how to build in-product experiences. Users are judge-y based on every interaction they have with your product. So if you provide experiences that are ineffective, annoying, distracting, or irrelevant, they could churn yours for another <Cough> <Evernote>.
VALIDATION: I'm sure you have heard this repeatedly: validating a product is a make or break part of a startup's scale-up process, especially at the early stage. But how do you do that properly? Check this list of techniques and tools (it all starts with Market Research) - and get more into that starting here (with free templates!)
CRYPTO: Gemini's new Global State of Crypto report highlights the significant changes happening to the Crypto market in 2021. Regulation and Eduction still make up the headwinds of the industry's future: $30 billion VC investments deployed in 2021 ($10 m of which was just in Q4' 21). 41% of those surveyed purchased crypto for the first time in '21, and inflation was a primary driver for Crypto adoption last year (which is indicative of what may be in store for the inflationary year that 2022 has been so far).
CRYPTO DEVS: The sibling to #6 above Tomasz Tunguz also noted this week that only about 0.07% of devs globally work in Web3, but they have managed to create about $2 TRILLION in market cap (and that's only counting the top 100 valued projects). So who are these people, and what are they doing? TL;DR They are young and using (soon to be not) niche languages.
INFLUENCE MAPS: I enjoyed this read earlier this week. The opening paragraph got me, as this week I really unlocked the power of a vertical monitor and literally said both statements ("This is amazing!", "WTF?! Why didn't anyone tell me about this before?"). Well, guess what - this kind of discovery in the behavioural design field is called the "Influence Map" Framework, which is super obvious (in hindsight 😊 ).
USAGE BASED PRICING: I may have mentioned this in the past, but only 41% of SaaS Companies priced by seat in 2021. This reflects the evolving tech/SaaS landscape but is it for your business? Tomasz Tunguz asked the same question earlier this month (in his second appliance in this newsletter this week) and boiled it down to 3 questions to ask.
CASE STUDY: Blast from the past on how OKTA made category creation happen before possibly torpedoing everything earlier this month, so here is another SaaS security company, CrowdStrike, where Jason Lemkin takes a closer look via his "5 Interesting Learnings" series - they are currently at 1.7 Billion in ARR and growing at 65% YoY with $100k ARR ACV and 120%+ NDR.

POD OF THE WEEK: Great video (with outstanding notes) covering content creation and marketing strategy at the early stage: How to Earn Trust, Manage Risk and Build Momentum.

Top 10 in Tech - What to know for Week ending April 1, 2022

4/1/2022

SaaS METRIC OF THE WEEK: This is for all you CEOs: The 20 top metrics tracked by CEOs of enterprise software startups, all sorted by Finance/Cash-flow, Sales/revenue, and Marketing functions.
PERSONALIZATION: SaaS marketers are turning to personalization more and more to increase their conversion rates, improve customer success, and increase the quality of sales/marketing funnels. Great article here 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 crucial growth metrics when they employ personalization.
SMB vs ENTERPRISE: As a startup - which way to chase? Firstly this obviously depends on the product and market size. Still, in general, the Old Skool guidance was to start chasing the most significant 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.
PITCH: Want to compare how your Pitch Deck compares to others? Here is an absolute MONSTER of resource links for you (and your pitch team). Pitches from AirBnB, Uber, Shopify, other lesser-known startups, and some famous flameouts (such as Fyre) are on Billion-Dollar Pitch Decks and Pitch Deck Hunt. A cool approach on OpenDeck lets you search by Category/funding year. If you want to see a breakdown/analysis of pitch decks, then take a look at Alexander Jarvis - he has over 500 decks broken down by the good and the bad things people do. Added Bonus here - this tweet from earlier this month has stuck with me - Katelyn Gleason observes that no real generation-defining startups have been founded since 2014. I've racked my mental Rolodex of startups - and I think she is right. Can you think of any? Wordle doesn't even count, as it was initially created in 2013.
ADOPTION: Adding on to #2 above, this is for all you founders that have scaled, winged it, found PMF, hacked it and are scaling up: It's time to get serious about incremental gains to growth metrics, Adoption/Uptake being a big one that can make a massive uptick in growth. Behavioral Science is here to help you out with that.
MLP: For your tech dictionaries - that's Minimum Lovable Product). MVP (Minimum Viable Product) is OK, but what if no one likes that flavour? 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. UxDesign takes a more focused path on MLP: focus on the outcome, not output.
DECENTRALIZATION: COVID, the rise of Web3, increasing quality of global startup communities - all factors playing into the future of tech trends and shifts in the geography of tech are indicative of a less SF/Silicon Valley-centric tech industry. Hot off the press: 48% of all Tech Unicorns are located outside the US.
INFLATION: Super interesting article from Tomasz Tunguz as he reviews and compares Stock inflation and deflation across the lifecycle of traditional and newer Startups. Traditional Web2 startups are pretty inflationary compared to FANG Stocks - which have all run massive Deflation efforts over the past decade. Then the more recent Web3 Startups with issued tokens (to a surprise to mostly no one) diverge wildly with significant inflation rates (25% compared to 5% in Web2).
WORDLE: I love this game. I also love the spinoffs: Worldle, Heardle, and my favourite, Nerdle. But Wordle has crazy growth triggers built-in; its growth is no accident, and that growth design breakdown is outlined in this article.
CASE STUDY: I got mobbed by Monday.com ads, and I eventually evaluated their product for use (so they worked), and we are actively using the product today. They currently have a market cap of almost $7b. They are publicly traded, so we get some excellent insight into their growth numbers: Their SEO metrics get covered in this Twitter thread, and Jason Lemkin always has some good observations on their growth metrics, including a crazy 91% YoY growth rate (with only a 34% customer count increase). This is all thanks to their upmarket moves discussed in #3.

POD OF THE WEEK: Starting the month with a brilliant video covering all aspects of failure and resiliency - and how to get back up when you get let down (feel free to forward this one around).

Top 10 in Tech - What to know for Week ending March 25, 2022

3/25/2022

SaaS METRIC OF THE WEEK: Revenue Churn - The differences between Net vs. Gross revenue Churn are neatly explained here. Great if you're trying to understand your Churn and reduce it and make negative Churn your thing Aka Net Dollar Retention)
COMPETITION: You will always be asked for Market Sizing in a pitch, but how well prepared are you for questions about the competition? (Pro-tip - saying you don't have competitors is red-flag). Read this article from Search Engine Land that outlines the steps you can follow to get some quality, competitive analysis research. Pro-tip 2 - as we are all tech people here - do not underestimate the power of G2, product hunt, or Capterra to set your research foundations.
GOVERNANCE: Mark Suster (from Upfront Ventures) has started a series on his Medium Blog covering StartUp Boards. With a follow-up article that shows a board structure based on stage! He also provides a blog post AND a 43 slide.
GROWTH MARKETING: If you're responsible for growth/marketing, you've hit the motherlode this week! Dan Siepen has compiled a comprehensive list of resources (and the lists are updated often), so make sure you bookmark this page.
PRODUCT MANAGEMENT: - what exactly is it? This article highlights what it is and what it isn't (in comparison to the role of a project manager), as does this one. This article highlights a more subtle difference between Product Managers and Product Owners. When it comes to feature selection, add the Syms Method to your Tech Dictionary, which goes beyond features vs benefits but is more a guide on pure feature selection using some good old fashioned Venn diagrams.
STRATEGIC PLANNING: This is an excellent (pre-pandemic) article on planning from Foist Round Capital and includes lessons learnt from some of the best planners at Airbnb and Eventbrite (including their processes). It's a deep read and has some great templates (including the "W Framework" for you to put to work inside your organization.
VALUATIONS: This topic is making a common recurrence in this newsletter, thanks to the rapidly evolving shape of the SaaS market in 2022. Please look at Redpoint's State of Current Market Slide Deck (a Google Slide), where we see a MASSIVE correction (slide 10), but there is an all-time high amount of Dry Powder raised by big funds, AND liquidity is also at an all-time high. Based on much of this data, Jason Lemkin forecasts this sharp decrease in valuations to be temporary (he calls it a one-off "blip").
EXPONENTIAL GROWTH: It's all marketing hype and doesn't exist in real life. Take a look at this article which explains it more by taking a deep dive into the numbers of "Exponential" companies such as Slack ($0-$10m ARR in 10 months!), Facebook, and HubSpot. According to McKinsey, despite the sector's image as a bastion of hypergrowth, only a tiny share of SaaS companies sustains growth rates above 30 to 40 per cent.
LEADS: After a multi-year hiatus, TradeShows are making a comeback - with big ones such as CES and SXSW already wrapped up. Executing a trade show well is an art form, booths, networking, prospecting. It can be overwhelming, especially if you haven't hung out with people IRL for a while. So take a read of this Dear SaaStr article to get your head back into the Trade Show sales game.
CASE STUDY: WEWORK - OK, I'm sure you have all been watching AppleTV's Serialized Dramatization of the WeWork story and patiently waiting for the next episode to drop. But if you want a TL;DW version of that Growth-over-everything-else WeWork story, take a read of this article from Hackernoon.

POD OF THE WEEK: Selling into Enterprise is no joke, and for this week's podcast, Asana's head of engineering has some great tips on managing 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 March 18, 2022

3/18/2022

SaaS METRIC OF THE WEEK: LTV:CAC - the LTV:CAC ratio is often interpreted as an accurate value of 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 should be 3:1 - but is that true? The SaaSCFO looks at this myth (This is also his most popular article) - TL;DR - kinda yup. It's an excellent rule of thumb.
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. CBInsights also lists their top 12 reasons startups fail.
CUSTOMER SUCCESS: This is all about preserving as much revenue as possible over time (post-purchase). Complementing the post above, take a (deep) read of this extensive guide for building excellent customer success teams - it's not just about limiting churn, but also 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 expand on this and explain their approach to a (successful) success management strategy.
GROWTH: Who doesn't like a good Growth Strategy guide? Good SaaS growth requires a market, products, and GTM, and this guide tells you all about each one to help build an epic growth strategy and build a plan - because it even comes with its own Worksheet!
ARCHITECTURE: The enormous success in SaaS is the margin, which in turn, when you look behind the curtain, is good software architecture and infrastructure centred around multi-tenancy. Here is why multi-tenancy matters. Many modern SaaS apps are heavily dependent on good API architecture, too, so check the tips in this article on designing better APIs.
PRICING: Speaking of those modern SaaS Apps above, only 41% of SaaS Companies priced by seat in 2021 (You may have seen my "occasional" posts on Consumption-Based pricing from time to time in this newsletter). Interesting to note that this survey now includes varying segments beyond B2B and B2C - such as B2d (D for Developers) and API companies, which reflects the evolving tech/SaaS landscape.
PRICING: Only 41% of SaaS Companies priced by seat in 2021 (You may have seen my "occasional" posts on Consumption-Based pricing from time to time in this newsletter). Interestingly, this survey now includes varying segments beyond B2B and B2C - such as B2d (D for Developers) and API companies, reflecting the evolving tech/SaaS landscape.
LEGAL: In startup land, there is a long tail of BS founders need to navigate, and in a surprise to no one, much of that is legal. So check this huuuuuge article from Clerky on legal concepts all founders need to understand (incorporating, vesting, notes, etc.). Ready to get started drafting some documents? Here are some great resources for free legal docs 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, and for all you Kiwis, Simmonds Stewart has a comprehensive library of agreements and templates.
VALUATIONS: What happens if you are a company that raised and spent heavily in the over-inflated COVID market of '20'21? The team at Tech Crunch's The Exchange looks at changes in the Startup Market and argues that it's probably what is about to happen to these companies in Q2 '22. TL;DR - nothin' pretty, that's for sure, if you are short of cash. Jason Lemkin draws similar conclusions on Covid valuation anomalies using the BVP Nasdaq Index.
CASE STUDY: Toast. This is the Point of Sale system you have probably never heard of for many of you. For others, it's a Decacorn you have never heard of. It's only ten years old but listed on the NYSE last year and is currently valued at about $21 billion (which is a YTD low) with approx $568m in ARR (that's still about 37x according to my math). Why so hot? 118% growth and pretty over a half bill in revenue is not too shabby but check here for some detailed notes from under the hood. Plus, check this article on how Toast's $12m SEO Moat aided their pandemic led growth (when their target market - restaurants - were having a hard time).

POD OF THE WEEK: Great recommendation sent to me this week based on last week's post #4 covering differentiation. From FullFunnel.io - Strategic positioning for B2B tech companies with Mark Evans

Top 10 in Tech - What to know for Week ending March 11, 2022

3/11/2022

SaaS METRIC OF THE WEEK: Back to basics this week and referencing a six-year-old article from a16z of the 16 fundamental startup metric classics covering Bookings vs Revenue, Gross Profit, ACV, CAC, Active Users and the like and here is how to choose your north star metrics.
VIDEO: Nailing introductory and Demo videos is a bit of an 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)
PRICING (deep dive): Product pricing is super hard. Here are the top lessons learned from 25 SaaS companies, the impact pricing changes can have on your business, and how to test it. Chargify has a list of 5 pricing scenarios to test as a SaaS company, with real examples to compare, and Point Nine Capital has nine awesome pricing strategy experiments.
DIFFERENTIATION: Standing out in a saturated sea of SaaS is a tricky problem to solve - pro-tip - never do it on price alone (see #3 above). So ask yourself, "why should someone buy from you?" It requires balancing familiarity and differentiation - read this article to get you thinking on the topic more.
CORPORATE VENTURE: (or CVC) Hot off the press from CBInsights is the Global 2021 State of CVC Report (pdf). CVC-backed deals went bonkers in 2021. Global CVC-backed funding more than doubled ($169.3B), and Silicon Valley captured $35B of this (guess what - also a new record).
COMPENSATION: Ready to hire some salespeople for your Startup? Take a read of how Facebook re-imagined theirs at the 400 employees mark. When it comes to Sales Teams, bookmark the Betts Compensation Guide as it's always a handy reference site and then read this post from Jason Lemkin on constructing a framework for the first SaaS sales compensation plans. What about as a founder? A good rule of thumb, according to Nathan Latka, is if you're a two-co-founders and just hit $1m in ARR, you should each be making about $100k per year and Increase to $150k at $2m in ARR.
CUSTOMER ENGAGEMENT: Here is the Vonage Global Customer Engagement Report for 2021. LOTS has changed in the past two years: 300% growth in customers choosing video chat as the main channel for talking to companies, and WhatsApp is 160 per cent more popular now than SMS, with almost 50% of consumers using WhatsApp to connect with businesses.
HIGH OUTPUT MARKETING: Another for your tech dictionaries. It's a way to leverage and optimize workflow. The author increased SQL's by 177% using this method, so read their guide on getting started.
PRODUCT MARKET FIT (Another deep dive): Oooof. More than 50% of the time, the lack of Product-Market Fit (PMF) factors into why a startup fails (keep reading this article, though, as it goes through how StartupOS figured their PMF out). 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. Also, this article has some great PMF definitions. Marc Andreessen called PMF "the only thing that matters" to early-stage startups 12 years ago. Now his team get 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).
CASE STUDY: Expanding on above, asking the PMF question IMO is always the more noble focus (as opposed to answering the question). But sometimes - you've got to know (see above), and here is a case study on how Superhuman did it.

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 March 4, 2022

3/4/2022

SaaS METRIC OF THE WEEK: ACV or Annual Contract Value is one of the most popular metrics in the SaaS world; this article from Chartmogul goes into detail about what it is, how to calculate it, and how to leverage it in your business. This article also looks at Annual Contract Values (ACV) and groups them into animals we can all relate to (Mice, Rabbits, Deer, Elephants, and Whales) - Animal Contract Value :-) - anyone, anyone???? This analogy can then be used in turn for what it takes to build a $100m business and how different segments contribute to total revenues over time. Check #7 here for a spin on ACV
EMAIL: Take a look at this PowerPoint deck from Predictable Revenue on the four pillars they think constitutes a QUALITY sales-based email campaign; it's an excellent resource for anyone with email marketing as part of their business. From Better Marketing is a complimentary deep dive into a single cold email and why the author opened it (TL;DR - yes, it's all about everything in the email's design, but more about how targeted the message is).
MVP CANVAS: OK - this is a bookmarkable one for me (because visual frameworks are my jam). Y'all have heard of the Lean Canvas and the Business Model Canvas? Well, check out this spin on applying the framework focused on designing and launching MVPs (don't burn the Pizza). DIFFERENTIATION: Standing out in a saturated sea of SaaS is a tricky problem to solve - pro-tip - never do it on price alone. So ask yourself, "why should someone buy from you?" It requires balancing familiarity and differentiation - read this article to get you thinking on the topic more.
CUSTOMER PROFILE: Here is an excellent 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 a beneficial 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.
DEADLINES: Adding on to #6 from last week's newsletter on Estimation (which was a super popular post) - 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 while back.
UPMARKET: Expanding on the Animal Contract Values listed in #1 above, moving upmarket into larger organizations is a pretty standard SaaS growth strategy. Zoom just announced earlier this week their intention on upmarket growth. Jason Lemkin gives it a 50/50 chance. Increasing ARPU (Average Revenue Per Customer) is good! There is much to learn, and a lot of time and effort is also required to succeed in this market segment. Here is an excellent guide from Outreach on breaking into deals over $100k ARR.
CONCENTRATION: Break out your tech dictionaries again because, no, I'm not talking about my brain's ability to get distracted. Lightspeed Venture Partners' Nnamdi Iregbulem has outlined a new metric he created called weighted average contract value (WACV). He argues that this metric provides more meaningful information than ACV (see #1 above). The reason is that B2B SaaS revenue is highly concentrated due to the distribution of the customers being very concentrated: A large number of smaller companies, a moderate number of moderate-scale companies, or a very small number of very large companies).
MOBILE: In 2021, only 233 mobile apps crossed the $100 million mark in annual revenue but saw consumers spending $133 billion, and 75% of them were games. The global Mobile gaming market is forecast to reach $153.5 Billion by 2027
PRODUCT MARKETING. The SaaS world is getting crowded, and competition to acquire new customers is rising. Good Product marketing can give SaaS companies an edge to compete in this hyper-crowded market. Take a look at this complete guide to Product Marketing in 2022.
CASE STUDY: Expanding on #1, #6 and #7 this week - many well-known tech companies (such as Calendly, Atlassian, Zoom, and SurveyMonkey) moved upmarket, Tom Hale has a great case study on how it was done at SurveyMonkey (who are now well over $400m in ARR) - Enterprise is currently growing 53% YoY and accounts for 29% of total revenue

POD OF THE WEEK: We all dread that small amount of toxic customers who take up a disproportionate amount of people's time and energy, take a listen to this podcast from the team at Startups For The Rest Of Us for some fantastic tips on dealing with toxic customers.

Top 10 in Tech - What to know for Week ending February 25, 2022

2/25/2022

SaaS METRIC OF THE WEEK: CPA - Cost per acquisition is often conflated with Cost of acquisition, but they are different. Andrew Chen dives into the details as to why (and also how to calculate CAC accurately).
KNOWLEDGE BASE: This is very relevant to my pain right now. Building a comprehensive and valuable 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: According to a 2021 IDC cloud security study, 98% of companies experienced at least one cloud data breach in the past 18 months—up from 79% in the previous period. Security should be part of the dev cycle and know your weak spots. Founder Institute discusses 6 points of vulnerability in a tech stack that may be a bit leaky, and the lessons from Log4j: Cybersecurity defense isn't just about tech.
SHAPE UP: A refresher for your tech dictionaries. Software product development requires innovative strategies based on today's cadence expectations of continuous integration, micro-services, feature delivery, and scale. The team at Basecamp (I'm an old school fan) have developed ShapeUp, their publications, and a toolbox of techniques designed to eliminate chaos when it comes to creating, prioritizing, and shipping products/features.
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-founders and just hit $1m in ARR, you should each be making about $100k per year and Increase to $150k at $2m in ARR.
ESTIMATION: Estimating effort in Software projects is mega hard, and we're all terrible at it. McKinsey found that IT projects are on average 45% over budget and 7% over schedule, and the larger a project gets - the worse these stats become. So you should definitely bookmark this series (or share with the person you know that needs this bookmark) - Estimating Software Projects by Jacob Kaplan-Moss (and what to do when you mess up).
MARKETING FOR ENGINEERS: For all of you technical entrepreneurs who have built something and trying to get it out in the wild, check this GitHub-based curated collection of marketing articles and tools to grow your product. It's the ultimate GTM Repo!.
GROWTH: Zoom, Slack, Dropbox, Chrome, etc., are all software products that most of us use every day - they are frequent products. It's Tax Season in the US, so my annual pilgrimage into TurboTax software land is just about to begin. I will be enthusiastically welcomed back (Turbo Tax is a phenomenal lesson in good UX btw) - this is an outstanding lesson an excellent example of an infrequent Software product. The growth of an infrequent product is VERY different from that of those used frequently. Reforge have a great framework regarding this called the ICED Theory. (add it to your tech dictionaries) It's a great post discussing the nuances of infrequency, and they have just launched a complementary article to this post on strategies to grow an infrequent product.
PRIVATE MARKETS: From Carta's perspective, here is a look at the state of private capital markets leveraging their data. The number of rounds increased 31% over 2020 to over 7500, and the proportional amount of cash invested was up 111%!!! Every sector saw an increase in dollars - but healthcare saw the most significant jump. 2022 has already been a year of correction - so I'll report back at the end of Q1.
CASE STUDY: Adobe! Remember when Adobe products were just software licenses? This seems like a generation ago in Tech years. Adobe Creative Cloud launched a decade ago in mid-2012, and the transition was fast; Creative Cloud surpassed product revenues VERY quickly (by mid-2013). Adobe now is at a whopping $12.24B ARR just on subscriptions revenue (as of Q4 2021). Here are seven lessons for us all on this transition, and from ChartMogul, here is a break down the strategy that got them here.

Top 10 in Tech - What to know for Week ending February 18, 2022

2/18/2022

SaaS METRIC OF THE WEEK: NPS: We all like to be liked - Net Promoter Score is 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.
RENEWALS: Existing customers are the lifeblood of growth in a SaaS business, so making sure they like you enough (see #1) to renew is an exercise in revenue efficiency. New customer acquisition costs average about $1.10+ per $1 of ARR. Compare that to the cost of retaining or up-selling existing customers (about 12c-15c per $1ARR) - that's eight 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.
SPEND: How much money do SaaS companies spend on stuff? Well, check the first chart in that link on SaaS company spend - bootstrapped companies are (obviously) being outspent by venture-backed companies - but the average difference is 80% of ARR compared 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).
EMAIL: DEEP DIVE. When it comes to outbound marketing, email works best. Yes, organic search is consistently the most significant 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) of highly effective Call-To-Action templates you can use in email campaigns.
SMS: Contrary to the above - 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.
SECONDARY DEALS: As mentioned in #9 last week - public SaaS has taken a beating since Dec '21, and the market has been seeing a rise in Secondary Deals, which is a mechanism where investors buy secondhand equity stakes from early backers, founders, and employees. Over the last few weeks, investors and some late-stage VCs have been busy trying to build positions in their existing portfolio companies.
CHURN: In this post, Lenny Rachitsky asks the question, "What is a good monthly churn for a SaaS business?". Zero is the obvious answer for me - but he took to a benchmarking exercise and sourced some quality data sources to develop this chart. For B2C SaaS: 3% - 5% churn is GOOD, less than 2% is GREAT. For B2B SMB: 2.5% - 5% is GOOD, less than 1.5% is GREAT. For B2B Enterprise: 1% - 2% is GOOD, less than 0.5% is GREAT.
DE-SCI: Crack open your tech dictionaries and add this one to the list. Deci (or Decentralized Science) is one of the latest Web3 movements and IMO one of the more interesting. It is trying to address two issues: 1) efforts within the scientific community to change how research is funded and knowledge is shared, and 2) efforts within the crypto-focused movement to shift ownership and value away from industry intermediaries. What's not to like? Read more here on Deci from a16z.
DEBT: Tomasz Tunguz asks if 2022 will see the rise of Debt in Venture? Debt is always less expensive than equity because it's far less dilutive. His conclusion, according to the data: interest rates (which may arise by the Fed in 2022) do influence how much debt startups acquire, but the ratio of debt/equity for startups is relatively constant throughout time. The increase in access to Venture Debt in recent years has seen the rise of essential 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
CASE STUDY: Square is a fintech with a heavy focus on developing and retaining high-quality engineers, and they have created and openly published their Growth Frameworks for Engineers and Engineering Managers success at Square and also made their internal Engineering Career Ladder freely available for us all to view (and it's a downloadable PDF).

POD OF THE WEEK: Dannie Herzberg is now a Partner at Sequoia Capital but, prior to this, spent four years at Slack as their Head of Enterprise Sales and over five years at Hubspot building sales. She is a PLG guru, and this podcast is about building sales teams with a Product-Led-Growth GTM strategy.

Top 10 in Tech - What to know for Week ending February 11, 2022

2/11/2022

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 many things; product-market-fit, market, pricing fit, value, business model viability, etc. The authors of this article from Profitwell describe the formula and differentiate between renewal and retention - one is actively renewing, the other is not actively canceling.
CRYPTO CAP TABLES: Have you ever wondered how the funding of a crypto/token-based startup works in relation to cap tables? (hint - they maintain more than one). Tomasz Tunguz explains how equity and token-based cap tables work.
GROWTH MARKETING: Want 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.
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 - a comprehensive process and guide to developing a successful (and founder-led) recruitment strategy for those at the early stages.
REVOPS: aka Revenue Operations is 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. Still, the plot twist is that it's also a way to align this operational excellence around the customer experience in this Age of the Customer. Here is an excellent introductory article from Chargebee on RevOps, and here are three nuggets of wisdom from some significant RevOps leaders. BCG also has a great deep dive for you to read here.
BUILD or BUY: I'm constantly in a debate (mainly with myself) of whether to build or integrate with an existing app/service to solve a problem in my business or introduce a new feature on behalf of a customer/feature request. So (like me), you should read this article to get a better grip on assessing the pros and cons of a build vs. buy strategy.
SOFTWARE: Last weeks post on productivity (measured by the most popular apps at work) was a REALLY popular one (most click-throughs of this newsletter ever), so I'm doing another post this week as we all use some products more than others with G2's Best Software Award Winners - all ranked based on a combination of their G2 satisfaction revues and Market Presence scores.
MARKETING: There are many marketing strategies organizations can deploy that are relevant for their line of business and target audiences, from pay-per-click to content marketing. Bloom lists 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 at how to create a solid one in 7 steps. (BTW - benchmarking budget - Marketing teams spend 5-10% of a companies ARR).
MULTIPLES: This is a preferred metric used to value SaaS companies, which generally carry very few assets, little to no profitability, but all kinds of potential. That number is wildly variable, and Public SaaS and Tech companies have suffered a massive beatdown in 2022 (starting in Dev 21) that has had a significant impact on multiples. This chart shows that Tech/SaaS has almost reverted to pre-2019 multiples. Will it bounce back? Jason Lemkin remains bullish.
CASE STUDY: Uber made the call to completely re-write their app way back in 2016. But the cool thing was that the redesign is less than a 100MB as at the time that was the max size of an iOS app available via cellular download (the app these days is 300MB +) because most first time customers need this because they download the app curbside). This is how they did it - it's a pretty crazy developer ride.

POD OF THE WEEK: Expanding on #9 above. SaaStr has a podcast covering the 6 Steps to managing Marketing when everything in the business is locked into hyper-growth

Top 10 in Tech - What to know for Week ending February 4, 2022

2/4/2022

SaaS METRIC OF THE WEEK: DAU/MAU. The DAU/MAU ratio is a popular metric for companies measuring user engagement. Rule of thumb: Apps with over 20% = good. If you have 50%+ - you're world-class.
REVENUE GROWTH: This one is from the archives, as I consider it one of the best presentations at SaaStr Annual. It's from Mark Roberge of Stage 2 Capital and Harvard Business School, who is providing a handy step-by-step guide to revenue growth - broken down by stage (as a downloadable PDF!).
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 what is involved in a convertible loan and what to look out for.
BUYERS vs. USERS: The person writing you a check is not necessarily the same person getting value from your Business. So take a read of this insightful article from HeavyBit on differentiating messaging based on this premise and the different profiles.
OUTBOUND vs. INBOUND: How you handle an inbound lead vs. an outbound lead is quite different. Check this article from Jack Jorgovan on how Outbound leads differ (and how to close them). Oh, and do you want to binge some Outbound Sales TV???? Yeah, I knew you would. The team at predictable revenue has been running over 50 outbound sales experiments to find out what works best (and what doesn't.). Watch the whole series on YouTube.
BRAND MARKETING: Just how much does brand matter in B2B?….well, put your bias away as it's a lot according to this article and this one. Need to get started or run a branding review? Check this article on how to get started.
PROFESSIONAL SERVICES: It's a weird open secret that many 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 capture 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 companies.
CULTURE: LinkedIn has published a fascinating new report into the rapid workplace culture shifts that have been in play since 2020 and what these shifts mean for your internal team branding. Flexibility and work-life balance beat out compensation and salary.
PRODUCTIVITY: Okta has released its 8th annual Business at Work report covering the applications and services workers use to be productive; plenty have emerged in response to WFH and pandemic-related shifts. In a surprise to no one, companies focused on collaboration and data security tools as the top 2 most popular categories.
CASE STUDY: From a VC perspective, the Series A funding round is a stamp of approval. It shows that product-market-fit is evident and that there is a venture-backable market out there for the Business to target. From the PointNine Capital blog comes the story of how PlayPlay managed to raise their €10M Series A (broken down into a digestible 9 point play).

POD OF THE WEEK: It's a video, not a podcast this week. The content pumping out of Y-Combinator at present is always good. YC Partner Carolynn Levy details the basics of startup financing and how modern early-stage financing rounds work using convertible securities, such as the SAFE note.

Top 10 in Tech - What to know for Week ending January 28, 2022

1/28/2022

SaaS METRIC OF THE WEEK: The nag Metric - This one is fun (but not for everyone). A call to action within a website or customer journey is kinda like a parent trying to get their kid to clean up their mess. It just gets a bit naggy after a while and gets mentally filtered out. Over time, this can impact your brand/NPS or irritate people into churn. The Nag Score - outlined in detail here, is an attempt to quantify this.
PLG: 2021 was a massive year for product-led growth (especially according to this newsletter). But where is it headed in 2022? The team at ProductLed takes a good look at what this year may have in store. Adding Outbound Sales and Marketing is a start.
NETWORK EFFECTS: Last week's podcast on network effects was popular enough to warrant another post this week. Building and scaling products like Slack and Zoom is still quite a challenge so take a read of this conversation between Andrew Chen and Des Traynor on building networks that make your product thrive.
OPS: I've skimped lightly on all things Ops and Finances lately - so here is a comprehensive benchmark report for Financials and Ops for 2021 with all the REALLY good metrics to compare - YoY growth, employee headcount, CAC, NDR, Diversity.
GROWTH: 2022 has not been kind to publicly traded SaaS. These Businesses have been on a bull market for well over a decade though. During this bullish time, it has all been about growth metrics and not necessarily profits (which is partly why the Public Markets have been hit lately with inflation concerns). A16z makes the case that SaaS companies should be focused on efficient growth strategies and metrics to weather this downturn. NfX compliments this by discussing the new historic growth vs. profitability tension rules in SaaS.
IDEAS: here is a framework for managing them - I found this a helpful article with a template that is now on my wall! An HD version of it is here. A little bonus is a compilation of mental models that entrepreneurs and investors leverage to develop new startup ideas & venture theses from the same author.
TEAM ONBOARDING: Successful onboarding is challenging in person - it's 10x harder in today's remote work environments. Here is how Zapier does it (and leverage their own product to use automation to do it), and here are some lessons learned from Slack.
CONTENT MARKETING: Heavy Bit makes the case that now is the best time to double down on content - so get writing!. Also, spot quiz hotshot - how long should a Blog Post be? Hypothetically this long (but also literally not that long - it's a long-ass blog post).
DO IT!: Finding it hard to get back into the swing of productivity after the holidays? I did. It's easy to get caught up in the backlog, debates, details, and troubles that work or projects throw our way. Keeping the beat and progressing the business forward takes some help as a leader. So read this from Henry Ward from Carta on creating a continued Bias for Action.
CASE STUDY: Spotify and its Squads. A few years ago, an inspiring and memorable video circulated (you know, in one of those cutesy handwritten animation styles) describing the Agile Squads that Spotify employs in its cooler than cool Utopian Developer department. Well, guess what, sorry to burst your Spotify bubble; they abandoned it. (How Agile of them)…. In this post mortem assessment, the most significant critical failure was such a SaaS-based one: It was solving the wrong problem.

POD OF THE WEEK: The Video version of #7 - Employee onboarding secrets from Zapier founder Wade Foster.

BONUS: SaaStr Build, a one-day, live digital event, is coming.....and it's free. Sign up/learn more here.

Top 10 in Tech - What to know for Week ending January 21, 2022

1/21/2022

SaaS METRIC OF THE WEEK: Churn. So, according to CatchJS, we're all calculating churn rates wrong. But if you love Statistics, the article is well worth reading and even gives some Python code to perform the more complicated probability-based equation they recommend. Is this not how you want to start your new year? Then check out this tool (as a handy Google Sheet) from Newfund as a way to analyze the strength of revenue streams for any B2B startup. A complimentary article outlining the methodology behind the tool is here (and you should read it first). Churn also has an interesting section in the report in #2 below.
BILLING AND PRICING: What are your pricing plans for 2022? Check this joint report from SaaS Optics and Chargify on B2B SaaS Trends in Billing & Financial Operations to benchmark yourself. Forty-Two percent of us opted for a sales-negotiated pricing model in 2021 — additionally, 37% plan to expand into new pricing models in the coming year. The most desired addition is a variable pricing model (such as consumption-based pricing), and ARR remains the top priority for most SaaS businesses.
PRICING SENSITIVITY: Reviewing pricing is critical in 2022 as a 1% increase in price can generate up to an 11% increase in your profits. So this week, let's also take a look at different concepts within pricing strategies starting with priced-based sensitivity, which measures 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 this concept much better than me - so take a read of their article about how to measure and optimize it (check the Van Westendorp's Price Sensitivity Meter")
DUNNING: Also relevant this week, and check the churn section in the report above (#2) for metrics on involuntary churn. "Dunning" is 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.
VENTURE: The Q4 2021 PitchBook Venture report is out (you can even get the Excel version if you prefer spreadsheets), with VC Fundraising topping $100 billion in a record year for venture capital. US VC-backed companies raised $330 billion in 2021, almost double the number for 2020 ($166.6 billion and prior record). $774 billion in annual exit value was also created by VC-backed companies (either via IPO or acquisition).
DUE DILIGENCE: 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. Security-based due diligence is a critical part of the sales cycle for those on the Enterprise side of town (there is a growing need for chief compliance officers example). 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 and also how to pass those awkward, sales-friction-inducing, Enterprise Security Audits/Reviews….and finally how to get started with security as a startup.
GROWTH: Growth rate is more closely correlated with SaaS valuations than ever before, and this week, I enjoyed reading this article on how to accelerate growth in 2022 by Kyle Poyar, listing six areas to consider for your year-end/year-start planning
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!
ADVICE: Looking for good SaaS Resolutions for 2022? Take a good read of this article from First Round Review: The 30 Best Pieces of Advice for Entrepreneurs in 2021 - I already have a couple of these on my list.
CASE STUDY: Stripe is (still) the largest privately held tech company globally - but how did they come out of nowhere to dominate the payments space? The answer: Developers! They focussed on going after developers — the leading group of people involved in integrating payments into all kinds of digital applications.

POD OF THE WEEK: Kickstarting 2022 with an a16z podcast on how to kickstart Network Effects looking at Slack and Zoom as prime examples.

Top 10 in Tech - What to know for Week ending January 14, 2022

1/14/2022

According to Ardas, analysts believe the SaaS market will grow at 12% per year. By the end of this year, the volume of investments will reach $ 141 billion, so here is a rundown of what big things may be in store for tech and Saas in 2022.

PRODUCT: The SaaS world is becoming a lot more democratized as it's more pervasive, accessible thanks to no-code platforms, and more developers are coming online all the time. This results in higher expectations and that a great product experience is a must-have, not a nice to have, and that there is a need to provide personalized experiences to drive value. Don't take my word for it, though - that was just a TL;DR of the Product Trends and Resolutions report for 2022 – from a bunch of top Product Experts.
CRYPTO: What do we even call Crypto anymore? Web3 makes sense, and the tech itself has been and still is in a period of ever-increasing complexity (and sophistication). 2022 will absolutely be more distributed, but there is still more infrastructure to build. Tomasz Tunguz has some predictions of which Web3 sectors will be top this year. A significant movement will be National, with some countries declaring that they have adopted <insert crypto coin here> as legal tender.
THE METAVERSE: According to many of my friend's Christmas goodies this year, we have some seriously quality VR devices now, and it's just getting started. Expanding on above - as we figure out how Web3 plumbing will work - one can hope the same for VR and AR. Some of it is undoubtedly cool - but where is the value? NFT's are creeping in here, but Bill Gates predicts something interesting: most virtual meetings will move from 2D camera image grids … to the metaverse, a 3D space with digital avatars.
SECURITY: I think we can all agree that security is one of the most essential priorities for 2022 and a big problem. Forbes predicts some serious supply-chain hacks, continued public cloud breaches, and an increase in ransomware.
QUANTUM: Back in 2018, IBM and Intel announced impressive advances in Quantum Computing chips. IBM even had a Quantum Computer on display at CES (which was a thing of beauty). But in 2022, things are really heating up for Quantum, with Google, Microsoft, Amazon, and IBM, and Intel establishing themselves in the quantum space through product launches, R&D projects, investments, partnerships, and more. At the time of publishing for this report from CB Insights, $921m of capital had been deployed into Quantum in 2021 (compared to $411m in 2020 and $470 in 2019)
CONTENT MARKETING: Content marketing helps you attract, engage, convert, and retain customers you may not reach otherwise, and only 10% of marketers don't use content marketing, so for all you marketers out there, here is a list of Content Marketing statistics and benchmarks for 2022.
TOMASZ TUNGUZ: For the last few years, Tomasz Tunguz from Redpoint Ventures has made a list of predictions and scored last year's predictions. Here are this year's top 5 predictions with all the usual suspects: Web3, Data, and Machine Learning topping the list. A great one for all you non-Silicon Valley readers is his post-pandemic prediction of the spread of innovation and funding outside of the Valley.
JOBS: Backing up #7 above, this article from Dice (backed up by an analysis of postings on their site) recognizes that organizations everywhere see AI as increasingly vital to their long-term strategies, and they're looking for recruiting Devs with the right mix of AI and machine-learning skills and backing this up, the IDC predicts that spending on AI will increase 24.5% annually to $204 billion by 2025
FORRESTER: Forrester publishes a predictions paper every year - here is their 2022 version. Top of their list: higher consumer expectations of digital experiences; "always-on" digital engagement strategy for B2B marketers, one in three businesses implementing a hybrid work model will fail!
SOCIAL MEDIA: HubSpot and Talkwalker deliver the Social Media Trends Report for 2022. Viewing TikTok as the platform-du-jour, advertising in a post-cookie apocalyptic world, and the rise of Omni-channel engagement.

Top 10 in Tech - What to know for Week ending January 7, 2022

1/7/2022

Happy New Year and welcome to the Benchmark Holiday special! This is a compilation of useful benchmark data reported from across the webs in 2021 for you to put to good use.

SKOK: David Skok is a legend in the SaaS world, and I have written about his work extensively in the past and convinced him to speak at an event. His 2021 annual report in partnership with KBCM Technology Group (formerly Pacific Crest Securities) is here - absolutely comprehensive benchmarks for any SaaS business.
EXPANSION 1. Acquiring customers is not enough for SaaS companies to sustain long-term success. Expansion strategies are pragmatic growth practices that any good SaaS company needs to grasp, as 36% of new ARR bookings are attributable to cross-sell/up-sell activities. Larger companies use this strategy more heavily than their smaller counterparts (2x more). This is likely due to not being so reliant on new acquisition focused as the business matures. Here is what good expansion looks like.
EXPANSION 2: Expansion is such a big deal that OpenView Partners have gone to town to benchmark this metric with an extensive Expansion SaaS Benchmarks report (it's a downloadable PDF). Product Led Growth businesses lead the pack!
RETENTION: To compliment #2 and #3 above, retention is deeply related to expansion regarding sustainable growth. Here is what reasonable retention goals should be benchmarked against (another downloadable PDF report) and how to strategically optimize for this metric. Churn is still a problem overall. The YoY trend of a dollar churn decreased from 13.9% (20% of which was attributed to Covid) in 2020 back to 12.6%. This is back to similar 2019 levels (which was 12.5%).
PRODUCT LED GROWTH: As mentioned in #3 above (and from me from time to time in this newsletter), Product Led Growth (PLG) businesses lead the pack when it comes to expansion. PLG companies also deserve their own benchmark reports - so I got you covered with this one where you can benchmark 250+ PLG companies.
CAC: This one needs nuance, so the report breaks CAC into 3 main categories: blended, new, and up-sell/expansion. The median blended CAC comes at $1.20 for every $1 of revenue realized which sits slap bang between 2019 ($1.10) and 2020 ($1.32). New Customer CAC is up against 2019 ($1.34) and 2020 ( $1.60) - SaaS is increasingly competitive. Upsell/cross-sell is still cheap at $0.63 per $1 of ARR earned.
GROWTH: At the beginning of 2020, 39% growth was expected in January. By the end of June, it was reduced to 20% (in 2019, this was 36%). In 2021 the organic ARR growth levels were back up to a healthier 31% as the COVID disruptions start to settle, and overall growth forecasts are back to the same 36% seen in 2019.
MARKETING AND SALES: Hubspot continually benchmarks Pandemic-times data IRL 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 a handy tool as a benchmark to measure your business against. Explore all the benchmark data here. They also took this a step further in 2021 by launching their (not another) State of Marketing Report for 2021.
WEB VITALS: Optimizing a User Experience is key to the long-term success of any service or product. Google is all over this and launched Web Vitals a few years back, a program that offers developers guidance about user experience. It's benchmarking very Google-based metrics: loading, interactivity, and visual stability.
SPEND: The average SaaS company burns $52m to get to $100m in ARR, and it takes under 9 years (8.7 to be exact). Figuring out how to optimize marketing spend of this burn in relation to growth rate is a crucial question, and this study doesn't show the benchmarks marketers want to hear: While the median sales and marketing spend maybe 36% of revenue, to really ramp ARR growth, you gotta blow a lot more. Percentage of revenue in isn't much more than percentage growth spend out.

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

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

12/24/2021

I'm making this last newsletter of the year (taking a break next week) a customer-focused edition - happy holidays and happy new year y'all, thanks for all of your eye-balls and clicks this year.

SaaS METRIC OF THE WEEK: CLV (or sometimes LTV): The C stands for CUSTOMER, and this metric represents the average revenue that a customer generates (LifeTime Value) before they churn. ChartMogul has a great online calculator here. Go to advanced mode, though, as this calculator references the traditional formula and the David Skok version (the advanced one is viewed as more realistic).
CUSTOMER EXPERIENCE: Customer loyalty drives the success of a business, and the customer experience (CX) drives loyalty. Zen Desk has published its CX Trends Report for 2021. It's full of great nuggets: support requests are up 20% on average since the start of the pandemic, 75% of customers feel loyal to a particular brand or company (that delivers good CX), and 65% of customers want to buy from companies that offer quick and easy online transactions.
CUSTOMER TESTIMONIALS: People trust people over brands when it comes to trust. Chart Mogul has posted an 'Ultimate' Guide to Using Customer Testimonials to Boost Sales, noting that a generic and insincere endorsement is just as helpful as not using anything. It's also possible to take it a step further by leveraging those frothiest customers into a referral channel. Here is a playbook from SaaStr on how to make that happen.
CUSTOMER CASE STUDIES: Latching onto #3 above. Going beyond testimonials, case studies are super valuable at the early stages as a company needs to demonstrate its credibility, the business value, and the technical context of the product. Heavy Bit has a great guide on crafting that first customer case study, and Uplift provides six best practices to be used in your story.
CUSTOMER SERVICE: In this current age of the customer, enhanced by COVID, SaaSx makes the profound argument that Customer Success IS the product. Want to start building out that product? Check the HubSpot guide on getting started with your customer team.
CUSTOMER SEGMENTATION: To calculate the cost of a Customer Service Manager, it's best to segment customers out to understand the efforts required. Chartmogul has this tremendous visual, and once again, Gainsight takes a look at how to Benchmark efforts over-segmentation. Here is what they found. The median amount of ARR that an Enterprise CSM can manage is between $2M and $5M, and The median amount of customers an Enterprise CSM manages is 10-50 - these revenue figures drop with mid and SMB customer segments and increase fairly dramatically with the number of customers per CSM.
CUSTOMER 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 and how to (with templates!)
CUSTOMER DATA: Customer data management is a practice, not a technology. I love that simple message. Gluconic gives the crib notes/5-steps in this article about developing a strategy to optimize and improve customer experience using good data management practices.
CUSTOMER 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 on SaaS companies' best customer onboarding software options.
CUSTOMER DELIGHT AUDIT. It's the Age of the Customer, you know, so this needs to be a thing - here is an in-depth post from CopyHackers on how to make this kind of Audit happen, and here is a case study on how three big Tech companies (GitLab, HubSpot, and Zoom) make delight happen. Also, here is a Case Study on building a customer-centric B2B organization from McKinsey.

POD OF THE WEEK: WFH life for Customer Success teams - the CEO of ChurnZero has a perspective on how to build this function remotely.

Top 10 in Tech - What to know for Week ending December 17, 2021

12/17/2021

SaaS METRIC OF THE WEEK: The SaaS Magic Number - this is simply the balance between Sales and Marketing Spend and new ARR/MRR created. It's a good number for indicative over or under spend on marketing and sales. Check the SaaS CFO on how to calculate the Magic Number and from Jason Lemkin, some more nuanced thoughts on issues he sees with the metric and a reference to IVP, who Benchmark the Magic Number is 1.2 on average.
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 stand-out 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. Here is the Founder's Guide to Venture Debt with advantages vs. disadvantages of Debt vs. Equity from the SaaS CFO.
FUNDRAISING: Another link to IVP this week to get 2022 started right. It's a comprehensive guide to SaaS capital raising so that you can be better prepared for your companies next round. This 25-page article covers financials, go-to-market strategies, market sizing, valuation, and storytelling.
UNICORNS: In total, there are more than 800 unicorn startups globally. So actually, this visualization covers the world's top decacorns (unicorns with valuations above $10 billion) as of December 2021, according to CB Insights data.
FUTURE TECH: It's fast approaching the end of the year, so time to start curating some interesting tech forecasts. Benedict Evans has one of the better (and bigger) ones and does this kind of thing annually. This year focuses on the 2025-2030 horizon and has a heavy emphasis on all things web3 and the non-Facebook metaverse.
SDR RAMP: According to past studies, the time to ramp for an SDR averages about 3.2 months. From Saleshacker, here are some tips and tricks to make this ramp time as practical and successful as possible.
FIPS: OpenView has delivered the 2021 Financial and Operating Benchmarks Report. This report is designed for SaaS operators to compare themselves against peers across many metrics that matter most in a SaaS business. View the interactive report here. Covers benchmarks such as employees, YoY growth, marketing spend, burn rate, NDR CAC, and diversity!
DIVERSITY: The OpenView report above provides interesting diversity benchmarks based on a companies stage. But let's take a look at diversity in founders: Less than 2% of enterprise software startups in the U.S. feature a female founder (actual report here). 500 Startups also looked into coronavirus's disproportionate (and adverse) effects on female and minority founders. Let's not miss out on the fact that in 2020, Black founders received only 0.6% of venture funding!
OUTAGES: If you were hiding under an internet rock last week or last month, you might have missed some pretty significant outages from Amazon Web Services and a big Zero-Day exploit across a lot of the Internet's Apache-based web servers. Which raises some serious questions - such as how resilient is the internet? This article makes an excellent case for #5 above; the web needs some decentralization to remain resilient.
CASE STUDY: I like a good case study covering products I love to use. Grammarly is now valued at $13 Billion after a $200m round last month - with 30 million daily average users (of which I am for-sure one) they have been profitable since day one as they are one of the ultimate PLG businesses that merge B2C and B2B with a TAM of.........pretty much everyone. A great case study on SEO, engineering, great content, and an embedded and rewarding product experience.

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

12/10/2021

SaaS METRIC OF THE WEEK: Retention. A blended retention/acquisition strategy is critical for the long-term sustainability of a SaaS business, but what are the core retention metrics to monitor? Take a read here of how to measure and improve the ones on the list.
QUOTA 1/2: Hands up if you're forecasting or re-forecasting for 2022! Compensating SaaS Sales Reps is complicated and expensive. This blog post from Kyle Racki of Proposify has a pretty comprehensive guide on setting quotas and commissions. But here is a quick shortcut to make it easy for all you Account Executives: The average annual quota in this report from David Skok and Co is $770K in ACV, and on average, the quota was 5.3X OTE. An expanded top10inTech teardown of that report (which admittedly is from 2017, so starting to get a bit long in the tooth) can be found here.
QUOTA 2/2: Thought-provoking article: Your Sales Team has a Sales Quota. Your Marketing team has to have a quota too - as they are also part of your revenue team. Getting both sales and marketing teams aligned beyond quota is a fundamental trick, and Tomasz Tunguz has a quick diagnostic to determine if your sales and marketing teams are working well together.
FORECASTS: Outside of setting quotas, running a SaaS business relies heavily on cash flow - so it is imperative to forecast future revenue to avoid a cash crunch when trying to scale. So check this article covering Sales Forecasts and Pipeline Reviews: Why and How from a cash perspective.
PITCH: The days of mandatory in-person pitch meetings 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 founders make pitching to VCs from Jason Lemkin and read here on how you will be Zoom-judged by the VCs you are pitching to.
OPTIONS and ESOP: Stock options are necessary for hiring and retaining the best talent in this hyper-competitive Startup Land. So how can companies build an effective option plan? During a call this week, I was referred to this site earlier this week that has compiled a set of benchmark data, comprising over 20,000 option grants from more than 1,650 startups across the US and Europe sorted by Seed or Venture stage.
SOCIAL MEDIA: 2021 was a bit bonkers (ask Google), especially in the Social Media world. So how will 2022 fare? Take a read of this report from HubSpot and Talkwalker for 2022 Social Media Trends - they have a pretty good Top 10 list.
MULTIPLES: Public SaaS and Tech companies suffered a beat down earlier this month. Did it have any significant impact on multiples of their revenue? Overall Stats: Median: 12.3x, Top 5 Median: 49.0x, 3 Month Trailing Average: 15.5x, 1 Year Trailing Average: 16.0x - that's a measurable downturn but keep in mind these numbers are still 86% above pre-covid highs.
UX: Optimizing a User Experience is critical to the long-term success of any service or product. Google has Web Vitals, a program that offers developers guidance about best practice benchmarks on user experience. First, Round Capital has a DEEEEEP dive/crash Course for Founders on the principles of UX Research from people at Zoom, Zapier, and Dropbox.
CASE STUDY: Category Creation is the Holy Grail - we all want to be up, and to the right is one of those Gartner/Forrester Quadrant reports. So here is how Neo4 did it. Here is another story from Gett and a warts-and-all case story about how OKTA made their category creation happen via Bessemer Venture Partners.

POD OF THE WEEK: Financial Reporting for Startups is something every founder has to up-skill at - this webinar (replay) covers operational and financial forecasts. Answering all those hairy questions - such as how do I forecast ARR when in startup mode?

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

12/3/2021

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

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

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