1. SaaS METRIC OF THE WEEK: Lead scoring is a well-established way of assigning numerical values to prospects so sales and marketing teams can optimize their funnels and convert faster - how does that work in a Product Lead World? This blog has all the answers.
2. MLP: For your tech dictionaries - that's Minimum Lovable Product. MVP (Minimum Viable Product) is OK, but what if no one likes it? FirstRound Capital uses the analogy of burnt pizza - pointing out that the fastest and cheapest functional prototype could produce a poor or flawed version of something that people may actually love.
3. VALIDATION: I'm sure you have heard repeatedly that validating a product is a make-or-break part of a startup's scale-up process, especially at teh 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!)
4. PUBLIC SAAS: Meritech dives into the $2 trillion SaaS Public market, showing some pivotal shifts: Revenue multiples have dropped by up to 80% from the '21 highs (median multiple is 6.5x today), and a stark trend of trading growth for profitability and efficiency. NDR is also at an all-time low - 115% upsells and churn impacting that metric hard.
5. DATA PRIVACY: Tracking and personalization have historically been a big part of marketing efforts via tracking Cookies. However, regional legislation (such as GDPR) and the death of third-party cookies have changed everything. Indiehacker dives deep into how to track users ethically. What does that mean for personalization? Venturebeat dives into this topic and also looks at how marketing, in general, can be more private.
6. GOVERNANCE: Mark Suster (from Upfront Ventures) has 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 deck.
7. SDRs: A couple of weeks back, I got a prompt from a friend asking about SDRs, and I realized it has been a while since I have written much about them. In past long-form newsletters, I have referenced SDR metrics and quotas, and ICONIQ Capital has their 2023b Sales Compensation guide discussing SDR comp from earlier this year as well as the updated 2023 SDR Bridge Group SDR Survey - answering all the great benchmark metrics such as How much time does it take for an SDR to ramp up? And how many calls does it take to book one meeting? What about the SDR:AE ratio? This article goes all out and pitches a Mendoza Line for sales reps based on value to the company (not just quotas). BONUS: SDR compensation calculator (Excel).
8. EMPLOYEES: Here is a great question: How many employees should you have based on your ARR? In 2023, this answer may be much lower in our Leanops market, but my former big boss David Sacks has a great slide from his SaaStr presentation on optimal SaaS Org Charts (Full deck here) - Series A is 40-50 at 1m ARR. Yup, that's only $20-$25k ARR per employee - full report here, which expands into what roles you should hire and what the org chart looks like.
9. POC: Switching to proof of concept (POC) based paid trials is working well for me as part of our customer journey and is the fastest time-to-value metric we can deliver for various enterprise stakeholders. Want to get your POC up and running fast? The team at Work-Bench has a step-by-step framework AND a template of a POC Agreement for you here.
10. CASE STUDY: Airtable announced it would lay off about one-third of its team this week following a similar-sized round of layoffs back in December. This has prompted some online reviews of the business as Airtable is currently valued at $11.7B, and there are now some significant doubters (including Anand Sanwal of CBInsights)
POD OF THE WEEK: Another from David Sacks, fresh out of this year's SaaStr Conference, covering what the future of SaaS may look like - lots of SaaS-AI, what it's gonna take to raise a Series A these days, and why Seed investing is currently not a good deal.
1. SaaS METRIC OF THE WEEK: Churn. See #6 and Pod of the Week for more on Churn in 2023. According to CatchJS, though, we're all calculating churn rates wrong. If you love Statistics, the article is well worth reading and it even gives some Python code to perform the more complicated probability-based equation they recommend. You can then check out this tool (as a handy Google Sheet) from Newfund 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). Then, dive into Bessemer's new article on how to fix the Churn leaky bucket.
2. PLG: (for complex products): While PLG may only fit a few enterprise players, there is hope. Companies are starting to apply PLG techniques in totally new settings - such as with complex products.
3. SMB: In general the Old SaaS-Skool guidance was to start chasing the biggest contract values as soon as possible (hello Enterprise!). However, according to Craft, newer school thinking is to focus on SMBs, as sales velocity is a better strategy than chasing contract size - and SMBs are plentiful. However - the downside of SaaS-for-SMB is discussed in this article from SaaStr - CHURN! BONUS: Linking 2 and 3 together here - Why SMB and Enterprise sales have nothing in common from Jason Lemkin.
4. ZERO-BASED DESIGN: Another concept for your dictionaries: Zero-based design has emerged as a potent approach for businesses to improve performance and redesign their products, services, and even organizations. McKinsey goes even deeper with a look at this from what they call Operations Practice.
5. AI: McKinsey's annual State of AI survey reveals the breakout adoption of generative AI: 30% of those surveyed indicated regular business use. Even though generative AI is on the rise, overall AI adoption remains steady with 40% planning an increase in AI spend. YC's new summer cohort is also 65%+ AI.
6. GENERATIVE AI: Adding a spin onto #5 above. Generative AI has seen success in B2C applications (like ChatGPT), but this article makes the case that Generative AI faces uphill challenges in B2B. Due to a lack of industry-specific data, it needs to be more accurate, outcome-focused, and in-depth. They pitch combining LLMs with proprietary data and human expertise to create practical B2B generative AI applications.
7. STATE OF SAAS: Profitwell is the King of data-driven content. Paddle acquired them last year, but the content coming out this year is still excellent. Paddle just launched Forward, their own little conference/product launch, and as part of this, they presented SaaS Market Conditions for 2023 based on data from the 34k companies on the Profitwell platform. The summary is here - but watch the Video (linked below in Pod of the Week) if you have the time (first 10 of a 30-ish minute presso). Growth is slower, PLG Tactics are everywhere(backing up #2 above), especially try-before-you-buy, and CAC is way up in mature markets (US, UK, etc.).
8. SALES: OK - who doesn't want this from their sales team? From Openview, here's how to increase sales by 33% without hiring more Reps: it's all about simplifying sales and protecting selling time.
9. BUDGETS and FINANCE - DEEP DIVE: A lot more of you than I expected clicked the Budget and Forecast links last week - so let me add one more to help with your Financial Year plans: Bessemer has a significant six-part "fundamentals of startup finance" series - Part 1 (goldilocks Budgets), Part 2 (Forecasts), Part 3 (Hiring), Part 4 (Growth and Profits), Part 5 (Pricing) and Part 6 (Metrics and benchmarks).
10. CASE STUDY: Intercom's Des Traynor and Fergal Reid share insights on leveraging AI language models (like GPT-4) to transform Intercom's SaaS products, highlighting the importance of low-risk problem selection and a centralized ML team.
POD OF THE WEEK: Following on from #6 above. I tried to have this Video running in the background but had to pause everything else and give this start of this Video presentation my full attention - it's absolute solid data, but with some skippable Marketing thrown in. Winning new business from existing customers is becoming even more profitable than acquiring new business, but Churn is now at an all-time high, seriously eroding new business.
1. SaaS METRIC OF THE WEEK: 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 more realistic)... Check here for a thought-provoking read of why your LTV may be lower than you think.
2. GROWTH: ChartMogul's SaaS Growth Report is out and has some juicy insights on SaaS growth metrics. Quick peek: Growth is steadying (kind of good news - it's not shrinking), top-notch startups grow over 100% YoY, and here is one I haven't considered before - SaaS looks to be mildly seasonal (and corollary to budgets?) with Q1 being the best and Q4 the slowest.
3. BUDGETS: Speaking of annual budgets - for those who run calendar Financial Years - it's Budget/strategy planning time! It's time to get next year's budget drafted, circulated, revised, completed, and board approved! Don't panic. I have an article for you to read for that (it's a couple of years old but still prime) to better understand how businesses allocate their resources - it's based on interviews with over 600 SaaS startups.
4. FORECAST: This is a great article to get you to forecast your subscription growth better, shifting focus from immediate earnings to long-term revenue. It uses a great walk-through example emphasizing the importance of understanding retention rates.
5. IPO MARKET: Is the Public Market back for Tech/SaaS? I'm still calling a Q1 '24 return to "normal" (but fewer IPOs than the bonkers 1035 IPOs of '21), but Klaviyo just submitted their S1, joining ARM and Instacart. This is definitely a signal, and the Team at Genuine Impact also sees a potential AI-infused spike. Other VCs are not as convinced. Looking back to where we were pre-downturn, the average SaaS IPO took 12 years. It also took, on average, ten years to get to a $1B+ acquisition/exit in SaaS.
6. MULTIPLES: Adding more context to #4 above, Interest Rates and Forward Multiples are two significant considerations with Tech IPOs. Jamin Ball of Clouded Judgement runs the numbers deep in this post and notes that forward multiples are currently below the 10-year average (6x vs. 7.8x), BUT when adjusted to growth (because every software company has seen their growth slow down), current multiples are currently ~50% HIGHER than their long term average. Public valuations are technically still historically expensive.
7. PPG: Grab your tech dictionaries, everyone! I have another acronym for you: PPG, or People Powered Growth. This derivative of Product-led growth consists of a cross-functional team with customer-and non-customer-facing members. It's a People + Product partnership that develop and test solutions, searching for ways to scale human interactions/intervention with a product. Some examples of PPG companies are Drift, Dropbox, and Loom.
8. SALES: Looking to establish your first (non-PG) SaaS Sales Comp plan? So first, check this excellent report on the State of Startup Compensation from the team at Carta. They look into questions such as what makes up for the largest share of compensation spend, what roles get paid the most, and startups are still hiring remote workers (yes, remote hires now represent 62% of all new contracts). And then, read Jason Lemkin's post on constructing a framework for the first SaaS sales compensation plans.
9. MVSP: Here is one more for your tech dictionaries - this stands for Minimum Viable Secure Product. This is a simplified security checklist for B2B software and outsourcing providers. It outlines essential controls to ensure a minimal yet effective security posture. It's not quite the SOC/ISO/APRA level stuff I have to deal with - but it's great for those outside of Enterprise and Financial Services.
10. CASE STUDY: Check out how Vanta found product market fit, starting with signing up 600 customers without a website and totally solving their problem without first writing any code. You could also fast-forward to the timeline graphic version here.
POD OF THE WEEK: Funnel and revenue math, kindly explained by Mark Roberge and Matt Plank of Rippling in the Science of Scaling podcast.
1. SaaS METRIC OF THE WEEK: From Andrew Chen of a16z this week (who is now LA-based - see #3 below as to why that's important): An 80-page slide deck of the red flags and magic numbers that investors look for in your startup's metrics. The article is the best part due to Andrew's commentary - but if you want the PDF, I got ya. Just click here.
2. VENTURE: Venture funding, once abundant, has dried up and become scarce. With a current average 1.5-year gap between funding rounds, cash-strapped startups are either shutting down or seeking buyers. An imminent startup bloodbath is predicted, as indicated in the article. There is little bonus X-Thread on VC returns that explains some of the reasoning: From 11,350 startups, only 1.1% drive the VC fund returns.
3. FIRST PRINCIPLE THINKING: This is a famous Silicon Valley principle/tech-ism. Take a read here on the concept of First Principles Thinking. Not gonna to lie; I've re-read it again this week, and it is a great way to make my brain hurt. Want more? Fine. Here is a complete guide/website. Now that you are an expert on this principle, here is how First Principle Thinking can be applied IRL - in this example, towards a Product Lead Growth business.
4. SaaS COUNT: It's always been a SaaS-ism that the US leads the pack regarding SaaS country of origin - but how big is the lead? Check this post from earlier this year - there are around 30,000 global SaaS companies, and the US claims 60%+. It's a star-spangled dominance; the UK and Canada are the next two very distant countries to round out the podium. Efficiency is the secret sauce, not layoffs. Don't just take my word for it. Check the stats.
5. PERSONAS: SaaS B2B Marketing is a unique beast - and getting into the minds of an idealized customer often requires creating personas - You should try it - it will 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.
6. MARKETING: More for your SaaS dictionary: Buyer Intent Data. There is never a one-size-fits-all marketing strategy and channel for a business. So, how does a company find the best marketing channels for them? This article suggests that everything needed to answer those questions is already within the data a business generates daily. (You'll need Personas - so complete the links above.)
7. COMMAND: A much-needed read for me this week. Being 'in command' of your business doesn't mean you're in control, and that's OK - it involves proactive, agile leadership that drives change, acknowledges challenges, and seeks solutions, ensuring autonomy and accountability for success.
8. DILUTION: This is a fantastic Carta Chart: How much is equity dilution standard? At the Seed and Series A stage, businesses usually see around 20% equity dilution. At later stages (Series C-D), dilution drops to ~10% per round.
9. AI: Race Capital has a thought-provoking article covering areas they are excited about within AI - Disruption of horizontal SaaS, AI for Enterprise enablement (and look what OpenAI did this week), Commoditization of the cloud, etc. McKinsey has their more cerebral insight here as a bonus.
10. CASE STUDY: Everyone loves a good old Pivot story - here are 5: The Hidden Backstory of 5 Startup Pivots That Grew to $43B including Lyft and Discord.
POD OF THE WEEK: How to build a SaaS landing page that converts from the team at Product Led.
1. SaaS METRIC OF THE WEEK: 32 SaaS KPIs Every Company Should Track, awesomely split across five different divisions: Marketing, Sales KPIs, Finance KPIs, Revenue, and Customer Success KPIs.
2. CONTENT: The idea that I should view content as a product was a valuable marketing insight. As was being told that the strategy of "producing ten blog posts" was wrong. Read this Two-part blog (part 1 and part 2) to change your mindset on what good content should be.
3. DUE DILIGENCE: For investors, what the heck does due diligence look like for pre-seed or pre-rev companies with no real traction or trends to share? It's hard to do - but this article captures many vital areas, especially founder equity, non-founders on the cap table, and founder vesting.
4. PERSONALIZATION: Twilio released their 2023 The State of Personalization report. AI is here - more than 9 in 10 businesses are using AI-driven personalization to drive growth, and over half (56%) of consumers surveyed say they will become repeat buyers due to personalized experiences (a 7% increase YoY).
5. VIDEO CONTENT: Nailing introductory and Demo videos is a total art form. Need help to figure out where to start or have 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).
6. SHIP IT: Learn how to ship it real good in the tech world with these six offbeat strategies, from ditching staging to nurturing clear engineering ownership, ensuring success in the fast-paced startup universe.
7. ENTERPRISE: Check out the State of the Enterprise report by Insight Venture Partners - good reading if this is the sector you are selling into: Security is still a top priority, data & AI budgets have expanded the most, APIs are becoming mainstays of the modern infra stack within enterprises.
8. VENTURE: Tomasz Tunguz has done some hard-core statistical analysis examining Startup investing trends. It's a technical read but given current trends, round counts should revert to the mean sometime in H2 2023, which he calls ~ 1000 Seed, 240 Series A, & 65 Series B investments per quarter.
9. SAAS EFFICIENCY: It's surging. Many (public) SaaS companies are showing increased efficiency while maintaining growth: Toast's +6% EBITA, Monday.com +26% cash flow, MongoDB's +5% margins, Snowflake's 46% predicted cash flow, and HubSpot's 30% growth with double-digit margins. Hopefully, efficient growth trends like this will continue.
10. CASE STUDY: Complimenting #7 above, moving into the Enterprise is no mean feat. Here are the top 5 Lessons from Howie Liu, the CEO of Airtable, on their Upmarket mission. Bonus content: how Airtable leverage SEO. And here are ten tips to start selling to big companies as a little guy.
POD OF THE WEEK: This is a great one - The State of the Seed Market, specifically discussing why Seed is broken and what happens from here.
1. SaaS METRIC OF THE WEEK: CLV. - How far out should you calculate your customer's lifetime: two years, three years, five years? Turns out the shape of the decay curve matters, as does max customer lifetime.
2. CLOUD 100: Bessemer Ventures/Forbes created a "Cloud 100" list eight years back, an annual ranking of the world's top private cloud companies. The 2023 list looks a little different. This year saw the first-ever drop in overall aggregate value. Also, Stripe has been dethroned from its usual #1 spot by, surprise, surprise, AI with OpenAI, who also made the list for the first time. Combined, the top 10 companies in the Cloud 100 are worth a staggering $211 billion and average 26x ARR in forward multiples.
3. NETWORK EFFECTS: Building and scaling products like Slack and Zoom is still quite challenging, so read this conversation between Andrew Chen and Des Traynor on building networks that make your product thrive.
4. VENTURE: According to the Q2 2023 US VC Valuations Report from Pitchbook, early-stage startup median valuations dipped to $38.5M in Q2 2023 from the Q3 2022 peak of $45M - interest rates, bank drama, and economic volatility look to be major influences, which is why investors are eagle-eyed for solid fundamentals.
5. VENTURE: This week, Tomasz Tunguz notes that the correlation between public market trends and venture activities during the 2008 financial crisis might not have felt apparent at the time, but historical analysis reveals a strong connection - which we may be able to learn from this time around.
6. PRODUCT MARKETING: In this article, Kim Caldbeck of Bessemer Ventures outlines "The Six Ps" framework from Dan Olsen's Lean Product Playbook for effective product marketing. These Ps - persona, problem, proposition, positioning, product, and promotion strategy - form the foundation for successful product marketing.
7. PLG MODELS: Free trials and a freemium model aren't the only options for "free" experiences you can give to your users: Opt-In Free Trials, Opt-Out Free Trials, Usage-Based Free Trials, Freemium, New Products, and Sandbox.
8. PMF: OMG - we now have a Product Market Fit Report! High Aplah has put together some research on PMF to help those founders benchmark their progress against others on the same path: Only 56% believe they have product-market fit, and 29% think they will do this within the first 12 months of founding.
9. ROBOTAXIS: Self-driving companies Waymo and Cruise have been given permission to launch 24/7 driverless taxi services in San Francisco. This is a substantial industry shift, allowing these companies to expand operating and charging models; what could possibly go wrong?.
10. CASE STUDY: This one is for the CFOs: Five CFO Learnings scaling from $10M to $100M+ ARR.
POD OF THE WEEK: Take a watch of Four SaaS experts who discuss sales tech stacks, emphasizing the importance of purpose-driven tools and the need to understand your problems before adding software.
1. SaaS METRIC OF THE WEEK: PQL vs Activations. In my mind, the try-before-you-buy approach to software subscriptions is the best way to get to my money - that is pretty much what PLG is - so put away your SQL and MQL metrics for a second and focus on their newer cousin: PQL (Product Qualified Leads) - this tracks potential customer who has exhibited buying intent based on product interest and usage. Now you know that - measuring PQL vs. Activations are the two metrics to measure in unison.
2. BURN MULTIPLES: Operators must balance growth and efficiency in this new SaaS environment. So it's time to brush up on those efficiency metrics in this 2 part post covering Burn Multiple and Sales Efficiency metrics. A Burn Multiple measures how much a startup is burning to generate each incremental dollar of ARR. The higher the Burn Multiple, the more the startup is burning to achieve each unit of growth. Here is how to calculate this metric, and here is an example.
3. VENTURE: Uh-oh. The Carta State of Private Markets report is out for Q2 2023, and 20% of all the VC deals were down rounds. But on the upside, venture overall is up 26% from the last Q due to the number of later stage deals (B Onwards) - but we're still down 58% year on year.
4. CAPITAL: This is a great deep dive on the state of fundraising for H2 2023 that covers all things early stage (Series B and prior) from Peter Specht of Creandum Partner. Volume is way down, especially in the Series A and B Space; AI companies are the dominant outliers of rounds, growth expectations, and burn expectations.
5. PRICING: This is an excellent report from Vendr: The SaaS Trends Report for Q2 2023 (b2b only). You can compare quarters from Q1 2020 to now, and a remarkable drop off in ACV happened last Q. It may be buyers prioritizing efficiency (I know that's certainly my MO right now) - it could also be an anomaly. I will check in again next Q. It Also has a great chart by SaaS Category and top products by ACV - check out Snowflake, Netsuite, and Salesforce - all with $160k + ACV.
6. MICROSERVICES: Microservices have become the application deployment method du jour for quite some time now due to scalability and agility. But those old-school monolith apps also have value. Case in point - the Amazon Prime Video team recently shifted from microservices to a monolith and reduced costs by 90%. The choice is case by case, though, Microservices can get crazy complex, and Monoliths simplify deployment but often lack scalability. So a blended approach makes sense, where core functions remain monolithic, and other components can go microservices.
7. PRODUCTS: Balancing the needs of existing vs. new customers is a complicated product act to balance, and that push and pull are nicely described in this article with some great analogies and tips on influencing the product roadmap.
8. ONBOARDING (Remote): Fun fact - I've only ever met 3 of my team IRL; everyone else is remote, overseas, and in a different time zone. Successful onboarding is tricky, so check this complete guide to remote employee training. For some solid examples, this is how Zapier do it (and leverages their own product to use automation to do it), and here are some lessons learned from Slack.
9. M&A: Navigating some kind of acquisition process is a relatively unexplored topic in this newsletter, so check this guide to running an M&A process as a Founder from First Round Review.
10. CASE STUDY: Typeform - you have experienced and/or created at least one of their forms and surveys, and they have been around the block for quite some time, especially in PLG terms. Founded in 2012, Typeform reached $70 million ARR in 2021, serving over 125,000 paying customers, and continues to innovate with AI-powered tools and a focus on user experience.
POD OF THE WEEK: A follow-up on #4 (and #3) above - the video presentation version covering raising capital in H2 2023.
1. SaaS METRIC OF THE WEEK: Developer productivity: There are two primary frameworks for measuring developer productivity: DORA (with a free poster!) or the GitLab source. 5 metrics for a four-letter acronym to measure DevOps performance and SPACE - a more holistic framework for productivity. And also, as a little bonus, how to measure DevEx (Developer Experience)
2. ANNUAL DISCOUNT: If, like me, you are part of the great SaaS Ponzi Scheme, it may come as no surprise to you that annual contracts are discounted. But how much? 10% is the median - and the range is tighter than I thought - 6%-14%.
3. FRAMEWORKS: Beyond the above laws, a successful framework can distill complex processes or models to make execution more of a simple recipe. Kinda why OKRs exist. Sarah Tavel has compiled a great list of compelling Frameworks covering: The 10x model, The hierarchy of engagement, Hype cycles, and more!
4. DUE DILIGENCE: As reported last week, Startup formation has significantly declined over the past 3 years. Some of which is VC based. This means that Due Diligence of the VC kind has gotten more complicated and longer. So read this article from Allison Weil Lechnir at Hyde Park Venture Partners for great insight into what VCs expect when deciding to invest. FE International has a similar article but written from an acquisitions lens.
5. CAPITAL: Another follow-up from last week's report on the significant decline in Startup formation over the past 3 years comes with news that Sequoia Capital has downsized two of its recent funds - the crypto fund is down from $585M to $200M. They also halved the ecosystem fund from $900M to $450M. This is likely to provide/return liquidity to their partners - it also looks like Sequoia is going through some non-fund restructuring.
6. MOBILE: 2022 was a negative growth year both in app downloads and mobile consumer spend but in H1 2023, $67.5 billion in consumer spend and 76.8 billion app downloads were measured globally across iOS and Google Play (that's a 5.3% and 3.2% increase respectively), most of the spend was on iOS (5.8% vs. 4.3% on Google Play). TikTok is the major player in consumer spending outside of gaming -31% growth. At the same time, other apps that rely on subscriptions, such as Disney+, YouTube, and Duolingo, also delivered solid growth at 33%, 39%, and 48%, respectively.
7. APPLE-GPT: Get outta the way Siri, expanding on #6 above, to keep their iOS stronghold in terms of Mobile Growth; how might more modern AI fit into the Apple Empire? Take a read of this analysis and report from Bloomberg. Historically, they may be late to the party with these significant technology adoptions - but their execution is where they excel.
8. SALES COMP (PLG): Figuring out the proper sales comp and plan is super tricky for high-growth companies, and it gets even trickier for companies that have PLG + Sales. So check this guide on PLG Comp Plans from the team over at OpenView.
9. FOLLOW-UP: I probably push this too hard on Sales follow-ups and nudges, so I needed to subject myself to this article last week: How often to follow up: Follow-up Frequency to Close Deals Instead of Annoying People. It was great to see "Way more than you think." though 🙂 . There is also this concept of the "Rule of 7," which states that a potential customer needs to see or hear your message seven times before they buy something.
10. CASE STUDY: Z-Scaler is probably got some of the best growth metrics out there, and most people have never heard of them - FYI, they are a cloud security company: $1.5 Billion ARR, 125% NDR, 46% YoY Groth and 45% of revenue is non-US.
POD OF THE WEEK: From Lenny's Newsletter and complimenting #1 this week: How to measure and improve developer productivity from Nicole Forsgren (Microsoft Research, GitHub, Google).
1. SaaS METRIC OF THE WEEK: Attribution - Marketing attribution models help marketers assess the data behind user touch points and conversions to understand the return on Investment and effort. Learn more here on Single-touch attribution models, Multi-touch attribution models, attribution tools, and more to make better data-driven marketing decisions.
2. PRODUCT MARKET FIT: Oof. More than 50% of the time, the lack of Product-Market Fit (PMF) factors into a startup's failure (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. PMF was called "the only thing that matters" to early-stage startups by Marc Andreessen 12 years ago. Now his team gets a little more nuanced, suggesting focusing on Product-User-Fit as an indicator towards achieving PMF. A similar nuance is also true post-PMF with repeatable-scalable revenue models as a precursor to a repeatable-scalable business model (you know - the one with actual profits).
3. STARTUPS: Whoa - Crunchbase reported a significant decline in Startup formation this week over the past three years ('21-'23) across the US, EU, and Israel. Over this time, the number of new startups in the US is down 85+%! This is likely the triple whammy of Covid, Global Economies, and access to funding.
4. FAILURE: 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.
5. ESTIMATION: If you have a services element in your startup, estimating effort, especially 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 who needs the bookmark) - Estimating Software Projects by Jacob Kaplan-Moss (and What to Do when you mess up).
6. API: The latest State of APIs report is out from Postman. Some interesting findings: APIs are viewed as moneymakers (43% said APIs generate over a quarter of company revenue), which means pricing really matters. Also, the two most popular API integrations are Salesforce (not surprised) & WhatsApp (surprised).
7. TRENDS: Here is a report on the latest SaaS trends that backs up my "SaaS is just a big Ponzi Scheme" statement from Productiv. The website is a little funky with its navigation tricks - so here is the PDF version too. A few interesting tidbits to tease you into the click include: Average SaaS spend per employee is ~$10K, and the average department uses 87 SaaS apps.
8. AWS SATELLITES: Amazon is readying to launch a lot of broadband satellites via Blue Origin Rockets, the competitor to Elon Musk's SpaceX, to compete against Elon Musk's Starlink. The sky will get busy as they plan to have over 1000 satellites launched by July 2026.
9. LLMs: I, for one, am at the start of the journey to integrate LLMs into our Product stack, and this is a really well-thought-out (part 1) article/framework for how to think about security concerning LLMs features and how to categorize risks based on different use cases and deployment types (in-house, 3rd party, etc.).
10. CASE STUDY: I did write about Meta's newest app, Threads, last week - but here is a much better breakdown of the fastest-growing app ever (this will be a case study for years on Product Launch), as we compare that launch to the rebranding of Twitter to..........X this week, given Elon's very Succession-like desire for Twitter to become an "everything app" but with AI. Apparently, we don't Tweet anymore; we send Xs?
POD OF THE WEEK: Jason Lemkin's turn this week from SaaStr Europa - The cold, hard truths about SaaS in 2023 (part 1).
1. SaaS METRIC OF THE WEEK: CAC payback (and accounting for the upsell) Often time many of the base metrics (CAC, CAC/LTV, etc.) are in service to VCs and operationally don't tell us enough to make great decisions. This article takes an operator view on CAC Payback that includes (and celebrates) the value of net revenue retention, and here is a very relevant article on the importance of CAC payback in our current Bear/recessive market.
2. CUSTOMER SUCCESS - Quota: this is an expansion of celebrating Customer Success Teams' contribution as NRR and CAC payback referenced in #1 above. In past newsletters, I have referenced AE and SDR metrics and quotas. But what about quota expectations in renewal and cross-sell/upsell within a Customer Success Team? Tomasz Tunguz takes a look based on a report a couple of years back from Gainsight. Most Customer Success Managers can handle between $2-$5M in ARR and between 10-500 accounts (but it varies based on segment/ACMR).
3. SALES OPS: For those lucky enough to be in Scale-Up mode but not in a PLG way. Scaling creates some real teething problems, especially regarding revenue teams and moving beyond the founder being the primary (or only) salesperson. Eventually, a dedicated team will be needed (that doesn't involve the founder), and, in more modern times, Sales Ops operators are needed to help coordinate cross-departmental activities to help a revenue organization hum. Read this Sales Ops primer article from Point Nine Capital on starting all this.
4. PRODUCT: Now matter how much Workshopping and strategy development goes into a product, things sometimes work out differently IRL. First Round Review is back again this week to discuss this topic and have a list of things to avoid when building highly-technical products.
5. SEGEMENTING: I raised the topic of account-level segmentation a few weeks ago, and someone over at Userlist shared this article that they thought would be interesting. It's true - an excellent article outlining best practices for B2B SaaS companies in effectively segmenting accounts versus individual users.
6. BUYERS: Software generally benefits during Economic downturns - the downside is more competitiveness. So take note that (according to Gartner's 2023 Global Software Buying Trends report) almost 70% of SMBs plan to increase their spending on software this year, many to increase productivity (47%), and 42% rank as a top priority. G2 has just launched its 2023 Buyer Behavior Report with slightly different stats: 49% plan to increase budgets, and 86% require a security audit!
7. PLG TRAP: This is a great read (across 3 parts) - starting with Tomasz Tunguz's article a few months back, where he noted that (post-COVID) publicly traded PLG companies were operating about 5–10% less profitable than sales lead counterparts. Part 1 lays out what the "PLG Trap" is. PLG is not a revolutionary silver bullet for many, and the article points to where initial growth strategies and product offerings are no longer sustainable in driving revenue - showing PLG's scale limitations.
8. PLG vs. SLG: According to the Expansion SaaS Benchmarks report (it's a downloadable PDF), PLG businesses lead the pack, but as stated above - SLG can outperform PLG, and according to this article, it's not a "vs." thing - you don't have to choose, both strategies can co-exist.
9. AI MONEY: A look into how the heck AI companies monetize their AI-PLG apps and how revenue models are built (free trials FTW)...and need to be built to ensure a sustainable AI business is being established (the old Revenue vs. Cost optimization challenge). Bonus at the end of the article - CAC Payback is overrated!
10. CASE STUDY: Meta is back in the news lately by launching Threads, a Twitter competitor that was the fastest-growing app ever (beating out this year's ChatGPT!), but Threads also seems to be cooling off in a major way. Despite their current popularity shortcomings, however, the original Facebook app still has a solid moat, and quite unbelievably, it has a higher DAU/MAU ratio than in its early days.
POD OF THE WEEK: Complimenting 7 & 8 above from Stage 2 Capital: How and when to layer Sales into PLG with Tony Granados (DataDog and Airtable).
1. SaaS METRIC OF THE WEEK: Get stuck into the world of lead generation metrics with PPC (Pay-Per-Click) and PPL (Pay-Per-Lead) campaigns, where you can track impressions, clicks, click-through rates, cost-per-click, and conversion rates. PPL is super nuanced but can be super effective in driving quality leads.
2. CONVERTIBLE LOANS: They are a kind of debt until they are not. But Convertible Loans are a quick way to access money quickly via an interested investor. Point Nine Capital describes in detail what is involved in a convertible loan and what to look out for.
3. UN-SCALE: Sometimes, while building a repeatable scaleable business model, some un-scaleable things have to be done. This article highlights three specific non-scalable things sales teams should be doing right now.
4. SECONDARY MARKETS: Pitchbook analyzes that LPs are under performance pressures and a lack of liquidity as cash distributions from VC funds are far from great right now. Check this chart for how different pre-2016 funds are to 2019. This is manifesting itself as secondary stakes in portfolio companies, but it's a buyer's market, so only the best assets are in demand.
5. VALUATIONS: Adding onto this buyers market theme above, we all know by now the shift of value in SaaS from growth to valuing based on profitability. Tomasz Tunguz notes that in public markets, software companies have seen 40-112% increases in valuations over the last few months, but only for the top performers - strong unit economics & margins are vital to seeing this valuation creep. The era of efficient growth is now.
6. PLG: A successful PLG strategy goes beyond just having sexy UIs and "delightful" onboarding experiences. This Substack article highlights the importance of what needs to be under the hood - good data analytics, conducting experiments, and building a community centered around the product.
7. DIFFERENTIATION: Tricky question founders get asked all the time. 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.
8. A/B Tests: If you're looking for a concise guide on how to run, measure, and react to split test experiments, this bookmark-worthy article is a valuable resource.
9. WEBSITE: I've had this discussion at least four times this two weeks, and Jason Lemkin's blog post on the need for quality Marketing Websites this week wraps #6, #8, and #10 in this week's newsletter nicely together. Yes, your marketing site really does matter.
10. CASE STUDY: This chart got me on this one. It visually shows how finding your Ideal Customer Profile can lead to way more organic growth, word of mouth, and referral vs. Paid, low-quality paid signups: How Visily scaled to 100K signups in 5 steps.
POD OF THE WEEK: Customer Acquisition Strategies with Farzad Rashidi, who discusses how to grow and convert website traffic, get landing pages to rank, what content promotion strategies work best, and more.
1. SaaS METRIC OF THE WEEK: Consumption-based LTV. If you have a consumption-based model, then, like me, you probably have revenue that is not consistent monthly. Variable revenue is now a big thing in SaaS. Check out How to calculate LTV with variable revenue customers from the SaaS CFO (comes with a template!).
2. CUSTOMER SUCCESS MODELS: Like customers, not all CSMs are built the same. And it depends, based on stage and strategy, as to how your CSM teams will evolve…...but they will. Gainsight proposes five basic kinds of CSM and a corollary org chart. But keep in mind, IRL, they all will be different hues. SaaSx has this model. Which one best resonates with you?
3. MVT: Here is another one for your tech dictionaries: MVT or Minimum Viable Testing, which is about creating hypotheses and conducting tests that allow you to predict if a market will appreciate a product before even launching an MVP.
4. BOTTOMS UP: Bottoms-up adoption is hard to crack😉 (learn more about the bottoms-up model here). For example, according to Gergely Orosz, Hashcorp has 4,300 customers, but only ~800 generate 90% of their annual revenue.
5. NOLS FRAMEWORK: Not all decisions are made equally - As a former outdoor instructor and part of the National Outdoor Leadership School's (NOLS) network, I was pretty excited to stumble across this article from another alumnus discussing some of the excellent management frameworks to come out of there. This one focused on group decision-making, outlining six different ways to make decisions in a group.
6. AI: This article from Honeycomb discusses the tough challenges of building LLM-based AI products. Context window limitations, slow performance, prompt injection risks, legal compliance concerns, and the limitations of early access programs are all covered - must read if you have LLMs on your product roadmap.
7. AI INVESTMENT: The race is on for AI Investments. Just look at the astronomical Deals chart in this article from Pitchbook. Q1 2023 says $1.7b invested across 46 deals, with an additional $10.7 B announced (but still needs to be closed).
8. FIRST PRINCIPLE THINKING: Want to be more like old-school Elon (the one without all the SEC/Twitter dramas)? Take a read here on the concept of First Principles Thinking. Not gonna lie, I've re-read it for the 15th time this week, and it is a great way to make my brain hurt. Want more? Fine. Here is a full guide/website. Now that you are an expert on this principle, here is how First Principle Thinking can be applied IRL - in this example, towards a Product Lead Growth business.
9. PRODUCT POSITIONING: It's easy for startups to underestimate the significance of product positioning and marketing in the early stages. This article highlighted the importance of understanding the product, customers, and competitors. It had me at the subheader, "A lot of startups suffer after initial growth because they can't figure out what they are building & for whom."
10. CASE STUDY: Hootsuite migrated from a Sales based to a Product Led strategy with a 6-step process outlined in this article from their head of growth.
POD OF THE WEEK: Complimenting #7 above is a good listen from Bessemer Ventures with Dave Rogenmoser of Jasper discussing mistakes made by building out AI products.
1. SaaS METRIC OF THE WEEK: Start with a Point Nine Capital article on everything you always wanted to know about cohort analysis (but were afraid to ask), and here is a free Cohort Analysis template from the SaaS CFO. GoPractice has a Product-focused article on forecasting key product metrics through cohort analysis, and The Startup looks at this metric from a VC Due Diligence perspective.
2. DUNNING: Bringing this actual term with a weird-ass name back to the newsletter - it's a phrase for involuntary churn (aka bad or failed payments). According to Baremetrics, on average, SaaS and subscription businesses lose around 9% of their MRR due to failed payments. Learn more about a successful dunning (and pre-dunning) process.
3. TRIALS: Are proven funnel methods for a solid go-to-market strategy. Check this article on 9 ways to optimize your SaaS trial, and then note from Tomazs Tunguz how long your customer trial period should be?: TL;DR: Longer trials do not convert customers at greater rates. Two weeks, two months, same results.
4. DEEP TECH: Commercializing scientific research can take a longer horizon than most VCs are comfortable with. Bessemer Venture report on the sector this month and introduce us all to the XB100 - a ranking of the world's top private deep technology companies across AI, Aviation, AgTech, Quantum, and Space.
5. SALES TEAMS: Take a good read of this article from David Sacks on the simple math you can use to set up a sales team. Individual plans, team plans, and expansions/renewals are all considered for a high-growth sales team structure.
6. REFERRALS: Cracking the referral loop is a dream outcome, but making this work is pretty rare. Kyle Poyar has written a guide on how to do it ( a collab with Stefan Bader from Cello, makers of referral software).
7. TRUST: For #6 above to work, 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 further by leveraging those frothiest customers into a referral channel.
8. AI: I find this topic fascinating - Mark Roberge of Stage 2 Capital looks at the hype cycle about AI and asks who could win the go-to-market AI race - Startups vs. Incumbents? Adding fuel to this one with CB Insights AI 100, the 100 most promising AI startups of 2023.
9. VR: Facebook's ambitions for the Metaverse were embarrassingly out shadowed by Apple's announcement of their Vision Pro earlier this month - but my biggest question with all things VR and a big hurdle given the price tag is: Why should I care? Ben Evans explores these same sentiments in this essay, exploring what the heck it is exactly Apple is trying to build.
10. CASE STUDY: Moving upmarket into larger organizations is a standard SaaS growth strategy. Increasing ARPU (Average Revenue Per Customer) is good! But there is a lot to learn and a lot of time, knowledge, and effort required to succeed in this market segment. It's not easy, but it can be done. Here is an excellent guide from Outreach on breaking into deals over $100k ARR.
POD OF THE WEEK: From Lenny's Podcast this week is Melissa Tan (Webflow, Dropbox, Canva) discussing how to build high-performing teams.
1. SaaS METRIC OF THE WEEK: Value metric. Similar to the One Metric That Matters in that a Value Metric may be unique to your business or GTM model, these metrics directly align revenue models to the customer acquisition model. There are two types of value metrics: functional and outcome-based. Learn more here.
2. PRICING: This is an ongoing experiment, and we expect it to evolve forever (FYI, we are all not charging enough). Intercom makes the case that a solid pricing strategy should help shape an entire business model, and here is an excellent article on choosing the most suitable SaaS pricing model.
3. DOCUMENTATION: A few months back, I complained that building a comprehensive and helpful customer Knowledge Base platform is complex. Here is something to consider (it's certainly a helpful article for my mindset): There are stakeholders/purchases of your product who do not respond well to traditional marketing and may actively hate it. These people are like me, and while I may moan about how difficult creating good documentation is, it may be one of the best anti-marketing-marketing tools you have available, Especially if you have an API as part of your product.
4. VENTURE: This is a great Cheat Sheet from Antler - a guide for very early-stage founders on how much they can realistically raise in their first round. Especially if nothing has yet been built.
5. SALES: Insight Partners have their latest edition of the SaaS Sales KPI Report out. A couple of trends: Growth rates overall are normalizing after the 2021 COVID-19 digital push, and it didn't matter on company size - CAC payback is at least 10.5 months across all those surveyed.
6. GROWTH: Fast follow from above covering SaaS Growth Trends in 2023 via ChartMogul. The top quartile of SaaS business (ARR of $1 to $30 million) grew 62.1% in 2022 (vs. 93.4% in 2020), and retention strategies are now viewed as growth strategies. Lots of referencing of the SaaS Benchmarks Report in this one, and this Tweet is reporting that new revenue growth is falling across most enterprise tech companies.
7. CATEGORY CREATION: We all want to be up to the left in one of those fancy-ass Gartner/Forrester Quadrant reports. So watch this presentation on category creation from Neo4 and another version from Gett.
8. TAM: A critical question at the very early stages of startup land is, "What's the market size?" The size potential of this startup is directly proportional to the size of that market. Having a clear understanding of the Total Available Market (TAM), Serviceable Obtainable Market (SOM), and Target Market (TOM) can give all the confidence in the world to answer that question. But y'all really need to get started first with this TAM Masterclass.
9. ICP: Another entry for your Tech Acronym Dictionary. An ideal customer profile (ICP) is a detailed and specific profile of your startup's ideal customer. Being clear about your ideal customer profile (ICP), as it evolves is critical, as it drives everything in the business, including marketing, product, and engineering.
10. CASE STUDY: From Netflix to more modern apps such as Midjourney (via Discord), this is an excellent blog covering how the biggest apps acquired their first 50,000 users. Bonus Fact: It appears as if Midjourney is generating about $200M Annual Revenue.
POD OF THE WEEK: #6 above in Podcast format - SaaS Growth Trends in 2023 from ChartMogul with Christoph Janz (Managing Partner at Point Nine), Daria Danilina (Co-founder, Salesroom), and Peter Walker (Head of Insights at Carta).
1. SaaS METRIC OF THE WEEK: SaaS Metrics 2.0. This is a big one - we all know the core SaaS Metrics - CAC, LTV:CAC, ACV, etc., etc. But Kyle Poyar from OpenView Partners is making the case for the next era of core metrics. Product lead, expansion, and margin profiles (such as ARRR per FTE) are at the core of this new potential playbook.
2. MARKETING: Marketing is an extensive practice covering many disciplines and specialties. Which one should be the focus of a startup's first hire?
3. ONBOARDING: Doing this well is critical to increasing value, lowering churn, and creating advocates - so here is how some of the best do it: Leveraging email, this is how ZenDesk document their comms flow, and ChartMogul has a guide to their non-email version too. From HeavyBit, here is a 4-phase plan, and this article covers 5 Tips to Speed up Sales Onboarding without Sacrificing Quality.
4. IDEAS: Everyone has them, like all the time. So here is a framework for managing them. This one is bookmarked for me, and the template is now on my wall! The 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.
5. CONTINUOUS DESIGN: My post on DesignOps was popular last week - so here is another design-based article: Thomas Sutton is pitching a new Continuous design framework to bridge this divide between theory and practice that I like to call "Everything everywhere all at once." A bonus here is the "How do you design" document that covers more than 100 design process models. Why are these important? This article makes the case that Agile and UX are a failed marriage.
6. FAILURES: According to data from this morbid Crunchbase page, at least 72 startups have shut their doors in 2023. This doesn't quite indicate the trend in terms of YoY spreads - but the fact they have built a page can not be because of positive trends. The hypothesis is that a disproportional amount of failures are now occurring due to the VC Boom that ended in 2021 and the hard-core tightening of VC Wallets that happened almost immediately after.
7. ESOP: Employee Share Option Plans are a fantastic idea to incentivize and retain great staff, but under the hood, ESOPs are complex, especially with changing valuations, both positive and negative, in today's market. Check out Airtree Venture's best practices for communicating the value of ESOP to teams. This article also has a bonus financial model template (value calculator, salary package calculator, and vesting schedule). Check this cheat sheet for standard ESOP terms.
8. ESOP BENCHMARKS: A fast follow from #7 above is this wonderful site that has compiled Option 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.
9. BOOTSTRAP: This is a fun series just started from Inc mag (and currently at 2 parts) - part 1 here and part 2 here - covering How to start and grow a Tech company with less than $100 - it's all GTM, so make sure you have that whole product thing figured out first.
10. CASE STUDY: Spotify and its Squads. A few years back, a really inspiring and memorable video circulated (in one of those cutesy handwritten animation styles) describing the Agile Squads that Spotify employs in its apparently cooler-than-cool Utopian Developer department. Well, guess what? Sorry to burst your Spotify bubble, but they abandoned it. (How Agile of them)…. In this post-mortem assessment, the most significant fundamental failure was such a SaaS-based one: It was solving the wrong problem.
POD OF THE WEEK: From the Invest Like the Best team - a recent interview with Bessemer Venture Partners (one of my favorites). It's actually a VC firm that is over 100 years old and has a unique operating model and plans for building a VC Firm that last centuries.
1. SaaS METRIC OF THE WEEK: Renewal rate: You have to scroll down to the bottom of this article before you get to the informative bit on measuring this metric, but don't! (I could link you to this one). Please read the first part, too - it's great. TL;DR: Don't be a jerk when it comes to renewals. If you have to be, maybe it's you, not your customers (and then keep scrolling again to see the 5 main reasons why people unsubscribe). This additional article from Profitwell on Renewal Rates also describes the differences between retention and renewals.
2. PRICING: Openview has surveyed well over 1,000 SaaS companies about pricing. Check out the pricing evolution as companies mature (TL;DR ACV increases by about 60% from seed to expansion).
3. DESIGNOPS: Here is another one for your Tech Dictionary: Listen up! Design isn't a thing; it's a process. The principles of which can be used and adopted across all lines of business (which is why design thinking is trendy). Please read here to get a better rundown of what I'm trying to say. Then, how to use design thinking (and OPs) in product teams to build better products and experiences.
4. BUYERS vs. USERS: The person writing you a check is not necessarily the same person getting value from your business. So read this insightful article from HeavyBit on differentiating messaging based on this premise and the different profiles.
5. M&A: According to this report from Kroll, M&A Deal value is down 52% in Q1 2023 (compared to Q1' 22), but deal volume is up 23% (compared to Q4' 22)? M&A may be something you are evaluating in the near future, so here is a guide to running an M&A process as a founder from First Round Capital.
6. COMPENSATION: This is a great dive into dilution from a CEO's lens- asking what CEO equity looks like by Fundraising Round or at time of IPO?
7. CASH: Here is an interesting analysis. According to Carta research, early-stage startups have to reduce spend (Series B and prior) and that that, which correlates to a decrease in the median daily cash spending ability for seed, Series A, and Series B startups by 25%, 57%, and 65% year-on-year, respectively.
8. AI-1: Uhoh. According to the May 2023 Challenger Report, AI has already begun replacing us humans in jobs. With nearly 4,000 positions lost last month due (including at IBM). Gizmodo has more details.
9. AI-2: I am (and I encourage my team to be) an avid user of AI tools to help complement productivity, learning, and administration. Happily, the HI (Human Intelligence) that is Tomasz Tunguz, did some analysis work for us all this week by asking the question we all need to be answered: "How much more efficient should a SaaS startup be when using AI?" TL;DR - about 13% overall - but Engineers should be smashing it.
10. CASE STUDY: Overhauling pricing is scary, but the payoff can be great for your balance sheet. Here's how Disco increased pricing by 5–10x!.......and more than doubled growth year over year.
POD OF THE WEEK: Adding onto #10 above - How Spotify moved away from Squads and many other things in this 1:30 podcast from Lennys Newsletter with Gustav Söderström (Co-President, CPO, and CTO at Spotify).
1. SaaS METRIC OF THE WEEK: One I discussed in detail at a session last week: People are the most important (and expensive) metric for any company, especially SaaS (yes, more important than the actual product). Revenue per FTE is one metric to measure regarding company efficiency via people efficiency, but a better one, perhaps, is the ROSE Metric (Return on SaaS Employees). This metric highlights the tradeoffs between a SaaS company's headcount, recurring revenue, and EBITDA growth.
2. BENCHMARKS: ChartMogul launched their 2nd edition of the SaaS Benchmarks Report last week with data from over 2,100 SaaS businesses covering growth patterns and retention, churn, and growth rate benchmarks - LOTS to digest!
3. GROWTH: According to the report above and the SaaS growth in 2022 was the slowest it has been in years, and retention was a key driver of growth, and it caught the attention of Jason Lemkin, who has more to say. Today, top quartile SaaS companies are still growing 65% (and seem to be rebounding) - but in Q1 2021, it was 97%.
4. GROWTH 2: Testing new tactics for marketing growth takes a lot of resources, and most of us often need more time to run experiments? So check this Google Doc from Dashly, where they collected 100 growth marketing hypotheses tested by their experts. (includes advert retargeting, the wait list for product launches, niche glossaries, etc.)
5. SALES COMP: ICONIQ Growth partners just published their Sales Compensation guide (pdf) - a very detailed 77 pages with tons of content, but to tease you into the click: 50/50 base to variable remains the standard comp structure in B2B Sales, OTE/Quota is 4-5x, and Enterprise SDRs need to book 5 SQLs Per Month, but Mid-Market SDRs crank out about 20.
6. FREE TRIALS: According to Userpilot's State of User Onboarding for 2023,74% of SaaS companies now offer a free trial (way up from 43% in 2022). Openview Partners have a great article on how to optimize these free trials. BONUS: Tomasz Tunguz also conducted a survey on Free Trials a few years back, which has one of my favorite facts: Conversion rates aren't impacted by trial length (so make them shorter).
7. PATTERNS: The Data-Driven VC looked late last year at what data patterns can be analyzed across successful startups. Super interesting read, but TL;DR: most important is the number of executives, the split of business versus tech roles, the split of male versus female founders, and their age and degrees.
8. CAPITAL: Another week, another Pitchbook report - this one covers Enterprise SaaS, which remains pretty robust: In Q1 '23, U.S.-based enterprise SaaS startups raised $13.9B (across 363 deals). Funding remained strong for the enterprise SaaS sector last year, second only to the record-setting totals of 2021. YoY, this is tracking down by about 18.5%. But this figure is still way higher than 2020 by about 85% ($34B - $62B).
9. GROWTH LOOPS: Elena Verna (Head of Growth at Amplitude) had an excellent presentation at their Amplify 2022 event about predictable and defensible Growth Loops and how to make money from them. Elena makes the interesting argument that revenue is an outcome and should not be a KPI in Growth. Reforge now has a recent article with some examples and feedback on how to implement Growth Loops.
10. CASE STUDY: Adding onto #9 above, Growth Loops are hard to understand without a concrete example - Git Hub is a great one. This is how they built a 40M+ user platform via loops.
POD OF THE WEEK: From Software Snack Bites, Kyle Poyar from Openview goes all in on tips & tactics, pricing & packaging, sales & marketing, and case studies across the PLG World (including how to make product-led sales work).
1. SaaS METRIC OF THE WEEK: Expanding on post #4 from last week is a revisit of NDR and its cousin, GDR. Modern SaaS is all about acquisition, retention, and expansion; it's a bowtie, not a funnel. Crunchbase has done the work to calculate what good NDR benchmarks should look like.
2. RETENTION: Now expanding on #1's bowtie above - I referenced Gross vs. Net Retention Rates a couple of weeks back, but Chartmogul also has retention trends benchmarks for 2023, which is essential because Companies with best-in-class retention grow at least 1.5-3x faster than their peers - but in this market, it's now more challenging than ever. BTW: According to a report from SaaS Capital, yearly contracts don't actually increase NRR.
3. REVERSE TRIALS: Crack open up your tech dictionaries to add in this term. Reverse Trials are a play on freemium, where new users start with a time-limited trial of all your paid features. At the end of the trial, they can either buy or downgrade to a fully free tier - this article also explains how Airtable does this well. The benefit here is that, emotionally, the users experience loss aversion, where the pain of losing something is twice as powerful of a motivator as the pleasure of gaining.
4. PITCH: Want to compare how your Pitch Deck compares to others? Here is an absolute MONSTER resource link for you (and your pitch team). Pitches from AirBnB, Uber, Shopify, lesser-known startups, and famous flameouts (such as Fyre) can be found on Billion-Dollar Pitch Decks and Pitch Deck Hunt. A cool approach on OpenDeck that lets you search by Category/funding year. If you want to see a breakdown/analysis of pitch decks, then 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 last year is liley now redundant thanks to OpenAI (of ChatGPT fame)- Katelyn Gleason observed that no real generation-defining startup has been founded since 2014. But we now have one outlier - OpenAI (2015)
5. 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.)l. Ready to get started drafting some documents? Here are some great resources for free legal docs to stick to the mission: Avodocs - 3 free per month. In addition, 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.
6. IDP: You need your Tech Acronym Book open for a new entry. IDPs (Internal Developer Platforms). Stack Overflow's latest developer experience (DX) survey shows that most developers are running a bunch of CI/CD, DevOps, and automation tools. Still, only ~40% had a Portal or Platform to access the right tools and services. According to Forrester - good IDP is key to increasing productivity. Here are some popular players: Roadie, env0, and CloudQuery.
7. STATE OF STARTUPS: The 2023 edition of Pilot's State of Startups is out. The first slide shows we're an optimistic bunch - with 74% of those surveyed being optimistic about their startup's outlook (and view on layoffs) - but less optimistic about revenue growth compared to last year (2x vs. 4.9x). In addition, 56% are remote/office-less, and just over half of startups surveyed have more than 12 months of runway.
8. DEMO: For my daytime business, demos play a pivotal role in our sales process to experientially show and discuss the value we can bring to a prospective customer. The team at Content Beta analyzed a bunch of Product demo videos (100+) and reported back on places where these videos went wrong, so yours don't have to.
9. VENTURE: This is a bit of a pitch deck - but the PDF is packed with really interesting slides on Venture - it's called the Data-driven VC Landscape 2023 (report, I guess?). The pitch is........that VC is pretty latent in terms of digitization - hah! 84% of VCs want to increase data-driven capability, but only 1% have initiatives deployed, and Machine learning models can outperform human investors in deal screening. Talent is distributed equally, but capital is not, with North American startups raising more capital proportional to population than anywhere else, and in terms of accuracy and recall, Machine learning models are on par with the best investors (80%) and relatively outperform the average/median investor by 40%/33%."
10. CASE STUDY: The path to ChatGPT from Rama Ramakrishnan of MIT - Rama gives a long (104 Slide) informal explainer on how ChatGPT was built (including what GPT actually means - slide 42, of course).
POD OF THE WEEK: If you have yet to see SuperPumped (aka Uber: The Travis-blitz scale years), you should, as it's part 1 of this podcast post. Part 2 is the un-ubering of Uber with the post-Travis CEO, Dara Khosrowshahi, turning that toxic, blitz-scale culture around.
1. SaaS METRIC OF THE WEEK: ARR per FTE: Capital Efficiency is a new-fangled metric we all want to track in these LeanOps times. Benchmarking this - the median is $143K per FTE according to the 2022 KeyBanc Private SaaS Report. With public companies, it's double that, according to data from Maritech and Kyle Polar from Openview, breaks this down to tell whether you're on the right track.
2. AD BOT: The internet is only half human - Imperva's annual Bad Bot report revealed almost half (47.4%) of all internet traffic was from bots, with bot traffic of the bad kind accounting for over a quarter (27.7%) of all traffic.
3. DEX: Crack open your tech dictionaries for another acronym-based entry: Digital Employee Experience. This is all about your internal users - your team. In a surprise to mostly no one, 95% of employees say IT issues decrease workplace productivity and morale - which is a bigger deal AND a more significant challenge to solve now that digital tools are more mission-critical in today's WFH/Hybrid/Remote work environments.
4. SaaS (Born again): Great article from Harvard Business Review summarizes how the traditional sales model "funnel" does not apply to modern SaaS and equates a customer life-cyle to look more like a "Bowtie" rather than a funnel shape because most revenue takes place outside the marketing funnel (which is why modern Customer Success and NDR exists).
5. B2B SAAS: Silver Cloud lining time! Adding onto the Harvard Business Review article above is from Boston Consulting Group, who make the case that overall Tech may be cooling off, but B2B SaaS is not. They also bring receipts to back up that claim (B2B SaaS is outpacing Industry growth by 10x) and deliver a playbook that B2B SaaS companies can make to continue the growth trajectory
6. 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 easier than 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!
7. ENTERPRISE ADVICE: a16z convened some early-stage CEOs for a recent event, discussing business management need-to-knows like hiring, firing, scaling, sales, and marketing.
8. DOWN ROUNDS: According to data from Pitchbook, down rounds are on the rise but don't worry - read this article with the author making the point that down rounds won't kill you.
9. STATE OF WORK: A new report from software.com on the future of work (for Software Development) is an AI baseline of sorts that we should revisit next year. TL;DR - Devs have better work-life integration post-pandemic (with fewer late nights and weekend work), productivity remains unchanged (BUT devs are spending a little less time coding per week), and that's because AI is starting to show up. It will fundamentally change how Devs work.
10. CASE STUDY: I'm still trying to figure out why, but last week's article on Product Market Fit was very popular, so let's double down on how some popular companies got found PMF (via a Tweet Thread).
POD OF THE WEEK: As AI continues on a burn, founders and CEOs (me included) are discussing how to integrate this new superpower and also considering essential questions around data privacy, accuracy, and pricing (me included). Please take a listen to a16z's Podcast on what we are all already talking about.
1. SaaS METRIC OF THE WEEK: This week, you get to watch a video that should be mandatory for onboarding every person in a SaaS company and required watching annually. It's from David Skok (a legend in the SaaS world) and covers hardcore B2B SaaS metrics such as Rule of 40, Repeatability, Net new ARR, Bookings, LTV:CAC, churn, etc., etc. - it's a metric-packed 20 minutes.
2. AI LAYOFFS: According to Dropbox, AI-based Layoffs are here, same with Insider - not caused by AI but because they need more of it. Overall layoffs in tech remain strong (even though Google's AI is not happy about it), so the sound advice for those who are laid off seems to be to get into AI NOW! (from the former CEO of Reddit)
3. AI VENTURE: A few months back, I noted that Pitchbook had launched an AI platform called VC Exit Predictor. But I totally missed a complimentary report from them on recent VC investment into AI. VCs have steadily increased their positions in generative AI: $408 M in 2018, $4.8 billion in 2021, and $4.5 billion in 2022. So far, in 2023, we're at $1.7 Billion (announced).
4. VENTURE (Private Markets): According to Carta's State of Private Markets for Q1 2023, the total amount of capital raised by startups dropped 80% in the last 12 months (Q1 '22 to Q1 '23). Deal count fell 45% over the same span (an obvious indicator of smaller deal sizes), and 20% of all venture investments in Q1 '23 were down rounds.
5. INVESTOR UPDATES: The team at NFX has read a lot of investor updates and has published a guide where they share common mistakes and how you can avoid them (and also deliver hard news)
6. TALENT: 2023 has flipped from a candidate's to an employer's market, so even though things have changed, what talent is necessary at what stage? Openview has a 2023 Talent report for you and provides excellent insight into the mix of teams at different stages. Early-stage teams are product and engineering-heavy (56%). Past product-market fit, it's all about the go-to-market teams, and sales and marketing h overtake product and engineering.
7. PRODUCT-MARKET FIT: A long-running general rule (called a Growthism) in the Startup world is that getting to $1m of ARR is a strong sign of Product Market Fit (PMF). Kaitlyn Henry from Openview runs contrary to this Growthism, stating that there's no specific revenue indicator that defines PMF. Still, she continues to write about concrete signals of PMF available beyond a $$ amount and gut feel. Read more about all those signals here. This sits well with Brian Balfour's work, who wrote a fantastic article on the subject that is now almost 10 years old and still incredibly relevant for figuring out what stage(s) you may be at.
8. MISTAKES: I saw this original presentation from Anand Sanwal of CB Insights way back at SaaStr back in 2017 - but it's memorable because of its Silicon Valley-like (the TV Show) accuracy of things not to do. 100 things NOT to do when building a SaaS company.
9. ANNUAL PRICING: I'm sure you see this all the time, options to pay monthly or annually on a SaaS pricing page. Great for all you non-consumption-based folks out there. It's a great cash flow choice - but is it the right option for your business? Jason Lemkin has the low-down.
10. CASE STUDY: Ok - looking at #7 above - what could Product Market Fit look like experientially? Asking the PMF question, IMO is always the more noble focus (instead of being focused on answering the question). But sometimes - you gotta know, and here is a case study on how Superhuman did it.
POD OF THE WEEK: Carilu Dietrich of Miro, Segment, Atlassian, and 1Password discusses how to achieve hyper-growth via Lenny's Podcast
1. 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 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, and the other is not actively canceling.
2. DOWN-ROUNDS: According to data from Pitchbook, almost 7.5% of all venture funding rounds in the U.S. in Q1 2023 were down rounds. They also note that over 400 unicorns haven't raised new funding since 2021, and 94% (of tech unicorns) are unprofitable.
3. VENTURE: But wait - there is more. The Q1 '23 Venture Monitor report from Pitchbook dropped last month, and we may have the beginnings of a Startup pipeline problem: The angel and seed markets are at a 2.5-year low. The early stage Venture is the same (A&B rounds), while the late stage is at pre-2018 levels (21-quarter low). CBInsights has the same news, just different graphs.
4. DEMO: This one interests me (and apparently some people reading last week's newsletter) - as the path to Demo is precisely the primary call to action my website is designed for. I assume it is the same for many of you B2B people, so....." Should Your Website Drive Prospects to a Demo?" Read the article to determine if this is a problem at your startup.
5. MARKETING: Bookmark this article from the MKT1 Newsletter that dives into how to organize a B2B growth marketing team as we move away from just a demand gen/Growth hacking worldview.
6. BOTTOMS UP: Crack (get it) open your tech dictionaries for this one. Stage 2 has a Go To Market Analysis Model called the Bottoms Up Model (Bonus Worksheet here), starting with Current State to assess if Sales & Marketing efforts are well matched to the products' finance plan and unit economics.
7. VIDEO: Complimenting the above, nailing introductory and Demo videos is an art form. Need help to figure out where to start or have 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)
8. INTERNET: Big earnings from Big Tech last week, and see #10 below for a reason for this post; over the past 30 years, the Internet has launched some of the world's biggest companies - Google (~$1.4 Trillion), Amazon (~$1.1 Trillion), Facebook (~$615 Billion), and Netflix (~$150b). BUT - growth was all almost single digit. AI has landed, and none of it is powered by Big Tech (yet). The next earning season will be informative on that front.
9. AI: Another week, another eternity of progress in AI: Italy restores access to ChatGPT, the Godfather of AI quits Google, StabilityAI releases a ChatGPT competitor, Palantir releases a Military AI Platform (and it's scary), and a study found ChatGPT outperforms Physicians both in skill and empathy.
10. CASE STUDY: The World Wide Web turned 30 years old (publicly) last week, and we've come a long way since the Web protocol and code became royalty-free in 1993. Here is a history of how that all started from the OGs of Web Tech (where it was birthed pre-public in 1991) - CERN - with the badass domain of home.cern. The Wall Street Journal has an excellent visual story of the Web with images of Mosaic (the first image-based browser), AOL Online CDs, and Y2K flashbacks!
POD OF THE WEEK: Complementing #6 above - Mark Roberge of Stage 2 covers common SaaS sales potholes and how to avoid them.
1. SaaS METRIC OF THE WEEK: Space Metrics. The biggest rocket in history launched (and exploded) last week, so here is a great deep dive into the relevant Space industry metrics, acronyms, and Market Sizing that's driving real competition (including the loss of Virgin Orbit earlier this month) - Why should we care? The rise of Heavy Launch Vehicles has just started, and see Pod of the Week for more details - TL;DL - it's all about the global movement of goods and materials.
2. SHAPE UP: A refresher for your tech dictionaries and reading list. 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) has developed ShapeUp, its publications, and a toolbox of techniques that can eliminate chaos when it comes to designing, prioritizing, and shipping products/features.
3. SALARY: Hey Founders, a recent TechCrunch article recommends that founders pay themselves rather than doing it for the equity - after all, paying people is what Venture should be for, right? So how much? This doesn't mean you get Market Rates; startup founder's and CEO salaries can often range from zero to a gated raise based on ARR. See here for lots of good answers and also lots of different situations. According to Nathan Latka, a good rule of thumb is that if you're two-co-founders and just hit $1m in ARR, you should make about $100k per year and Increase to $150k at $2m in ARR.
4. PRODUCT BENCHMARKS: I'm hoping for an updated report soon, but this report is a must-read for those of you starting or deep into product-led growth. It's year 3 of the Openview product Benchmark Reports - downloadable here. Products continue to perform well as acquisition, conversion, and expansion tools, so this is an excellent report to gauge what's good vs. what is great regarding product conversion. In a hurry to benchmark yourself? Use this interactive calculator to see how your user journey compares to businesses of a similar size and scale. FUN FACT: 61% of companies in the Cloud 100—including Calendly, Amplitude, and GitLab—leverage a PLG model.
5. GO-TO-MARKET: The team at ContentBeta has teased their now-released Go-To-Market Playbook for 2023. Check here for some great nuggets - guides, ebooks, and research reports are still the best content assets to differentiate your software (more than video), and cold email is still a strong go-to.
6. COLD EMAIL: So based on #5 above, cold email remains a go-to modern-day sales tool - but diving deeper, this method historically has a shallow response rate (1% for cold emails historically but has dropped below 1% in recent years). 1. Jason Bay has spot-on methods to optimize response rates, 2. Predictable Revenue has this PowerPoint deck on the four pillars they think constitute a quality sales-based email campaign. 3. This is a quality case study for anyone with email marketing as part of their businesses - a deep dive into a single cold email and why the author actually opened it (TL;DR - yes, it's all about everything in the design of the email, but its more about how targeted the message is). 4. So here (from LeadIQ) is their 3-step guide to getting noticed by email. And finally, with a VERY focused mission on getting to Demo - a guide to booking 70+ demos/month/rep using cold email.
7. SAAS SPEND: Maybe in part to the AI boom of '23, but there is a growing demand for cloud that will push spending to about $600 billion by the end of the year, according to a new report from Gartner, with 1/3 of that spending on SaaS (about $200 million up 18% YoY)
8. EARLY STAGE FUNDING: Startups go through various fundraising lifecycles. This article guides understanding startup funding/investing for all of you at the early stage of Startup life.
9. ONBOARDING: Userpilot has just released their State of User Onboarding for 2023. 74% of SaaS companies offer a free trial, up from 43% in 2022. There may be a bit of survey bias here as they state that only 4% of companies relied on demos for customer acquisition - prob a ton of enterprise b2b SaaS that would disagree. It may be a hangover from their prior MarTech focus.
10. CASE STUDY: AutoGPT: OK - it's been a couple of weeks since AutoGPT was launched (which is like a year in AI time); here is everything you need to know (via a Twitter thread) - until, of course, things change.
POD OF THE WEEK: Complementing number 1 above. Why should we care about Space? Well, listen to the All In Podcast that hosted SpaceX investors and team members discussing how transportation (especially of goods and materials) could rapidly change in the next 10 years by traveling sub-orbital, at scale, and in big-ass rockets).
1. SaaS METRIC OF THE WEEK: OTMM - aka One Metric That Matters (to you!!!). 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. So to shift the needle, check this great article that reviews the methodology to uncover your unique OMTM.
2. DEAD or ALIVE? Time for some reality here. If you want to try (or are expected by your investors/Board) to operate with no growth capital for the foreseeable market future (18-24 months?), then the question to be asking is: Will your business reach profitability before running out of money? Time to take read this throwback article from 2015 that dives deep into this question and also has a great visual calculator.
3. CAPITAL: Tomasz Tunguz notes a strong (and strengthening) correlation between interest rates & venture capital investing. It is strong enough to build a simple prediction of early-stage venture capital activity in 2023.
4. 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, established quantifiable measures for each stage, structured the sequence and signals of when to move from one stage to the next, and explored the optimal go-to-market design of each one.
5. REVENUE PER EMPLOYEE: As an operator - asking the real question on scale: What should my annual recurring revenue (ARR) be per employee? Here is the chart in one TL;DR visual, but if you want to read the whole article, you can check it out here and also here (PDF).
6. CRYPTO: a16z has released its specialized crypto publications for the year, including the 2023 State of Crypto report that tracks data, indicators, and trends - active users are still way up. They have also introduced their State of Crypto Index, a tool for cutting through the money hype and focusing on crypto as a tech tool.
7. GTM: Go-to-market motions can be pretty specific, and your GTM motions can impact your marketing strategy and your org chart. Mark Roberge at Stage 2 Capital gives some PLG context on Go To Market Strategies. It's a really great presentation - I've watched it twice :-). The slide deck from the presentation can be found here.
8. CHATGPT: ChatGPT has taken the world by storm, and the Product Management, UX, and UI design part of the world have some significant ChatGPT use cases. Lenny's Newsletter has some great examples for getting real PM stuff done leveraging ChatGPT, and FastCompany has some methods that designers can superpower their work.
9. ZERO-OPS: A new entry for your tech dictionary, ZeroOps is a set of practices that result in developers focusing solely on coding and creating, with 0% of their time spent on operations or infrastructure.
10. CASE STUDY: Freemium. It's not necessarily a time to rethink Freemium as a SaaS Go-To-Market strategy, but ProdCamp did and learned a lot after removing and bringing back their Freemium tier.
POD OF THE WEEK: Complimenting #7 above - How to Prepare your Go-To-Market Strategy for a Downturn with Alexa Grabell of Pocus.
1. SaaS METRIC OF THE WEEK: RETENTION: Hey! Capital is currently costly for startups, so prioritizing customer retention is critical. Gross revenue retention (GRR) and net revenue retention (NRR) are key metrics to master. Here is a valuable guide to all things retention (and having merry customers).
2. VENTURE: New data out from Crunchbase last week puts the state of Venture Capital funding worldwide down 53% in Q1, and this includes the mega OpenAI (of ChatGPT fame) raise ($10B) and Stripes Series I (their 18th round overall) of $6.5B.
3. PRODUCT DESIGN: Getting better at Product is a '23 Goal, so I love this step-by-step guide (along with some solid examples/case studies) on how to package up and present all that extraordinary research, design, functionality, and user testing that product designers have to endure.
4. MISTAKES FEATURETTE: A morbid list of mistakes and failures to learn from this week. First up is a list of Seven deadly ones startups make. Next, Jason Lemkin lists his top 10. Failory has a free Notion Document from over 80 startups who have failed and identified some of their common mistakes (some fatal). Marketing problems seem the most abundant (and deadly) - but product-market-fit, market size, and value add are all creeping around too. CBInsights also lists their top 12 reasons Startups fail.
5. IP: If you have not noticed Facebook's general MO, many startups in the software space are vulnerable to their competitors producing copycat technologies. Now Twitter is in Zuck's cross-hairs. Please read this interview from Nico Hodel of Start It Up NYC on how to better protect your Tech IP and Entrepreneur magazine: 4 IP Mistakes startups make and how to avoid them.
6. CONTENT: Viewing content (of your content marketing) as a "product" was an aha moment for me, as was being told that the strategy of "producing ten blog posts" is wrong. Instead, read this Two-part blog (part 1 and part 2) to change your mindset on what good content should be.
7. SECURITY: It's table stakes that Tech companies should be continually concerned about the security of the software being built (it's why DevSecOps is a thing). But for all of you in the B2B Enterprise-y space, technical Due Diligence is also a critical part of the sales cycle (there is a growing need for chief compliance officers, for example). Having some kind of compliance, certification, or training, such as SOC-2 or ISO-27001, can reduce security/audit friction. Here is a guide to getting started on SOC-2 and an ISO-27001 guide. BONUS - I'm currently trialing trustshare.com as my compliance portal.
8. DIFFICULTY: Having all your security and compliance ducks in a row is MEGA hard, so the payoff (in terms of customer ACV) has to be worth it. Payoff > Difficulty. This is called the Difficulty Ratio - discussed more in a Substack post from David Sacks earlier this month.
9. AI: Weekly AI posts will likely be the norm for a bit - because the space is moving that fast right now. This week is a SaaStr Workshop Wednesday presentation from Tomasz Tunguz that he created via Ai Startups (Gamma, Midjourney, and IA Presenter) covering the four questions a startup should ask themselves about building a startup that uses generative AI. BONUS: The Video is a must-watch, too (starts at watch the whole thing as there is a BUNCH of value before Tomasz even gets to the presentation - and the Q&A after).
10. CASE STUDY: Complimenting #4 above: The top 10 Mistakes from the CEO of Gainsight - Nick Mehta - on his way to 100m ARR.
POD OF THE WEEK: Complimenting #4 above and probably one we all need to share around - this brilliant video covering all aspects of failure and resiliency - and how to get back up when you get let down.
1. SaaS METRIC OF THE WEEK: Burn multiple measures the capital efficiency of a startup. Burn multiple calculated by net burn/net new ARR. In a surprise to no one (because Burn is now a terrible word in this new market), Startup burn multiples have changed markedly in 2023.
2. PRODUCT LED MARKETING: Here is the ultimate deep-dive into PLG from Kyle Poyar of OpenView, one of the OGs of the PLG world. It contains tactical advice, real-life examples, and actionable next steps.
3. TECH MACRO: Every year, Benedict Evans goes on an absolute blinder in PowerPoint, exploring macro and strategic trends in the tech industry. He's back with this year's version noting that (across his 104 slide deck!) big-tech is becoming bigger-tech and the ultimate gatekeepers of the tech economy.
4. PRODUCT DEBT: Modern-day businesses create Technical Debt via Product Debt. Stop taking shortcuts, as 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, but this link also has a great PM-focused article on how to design out of it (or at least your backlogs).
5. CONSISTENCY: I have been delivering this newsletter weekly since December 2018, holy smokes - I even took significant breaks that no one noticed! So this article resonated this week on why being consistent matters - outside of his monetization, podcasts, etc. :-).
6. OPEN SOURCE: Here is an excellent dashboard of the top open source projects by growth, retention, and usage. It can be visually confusing, so read the Substack article outlining the dashboard in more detail here.
7. API: APIs allow different programs and services to get along and work together, which is why they're essential in today's crowded technology space. For your continuing education credits: A Full Guide: Understand Everything About APIs (with Examples).
8. AI: Stanford released a massive 386-page report on the state of AI, showing how heated the market has been getting for years - Newly funded AI startups have tripled in the last ten years, primarily in the US - and also showing how the past three years have been incredibly rapid paced across many measures (including AI-related lawsuits).
9. PRICING FEATURETTE: Optimizing Pricing is complicated, and it's never (ever) perfect. a) If companies decide to have a pricing page on their site (which is that whole other topic. Jason Lemkin lays out some thoughts of 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? Comptera has a great article on conducting a high-fidelity competitive pricing analysis project, and d) Productled has the ultimate "How to build the right SaaS pricing page" in 2023.
10. CASE STUDY: Down rounds are pretty standard this year (and probably next) - so what can we learn from Down Rounds of the past? Here is an excellent report about Docker which went through a down round and a 75% headcount reduction
POD OF THE WEEK: Complementing #2 above - The ultimate (podcast) guide to adding a PLG motion from Hila Qu, former director of growth at Reforge and GitLab.