Top 10 in Tech A WEEKLY NEWSLETTER

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

7/30/2021

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

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

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

7/23/2021

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

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

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

7/16/2021

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

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

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

7/9/2021

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

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

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

7/2/2021

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

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

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

6/25/2021

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

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

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

6/18/2021

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

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

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

6/11/2021

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

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

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

6/4/2021

SaaS METRIC OF THE WEEK: CHURN: Profitwell has a complete guide to understanding, calculating, and reducing churn, which they call "the silent killer of subscription businesses”. This is much more than a download as it’s pretty much an eBook. After you have read that - head over here to benchmark your Churn based on growth rates and sector sourced by paddle.com (SaaS is overall on average 4.79%).
MARKETING AND SALES: Hubspot continues to benchmark Pandemic-times data for core business metrics like website traffic, email send and open rates, sales engagements, close rates, and more (aggregated from their global customer base of over 70,000 companies). It’s an incredibly useful tool as a benchmark to measure your business against. Explore all the benchmark data here or check this week's summary here.
CUSTOMERS: What exactly is the difference between Customer Success and Customer Support? Get started here to understand the nuances, they are both parts of the same customer journey spectrum, and Totango posits, in this recent SaaStr Annual presentation, that we need a fresher look at Success and Support that they coin the “Customer Operating System” (Like the presso? Here are the Google Slides deck).
DILUTION: Did I scare you? It's one of the most feared words a founder can hear. So here we go - let's make it a benchmark. What is the average ownership percentage by SaaS Founders at the time of IPO? Sammy Abdullah takes a review and the median level of founders ownership is 14% while the average is 23% with VCs owning about 54% on the median. Obviously, there is a significant difference in Bootstrapped vs not in this dataset.
PRICING: It's a new month - so time for a whole new pricing bit. This one is interesting as the author is pitching a new, better (gasp!), way to decide your product pricing HINT: It's all about how you ask the question and this variant on how to research and implement a value-based pricing model.
UNSHIPPING: Here is another term for your Tech Dictionaries - when is it time to remove or deprecate features and products? We all cheered when Microsoft announced the end of Internet Explorer last week, so how can you and your team make the decision of when to unship something? Check here - a great article covering this topic from Reforge with evaluation criteria and real-world examples from Slack and Mixpanel.
HAMBURGER MODEL: The second (but weirder) one for the Tech Dictionaries this week. It's a modern go-to-market strategy in this PLG (Product Led Growth) SaaS era. The bottom bun is self-service PLG and the top bun is enterprise sales your product is the meat in the middle. Want an example? Check this week's Case Study on Vimeo - 75% bottom Bun - 25% top bun.
SOCIAL MEDIA: When is the best time to post on social media in 2021 (where social media became more important than ever)? This article has your answer for Facebook, Instagram, Twitter, and Linkedin across a bunch of industries - cool stuff!
UNICORNS: 2021 is not mucking around when it comes to these pointy-headed companies. There have been more unicorns minted in the past 5 months (Jan - May) than all of 2020. These aren't all SaaS companies - but most are.
CASE STUDY: Vimeo is now at $330,000,000 in ARR - growing at 56% YoY with just 674 employees, 40% of which are female - and this growth is 75% Self-service PLG driven and 50% occurs outside of the US.

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

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

5/28/2021

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

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

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

5/21/2021

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

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

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

5/14/2021

SaaS METRIC OF THE WEEK: CLTV: This metric represents the average revenue that a customer generates before they churn - Customer Life Time Value. ChartMogul has a great online calculator here. Go to 'advanced mode' as this calculator references the traditional formula as well as the David Skok version (which is the advanced one, but viewed as being more realistic)....and check here for a thought-provoking read of why your LTV may be lower than you think.
SECOND ORDER REVENUE: Doubling down on LTV this week and a little contrary to the last link above Jason Lemkin claims that CLTV isn’t the whole story and often references a term called "Second-Order Revenue". He states that traditional CLTV analyses underestimate true revenue generated by customers by 50-100% (whaaaaat!!!) in most SaaS models selling to any businesses larger than SMBs.
PITCH: The days of mandatory in-person pitch meeting to a VC are mostly behind us (at least for the foreseeable future). Pitching over Zoom is where we are at. Before you focus on getting the perfect lighting though - check these 16 rookie errors founder make pitching to VCs from Jason Lemkin and read here on how you will be Zoom-judged by the VCs you are pitching to.
CODE: Hard truth - some of your code is pretty stinky. Take a read of this for the kind of bad smells your repo may have. Meh - but how much does it really matter? Well here is a report from Stripe that gives you that cold-hard number and also calculates that the developer "community" is valued at about $3 trillion GDP globally.
WEBSITE: Do you have a pretty high churn rate from your home page or landing pages? Maybe you have a trust problem. This article outlining the Trust Pyramid is very much worth a read but TL;DR A website must meet users' basic trust needs before a visitor can be expected to engage meaningfully. With the Trust Pyramid, there are 5 distinct levels of trust-based engagement, each with separate design requirements.
GROWTH: For public SaaS companies there is a wealth of online benchmarks in regard to performance - but it is much harder to scratch the surface of private SaaS (when there is no compliance requirement to share the data). But here is a couple of reference documents for ya (both from SaaS Capital): 1) Growth - here is their latest report on Private SaaS Companies' growth rates. Some snippets: It takes approximately 5 years for companies to reach $1 million in ARR, 87% of those surveyed reported annual revenue growth of greater than 10%. 2) I've posted about this before - but spend is just an important measure as growth - bootstrapped companies are obviously being outspent by venture-backed companies - the average is 80% of ARR to 115% ARR!!
PRODUCT DEBT: This is a nuanced (and more customer-centric spin) on Technical debt: Product Debt is just as bad as Technical Debt - it's all the decisions that have been made, often tactical and acute, without a clear product vision or sufficient consideration about the long term effects of that moment/decision. The link above also has a great case study of Google Messaging's product evolution.
CONVERTIBLE LOANS: They are a kind of debt until they are not. But Convertible Loans are a quick way to access money quickly via an interested investor. Point Nine Capital describes in detail what is involved in a convertible loan and what to look out for.
LANDING PAGES: One of the most common reasons why a search engine-based marketing campaign fails is that it does not have optimized landing pages to continue the journey, take a look here at some best practices, real examples, and templates for Google Ad-based Landing Pages. Then also Check this site out - a collection of the best landing pages around the web with a focus on copywriting and design - finally (this is a repeat-post) IceBreakerVC lists best practices for good landing page planning and strategy.
CASE STUDY: STRIPE: Stripe just raised a new round, remaining private. It was a $600 million funding round that boosted its valuation to $36 billion - but how did they come out of nowhere to dominate the payments space? The answer: Developers! They focussed on going after developers — the main group of people involved in integrating payments into all kinds of digital applications.

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

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

5/7/2021

SaaS METRIC OF THE WEEK: Renewal rate: You have to scroll down this article before you get to the informative bit on how to measure this metric but don't because I could just link you to this one). So read the first part anyway: Don't be a jerk when it comes to renewals. If you have to be, maybe it's you, not your customers (keep scrolling again to see the 5 main reasons why people unsubscribe). The difference between retention and renewals is described more in this comprehensive Profitwell article on Renewal Rates.
CUSTOMER SUCCESS: Take a (deep) read of this extensive guide for building great customer success teams - CS is not just about limiting churn, but it also creates a department and practice to convince existing customers to buy even more from you. As Jason Lemkin said back in 2015: "Customer Success is where 90% of the revenue is”. Want a working example? Chart Mogul expands on this and explains its approach to a (successful) success management strategy.
FINANCE: Founders - take a good review of this! How many of these mistakes are you making? (I'm making a few but less than I was) : 8 Finance Mistakes Growing SaaS Businesses Make (and How to Fix Them).
FRAMEWORKS: Beyond metrics, a successful framework can distill complex processes or models to make execution more of a simple recipe. Kinda why OKR's exist. Sarah Tavel has compiled a great list of compelling Frameworks covering the 10x model, the hierarchy of engagement, hype cycles, and more!
PRICING: Usage-based pricing 2.0. Usage-based pricing helps minimize friction during customer onboarding, as customers only pay for what they’re using. This strategy typically sees best-in-class net-dollar retention results. The cool thing is that the current understanding of ways UBP is being applied in forward thinking SaaS companies is so fresh that this article is an updated understanding of UBP from November 2020 - but here is that playbook anyway (as a downloadable PDF) It's evolving fast as a new best practice. One of my favorite slides in that playbook is slide 324 - a flowchart that helps organizations decide if a usage-based pricing model is for them.
POC’s: (aka Proof of Concepts) are a powerful sales tool and a critical part of a customer journey, especially when it comes to those long-ass enterprise sales. But oftentimes they can be just as big an anchor in sales as an accelerator (hands up if you feel me on that one?). Here are some pro tips if your POC’s get stuck from Heavybit with some pro tips on Leveraging the PoC to Move that deal forward.
CUSTOMER JOURNEY: When it comes to measuring success, clearly mapping out a Customer Success Journey via a visual map is a great way to know at what areas a Customer Success Team needs to be involved in (and what their responsibilities will be) via a variety of engagement models. You can also access a sweet design process here.
FINANCIAL FORECAST: Your new financial year is just around the corner! Just kidding, but now is always the second-best time to get started(the first being two months ago). This is a great article with a complimentary excel download here from The SaaS CFO - it's a SaaS Financial Plan for Startups (and also works for most SMB’s). It also comes with a handy complimentary video tutorial to the worksheet.
MARKET RESEARCH: Love it or hate it - knowing how big the market is of people willing to pay for your stuff is kind of a big deal. Here is a pretty comprehensive step-by-step guide for startup market research and this article has a great template for all of us B2B market researchers (which is harder than B2C).
CASE STUDY: Netflix is my favorite case study regarding a speed-focused tech company,. They (amazingly to me) de-prioritized uptime in favor of speed and also become their own CDN as part of their speedy-experience solutions.

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

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

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

4/30/2021

SaaS METRIC OF THE WEEK: PQL vs Activations. In my mind the try-before-you-buy approach to software subscriptions are the best way to get to my money - that is pretty much what PLG is - so put away your SQL and MQL metrics for a second and focus on their newer cousin: PQL (Product Qualified Leads) - this tracks potential customer who has exhibited buying intent based on product interest and usage. Now you know that - measuring PQL vs Activations are the two metrics to measure in unison.
PRICING SENSITIVITY: I do post about pricing a lot (because a 1% increase in price can generate up to an 11% increase in your profits) So this week lets take a more nuanced approach by looking at different concepts within pricing strategies starting with priced based sensitivity: which is basically a measure of the percentage of sales you will lose or gain at any particular price point relative to another lower or higher price point. Profitwell can explain it much better - so take a read of their article about how to measure and optimize it (check the Van Westendorp's Price Sensitivity Meter")
WFH (DEEP DIVE): OK - so here is the big question-of-our-time we all want to be answered: Are we more productive or less productive working from home and petting our cat/dog? Upwork reports that the WFH forced experiment IS working but their platform has kinda consisted of WFH people since those golden days pre-Covid - so they may have an agenda - they say 'empirically,' but in more qualitative not quantitive ways. So let's also look at a more trusted and independent source: The Economist (if you have a sub to their site) and Harvard (if you don't). In their study they unearthed a better metric: Productivity sharply rose by 7.5% when workers went remote with no sacrifice in customer satisfaction reviews. Slack takes a bit of a different path on their study: WFH is not for everyone but if you are an employer: People prefer choice (72%). So if you want to hire good people you need to be flexible about where they will work. Ultimately the winning metric is forecasting that the WFH boom will lift productivity in the U.S. economy by 5% (mostly because of savings in commuting time).
PR: Getting good PR if you’re an unknown startup is hard (and also can be seen as a low priority in the endless stable of things-to-get-done) - but it's not as hard as you think without a publicist. Here is a great 101 article from Point Nine Capital (they call it PR for dummies) on how to get great press coverage. ChartMoguls also have this article late on PR for SaaS - with some sample scripts!
SAAS SPEND: This is actually a really good benchmarking report for your spending habits. I (semi-often) joke that SaaS is just a big Ponzi Scheme - because running a SaaS company requires a boatload of money being spent on other SaaS Companies products (Slack! Zoom! HubSpot! AWS! Google! Microsoft! Adobe! Atlassian! etc etc etc). But how much money do SaaS companies spend on everything? Well, check the first chart on SaaS company spend - remarkably to no one bootstrapped companies are being outspent by venture-backed companies - but the average is 80% of ARR to 115% ARR!! (operating at a loss to support growth - because growth is a Moat). Keep scrolling through - way more goodies in there (such as spending by ARR levels).
AI TRENDS: Even though we're 1/3 of the way through 2021, this s a fun article on trends in AI for 2021 from Forbes. d\Deep fakes are becoming more and more alarming - but AI for Kids caught my attention the most - but the ones with impressive commercial potential are Advanced Pre-trained Language Models - AI is now writing poetry, you dig??
OPEN STARTUPS: Most Startups are very secretive about their metrics but over the last 6 years Baremetrics has been chipping away at this industry norm to get SaaS companies to be more open about performance; Theorizing that radically transparency can actually be beneficial - it works for me to compare and contrast my own business performance.
WRITING: Being able to write well is a skill that needs to sit with founders. So here is 3 step guide - Step 1. How to position your startup and achieve your unique value prop; Step 2. how to write well and one more version for good measure; and Step 3 top tips for telling stories.
ONBOARDING CHURN: This is the sibling to the post above as abandonment can be a signal of poor onboarding. Here are 3 reasons why users abandon the onboarding process (identify verification, slow onboarding experiences, and being asked for too much data) and AppSee has another 8 reasons in this article (adding Privacy and Ad clutter to the list).
CASE STUDY: Datadog - who, you may ask? Well, I use 'em, I bet your platform engineers may too along with a truckload of others because they generate a whopping $700 Million+ in ARR and growing at 61% year-on-year. The top 7% of their customers generate 75% of revenue and 60% of revenue growth comes from existing customers!

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

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

4/23/2021

SaaS METRIC OF THE WEEK: NPS: We all like to be liked - Net Promoter Score is basically a way to quantify that for your product. This White Paper from Ask Nicely reviews NPS (among other common customer experience metrics) and explains how to measure and calculate NPS. See this link for some methods to improve the NPS of a SaaS product and Neil Patel then gets into a 3 step program of how to leverage NPS for your business.
TESTING: Everything is a hypothesis in a startup and testing should be embedded in everything you try towards growth and product. When conducting experiments such as A/B tests, Go Practice has some great advice on how to make these experiments run faster.
PLG (aka Product Lead Growth) - as a refresher read this to understand the 4 basic principles behind PLG and then check this article out that goes into lengthy detail of how to design for PLG across the customer journey (and creating a flywheel) - trying to get a user to a point at which they understand the value they can get from your product (aka the AHA moment). Still confused? This is a great article using the hierarchy of needs as an explainer.
SEO: Want More SEO Traffic? Follow this self-guided process to get a 7-week SEO Action plan from Neil Patel for your business! Moz also has a great little guide on keyword research complemented by their other article on Search Intent and here is a pretty good (current) guide from Founder Institute.
REVOPS: aka Revenue Operations is definitely a thing and it needs to be - but do you need it? Well, you may already be practicing this without using the platitude - it’s just a high-impact way to maximize revenues and provide some operational efficiency but the plot twist being that in this Age of the Customer it’s also a way to align this operational excellence around the customer experience. Here is a good introductory article from Chargebee on RevOps and here are 3 nuggets of wisdom from some significant RevOps leaders. BCG also has a great deep dive for you to read here.
GROWTH: Adding onto the above and using real-world companies Zoom and Twilio as examples (both also notable product-led) a16z make the case that the new era of enterprise go-to-market requires growth-plus-sales - which is just a fancy-pants way of highlighting the evolution in customer buying behavior for high-end B2B. Great read.
CONVERSION RATE: There are many, many conversion rate metrics you could track - so which ones are the most important? It really depends on the goals of your business - so let Neil Patel tell you his 8 Most Important Conversion Rate Metrics.
COOKIES: This is an expansion from above, so not the chocolate chip kind of Cookies. Love them or hate them, the reality is that browser cookies are heading the way of the Dodo, so conversion tracking via cookies being phased out creates a new attribution problem to solve. Conversion modeling is a way forward, so if attribution is a necessary part of your business or your channel/partners Business, take a read of this article from Google on why conversion modeling will be crucial in a world without cookies.
MACHINE LEARNING: A rather bleak article for many highlighted that AI is set to replace 50% of low skilled jobs in the next 5-7 years starting with a market growth of $112.2 billion (46%) by 2022 - that's next year for those of us like me that haven't adjusted to 2021 yet. Sooooooooo, want to check out something new after that? Well, take a looksie at these 28 Free AI, Machine learning, Data Science, and Python eBooks all ready for download directly to the device of your choice now.
CASE STUDY: Taking a look at Twilio this week as an expansion of #6 above. In August 2019 Jason Lemkin noted the impressive metrics of Twilio as it reached $1B in ARR. Fast forward to January of this year, he's update observations now that they are at $2b+ ARR - yup - a $1B ARR increase in 18 months - now 60B market cap and growing at about 53% YoY thanks to an NDR clocking in at 140%!

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

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

4/16/2021

SaaS METRIC OF THE WEEK: CAC! Understanding customer acquisition cost can help create, measure, and improve a growth strategy that can put a business on the path to profitability. Here is a deep dive into the whys, the whats, and hows of CAC.
MARKETPLACES: 2020 was a bit of a gut punch for many marketplace categories, I even (very optimistically) in a pre-covid newsletter mused what marketplace consolidation will occur in the upcoming year. Little did I know! a16z have just updated their Marketplace 100 and guess what? Consolidation was very much a thing: last year, four startups accounted for 76 % of consumer spending. This year more than 70 % of Market Value can be attributed to just one company (Instacart is the Covid winner) and 10% of companies from last year went public or were acquired. Ed Tech is also the newest category winner.
VENTURE CAPITAL: BOOM! Investments to US-based companies surged to a record high of $62 Billion in Q1 21 according to the PwC and CB Insights Q1 2021 MoneyTree Headline report (that's up 62% from Q4 of last year) - to put this into context, it's almost half of all money raised last year (and 2020 was a historical high). Deal activity is also up 14% YoY (1,735 deals) - great sign, unless you are looking for Seed $$'s, as deal activity is up in all stages except seed (which is down in comparison to Q4 of last year)
PRODUCT MARKETING: Marketing is a very broad practice, see here for a list of the separate marketing functions that can exist. So here is a very helpful dive into Product Marketing and specifically what the roles and responsibilities are of a Product Marketing Manager.
PERSONALIZATION: Did you know that marketing personalization can reduce acquisition costs as much as 50% and 87% of companies see a lift in key growth metrics when they employ personalization? SaaS marketers have been leveraging personalization to increase conversion rates, improve customer success, and increase the quality of sales/marketing funnels for some time so here is a great article from Chart Mogul on the (modern-day) personalization fundamentals.
DEATH TO EMAIL: Just kidding. Email is a long way from going bye-bye, we spend, on average, over 3 hours a day using it, so don't rush out to delete your inbox just yet. Communication platform companies have been making this death-to-email statement for years though - looking at you Yammer. The irony is not lost as I'm sure many of you are suffering from intense Slack/Zoom/Teams fatigue. But guess what? These platforms are absolutely not going anywhere. A new (VERY Slack-centric) report from Slack shows the impact and importance of collaboration platforms in our new post-pandemic workplace environments: 40% of meetings can be replaced, 95% of Slack users say they prefer Slack to video calls when connecting with their team, and 100% of Slack users want to keep using Slack even after the pandemic!
RENEWALS: Existing customers are the lifeblood of growth in a SaaS business, so making sure they renew is an exercise in revenue efficiency. New customer acquisition costs about $1.10+ per $1 of ARR). Compare that to the cost of retaining or up-selling existing customers (about 12c-15c per $1 of ARR) - that’s 8 times cheaper. So take a peep at this article that not only lists 5 SaaS Renewal Best Practices but also explains how best to go about calculating renewal rates.
COMMISSIONS: How do you pay out your different sales channels? Commission levels of sales are pretty stable across sale types at about 10-14%. Commissions on renewals are only 3% and upsell is 9% - however about 50% of the time, this is not paid at all. (Bringing up another subject on how much revenue a Customer Service Manager can manage).
CSM ATTRIBUTION This is an extension of the last link above: How do you account for, or budget the cost, of a Customer Sucess team? The team at Gainsight dives deep into this question and comes up with some fantastic insight - even though the question itself is complicated and the answers end up being more non-monetary than you would probably like. Owning the renewal, up-sell, cross-sell are key delineation points between expense attribution across different departments who CSM teams may sit under.
CASE STUDY: Dropbox! I've been a big Dropbox user since inception - I was an early birder! As were they to Product Lead Growth strategies - they have a legendary story of 3900% growth in just 15 months! Just mind-boggling. Check out how they made all that happen.

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

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

4/9/2021

SaaS METRIC OF THE WEEK: Where do you start at the early stages of a startup when it comes to tracking metrics? The most important bottom-up SaaS metrics to track (and how to best visualize them) are in this article and neatly broken out via pre-revenue and post-revenue.
PRICING: Many SaaS Companies are shifting to usage-based models (me too!). Charging per-use makes the product more affordable and accessible (and take advantage of the features they need), so check out this usage pricing guide from Baremetrics.
SPEED MATTERS: Yup - I write about speed a lot lately. When I write this newsletter I prioritize speed and prioritize content over spelling, editorial tightness, and grammar. (But big shout to Grammarly who I outsource all that to). James Somers feels the same and Brad Dickason goes a step further - calling Speed the killer feature with firm examples of where speed matters in a digital experience and can be a great UX moat. Google obviously makes speed a priority for their tech stack but Netflix is my favorite great speed-focused tech company, which (amazingly to me) de-prioritized uptime in favor of speed and also become their own CDN as part of their speedy-experience solutions.
MARKETING: Guess what? Your marketing team is slow!. Take a read of this article on frameworks to make your marketers speed up. Tech companies are market differentiators in part because they operate at a cadence that is faster than most. Speed is a competitive advantage that your marketing teams need to leverage!
TEST TEST TEST: Evaluating the functionality of a software application at every stage is critical to shipping something awesome. Take a good read of this PDF guide (along with real-life examples) and then bookmark this Google Site (blast from the past) page for a comprehensive list of the Stages of Test Development. That list is kind of old school though - so take a read and sprinkle some of this more modern (ie Agile) take on testing. into your QA world.
CLOUD: This is actually pretty big news: Cloud infrastructure spending by Enterprise surpassed on-premise spending for the first time in 2020 - it grew by 35% to reach almost USD $130 billion. I do find this number quite a small piece of the approximate $2 Trillion in total annual cloud spend Bessemer ventures reference for 2021 in their Cloud Index.
LINK BUILDING: This kind of seems like an SEO tactic of the past, where businesses build links to create a more organically positive Search rating. So is it still a relevant practice in 2020? Well......yah! But the rules have changed quite a lot. Check this article on how to optimize (by careful curation and intent) what to link.
JAVA: This is actually outstanding news this week (unless you are Larry Ellison). The U.S. Supreme Court ruled that Google was legally allowed to use part of Oracle's Java API while building its Android mobile operating system. This court case has dominated tech industry news for yeeeeeaaaars (about 10)
CORPORATE VC: (or CVC) CVC-backed deals declined from a record high of 3,416 in 2019 to 3,359 in 2020, however corporate VC groups participated in 182 mega-rounds in 2020 ($100M+ deals) — a 48% increase compared to 2019 which bumped up the total funding to record highs (screw you Covid) of $74.1 Billion USD. Full (downloadable PDF) report from CB Insights here.
CASE STUDY: Canva - I'm a big fan (and user). Apparently, I'm not alone as in just 7 years they acquired over 15 MILLION users - this was back in 2019 when they were valued at $3.6 billion. Jumping over to 2021 they are now a decacorn and passed $500 million in annualized revenue, up 130% from last year!

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

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

4/1/2021

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

EXPANSION: Just acquiring customers isn’t enough of a strategy for long-term success: Expansion strategies are pragmatic growth practices that any good SaaS company needs to get a grip on as 37% of new ARR bookings are attributable to cross-sell/up-sell activities. Here is what good expansion looks like. OpenView Partners have gone to town to benchmark this metric with an extensive Expansion SaaS Benchmarks report. Product Led Growth businesses leads the pack!
RETENTION. To compliment #2 above, retention is deeply related to expansion as it relates to sustainable growth, and here is what good retention goals should be benchmarked against and how to optimize them.
CAC: This one needs nuance, David Skok, the godfather of SaaS Metrics has broken it down into i) blended, ii) new, iii) up-sell, and iv) expansion. It's getting hard out there though - Every dollar of new revenue in 2020 costs $1.60 (compared to $1.35 in 2019). Up-sell and cross-sell still remain the CAC bargain, but it’s still up YoY, with each dollar of new revenue costing $0.69 in 2020 (it was $0.61 in 2019). Big impacts on sales efficiency. This chart alone highlights why having a customer-focused strategy is critical for growth.
GROWTH: Median organic ARR growth for the year surveyed (2018) was 36%. Thus is across 424 SaaS businesses distributed globally (but 2/3 of which were US-domiciled). This rate is pretty evenly split across different contract size businesses - so there is no obvious relationship between ACV and growth. Companies surveyed average a median ARR of $8.7m
MARKETING AND SALES: Hubspot continues to benchmark Pandemic-times data for core business metrics like website traffic, email send and open rates, sales engagements, close rates, and more (aggregated from their global customer base of over 70,000 companies). It’s an incredibly useful tool as a benchmark to measure your business against. Explore all the benchmark data here or check this week's summary here. Chorus.ai is doing something similar by benchmarking sales organizations (daily!) across their user base. A recent Tomasz Tunguz summary can be found here.
GTM: Current and pragmatic Go-To-Market benchmarks are presented in this deck from Tomasz Tunguz and the team at Redpoint Ventures. Some good findings from their survey: 1) If SDR/BDR teams hit their numbers, so do Account Executives; 2) Most sales teams ramp Account Executives in about six months; 3) Marketing teams spend 5-10% of a companies ARR. David Skok also observes that the primary mode of Sales and Marketing efforts remains Field Sales based, with Inside Sales taking a very close second strategy for smaller businesses (under $10m ARR)
UX: Optimizing a User Experience is key to the long-term success of any service or product. Google is all over this and just launched Web Vitals, a program that offers developers guidance about best practice benchmarks on user experience. It’s benchmarking very Google-based metrics: loading, interactivity, and visual stability.
PROFESSIONAL SERVICES: It’s a weird open secret that a lot of B2B SaaS businesses generate a significant amount of revenue from implementation and deployment projects, often captured as revenue from Professional Services, due to deployment and configuration complexity. So what are the revenue benchmarks for a SaaS Business to captured revenue through professional services? On average it caps out at 11% of all annual revenue with Enterprise-focused businesses but even at the lower end of town it’s still 5% of revenues with SMB focused businesses.
SPEND: Figuring out how to optimize marketing spend and growth rate is a key question and this study doesn’t show great benchmarks - the percentage of revenue in pretty much equals percentage growth out, but with an ever-increasing range of outcomes as spend increases per business. More solid benchmarks are with the Sales vs Marketing spend ratios which stay at about 2:1 regardless of market-facing strategies (although Mixed is a bit of an outlier).
BOOTSTRAPPERS: This is for all of you choosing the do-it-without-investors route: The latest State of Independent SaaS Report based on hundreds of non-venture track, revenue-generating SaaS companies. It has really great Bootstrapped benchmarks: growth rates, demographics, validation approaches, and more.

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

Top 10 in Tech - What to know for Week ending March 26, 2021 - State of The Cloud Special!

3/23/2021

One of my favorite sessions to attend every year at SaaStr is the Bessemer Venture Partners State of the Cloud Report. It's a fantastic, detailed, deep dive into micro and macro trends, forecasts, and industry predictions. This year SaaStr release was a Cloud edition but here are the Presentation files and link to the full presentation page on their website - or if this is your thing: The PDF version. They also finish off with top predictions for 2021 (which I feel we already did to death here - so that part is skipped - here if you want to read more - because it's good)

MARKET CAP: Cloud companies have thrived in 2020 with a record-breaking market cap of more than $2 trillion! For context, two years ago (February 2019) the collective value of the cloud index was $690 billion
VALUATIONS: Cloud multiples are rising to new heights - AVERAGE is 20x!!!! That's an increase of over 150% in the last five years. Why? Growth rates - that don't quit - the average is 40%
PUBLIC CLOUD: AWS continues to dominate public cloud - but MSFT is growing share fast (And Public cloud is now greater than $2 trillion). AWS, Azure, Google Cloud, and Ali Cloud. All of them enjoy more than 50% growth annually.
PRIVATE CLOUD: There is more demand than supply for cloud assets, with a 10x increase in investments into private cloud companies. It is clear that cloud computing will become a majority of enterprise software by 2025 - which leads onto #5 below:
UNICORNS: The number of private unicorns has doubled in the past two years (527 of them) with a cumulative value of $1,964 Billion) and this growth shows no sign of slowing
DIGITAL TRANSFORMATION: Went bonkers - high demand, high multiples, high growth rates, and large access to capital means that 2020 is the best time in history to be a private cloud company founder
GROWTH 1 - Usage-based pricing models: When Bessemer release these reports, they also share insights into how to drive go-to-market strategies - starting with usage-based pricing models. This strategy goes hand in hand with PLG (see below). Usage-based pricing helps minimize friction during customer onboarding, as customers only pay for what they’re using. This strategy typically sees best-in-class net-dollar retention results.
GROWTH 2 - Product-Led Growth: PLG (if you didn't already get the hint from this newsletter) has been growing over the past several years as the ubiquity of solutions and increased automation has pushed purchasing decisions down to the end-user. The cumulative market cap of product-led growth companies has grown more than 100x in six years.
GROWTH 3 - Cloud marketplaces: This should come as no surprise to anyone who has Shopify, Atlassian, or Salesforce partner experience. - but here are some good stats: SaaS businesses experience 50% faster sales cycles on average through cloud marketplaces; revenue generated through cloud marketplaces is predicted to reach $3B in 2021.
FAANG IS DEAD: Well not really - the old Facebook, Amazon, Apple, Netflix, and Alphabet (aka Google) championship team of high performing technology companies are going gangbusters (330% return over the last 4 years) but have been superseded by a new (and slightly less cool but more mountainous) acronym of the top publicly traded tech companies - MT SAAS. Microsoft, Twilio, Salesforce, Amazon, Adobe, and Shopify (803% return).

POD OF THE WEEK: The 45 minute long Bessemer Venture Partners State of the Cloud report or alternatively check the SaaStr Podcast share the latest trends and predictions for the cloud marketplace.

Top 10 in Tech - What to know for the Week ending March 19, 2021

3/19/2021

.SaaS METRIC OF THE WEEK: ACV or Annual Contract Value is one of the most popular metrics in the SaaS world, this article from Chartmogul goes into detail about what it is, how to calculate it, and how to leverage it in your business. This article also looks at Annual Contract Values (ACV) and groups them into animals we can all relate to (Mice, Rabbits, Deer, Elephants, and Whales) - Animal Contract Value :-) - anyone, anyone???? This analogy can then be used in turn for what it takes to build a $100m business and how different segments contribute to total revenues over time.
SDR SALES: Chorus.ai has built a great report of what high-performing outbound sales teams are doing to close deals (this is an analysis of over five million sales calls!). You can add in the kind of business you are (SMB, Mid, Enterprise) to see how you measure up. Key nuggets: An SDR dials, on average, 106 people to schedule just one meeting, and the typical win rate of a sales-qualified lead (SQL) is 19%.
ENTERPRISE SALES: Moving upmarket into larger organizations is a pretty standard SaaS growth strategy. Increasing ARPU (Average Revenue Per Customer) is good! But there is a lot to learn and a bunch of time, learning, and effort required to be successful in this market segment. It's not easy, but it can be done. Here is a great guide from Outreach on breaking into deals over $100k ARR.
ONBOARDING: Doing this well is key to increasing value, lowering churn, and creating advocates - so here is how some of the best do it: Leveraging email, this is how ZenDesk document their comms flow and ChartMogul have a guide to their non-email version too. From HeavyBit here is a 4 phase plan and this article covers 5 Tips to Speed up Sales Onboarding without Sacrificing Quality.
SALES (& PLG): Product Lead Growth (PLG) has proven that your business can grow while having little if any traditional sales interaction with prospective customers. So how to best figure out Sales Forecasting within a product-led strategy? Chartmogul expands on this with a breakdown of traditional sales forecasting methods combined with product-led forecasting methodology.
SECURITY: There is an ever-increasing demand (and value) seen in good security practices when investors evaluate startups. Even more so when evaluating mid-market and (even, even more so) enterprise targeted tech. Here are a couple of great articles from HeavyBit discussing this in detail - from what investors are looking for in a team's response to security to how to pass that awkward, sales-friction-inducing, Enterprise Security Audits/Reviews….and also how to get started.
SPEED: First Round Capital always has a good perspective on speed at the business level. This is because top tech companies and are market differentiators in-part due to the fact that they operate at a cadence that is faster than most. It’s all about execution and heartbeat, which requires a fierce focus and prioritization. This kind of adaptability is something we all need after last year.
LOW CODE/NO-CODE: While we are on the topic of speed. Here is one emerging technology that can really provide a non-cultural turbo-boost to a department or organization - Low Code and No-Code. Infrastructure has become so commoditized and abstracted that we have now reached a point in time where web services, apps, and integrations can be provisioned visually with zero amounts of line-based code written. AWS has legitimized this practice into the main-stream via Amazon Honeycode, a tool that makes it possible to build web and mobile applications without coding and this article goes into depth outlining the current squad of no-code players, tools, and haters. of speed and this is a guide to getting started in Low-Code
CAPITAL: Here is another term for your dictionaries - Entrepreneur Capital. It's a nuanced take on traditional VC - but one that is much more human-centric where the author differentiates VC and EC as Venture Capital = Companies + Money vs Entrepreneur Capital = Teams & Companies + Resources & Money. Seems superficial at first glance - but the more I sat with it, the more I realized it's all about assembling the right team.
CASE STUDY: Upwork - I have awesome full-time staff that came from shorter-term gigs on Upwork, who is now worth $6 billion and at $400m+ in ARR. 2020 gave them a chunky Covid boost and they are only just getting started with the good ol' fashioned "move-upmarket" strategy (see#2 above) with an absolute classic 80/20 rule in effect. 80% of clients are SMB's but 80% of the revenue comes from 20% of clients.

POD OF THE WEEK: Stripe just raised a new round (remaining private) - so here is a little blast from the past via the How I Built This Podcast on how a couple of Irish Brothers built a business now valued at $95 Billion (which is 2.6x the amount they were valued at this time last year).

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

3/12/2021

SaaS METRIC OF THE WEEK: Time for some financial ones. Bookings, Billings, and Revenue are some top-line SaaS revenue terms that need a bit of deciphering. A downloadable PDF version is here, along with an explainer Excel Sheet here. Still confused? Check this article/explainer from SaaSOptics.
WOMEN IN TECH: Happy International Women's Day! Call back to the Girls Who Code and Accenture report - check out this metric: By age 35, fifty percent of women leave their jobs in tech. This is primarily (37% of those surveyed) attributed to noninclusive company cultures. The call to action here is that the bottom 80% have a big role to play: If all companies could score as well in inclusion as the top 20%, attribution could drop by up to 70%!
CUSTOMER PRICING: In the SaaS world, great pricing prioritizes the customer’s success over that of the businesses. That logic seems a little counterintuitive, but the profitability of a customer in SaaS happens waaaaay after a customer becomes an actual customer. OpenView expands on this reasoning more in this complex post on achieving net negative churn (where the average revenue per customer increases at rates that offset any churn) by using customer-based value metrics as a pricing strategy. Packaging up offerings and finding the optimal pricing and features structures for both customers and business unit economics is incredibly hard though....and never right. The team at Heavybit knows this very well and this article from them on using feature flags is a great read.
MARKETING: Marketing is a very broad practice, so this is a conceptually helpful article even if your organization isn't at the separation-of-marketing-functions phase on how to think about marketing efforts this article provides an excellent primer on all of the marketing roles that are out there.
PRODUCT MANAGEMENT: The Syms Method - another for your Tech Dictionary that goes beyond features vs benefits but is definitely more a guide on pure feature selection using some good old-fashioned Venn diagrams.
LEGAL DOCUMENTS: In startup land, there is a long tail of legal documents that need drafting just to run the business. Here are some great resources for free legal documents so you can stick to the mission: Avodocs - 3 free per month. Cooley Go has a library of documents for the US and UK, from Penn State Law School - a startup Kit bundle
STORYTELLING: Adding onto last week's listing on a post discussing Emotional Moats as a competitive advantage: I anecdotally feel like my way of storytelling has shifted from pre-pandemic ways and Google seems to agree with my sentiment.
SECURITY. Cybersecurity is now an essential business consideration for organizations of all sizes and stages. The CEO of Tonic thinks that 2021 will be the worst year for data breaches yet (mainly based on the data point that the past few years have seen an unfortunate steady upward climb in the number of data breaches)
SPAC: RocketLab is the newest high profile company that will IPO via a SPAC (no not Space) - a Special Purpose Acquisition Company - which seems to be the 'public-offering-du-jour' right now - IPO's (initial public offering) are well understood by most investors, so what is a SPAC then? It's pretty much a publicly listed shell company that merges with a privately held one to create a publicly-traded version of the private one - got it? Here is a quick explainer if not. But FYI there were a record $109 billion in transactions globally, which according to some may be a bit of a bubble.
CASE STUDY: Zoom! I don't care what you say - they are an absolute SaaS rockstar. Even pre-Covid, Zoom was on a growth burn. When it IPO'd it was valued at $4billion - now it's trading more than that in ARR (and grown 369% in ONE QUARTER)!!!!! They have a fantastically optimal payback period of about 3-months and a net dollar expansion of 130%+. Want more? Fine how about 54 more stats?

POD OF THE WEEK: This is a cool retro one (a blast from the 2016 past) - The founder of Yammer (my old alma mater and OG Unicorn) and Slack (my old neighbors) get together to talk Unicorns or Bust (this is way before Slack took off

Top 10 in Tech - What to know for the week ending March 5, 2021

3/5/2021

SaaS METRIC OF THE WEEK: The three key interrelated metrics you need to build a great startup (CAC, LTV, and payback period).
SALES: Being the first sales rep at a SaaS startup is challenging for both the rep and the founders. Here are some reasons why and here is what you can do about it (and make sure the good ones never leave) - hint it's the Comp Plan!
SELLING: In the COVID/WFH current norm, remote recruiting, remote pitching, and remote selling are new skills we are all learning. So for all of you now selling remote, or if your customers are so globally distributed, selling remote IS the norm, check this sweet guide from Hubspot and Vidyar containing 10 proven Video Script and email templates for remote selling.
JTBD: Jobs to be Done is one of my favorite frameworks - it's a way to make the process of innovation accessible and tangible in very pragmatic ways. Take a deeper read here on a lightweight JTBD framework - broken down with real-world business examples - or skip straight to the templates
CONTENT MARKETING: Great content marketing efforts are what make this newsletter work, here is an extensive review of SaaS Content marketing, with the efforts of over 500 companies being analyzed. TL;DR Blog and write (but do it well), be consistent, test, and always offer something valuable in your content. Also, be sure to check this Content Marketing Benchmark report that analyzed 150,000,000 page views from dozens of SaaS companies! (TL;DR: 60% of total traffic came from organic search and was the fastest-growing channel (9%); deliver value within the first 400 words; Create tutorial content)
CUSTOMER RETENTION: The global pandemic has been rough for everyone, including, quite possibly, your customers. So here is a customer retention strategy well aligned for 2021 (using the thriving-striving-surviving health score). It's also really important to conduct a solid churn analysis (starting with a breakdown of internal vs external reasons).
MOATS: I've mentioned this in past posts, Moats are one of the best ways to provide a competitive advantage for your business and moats come in all kinds of different flavors (such as speed, brand, or growth). But here is a great one that conceptually covers b2b and b2c: Emotion. When it comes to pure B2B this post lists some popular and effective ways companies create moats for their products.
PRODUCT LEAD GROWTH: You may have heard me talk about this category from time to time. But here is a sub-category term for you: Product-Led Storytelling. PLG isn’t for everyone, some people, like the author of this article, call it hype, but probably so he can hammer home his agenda/story: That Product-Led Storytelling is way cooler.
GOVERNANCE: Alexander Jarvis has a great post on when and how to start thinking about forming a board and Mark Suster (from Upfront Ventures) has a series on his Medium Blog covering StartUp Boards one of which is a post that shows a board structure based on stage! He also provides a blog post AND a 43 slide presentation on Managing Startup Boards with really interesting (for founders at least) continuous integration/agile approaches to management.
CASE STUDY: This week, it is all about Postmortem lessons learned: From Tracy Young (co-founder of PlanGrid), The truth about starting a Startup, and Calvin French-Owen (co-founder of Segment) has lessons for early-stage founders.

POD OF THE WEEK: “Jobs to be done” adding on to #4 above - it isn’t a phrase, it’s a methodology for getting stuff done - listen more on the concept here.

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

2/26/2021

SaaS METRIC OF THE WEEK: CPA - cost per acquisition - vs CAC. CPA is often conflated with the Cost of acquisition, but they are different. Andrew Chen dives into the details as to why (and also how to calculate CAC accurately).
DESIGN: Bringing good design into different elements of a business is nothing new to modern businesses. But there are specialized branches of design constantly emerging. Growth Design is my new all-time favorite - merging typical HCD/Empathy Design but adding in the pragmatism of designing the jobs that need to be done.
SALES OPS: For those of us lucky enough to be in Scale-Up mode. Scaling creates real teething problems. Especially when it comes to 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 Operations operators are needed to help coordinate cross-departmental activities to help a revenue organization hum. Take a read of this Sales Ops primer article from Point Nine Capital on how to get started.
DEATH: Of the SaaS kind. Sorry to make it morbid - but Y-Combinator (via the SaaStr Blog) lists 5 things that kill startups (and what to do about it). It's a way deeper article than it sounds (and it ain't just 5 things) - then there is also this Twitter Zinger.
CYBERSECURITY: This is actually an expansion of the Pod of the Week below (listen to it!). Cybercrime has become big business and selling your product to larger corporates and the enterprise in a post-SolarWinds breach world has made operational and cyber Due Diligence a lot trickier to navigate (there is a growing need for chief compliance officers for example). What to start focusing on? Start with more detailed Log Management (listen to the Podcast to understand why in the Solar Winds case)
SEGMENTATION: Not all customers are created equal and audience segmentation isn’t a new concept. But it's a constantly moving target and can be a hard topic for startups to master. In this rapid deep dive, learn What segmentation is: Why it matters, and How to implement it. If done right, there are massive upsides. But Cohorts are also a necessary ingredient in Segmentation analysis and sometimes segmentation can be a bad idea.
CUSTOMER SUCCESS MODELS: Just like customers, not all CSM’s are built the same either. And it depends, based on stage and strategy, as to how your CSM teams will evolve…...but they will. Gainsight proposes 5 basic kinds of CSM, along with a corollary org chart. But keep in mind IRL they all will be different hues. SaaSx has this model. Which one best resonates with you?
CUSTOMER SUCCESS #2 - Quota: In past newsletters, I have referenced AE and SDR metrics and quotas. But what about quota expectations in renewal and cross-sell/upsell within a Customer Success Team? Tomasz Tunguz takes a look based on a report a couple of years back from Gainsight. Most Customer Success Managers can handle between $2-$5M in ARR and somewhere between 10-500 accounts (but it varies based on segment/ACMR).
MARKETING: Just save this link to your ideas/inspiration board or something. At first glance, it looks like a lightweight article. But just wait. One day you will be looking for ideas on how to elevate your product or business, when you do open up this bookmark for some true inspiration on 52 Low-Cost Ways to Promote Your Business
CASE STUDY: The Freemium and Product Lead Growth master - SLACK - and 5 interesting learnings now that they are at $1B in ARR. They are still growing revenue at 40% year-over-year - likely thanks to Covid and PLG, and thanks to their Freemium model Slack has a great 50/50 split of customers Small/Enterprise.

POD OF THE WEEK: a16z's declaration of a pivot into Media last month was a surprise to no-one who listens to or reads any of their content. So take a listen to this tear-down of how the Solar Winds hack went down (technically). Really great listening for anyone that loves Serial-style podcast covering super tech issues. The SolarWinds hack is no joke. It's a very big deal with political ramifications.

Top 10 in Tech - What to know for Week ending February 19, 2021

2/19/2021

SaaS METRIC OF THE WEEK: NRG - Natural Rate of Growth. Now that I’ve slow-burn convinced a bunch of people subscribed to this newsletter to go all-in with Product Lead Growth (PLG), it’s time to reference the metrics you need to know. It requires us to get halfway through this article before that becomes clear. But hey - it’s totally worth the scroll. With Natural Rate of Growth (NRG), the assumption is that a PLG business has an organic, self-service growth engine at their core (because they’re built to attract the end-user). Keep reading as the article comes complete with benchmarks towards the bottom. Hungry for more best-practice PLG metrics? I got ya!
DEATH TO SAAS: Made ya look! Last week I discussed the challenges of adding value via data into pricing for a subscription/SaaS company - This TechCrunch article takes this premise further highlighting that many SaaS Companies are shifting to usage-based models (full confirmation-bias disclosure - I operate a hybrid pricing model).
EMAIL (deep dive): On the non-PLG end - Cold email outreach is a go-to modern-day sales tool but this method historically has very low response rates (1% for cold emails historically but it dropped below 1% for the first time in 2019!). 1. Jason Bay has some spot-on methods to optimize response rates, 2. Predictable Revenue has this PowerPoint deck on the four pillars they think constitutes 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 emails design, but its more about how targeted the message is). 4. So here (from LeadIQ) is their 3-step guide to getting noticed by email.
PRICING FEATURETTE: Adding on from last week (as it was a popular post) - FUN FACT: On average, a 1 percent price increase translates into an 8.7 percent increase in operating profits - but optimizing Pricing is hard and it’s never (ever) perfect. a) If companies decide to have a pricing page on their site (which is a whole other topic), Jason Lemkin, the founder of SaaStr, 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 how to conduct a high-fidelity competitive pricing analysis project.
SALES: This article challenges us all to sell something bigger than your boring ass product. It’s similar to the mindset of "The Jobs That Need to be Done” discussed in earlier posts, making the point that the true sales value is something that genuinely helps users get better or more successful at what they do.
FOUNDERS: A great (but uncomfortable for many) article on the lessons learned through the journey of a startup……..which may not end with a founder in charge: "A founder creates something from nothing. A CEO manages something that already exists. They’re two totally different jobs"
BOOTSTRAPPED: Bootstrapping is a perfectly awesome approach to growing a startup or tech company, so take a read of the latest State of Independent SaaS Report based on hundreds of non-venture track, revenue-generating SaaS companies. It has really great Bootstrapped benchmarks: growth rates, demographics, validation approaches, and more......and from Pierre de Wulf are 6 (wise) things I wish I knew before I bootstrapped my first SaaS startup.
VENTURE CAPITAL: The Ying of the #6 Yang above - While bootstrapping (I've been there) is a very noble approach, more often than not, some kind of Venture Capital is needed to help fund growth and development. In last year's KeyBanc SaaS report, only 14% of companies surveyed were Bootstrapped or Independent. This report also found that VC-backed businesses demonstrate better growth, but at the total expense of margin. Correlating these deal size categories to forecast growth highlights that the low end of town retained the best forecast for (25% growth). TL;DR - Growth rate really matters to VC's and you need to understand exactly why. This article, by Jason Calacanis, lays out why VC firms aren’t focused on slow/modest growth startups.
PRODUCT: This one is for all you product managers. Lenny Rachitsky has curated a list of templates and frameworks for Product Management (there are also a bunch of others in there too) - definitely a bookmark-able page! If you are a founder and acting Product Manager then this one is a better fit for you.
CASE STUDY: HubSpot's turn. - this is another SaaS company that has crossed $1b in ARR (and growing at about 30%!!). They have been around for 14 years but didn't really get started until about 2011. You can watch the $0 - IPO breakdown here too.

POD OF THE WEEK: Adding onto #3 above, Profitwell run a pricing page teardown on Accounting software company, Xero

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

2/12/2021

SaaS METRIC OF THE WEEK: Active Users! An active user is any user who interacts with your platform in some way during a specific time period that you can identify (depends on your business but can be daily, weekly, monthly). Some consider this a vanity metric but here is why this is still important.
SALES: Many well-known tech companies (Atlassian, Zoom, SurveyMonkey) "moved upmarket" - which means they started in the Consumer/SMB space and transitioned into a successful enterprise-focused business. The team at SaaStr has 5 tips to closing larger deals more frequently and Tom Hale has a great case-study on how it was done at SurveyMonkey.
PR: Getting PR if you’re an unknown startup is hard (and also can be seen as a low priority in their stable of things-to-get-done)- but it's not as hard as you think without a publicist. Here is a great 101 article from Point Nine Capital (they call it PR for dummies) on how to get great press coverage. The Nasdaq Entrepreneurial Center also has a webinar coming up on Feb 17 PST on how to get PR for your business without a publicist.
VENTURE: The CBInsights/Money Tree tech report for Q4 2020 is now out and despite this whole pandemic thing, 2020 investments reach a new annual record (of USD $130B - up 14% YoY) - mostly attributable to the rise of fewer-but-bigger checks with investors consolidating their tech investments into more mega-rounds (reflected by the fact that deal count is down 9% from 2019). IPO's also made a come-back - 147 tech IPO's in 2020 vs 90 in 2019. 2021 is also not messing around with, $40B invested, setting an all-time high record, according to Crunchbase.
USABILITY TESTING: Creating an intuitive user experience within an application or website takes time, and requires a continual process of design - what may seem obvious to one person may not be for everyone. It's not just about UX - it's about usability testing, read here for the fundamentals of this concept. Once you have that article mastered, head over here on how to elevate your UX design empathy skills.
FRAMEWORKS: Beyond measurements/metrics, a successful business framework can distill complex processes or models to make execution more of a simple recipe (but ones that can build enduring, mass-market businesses). Sarah Tavel has compiled a great list of compelling Frameworks covering the 10x model, the hierarchy of engagement, hype cycles, and more!
SAAS SPEND: The "Covid Boost " is a thing, the speed of digital transformation is going gangbusters - so much so that Gartner has had to re-forecast their numbers in this report that has increased its estimates for global enterprise and IT spend for 2021 and 2022, with Enterprise Software and SaaS the biggest winners - projected to grow 6.2% and another 4.6% in 2022 - with Enterprise Software really taking the big (forecast) prizes - 8.8% 2021 and 10.2% 2022.
PRICING: In the Software and SaaS world, pricing has always been tricky. With the more recent additional complexity introduced by Data, AI, and Intelligence-based products, it’s getting even harder - how do you price intelligence?. Tomasz Tunguz breaks down what he has learned on pricing over the past 10 years and this article breaks down pricing in Per-seat vs Usage-based scenarios.
CUSTOMER PROFILE: Here is a great tool for anyone. Sales can be a real uphill battle when revenue teams don't truly understand their ideal customer, building out customer profiles is an incredibly useful way to identify your best customers. So download this Profiler kit pdf and use these questions and survey generator to quickly generate the ideal questions and template for your customer profiles. The rest is all on you.
CASE STUDY: OTKA - They are an under-the-hood Tech company ("one of those" SOMA 2nd Street Tech Companies is the SF reference) but coming up to almost $1B in ARR!!!! So check this SaaStr Case Study on the growth of the OKTA business on how they got there.

POD OF THE WEEK: To add some power to #4 above What It Takes to Really Raise Capital in 2021 with Christoph Janz, Co-Founder, and Partner @ Point Nine Capital‬.

TOP 10 IN TECH
a weekly tech newsletter