# Top 10 in Tech - What to know for Week ending February 23, 2024

Published: 22 February 2024
Canonical: https://www.top10in.tech/posts/week-ending-february-23-2024

## 1. SaaS METRIC OF THE WEEK: BURN MULTIPLES.

In this new capital-efficient SaaS environment, operators must balance growth and efficiency. So it's time to brush up on those efficiency metrics in this 2 part post covering [Burn Multiple](https://www.airtree.vc/open-source-vc/startup-metrics-burn-multiple) and Sales Efficiency metrics (see post 2). A Burn Multiple measures how much a startup is burning to generate each incremental dollar of ARR. [The higher the Burn Multiple, the more the startup is burning](https://sacks.substack.com/p/the-burn-multiple-51a7e43cb200) to achieve each unit of growth. [Here is how to calculate this metric](https://www.klipfolio.com/metrics/saas/burn-multiple) and [here is an example](https://www.wallstreetprep.com/knowledge/burn-multiple/).

Link: https://www.airtree.vc/open-source-vc/startup-metrics-burn-multiple

## 2. SALES EFFICIENCY

Also known as the Magic Number and is the sister metric to Burn Multiples above. [Sales Efficiency measures how effectively your company generates $$ via front-end spend](https://blog.coupler.io/sales-efficiency/) - basically new revenue generated over a specific period with the expenses incurred on Sales & Marketing during that same time frame. Check [the SaaS CFO](https://www.thesaascfo.com/calculate-saas-magic-number/) on calculating the Magic Number, and [this article deconstructs it](https://www.mostlymetrics.com/p/is-the-magic-number-a-bad-party-trick) and highlights that it's a complex metric influenced by factors like market conditions and company spending, making it difficult to pinpoint specific areas for improvement.

Link: https://blog.coupler.io/sales-efficiency/

## 3. SALES TEAMS

Take a good read of this article from David Sacks on [the simple math you can use to set up a sales team.](https://sacks.substack.com/p/simple-math-to-set-up-a-sales-team) Individual plans, team plans, and expansions/renewals are all considered for a high-growth sales team structure.

Link: https://sacks.substack.com/p/simple-math-to-set-up-a-sales-team

## 4. MARKETING

I feel personally attacked by the title of this article, "[You Suck at Marketing](https://cra.mr/you-suck-at-marketing/)." As an operator wearing many hats, including marketing, I begrudgingly have to agree. Most of what works for us is inbound and the result of Content Marketing - so read [this article from the team at Organic SaaS Growth on how to be less sucky at that](https://thoughtlytics.substack.com/p/28-maneuvering-the-biggest-content).

Link: https://cra.mr/you-suck-at-marketing/

## 5. EXPERIMENTS

In a very enjoyable mentoring session last week, we took a deep dive into experimentation - because every day, every path you take towards growth and revenue should be a hypothesis in startup land - time to upskill your experiment skills by reading [how to run a growth experiment](https://mannhowie.com/growth-experiment) (in 4 easy steps!). [Testing versions](https://mailchimp.com/marketing-glossary/ab-tests/) of things is something to embed across your company and culture as you experiment toward growth - it's why failure is critical to not failing. When conducting experiments such as A/B tests, start with [this refresher](https://hbr.org/2017/06/a-refresher-on-ab-testing) and then [this Step-by-Step Guide](https://www.crazyegg.com/blog/ab-testing-google-analytics/). Go Practice has [some great advice on how to make these experiments run faster](https://gopractice.io/blog/ab-tests-take-longer-than-should/), too.

Link: https://mannhowie.com/growth-experiment

## 6. FOLLOW UPS

I probably push this too hard on Sales "follow-ups" and "nudges," so I need to subject myself to this article from time to time: [How often to follow up: Follow-up Frequency to Close Deals Instead of Annoying People](https://blog.close.com/how-often-should-you-follow-up). It was great to see "Way more than you think." though 🙂 . There is also this concept of the "Rule of 7," which states that a potential customer needs to see or hear your message seven times before they buy something.

Link: https://blog.close.com/how-often-should-you-follow-up

## 7. AI

Last week, we saw another game changer, OpenAI, which now does text-to-video with the release of the short-form video generator [Sora](https://openai.com/sora), and the AI formerly known as Google Bard was [rebranded as Gemini](https://gemini.google.com/app). Not to be out-thunk by AI, the team at a16z has launched a thought leadership "agenda" by calling this new phase of tech change driven by generative AI the "[Era of Abundance](https://gamma.app/docs/a16z-Consumer-Abundance-Agenda-ieotbnzbxj81biu?mode=doc)" - built onto of an AI-enabled Pitch Deck generator, of course, ([gamma.app](https://gamma.app/)) and also came with an interesting [Market Map](https://twitter.com/venturetwins/status/1757077455616332056/photo/1).

Link: https://openai.com/sora

## 8. VALUATIONS

Throwback to a 13-year-old (dotcom 2.0 bust) article that may as well have been written this year on [valuation multiples and how not all revenue is treated (forward multiple) equally](https://abovethecrowd.com/2011/05/24/all-revenue-is-not-created-equal-the-keys-to-the-10x-revenue-club) from Bill Gurley (of Uber fame). Adding flavor to this is [a take from Santosh Sharan on the recent acquisition of Drift by SalesLoft](https://www.linkedin.com/posts/ssharan_why-saleslofts-acquisition-of-drift-signals-activity-7163646179686240256-eHME), which he views as more of a merger so Vista Equity (the parent company of both) can keep forward multiples high, especially given the original sticker price they paid prior to the downturn.

Link: https://abovethecrowd.com/2011/05/24/all-revenue-is-not-created-equal-the-keys-to-the-10x-revenue-club

## 9. CONTRACTS

This is the report none of us knew we needed - but my word, there are some insightful gems: [A guide on SaaS Contracts](https://commonpaper.com/resources/contract-benchmark-2024-q1), complete with benchmarks such as customer signature roles (3/4 are Executives), AI and ML clauses (5x increase from Q1 to Q4 last year), and the big one, time to sign - 3-5 days-ish (SMB to Enterprise). Have a read - I bet you will be pleasantly surprised.

Link: https://commonpaper.com/resources/contract-benchmark-2024-q1

## 10. CASE STUDY

Complimenting #5 above on experimenting**.** On the extreme end of A/B testing is [booking.com](http://booking.com), which [often runs over 1,000 tests simultaneously!](https://partner.booking.com/en-us/click-magazine/role-experimentation-bookingcom) But here is the payoff: [That flywheel](https://vwo.com/blog/cro-best-practices-booking/) enabled Booking.com to compound at healthy growth rates while maintaining ~30% EBITDA margins and scaling Google ad spend to approximately **$4 billion per year**!

Link: http://booking.com

## POD OF THE WEEK

Alex Lieberman and Ian Ito have done the hard work and [consolidated the best podcast interviews](https://docs.google.com/spreadsheets/d/1o4e1D5hFIzI-l8G4XkyDGebyLA1Vqsd_vb1AZLNTi-U/edit#gid=0) according to a survey of over 300 people. It's an extensive list.

Link: https://docs.google.com/spreadsheets/d/1o4e1D5hFIzI-l8G4XkyDGebyLA1Vqsd_vb1AZLNTi-U/edit#gid=0