Top 10 in Tech - What to know for Week ending January 29, 2021

SaaS METRIC OF THE WEEK

Payback Period. SaaS revenue is painful until it’s not. What I mean by that is that the cost of acquisition for every customer is generally much more expensive than the first payment(s). It takes time to recoup those costs (something called the "Capital Trough”). But how much time? On average (according to David Skok et al) it’s about 17 MONTHS!(Ouch). Tomasz Tunguz takes a look at this metric as well and reviews best-in-class for public traded companies and data sources. Zoom (one of my all-time favorites) tops out at a payback period of about 3-months, which helps justify their spend on Sales and Marketing - 73% of all spend.

SALES

In the early days of any SaaS business, the founder is the first (and only) salesperson - read here to learn how you may get good at sales as a founder. Eventually, a dedicated sales team will be needed, and hopefully, founders step away from front-line sales - to do this intentionally a repeatable SaaS sales process (that doesn't involve the founder) is needed.

STARTUP SALARY

How much should you pay yourself as a founder after raising some capital? There are lots of interesting answers and also lots of different situations. There are some good common sense quotes from this INC article too: "*Salary should be sufficient to not create hardship*" and "*When you're profitable, you can start paying yourself a more impressive salary*" and sensibly expanded in this article (but the currency is in Pounds - so convert!). If you want the real numbers though - check this report from a 2019 survey of 125 startups.

CUSTOMER SUCCESS

2020 really showed just how important keeping existing customers happy and hanging around is. So check this blog post on the why, when, and how of Customer Success best practices to boost retention in 2021.

CHURN

Adding onto the above are the hard facts - Ouch! Big Companies Don’t Churn. They Quit You.

DESIGNOPS

Another one for your Tech Dictionary: Don't roll your eyes - listen up! Design isn't a thing, it's a process. The principles of which can be used and adopted across all lines of business (which is why design thinking is a very popular thing). Take a read here to get a better rundown of what I'm trying to say. And then how to use design thinking (and OPs) in product teams to build better products and experiences.

PRODUCT MARKET FIT

Asking the question IMO is always the more noble focus (as opposed to being focused on answering). But sometimes - you just gotta know and here is a case study on how Superhuman did it. Also, this article has some great PMF definitions. PMF was called “the only thing that matters” to early-stage startups by Marc Andreessen 12 years ago. Now his team gets a little more nuanced suggesting focusingon Product-User-Fit as an indicator towards achieving PMF. Similar nuance is also true post PMF with repeatable-scalable revenue models as a precursor to a repeatable-scalable business model (you know - the one with actual profits).

DEBT - 1/3

Not of the financial kind! This re-post from Stripe on the fiscal benefits of developers (They calculate it at $3 trillion GDP globally) also highlights the opportunity costs of bad code and technical debt, which occurs across all stages of tech companies (looking at you Salesforce). We all do it - so this article discusses how to manage the consequences.

DEBT - 2/3

According to Bessemer Venture Partners, privacy debt is the new technical debt, and discuss this in their State of the Cloud Report from last yearand discussed in this panel discussion. Here is how to get started on a slim budget - the burden of proof here will be expected by your customers.

DEBT - 3/3

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 product evolution.