Top 10 in Tech - What to know for Week ending October 4, 2024

SaaS METRIC OF THE WEEK

SALES EFFICIENCY, also known as the Magic Number, measures how effectively your company generates $$ via front end spend - basically new revenue generated over a specific period with the expenses incurred on Sales & Marketing during that same time frame. Check the SaaS CFO on calculating the Magic Number, and this article deconstructs it 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.

MARKETING

There is a funny techism along the lines of "30% of marketing is effective, we just don't know what 30%". If this resonates with you, look at this post from MKT1 on measuring what marketing activities are actually driving revenue.

VERTICAL INTEGRATION

It's a a high-reward but high-risk strategy, so if you are thinking about going more vertical, check out Not Boring's two-part series, which explores the shift to vertical integration as companies aim to control more of their value chain. Part 1 highlights how owning multiple layers (from production to distribution) can boost innovation and differentiation. Part 2 examines the risks, including the capital intensity and operational complexity of scaling vertically. The takeaway? Vertical integration requires careful balancing of control and agility.

TRIALS

Are a proven funnel method for a solid go-to-market strategy, and according to this article, starting users with premium trials (aka Reverse Trials) can boost conversion. Also, check this article on nine ways to optimize your SaaS trial and then note an older article from Tomasz Tunguz analyzing how long trial periods should be. TL;DR: Longer trials do not convert customers at greater rates. Two weeks, or two months, same results.

SEED

Last month, Lenny's Newsletter offered a masterclass on raising a seed round. Key takeaways: Secure 24-36 months of runway, avoid too much dilution and maximize FOMO among investors. Building solid relationships with investors and nailing your product-market fit are essential. This is a must-read for all you founders looking to navigate the early-stage fundraising process.

CLOUD

The State of the Cloud 2024 report from Flexera reveals that multi-cloud adoption remains strong (87% of organizations use multiple cloud platforms, but 82% of respondents say managing cloud spend is difficult - me included!). Hybrid cloud is also on the rise, with 45% of enterprises adopting hybrid approaches. AWS continues to lead, but Azure looks to be catching up. A key takeaway? Companies plan to increase their cloud budgets by 22% next year - Cloud Marketplace listings mean you could capture some of that good b2b spend!

INCIDENT MANAGEMENT

We all have incidents and accidents, and incident reviews are a critical component of improving system reliability and teams, but many of us fall short of making these sessions actually productive. According to The Pragmatic Engineer, some of the best practices (which I have adopted and now use) include creating a blameless environment to encourage honest assessments, focusing on learning rather than punishment, and ensuring incident reviews are actionable. The template I reference is from Atlassian - they have a very detailed Incident Management book, aaaand you can generate your own template here.

FOUNDERS

I received quite a lot of feedback from people about the "Personalities" post in one of last month's newsletters, so I took a step further this week by looking at the published research paper itself thats looks at how the personality traits of startup founders can influence company outcomes. So listen up - all of you founders with higher levels of conscientiousness and emotional stability are linked to better business performance. When it comes to charisma, extroverted founders tend to raise more capital but may experience more volatility in company success. It's a super fresh perspective on the relationship between personalities and outcomes, which I think could be a valuable lesson for us all. TL;DR: don't be an asshole!

INVESTORS

This one is slightly related to #8 above. According to new research by PitchBook, VCs that stick to their domain expertise when investing in startups generate better outcomes (1.2x more likely)! Here is a LinkedIn summary of the paper.

CASE STUDY: Demos

For my daytime business, Demo's play a pivotal role in our sales process to experientially show and discuss the value we can bring to a prospective customer. The team at Content Beta analyzed a bunch of Product demo videos (100+) and reported back on places where these videos went wrong, so yours don't have to.