Top 10 in Tech A WEEKLY NEWSLETTER

Top 10 in Tech - What to know for Week ending January 28, 2022

1/28/2022

SaaS METRIC OF THE WEEK: The nag Metric - This one is fun (but not for everyone). A call to action within a website or customer journey is kinda like a parent trying to get their kid to clean up their mess. It just gets a bit naggy after a while and gets mentally filtered out. Over time, this can impact your brand/NPS or irritate people into churn. The Nag Score - outlined in detail here, is an attempt to quantify this.
PLG: 2021 was a massive year for product-led growth (especially according to this newsletter). But where is it headed in 2022? The team at ProductLed takes a good look at what this year may have in store. Adding Outbound Sales and Marketing is a start.
NETWORK EFFECTS: Last week's podcast on network effects was popular enough to warrant another post this week. Building and scaling products like Slack and Zoom is still quite a challenge so take a read of this conversation between Andrew Chen and Des Traynor on building networks that make your product thrive.
OPS: I've skimped lightly on all things Ops and Finances lately - so here is a comprehensive benchmark report for Financials and Ops for 2021 with all the REALLY good metrics to compare - YoY growth, employee headcount, CAC, NDR, Diversity.
GROWTH: 2022 has not been kind to publicly traded SaaS. These Businesses have been on a bull market for well over a decade though. During this bullish time, it has all been about growth metrics and not necessarily profits (which is partly why the Public Markets have been hit lately with inflation concerns). A16z makes the case that SaaS companies should be focused on efficient growth strategies and metrics to weather this downturn. NfX compliments this by discussing the new historic growth vs. profitability tension rules in SaaS.
IDEAS: here is a framework for managing them - I found this a helpful article with a template that is now on my wall! An HD version of it is here. A little bonus is a compilation of mental models that entrepreneurs and investors leverage to develop new startup ideas & venture theses from the same author.
TEAM ONBOARDING: Successful onboarding is challenging in person - it's 10x harder in today's remote work environments. Here is how Zapier does it (and leverage their own product to use automation to do it), and here are some lessons learned from Slack.
CONTENT MARKETING: Heavy Bit makes the case that now is the best time to double down on content - so get writing!. Also, spot quiz hotshot - how long should a Blog Post be? Hypothetically this long (but also literally not that long - it's a long-ass blog post).
DO IT!: Finding it hard to get back into the swing of productivity after the holidays? I did. It's easy to get caught up in the backlog, debates, details, and troubles that work or projects throw our way. Keeping the beat and progressing the business forward takes some help as a leader. So read this from Henry Ward from Carta on creating a continued Bias for Action.
CASE STUDY: Spotify and its Squads. A few years ago, an inspiring and memorable video circulated (you know, in one of those cutesy handwritten animation styles) describing the Agile Squads that Spotify employs in its cooler than cool Utopian Developer department. Well, guess what, sorry to burst your Spotify bubble; they abandoned it. (How Agile of them)…. In this post mortem assessment, the most significant critical failure was such a SaaS-based one: It was solving the wrong problem.

POD OF THE WEEK: The Video version of #7 - Employee onboarding secrets from Zapier founder Wade Foster.

BONUS: SaaStr Build, a one-day, live digital event, is coming.....and it's free. Sign up/learn more here.

Top 10 in Tech - What to know for Week ending January 21, 2022

1/21/2022

SaaS METRIC OF THE WEEK: Churn. So, according to CatchJS, we're all calculating churn rates wrong. But if you love Statistics, the article is well worth reading and even gives some Python code to perform the more complicated probability-based equation they recommend. Is this not how you want to start your new year? Then check out this tool (as a handy Google Sheet) from Newfund as a way to analyze the strength of revenue streams for any B2B startup. A complimentary article outlining the methodology behind the tool is here (and you should read it first). Churn also has an interesting section in the report in #2 below.
BILLING AND PRICING: What are your pricing plans for 2022? Check this joint report from SaaS Optics and Chargify on B2B SaaS Trends in Billing & Financial Operations to benchmark yourself. Forty-Two percent of us opted for a sales-negotiated pricing model in 2021 — additionally, 37% plan to expand into new pricing models in the coming year. The most desired addition is a variable pricing model (such as consumption-based pricing), and ARR remains the top priority for most SaaS businesses.
PRICING SENSITIVITY: Reviewing pricing is critical in 2022 as a 1% increase in price can generate up to an 11% increase in your profits. So this week, let's also take a look at different concepts within pricing strategies starting with priced-based sensitivity, which measures 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 this concept much better than me - so take a read of their article about how to measure and optimize it (check the Van Westendorp's Price Sensitivity Meter")
DUNNING: Also relevant this week, and check the churn section in the report above (#2) for metrics on involuntary churn. "Dunning" is 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.
VENTURE: The Q4 2021 PitchBook Venture report is out (you can even get the Excel version if you prefer spreadsheets), with VC Fundraising topping $100 billion in a record year for venture capital. US VC-backed companies raised $330 billion in 2021, almost double the number for 2020 ($166.6 billion and prior record). $774 billion in annual exit value was also created by VC-backed companies (either via IPO or acquisition).
DUE DILIGENCE: The ever-increasing adoption of cloud-based software exacerbated by Covid also creates more exposure and risk to bad actors looking to exploit vulnerabilities. Tech companies should be continually concerned about the security of the software being built. Security-based due diligence is a critical part of the sales cycle for those on the Enterprise side of town (there is a growing need for chief compliance officers example). OWASP can help you out here - it's a foundation working to improve the security of software - and maintains a Top 10 list of the most critical security risks to web applications and also how to pass those awkward, sales-friction-inducing, Enterprise Security Audits/Reviews….and finally how to get started with security as a startup.
GROWTH: Growth rate is more closely correlated with SaaS valuations than ever before, and this week, I enjoyed reading this article on how to accelerate growth in 2022 by Kyle Poyar, listing six areas to consider for your year-end/year-start planning
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!
ADVICE: Looking for good SaaS Resolutions for 2022? Take a good read of this article from First Round Review: The 30 Best Pieces of Advice for Entrepreneurs in 2021 - I already have a couple of these on my list.
CASE STUDY: Stripe is (still) the largest privately held tech company globally - but how did they come out of nowhere to dominate the payments space? The answer: Developers! They focussed on going after developers — the leading group of people involved in integrating payments into all kinds of digital applications.

POD OF THE WEEK: Kickstarting 2022 with an a16z podcast on how to kickstart Network Effects looking at Slack and Zoom as prime examples.

Top 10 in Tech - What to know for Week ending January 14, 2022

1/14/2022

According to Ardas, analysts believe the SaaS market will grow at 12% per year. By the end of this year, the volume of investments will reach $ 141 billion, so here is a rundown of what big things may be in store for tech and Saas in 2022.

PRODUCT: The SaaS world is becoming a lot more democratized as it's more pervasive, accessible thanks to no-code platforms, and more developers are coming online all the time. This results in higher expectations and that a great product experience is a must-have, not a nice to have, and that there is a need to provide personalized experiences to drive value. Don't take my word for it, though - that was just a TL;DR of the Product Trends and Resolutions report for 2022 – from a bunch of top Product Experts.
CRYPTO: What do we even call Crypto anymore? Web3 makes sense, and the tech itself has been and still is in a period of ever-increasing complexity (and sophistication). 2022 will absolutely be more distributed, but there is still more infrastructure to build. Tomasz Tunguz has some predictions of which Web3 sectors will be top this year. A significant movement will be National, with some countries declaring that they have adopted <insert crypto coin here> as legal tender.
THE METAVERSE: According to many of my friend's Christmas goodies this year, we have some seriously quality VR devices now, and it's just getting started. Expanding on above - as we figure out how Web3 plumbing will work - one can hope the same for VR and AR. Some of it is undoubtedly cool - but where is the value? NFT's are creeping in here, but Bill Gates predicts something interesting: most virtual meetings will move from 2D camera image grids … to the metaverse, a 3D space with digital avatars.
SECURITY: I think we can all agree that security is one of the most essential priorities for 2022 and a big problem. Forbes predicts some serious supply-chain hacks, continued public cloud breaches, and an increase in ransomware.
QUANTUM: Back in 2018, IBM and Intel announced impressive advances in Quantum Computing chips. IBM even had a Quantum Computer on display at CES (which was a thing of beauty). But in 2022, things are really heating up for Quantum, with Google, Microsoft, Amazon, and IBM, and Intel establishing themselves in the quantum space through product launches, R&D projects, investments, partnerships, and more. At the time of publishing for this report from CB Insights, $921m of capital had been deployed into Quantum in 2021 (compared to $411m in 2020 and $470 in 2019)
CONTENT MARKETING: Content marketing helps you attract, engage, convert, and retain customers you may not reach otherwise, and only 10% of marketers don't use content marketing, so for all you marketers out there, here is a list of Content Marketing statistics and benchmarks for 2022.
TOMASZ TUNGUZ: For the last few years, Tomasz Tunguz from Redpoint Ventures has made a list of predictions and scored last year's predictions. Here are this year's top 5 predictions with all the usual suspects: Web3, Data, and Machine Learning topping the list. A great one for all you non-Silicon Valley readers is his post-pandemic prediction of the spread of innovation and funding outside of the Valley.
JOBS: Backing up #7 above, this article from Dice (backed up by an analysis of postings on their site) recognizes that organizations everywhere see AI as increasingly vital to their long-term strategies, and they're looking for recruiting Devs with the right mix of AI and machine-learning skills and backing this up, the IDC predicts that spending on AI will increase 24.5% annually to $204 billion by 2025
FORRESTER: Forrester publishes a predictions paper every year - here is their 2022 version. Top of their list: higher consumer expectations of digital experiences; "always-on" digital engagement strategy for B2B marketers, one in three businesses implementing a hybrid work model will fail!
SOCIAL MEDIA: HubSpot and Talkwalker deliver the Social Media Trends Report for 2022. Viewing TikTok as the platform-du-jour, advertising in a post-cookie apocalyptic world, and the rise of Omni-channel engagement.

Top 10 in Tech - What to know for Week ending January 7, 2022

1/7/2022

Happy New Year and welcome to the Benchmark Holiday special! This is a compilation of useful benchmark data reported from across the webs in 2021 for you to put to good use.

SKOK: David Skok is a legend in the SaaS world, and I have written about his work extensively in the past and convinced him to speak at an event. His 2021 annual report in partnership with KBCM Technology Group (formerly Pacific Crest Securities) is here - absolutely comprehensive benchmarks for any SaaS business.
EXPANSION 1. Acquiring customers is not enough for SaaS companies to sustain long-term success. Expansion strategies are pragmatic growth practices that any good SaaS company needs to grasp, as 36% of new ARR bookings are attributable to cross-sell/up-sell activities. Larger companies use this strategy more heavily than their smaller counterparts (2x more). This is likely due to not being so reliant on new acquisition focused as the business matures. Here is what good expansion looks like.
EXPANSION 2: Expansion is such a big deal that OpenView Partners have gone to town to benchmark this metric with an extensive Expansion SaaS Benchmarks report (it's a downloadable PDF). Product Led Growth businesses lead the pack!
RETENTION: To compliment #2 and #3 above, retention is deeply related to expansion regarding sustainable growth. Here is what reasonable retention goals should be benchmarked against (another downloadable PDF report) and how to strategically optimize for this metric. Churn is still a problem overall. The YoY trend of a dollar churn decreased from 13.9% (20% of which was attributed to Covid) in 2020 back to 12.6%. This is back to similar 2019 levels (which was 12.5%).
PRODUCT LED GROWTH: As mentioned in #3 above (and from me from time to time in this newsletter), Product Led Growth (PLG) businesses lead the pack when it comes to expansion. PLG companies also deserve their own benchmark reports - so I got you covered with this one where you can benchmark 250+ PLG companies.
CAC: This one needs nuance, so the report breaks CAC into 3 main categories: blended, new, and up-sell/expansion. The median blended CAC comes at $1.20 for every $1 of revenue realized which sits slap bang between 2019 ($1.10) and 2020 ($1.32). New Customer CAC is up against 2019 ($1.34) and 2020 ( $1.60) - SaaS is increasingly competitive. Upsell/cross-sell is still cheap at $0.63 per $1 of ARR earned.
GROWTH: At the beginning of 2020, 39% growth was expected in January. By the end of June, it was reduced to 20% (in 2019, this was 36%). In 2021 the organic ARR growth levels were back up to a healthier 31% as the COVID disruptions start to settle, and overall growth forecasts are back to the same 36% seen in 2019.
MARKETING AND SALES: Hubspot continually benchmarks Pandemic-times data IRL 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 a handy tool as a benchmark to measure your business against. Explore all the benchmark data here. They also took this a step further in 2021 by launching their (not another) State of Marketing Report for 2021.
WEB VITALS: Optimizing a User Experience is key to the long-term success of any service or product. Google is all over this and launched Web Vitals a few years back, a program that offers developers guidance about user experience. It's benchmarking very Google-based metrics: loading, interactivity, and visual stability.
SPEND: The average SaaS company burns $52m to get to $100m in ARR, and it takes under 9 years (8.7 to be exact). Figuring out how to optimize marketing spend of this burn in relation to growth rate is a crucial question, and this study doesn't show the benchmarks marketers want to hear: While the median sales and marketing spend maybe 36% of revenue, to really ramp ARR growth, you gotta blow a lot more. Percentage of revenue in isn't much more than percentage growth spend out.

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

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Top 10 in Tech - What to know for Week ending January 28, 2022

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