Top 10 in Tech A WEEKLY NEWSLETTER

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

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

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

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

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

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

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

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

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