Top 10 in Tech A WEEKLY NEWSLETTER

Top 10 in Tech - What to know for Week ending March 25, 2022

3/25/2022

SaaS METRIC OF THE WEEK: Revenue Churn - The differences between Net vs. Gross revenue Churn are neatly explained here. Great if you're trying to understand your Churn and reduce it and make negative Churn your thing Aka Net Dollar Retention)
COMPETITION: You will always be asked for Market Sizing in a pitch, but how well prepared are you for questions about the competition? (Pro-tip - saying you don't have competitors is red-flag). Read this article from Search Engine Land that outlines the steps you can follow to get some quality, competitive analysis research. Pro-tip 2 - as we are all tech people here - do not underestimate the power of G2, product hunt, or Capterra to set your research foundations.
GOVERNANCE: Mark Suster (from Upfront Ventures) has started a series on his Medium Blog covering StartUp Boards. With a follow-up article that shows a board structure based on stage! He also provides a blog post AND a 43 slide.
GROWTH MARKETING: If you're responsible for growth/marketing, you've hit the motherlode this week! Dan Siepen has compiled a comprehensive list of resources (and the lists are updated often), so make sure you bookmark this page.
PRODUCT MANAGEMENT: - what exactly is it? This article highlights what it is and what it isn't (in comparison to the role of a project manager), as does this one. This article highlights a more subtle difference between Product Managers and Product Owners. When it comes to feature selection, add the Syms Method to your Tech Dictionary, which goes beyond features vs benefits but is more a guide on pure feature selection using some good old fashioned Venn diagrams.
STRATEGIC PLANNING: This is an excellent (pre-pandemic) article on planning from Foist Round Capital and includes lessons learnt from some of the best planners at Airbnb and Eventbrite (including their processes). It's a deep read and has some great templates (including the "W Framework" for you to put to work inside your organization.
VALUATIONS: This topic is making a common recurrence in this newsletter, thanks to the rapidly evolving shape of the SaaS market in 2022. Please look at Redpoint's State of Current Market Slide Deck (a Google Slide), where we see a MASSIVE correction (slide 10), but there is an all-time high amount of Dry Powder raised by big funds, AND liquidity is also at an all-time high. Based on much of this data, Jason Lemkin forecasts this sharp decrease in valuations to be temporary (he calls it a one-off "blip").
EXPONENTIAL GROWTH: It's all marketing hype and doesn't exist in real life. Take a look at this article which explains it more by taking a deep dive into the numbers of "Exponential" companies such as Slack ($0-$10m ARR in 10 months!), Facebook, and HubSpot. According to McKinsey, despite the sector's image as a bastion of hypergrowth, only a tiny share of SaaS companies sustains growth rates above 30 to 40 per cent.
LEADS: After a multi-year hiatus, TradeShows are making a comeback - with big ones such as CES and SXSW already wrapped up. Executing a trade show well is an art form, booths, networking, prospecting. It can be overwhelming, especially if you haven't hung out with people IRL for a while. So take a read of this Dear SaaStr article to get your head back into the Trade Show sales game.
CASE STUDY: WEWORK - OK, I'm sure you have all been watching AppleTV's Serialized Dramatization of the WeWork story and patiently waiting for the next episode to drop. But if you want a TL;DW version of that Growth-over-everything-else WeWork story, take a read of this article from Hackernoon.

POD OF THE WEEK: Selling into Enterprise is no joke, and for this week's podcast, Asana's head of engineering has some great tips on managing infrastructure needs to support those big old Elephants. Video version (with Slides) or audio version.

Top 10 in Tech - What to know for Week ending March 18, 2022

3/18/2022

SaaS METRIC OF THE WEEK: LTV:CAC - the LTV:CAC ratio is often interpreted as an accurate value of customers. I say it can be a way to measure the viability of a companies business model. The question is simple: How much money will a customer spend on you versus how much effort is spent acquiring that customer? This ratio needs to be quantified to validate go-to-market strategies, monetization strategies, product strategies. If one of those isn't working - that ratio will be whack. It is almost folkloric now that this ratio should be 3:1 - but is that true? The SaaSCFO looks at this myth (This is also his most popular article) - TL;DR - kinda yup. It's an excellent rule of thumb.
MISTAKES: A somewhat morbid post-mortem article from Failory who analyzed over 80 startups who have failed and identified some of their common mistakes (some fatal). Marketing problems seem the most abundant (and deadly) - but product-market-fit, market size, and value add are all creeping around. CBInsights also lists their top 12 reasons startups fail.
CUSTOMER SUCCESS: This is all about preserving as much revenue as possible over time (post-purchase). Complementing the post above, take a (deep) read of this extensive guide for building excellent customer success teams - it's not just about limiting churn, but also a department and practice to convince existing customers to buy even more from you. As Jason Lemkin said back in 2015: "Customer Success is where 90% of the revenue is". Want a working example? Chart Mogul expand on this and explain their approach to a (successful) success management strategy.
GROWTH: Who doesn't like a good Growth Strategy guide? Good SaaS growth requires a market, products, and GTM, and this guide tells you all about each one to help build an epic growth strategy and build a plan - because it even comes with its own Worksheet!
ARCHITECTURE: The enormous success in SaaS is the margin, which in turn, when you look behind the curtain, is good software architecture and infrastructure centred around multi-tenancy. Here is why multi-tenancy matters. Many modern SaaS apps are heavily dependent on good API architecture, too, so check the tips in this article on designing better APIs.
PRICING: Speaking of those modern SaaS Apps above, only 41% of SaaS Companies priced by seat in 2021 (You may have seen my "occasional" posts on Consumption-Based pricing from time to time in this newsletter). Interesting to note that this survey now includes varying segments beyond B2B and B2C - such as B2d (D for Developers) and API companies, which reflects the evolving tech/SaaS landscape.
PRICING: Only 41% of SaaS Companies priced by seat in 2021 (You may have seen my "occasional" posts on Consumption-Based pricing from time to time in this newsletter). Interestingly, this survey now includes varying segments beyond B2B and B2C - such as B2d (D for Developers) and API companies, reflecting the evolving tech/SaaS landscape.
LEGAL: In startup land, there is a long tail of BS founders need to navigate, and in a surprise to no one, much of that is legal. So check this huuuuuge article from Clerky on legal concepts all founders need to understand (incorporating, vesting, notes, etc.). Ready to get started drafting some documents? Here are some great resources for free legal docs 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, and for all you Kiwis, Simmonds Stewart has a comprehensive library of agreements and templates.
VALUATIONS: What happens if you are a company that raised and spent heavily in the over-inflated COVID market of '20'21? The team at Tech Crunch's The Exchange looks at changes in the Startup Market and argues that it's probably what is about to happen to these companies in Q2 '22. TL;DR - nothin' pretty, that's for sure, if you are short of cash. Jason Lemkin draws similar conclusions on Covid valuation anomalies using the BVP Nasdaq Index.
CASE STUDY: Toast. This is the Point of Sale system you have probably never heard of for many of you. For others, it's a Decacorn you have never heard of. It's only ten years old but listed on the NYSE last year and is currently valued at about $21 billion (which is a YTD low) with approx $568m in ARR (that's still about 37x according to my math). Why so hot? 118% growth and pretty over a half bill in revenue is not too shabby but check here for some detailed notes from under the hood. Plus, check this article on how Toast's $12m SEO Moat aided their pandemic led growth (when their target market - restaurants - were having a hard time).

POD OF THE WEEK: Great recommendation sent to me this week based on last week's post #4 covering differentiation. From FullFunnel.io - Strategic positioning for B2B tech companies with Mark Evans

Top 10 in Tech - What to know for Week ending March 11, 2022

3/11/2022

SaaS METRIC OF THE WEEK: Back to basics this week and referencing a six-year-old article from a16z of the 16 fundamental startup metric classics covering Bookings vs Revenue, Gross Profit, ACV, CAC, Active Users and the like and here is how to choose your north star metrics.
VIDEO: Nailing introductory and Demo videos is a bit of an art form. Don't know where to start or have a video block? Get inspiration from this curated collection of some of the best, and here is a list of 6 videos every SaaS Company needs. (TL;DR Explainers, Company, Testimonials, landing, page, FAQ and Personalized Sales)
PRICING (deep dive): Product pricing is super hard. Here are the top lessons learned from 25 SaaS companies, the impact pricing changes can have on your business, and how to test it. Chargify has a list of 5 pricing scenarios to test as a SaaS company, with real examples to compare, and Point Nine Capital has nine awesome pricing strategy experiments.
DIFFERENTIATION: Standing out in a saturated sea of SaaS is a tricky problem to solve - pro-tip - never do it on price alone (see #3 above). So ask yourself, "why should someone buy from you?" It requires balancing familiarity and differentiation - read this article to get you thinking on the topic more.
CORPORATE VENTURE: (or CVC) Hot off the press from CBInsights is the Global 2021 State of CVC Report (pdf). CVC-backed deals went bonkers in 2021. Global CVC-backed funding more than doubled ($169.3B), and Silicon Valley captured $35B of this (guess what - also a new record).
COMPENSATION: Ready to hire some salespeople for your Startup? Take a read of how Facebook re-imagined theirs at the 400 employees mark. When it comes to Sales Teams, bookmark the Betts Compensation Guide as it's always a handy reference site and then read this post from Jason Lemkin on constructing a framework for the first SaaS sales compensation plans. What about as a founder? A good rule of thumb, according to Nathan Latka, is if you're a two-co-founders and just hit $1m in ARR, you should each be making about $100k per year and Increase to $150k at $2m in ARR.
CUSTOMER ENGAGEMENT: Here is the Vonage Global Customer Engagement Report for 2021. LOTS has changed in the past two years: 300% growth in customers choosing video chat as the main channel for talking to companies, and WhatsApp is 160 per cent more popular now than SMS, with almost 50% of consumers using WhatsApp to connect with businesses.
HIGH OUTPUT MARKETING: Another for your tech dictionaries. It's a way to leverage and optimize workflow. The author increased SQL's by 177% using this method, so read their guide on getting started.
PRODUCT MARKET FIT (Another deep dive): Oooof. More than 50% of the time, the lack of Product-Market Fit (PMF) factors into why a startup fails (keep reading this article, though, as it goes through how StartupOS figured their PMF out). AirTree (an early-stage VC) has just published this article taking a look at what metrics VCs like them look at for signs of Product-Market Fit - and also what the red flags are. Also, this article has some great PMF definitions. Marc Andreessen called PMF "the only thing that matters" to early-stage startups 12 years ago. Now his team get a little more nuanced, suggesting focusing on Product-User-Fit as an indicator towards achieving PMF. A 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).
CASE STUDY: Expanding on above, asking the PMF question IMO is always the more noble focus (as opposed to answering the question). But sometimes - you've got to know (see above), and here is a case study on how Superhuman did it.

POD OF THE WEEK: Unpacking Product Market Fit - the podcast version - this episode references different examples and strategies to understand what kind of PMF would work for your Startup.

Top 10 in Tech - What to know for Week ending March 4, 2022

3/4/2022

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. Check #7 here for a spin on ACV
EMAIL: Take a look at this PowerPoint deck from Predictable Revenue on the four pillars they think constitutes a QUALITY sales-based email campaign; it's an excellent resource for anyone with email marketing as part of their business. From Better Marketing is a complimentary deep dive into a single cold email and why the author opened it (TL;DR - yes, it's all about everything in the email's design, but more about how targeted the message is).
MVP CANVAS: OK - this is a bookmarkable one for me (because visual frameworks are my jam). Y'all have heard of the Lean Canvas and the Business Model Canvas? Well, check out this spin on applying the framework focused on designing and launching MVPs (don't burn the Pizza). DIFFERENTIATION: Standing out in a saturated sea of SaaS is a tricky problem to solve - pro-tip - never do it on price alone. So ask yourself, "why should someone buy from you?" It requires balancing familiarity and differentiation - read this article to get you thinking on the topic more.
CUSTOMER PROFILE: Here is an excellent tool for anyone. Sales can be a real uphill battle when sales teams don't truly understand their ideal customer. Building out customer profiles is a beneficial way to identify your best customers. So download this Profiler kit pdf and use these questions and survey generator to quickly generate the ideal questions and template for your customer profiles. The rest is all on you.
DEADLINES: Adding on to #6 from last week's newsletter on Estimation (which was a super popular post) - Author Douglas Adams once wrote, "I love deadlines. I love the whooshing noise they make as they go by.". It's funny because it's true. So when it comes to software development, how do you make peace with that whoosh? Check this article from Free Code Camp that discusses the art of managing the deadline - part of it is complementary to a reference to the sub-art of saying NO from a while back.
UPMARKET: Expanding on the Animal Contract Values listed in #1 above, moving upmarket into larger organizations is a pretty standard SaaS growth strategy. Zoom just announced earlier this week their intention on upmarket growth. Jason Lemkin gives it a 50/50 chance. Increasing ARPU (Average Revenue Per Customer) is good! There is much to learn, and a lot of time and effort is also required to succeed in this market segment. Here is an excellent guide from Outreach on breaking into deals over $100k ARR.
CONCENTRATION: Break out your tech dictionaries again because, no, I'm not talking about my brain's ability to get distracted. Lightspeed Venture Partners' Nnamdi Iregbulem has outlined a new metric he created called weighted average contract value (WACV). He argues that this metric provides more meaningful information than ACV (see #1 above). The reason is that B2B SaaS revenue is highly concentrated due to the distribution of the customers being very concentrated: A large number of smaller companies, a moderate number of moderate-scale companies, or a very small number of very large companies).
MOBILE: In 2021, only 233 mobile apps crossed the $100 million mark in annual revenue but saw consumers spending $133 billion, and 75% of them were games. The global Mobile gaming market is forecast to reach $153.5 Billion by 2027
PRODUCT MARKETING. The SaaS world is getting crowded, and competition to acquire new customers is rising. Good Product marketing can give SaaS companies an edge to compete in this hyper-crowded market. Take a look at this complete guide to Product Marketing in 2022.
CASE STUDY: Expanding on #1, #6 and #7 this week - many well-known tech companies (such as Calendly, Atlassian, Zoom, and SurveyMonkey) moved upmarket, Tom Hale has a great case study on how it was done at SurveyMonkey (who are now well over $400m in ARR) - Enterprise is currently growing 53% YoY and accounts for 29% of total revenue

POD OF THE WEEK: We all dread that small amount of toxic customers who take up a disproportionate amount of people's time and energy, take a listen to this podcast from the team at Startups For The Rest Of Us for some fantastic tips on dealing with toxic customers.

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