1. SaaS METRIC OF THE WEEK: TTV - Time To Value: This week, I've had some mentoring discussions about Time to Value. Great to bring it back - TTV is similar to ROI (return on investment). Still, instead of realizing the financial success of an investment, it implies achieving the effectiveness of an investment or for a customer to realize value out of your product. There is also a corollary "trough of disillusionment" your customers may need to navigate.
2. EXPERIMENTS: In another very enjoyable mentoring session last week, we took a deep dive into experimentation - because every day, every path you take towards growth and revenue should be a hypothesis in startup land - Time to upskill your experiment skills by reading how to run a growth experiment (in 4 easy steps!). Testing versions of things is something to embed across your company and culture as you experiment toward growth - it's why failure is vital to not failing. When conducting experiments such as A/B tests, start with this refresher and then this Step-by-Step Guide. Go Practice has some great advice on how to make these experiments run faster too.
3. SALES: Looking to establish your first (non-PLG) SaaS Sales Comp plan? So first, check this excellent report on the State of Startup Compensation from the team at Carta. They look into questions such as what makes up for the largest share of compensation spend, what roles get paid the most, and whether startups are still hiring remote workers (yes, remote hires now represent 62% of all new contracts). And then, read this post from Jason Lemkin on how to construct a framework for your first SaaS sales compensation plans.
4. SDR BENCHMARKS: The new 2023 SDR Bridge Group SDR Survey is out - answering all the great benchmark metrics such as How much time does it take for an SDR to ramp up? And how many calls does it take to book one meeting? What about the SDR:AE ratio? BONUS: SDR compensation calculator (Excel).
5. ASYNC CULTURE: Crack open your tech dictionaries again for this one - it's something we do at my day job; I just wasn't aware there was a label for it. Management and leadership can get asynchronous with 100% remote and distributed teams across different time zones. So this is a great Async playbook for those who need to practice this. It's going on my wall, so I can work on a couple of these pillars (especially around documentation).
6. SALES CYCLE: Ouch - According to Tomasz Tunguz and his 2023 Go To Market Survey, the typical Startup saw a 24% increase in sales cycle in 2023 in the past year. It's worse if you sell to Enterprise - up 36%.
7. AI: We're (un)officially in the "Age of AI" - and anecdotally to me, it seems about right as it's everywhere conversationally, and I use it daily (except in this newsletter because writing is a unique tool). It looks revolutionary - but here is how we got there. BONUS: A post looking into the origin, drama, and people behind OpenAI, the parent of ChatGPT (and, of course, Elon is there).
8. CRYPTO: Coinbase was served a Wells notice (I just heard of this term this week) for trying to follow the US guidelines for digital assets. A tougher environment for all Web3 companies is inbound, and a significant regulatory battle is incoming.
9. CAPITAL: Jason Lemkin notes that it's now year 2 of the venture downturn, and "No" is becoming the default response. According to another post from Tomasz Tunguz this week, the most challenging round to raise in 2023 is Series B (where most of those NOs are).
10. CASE STUDY: Complimenting #2 above on experimenting. On the extreme end of A/B testing is booking.com, which often runs over 1,000 tests simultaneously! But here is the payoff: That flywheel enabled Booking.com to compound at healthy growth rates while maintaining ~30% EBITDA margins and scaling Google ad spend to approximately $4 billion per year!
POD OF THE WEEK: The extension of #5 above on how to go totally asynchronous with a distributed team with no internal meetings.
1. SaaS METRIC OF THE WEEK: VALUE-BASED PRICING: It's a tough nut to crack as it makes the most of what the maximum cost customers would be willing to pay for a product or service - this means there is no magic guesswork or thumb-suck number. These prices need to be arrived at Empirically. Paddle.com has a good guide on what this means (with examples), and Profitwell has a comprehensive guide on making it happen (and how to go about calculating/measuring it).
2. PRICING: This one is totally a follow-up to #1 above and is interesting as the author is pitching a new, better (gasp!) way to decide your product pricing HINT: It's all about how you ask the question. And this is a variant of how to research and implement a value-based pricing model.
3. ENTERPRISE: Moving upmarket into larger organizations is a standard SaaS growth strategy. Increasing ARPU (Average Revenue Per Customer) is good! But it takes a lot of work to pull this move off as a tiny startup selling to large organizations. Here are 10 tips for selling to big companies as a little guy.
4. PERSONALIZATION: SaaS marketers have been increasingly turning to personalization in recent years to increase conversion rates, improve customer success, and increase the quality of sales/marketing funnels. So check out this great article from Chart Mogul on the (modern-day) personalization fundamentals. As a teaser: Personalization reduces acquisition costs by as much as 50%, and 87% of companies see a lift in key growth metrics when they employ personalization.
5. PLG DATA: One of the keys to excellent product-led growth is capturing and leveraging the right data to determine what to build next. Here's how to do that (REALLY in-depth with great examples).
6. INFLUENCE MAPS: I love discovering great tools - especially visual ones, as my mind works mainly in diagrams. Add Influence Maps to your tech dictionary this week - as one of the coolest Marketing Frameworks I've come across in a while and is an excellent tool for answering strategic marketing questions.
7. DEV: Great report from HeavyBit covering Software and Development Trends for Engineering Leaders, 16 pages of quality, including best practices, top languages, trends, and spending forecasts (Productivity Tools are top).
8. FINANCES: For many startups across the globe, it's been a heck of a month for finance teams. So for pre or post-mortem reasons, look at these guides on cash management and treasury management to help with more strategic planning or finance-based BCPs going forward. They are Google Docs - so be sure to make a copy!
9. VC AI: Pitchbook has launched an AI platform called VC Exit Predictor. This new tool aims to answer the question, "Of all the startups and funds, which ones are worth putting time into?". A full PDF report can be viewed here.
10. CASE STUDY: The Airtable links last week were popular - so doubling down on journeys into the Enterprise this week with a great article from Canny on how (tactically) they did it.
POD OF THE WEEK: From Ophelia Brown, the Founder of Blossom Capital, discusses why growth investors ruined the Venture market (mainly via follow-on investing), along with some insight into the European VC market.
1. SaaS METRIC OF THE WEEK: FINANCIAL MODELING: Fun fact: SaaS financial modeling is uniquely complex and requires careful thought and expertise. Luckily, there is a boatload of helpful content on the web to help with financial modeling. Baremetrics are incredible at this and have 1. An overview of why SaaS metrics are different; 2. A deep Dive on a usable model for you; 3. A Google Sheet that is ready to go (make yourself a copy).
2. SILICON VALLEY BANK: This week started with absolute chaos in the startup world, and hopefully, the crisis has been diverted, as it would have been a global GFC-style event. For an accurate unit economics breakdown of what caused the run on SVB leading to its demise in under 48 hours, read this post - or here for a longer Twitter version. I can't wait for the movie. (note this is written as of Wednesday this week, leaving plenty of room for more chaos before publication). Tomasz Tunguz has some wise words though "Take a Breath."
3. DILUTION: I didn't mean to scare you with that word. It's one of the most feared words a founder can hear. So here we go - let's make it a benchmark. What is the average ownership percentage by SaaS Founders at the time of IPO? Sammy Abdullah takes a review, and the median level of founders' ownership is 14% while the average is 23%, with VCs owning about 54% on median. Obviously, there is a significant difference in Bootstrapped vs. not in this dataset.
4. SPEND: I can't report all doom and gloom this week. For startups that sell B2B, good news, the Q1 2023 Cloud Software Spending Survey from Battery details a robust software spending budget. 46 % expect to increase budgets in 2023.
5. EXPENDITURE: Rounding out above with some opposite state stuff: We all know running a SaaS business is basically a Ponzi Scheme of having to spend a bunch of money on other SaaS Products. So in these operationally critical times, what are ways to cut some spending, especially as SaaS pricing inflation is five times higher than market inflation? TechCrunch has an article promising to cut your spend by 30%.
6. SHERLOCK HOMEBOY: Crack open your Tech Dictionaries so you can add this awesome phrase. The Sherlock Homeboy Technique is a way to reverse engineer your Content Marketing strategy for the rest of the year.
7. CHURN: Churn is not a Customer Success problem- it's a business one. Check out eight ways to move the needle on churn in this current economic environment.
9. AI: Sample size of 1 - NetDragon Websoft, a Hong Kong-based online gaming firm ($2.1B in annual revenue), has appointed an AI CEO (Ms. Tang Yu). Check out how Ms. Tang Yu outperforms the Hong Kong Stock Market by working 24/7 for $0 in salary. Not too bad considering that at Fortune 500 firms, the average CEO pay is now about $16m per year - time to take another look at #5 above.
10. CASE STUDY: Moving into the Enterprise is no mean feat. Here are the top 5 Lessons from Howie Liu, the CEO of Airtable, on their upmarket mission. Bonus content: how Airtable also leverages SEO.
POD OF THE WEEK: Complimenting #10 is from Lennys Podcast on Lessons from Airtable's unconventional growth strategy and how Airtable found its first super-users.
1. SaaS METRIC OF THE WEEK: CAC PAYBACK: Cash is king in the SaaS world, and the shorter the payback period is for the acquisition (CAC), the better (getting to cash flow positive). Here is an article that looks at ways to shorten CAC Payback.
2. OUTBOUND vs. INBOUND: How you handle an inbound lead vs. an outbound lead is quite different. Check this article from Jack Jorgovan on how Outbound leads differ (and how to close them). Oh, and do you want to binge some Outbound Sales TV? The team at predictable revenue has been running over 50 outbound sales experiments to find out what works best (and what doesn't). Watch the whole series on YouTube.
3. MLP: For your tech dictionaries - that's Minimum Lovable Product). MVP (Minimum Viable Product) is OK, but what if no one likes it? FirstRound capital uses the analogy of burnt pizza - pointing out that the fastest and cheapest functional prototype could produce a poor or flawed version of something that people may actually love.
4. SALES EFFICIENCY: Tomasz Tunguz has a banger of a post that takes a deep dive into Sales Efficiency through and after the COVID era. Since 2016, on average, Public SaaS sales efficiency has dropped from 52% to 47% (a drop of about 10%), and he notes that it isn't COVID - it's competition that's creating the slide.
5. PRODUCT MARKET FIT: To me, Product Market Fit is as constantly evolving (and never finished) as pricing. But way smarter people than me write about PMF in incredibly detailed ways - such as Brian Balfour, who wrote a fantastic article on the subject that is now almost ten years old and still very relevant for figuring out what stage(s) your startup may be at.
6. PRICING: Speaking of pricing never being finished (see above), here is a bookmarkable guide on leveraging product usage data to evolve your business and product packaging and pricing.
7. WEB3: The space has been quite volatile for several years, but investments and startups continue in the space, and McKinsey has a great article outlining the structures of Web3 that can take it beyond all of the hype and even have one for all you Web3-new CEOs.
8. FRAMEWORKS 1: HEART Framework - this was designed by Google'sGoogle's research team and is a methodology to improve software user experience (UX). It'sIt's an acronym for measurable UX evaluation: Happiness, Engagement, Adoption, Retention, and Task Success.
9. FRAMEWORKS 2: PIRATE METRICS (or AAARRR) were first proposed by 500 Startups. The great thing about this acronym-based grouping of metrics is that it can apply to non-software products or services as well as traditional SaaS as it's all about awareness/activation: Awareness, Acquisition, Activation, Revenue, Retention, Referral.
10. CASE STUDY: Sequoia Capital. According to a report from CB Insights (PDF version here), Sequoia Cap backed almost 100 startups last year. 1/4 of which were fintech startups. Three of the four deals in the capital markets sub-sector were follow-on rounds, meaning they remain pretty frothy in this category.
POD OF THE WEEK: Being first to market is not necessarily a winning advantage (looking at you, Friendster). Des Traynor (co-founder at Intercom and a great speaker) dives into elements that make a move into Enterprise effective.
1. SaaS METRIC OF THE WEEK: Usage-based pricing and MRR/ARR models are often mentally hard to compute collectively (I know this from experience), so this article was a sight for sore eyes earlier this week, discussing the mental mapping required from Annual to Monthly and Usage-Based Metrics (and introducing Implied ARR) from David Kellogg. A recent analysis of usage-based pricing from Bessemer Ventures is here to help you think about your own pricing models.
2. CUSTOMER JOURNEY: What the heck is a Customer Journey anyway, and why do you need to create one? Now that you know you need one, mapping out a Customer Success Journey via a visual map is a great way to tell what areas a Customer Success Team needs to be involved in (and what their responsibilities will be) via various engagement models. And a "complete guide" with some great, modern templates can be found here.
3. VALUATIONS: AngelList keeps a comprehensive set of Startup Valuation Data. Here are the highlights: Average valuations for startups in Q1 2023: Pre-seed $10M, Seed $19M, Series-A $95M.
4. SALES vs. MARKETING: Great (and relatively short) read from Jason Lemkin here for all you early-stage people discussing how a startup's growth problem was misdiagnosed as a sales one (when it was actually a marketing problem).
5. SLOW: One lesson my brain still resists thoroughly learning is that with any new technology adoption curve, regardless of how progressive or latent the core demographic is, customers will move way slower than you want them to.
6. REPRESENTATION - VENTURE: Women-founded startups raised just 1.9% of all VC funds in 2022, a drop from 2021. This comes at a cost for Female Founders who fundraise only from Female VCs. Women-led firms whose first round of VC funding was raised exclusively from female VC partners were two times less likely than those whose first round included male partners to eventually raise a second round.
7. REPRESENTATION - Web3: In Web3 only, well known for CryptoBros, 13% of Web3 founding teams include a woman, and only 3% have teams exclusively made up of women. Nasdaq has gone even further to ask what it is people are even building in the metaverse given the current gatekeeping status quo (and who's on a mission to fix it).
8. BUYOUT CONTRACTS: SaaS is increasingly competitive across markets and niches. To be successful, there are some cut-throat things you will have to do, one of which is offering buyout deals. If you want to steal a customer from the competition. Jason Lemkin goes into some detail on this topic via this post (including when Buy out contracts make sense and how to structure commission.)
9. ZERO-BASED DESIGN: Internal performance improvement may be higher on your agenda this year compared to previous years, so crack open your dictionaries to add Zero based Design. McKinsey goes even deeper than the Bain article linked with this paper, looking at what they call "Operations Practice," which is the kind of modernization process problem that companies such as ProMapp help solve.
10. CASE STUDY: Surely you have all tried ChatGPT out by now - but how the heck does it actually work? Here is an inside look into what ChatGPT is and how this kind of model (large language models or LLM - for your tech dictionaries) actually work.
POD OF THE WEEK: The extension of #6 above, a Podcast from TechCrunch covering more in-depth numbers and subjects such as pitching bias, the complications of imbalance, and more