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Curated SaaS and tech insight from around the web repackaged for people to put to good use
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1. CAC - in a modern SaaS world that has maturing companies using both sales-led growth (SLG) and product-led growth (PLG) motions and teams, how do you calculate CAC? The answer is they should be kept separate (see Pod of the Week for more below)
2. GTM: Go-to-market motions can be pretty specific and can impact your marketing strategy and your org chart. Mark Roberge at Stage 2 Capital gives some PLG context on go-to-market strategies in a really great presentation. The slide deck from the presentation can be found here. 3. CONVERTIBLE LOANS: They are a kind of debt until they are not. However, convertible loans are a quick way to access money quickly through an interested investor. Point Nine Capital describes in detail what is involved in a convertible loan and what to look out for. 4. PLG vs. SLG: According to the Expansion SaaS Benchmarks report (it's a downloadable PDF), PLG businesses lead the pack, but as stated above - SLG can outperform PLG, and according to this article, it's not a "vs." thing - you don't have to choose, both strategies can co-exist. 5. KNOWLEDGE BASE: I complain all the time that building a comprehensive and useful customer Knowledge Base platform is hard. But here is something to consider (it's certainly a helpful article for my mindset): There are probably stakeholders/purchasers of your product who do not respond well to traditional marketing and, in fact, may actively hate it. These people are like me, and while I may moan about how difficult creating good documentation is, it may be one of the best anti-marketing-marketing tools you have available, Especially if you have an API as part of your product. 6. DUE DILIGENCE: For investors, what the heck does due diligence look like for pre-seed or pre-rev companies (especially those seeking out Convertible Loans - see #2 above)with no real traction or trends to share? It's hard to do - but this article captures many key areas, especially founder equity, non-founders on the cap table, and founder vesting. 7. SEO (and AI): Last week, a post on how SEO is becoming less reliant (thanks to AI) was the second most clicked article. Apparently, everyone is interested, so here is more on how to prepare. 8. VENTURE: According to Pitchbook, the one-year rolling internal rate of return (IRR) metric for VC funds in the US is at the -10% mark (yup, that's a negative), started in late 2022 and has continued through to now (with a dip to almost -18% at the end of 2022). These Fund returns remain negative due to portfolio markdowns and a lack of liquidity. 9. ANNUAL DISCOUNT: We are all part of the great SaaS Ponzi Scheme, and the average enterprise has 23 vendors in their tech stack, so it probably comes as no surprise to you that annual SaaS contracts are discounted. But how much? 10% is the median, and the range is tighter than I thought, at 6%-14%. Why? Jason Lemkin has the answer for you (TL;DR - behavior - Human behavior) 10. CASE STUDY: This is more of a guide this week and a follow-up from #5, which I assume 95% of you think is boring. Yes, yes, it is—but it's super necessary. So read this guide to knowledge base creation for SaaS. I use it as a case study as it's also Userpilot drinking its own lemonade. POD OF THE WEEK: To marry #1 and #4 above from the SaaS CFO Calculating CAC when you have PLG and SLG motions. 1. SaaS METRIC OF THE WEEK: RETENTION Chartmogul notes that retention strategies are now growth strategies in their SaaS Growth Trends in 2023 report. Why is that? It's because companies with best-in-class retention grew at least 1.8x faster than their peers. Check out this other great ChartMogul article that outlines how to calculate, benchmark, and track retention (along with some good ol' fashioned strategies).
2. PRODUCTS: Balancing the needs of existing vs. new customers is a hard product act to balance, and that push and pull is nicely described in this article, which includes some great analogies and tips on influencing the product roadmap. It also includes an article from First Round Review with a list of things to avoid when building highly technical products. 3. BUDGETS and FINANCE—DEEP DIVE: For some of you, the new Financial Year just started, so check out some of this help for your Financial Year plans: Bessemer has a great six-part "fundamentals of startup finance" series: Part 1 (Goldilocks Budgets), Part 2 (Forecasts), Part 3 (Hiring), Part 4 (Growth and Profits), Part 5 (Pricing), and Part 6 (Metrics and benchmarks). 4. TRIGGER TECHNIQUE. Another new entry for the Tech Dictionaries, The Trigger Technique outlined in this article, shows how to leverage customer interviews to learn what "triggers" potential customers' buying decisions. This information helps design more targeted marketing campaigns to boost sales. 5. VENTURE: According to Crunchbase data, Global Venture Funding was up in Q1 this year, but not by much ($66B). In fact, it was the second-lowest period on record (by volume) since the start of 2018. Of that $66B, Seed and Early Stage pulled in about $3B. At later stages, the VC pullback continued (falling 35% YoY) to $29.5B. Carta agrees that it was in the "slightly better" category; here is their summary. 6. REVENUE: Did your team or company miss revenue goals last quarter? If so, you are not alone, as according to data in this article, 56% of companies fell short of their revenue goals. Marketing pipeline and sales velocity are also down, which are pretty key indicators that revenues will be down the next time this data gets refreshed (towards the end of the year). 7. PROFITS: Just how profitable should a SaaS Company be? This article from OnlyCFO looks to benchmark profitability data in SaaS, and here are the main takeaways: Gross Margins are Crucial: Companies with low gross margins (around 50%) face a hard limit on profitability, even with efficient operations (one of the reasons SaaS is favored); As SaaS companies grow decreases in OpEx as a percentage of revenue should occur, as should Sales and Marketing costs (typically the biggest component of OpEx) 8. DISTRIBUTION FIRST ERA: This intriguing article argues that SEO is becoming less reliant (thanks AI), so it advocates for identifying channels with high potential (via research of where the ideal customers are active, etc) using a Channel Growth Quadrant (I love me some quadrants). Great ideas for sometimes overlooked distribution methods. Adding onto this is the concept of "being where you matter" - and cynically, communities are not where that is (it's channel) 9. CLG: One more for the tech dictionaries. CLG stands for Customer Lead Growth, which is just another term for old-school referral engines or word of mouth. It's the most operationally efficient channel an operator could hope for. Download this "definitive guide" from Catalyst. Deloitte is even in on the acronym with their perspective. Userpilot breaks CLG down vs. PLG here. 10. CASE STUDY: Intercom's Des Traynor and Fergal Reid share insights on leveraging AI language models (like GPT-4) to transform Intercom's SaaS products, highlighting the importance of low-risk problem selection and a centralized ML team. POD OF THE WEEK: From ChartMogul, complimenting #9 above, Is Customer Led Growth (CLG) the new Product Led Growth? 1. SaaS METRIC OF THE WEEK: This week, a video should be mandatory for onboarding every person in a SaaS company. It's from David Skok and covers hardcore B2B SaaS metrics such as Rule of 40, Repeatability, Net new ARR, Bookings, LTV:CAC, churn etc., etc. It's a metric-packed 20 minutes, so it's easily watchable.
2. AI: Last year, valuations for early-stage AI startups saw a 20% premium compared to other companies raising early-stage capital. This premium also transfers into later-stage companies, with Series B AI rounds seeing 1.5x higher dollars than their counterparts. 3. GROWTH: Here is the start of an incredible three-part article from Notion covering the challenges faced by (VC-backed) startups as they strive to reach $100 m in revenue. Fun fact: Only 1.2% of us will achieve this milestone (welp). 4. AI: According to this a16z report on enterprise buying/usage of generative AI, budgets for AI are moving from one-off tests to proper OpEx. Companies seem to be using more than one model (my team certainly is), and internal use cases are easier to implement (again - samesies). 5. INDUSTRY TRENDS: The SaaS Industry is maturing out of its growth perception, and this is an excellent summary of a recent AGM presentation from Bowery Capital. SDRs and AEs are putting in way more effort to get less results these days. However, AI offers new growth potential in this mature and crowded market, driving ROI and opening up new opportunities for software companies. 6. SHUTDOWNS: According to this post and data from Carta, the number of startups shutting down is on the rise this year compared to last (and this is incomplete Q1 2024 data), and according to Pitchbook, organizations specializing in assisting startups with winding down operations are experiencing significant growth 7. PMF: There is no one prescribed way to tackle product market fit, and this article from Bessemer Venture Partners covers some of the diverse PMF strategies, from focusing on a narrow market to experimenting with pricing. Atlassian's freemium model and Box's enterprise focus highlight the real significance of market choice and adaptive pricing. Lessons like these (and see #10 for more), combined with frameworks for assessing product-market fit, provide some excellent PMF guidance - along with a cool PMF Quadrant. This article has some great observations about early-stage PMF. 8. DESIGN ENGINEERING: A new entry for our Tech Dictionaries. Design Engineering mashes engineering and creative problem-solving skills - UX + Tech. This newish role is handy for new tech shifts of the LLMs and AI kind - I like it. It offers a cross-discipline approach to product development and system design. 9. TRUST: This is a surprisingly interesting and cool report from Edelman, which is a study on trust in tech and with tech companies. Trust dynamics are hard and vary wildly by country (the UK is 39/100, India is 76/100). There is a loss of trust in leadership in several countries, along with distinct concerns around AI and a growing need for innovation regulation (likely all due to AI). 10. CASE STUDY: To add to #7 above, this article is a case study on Pilot, a startup by 3 serial founders on finding Product Market Fit. It explores their learnings across their startups. Key takeaways include picking a large market, solving a genuine customer problem, and building a strong team. POD OF THE WEEK: Complimenting #7 and #10 above, Dan Olsen (author of the great book The Lean Product Playbook) discusses How to Achieve Product-Market Fit. |
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