1. SaaS METRIC OF THE WEEK: Expanding on post #4 from last week is a revisit of NDR and its cousin, GDR. Modern SaaS is all about acquisition, retention, and expansion; it's a bowtie, not a funnel. Crunchbase has done the work to calculate what good NDR benchmarks should look like.
2. RETENTION: Now expanding on #1's bowtie above - I referenced Gross vs. Net Retention Rates a couple of weeks back, but Chartmogul also has retention trends benchmarks for 2023, which is essential because Companies with best-in-class retention grow at least 1.5-3x faster than their peers - but in this market, it's now more challenging than ever. BTW: According to a report from SaaS Capital, yearly contracts don't actually increase NRR.
3. REVERSE TRIALS: Crack open up your tech dictionaries to add in this term. Reverse Trials are a play on freemium, where new users start with a time-limited trial of all your paid features. At the end of the trial, they can either buy or downgrade to a fully free tier - this article also explains how Airtable does this well. The benefit here is that, emotionally, the users experience loss aversion, where the pain of losing something is twice as powerful of a motivator as the pleasure of gaining.
4. PITCH: Want to compare how your Pitch Deck compares to others? Here is an absolute MONSTER resource link for you (and your pitch team). Pitches from AirBnB, Uber, Shopify, lesser-known startups, and famous flameouts (such as Fyre) can be found on Billion-Dollar Pitch Decks and Pitch Deck Hunt. A cool approach on OpenDeck that lets you search by Category/funding year. If you want to see a breakdown/analysis of pitch decks, then look at Alexander Jarvis - he has over 500 decks broken down by the good and the bad things people do. Added Bonus here - this tweet from earlier last year is liley now redundant thanks to OpenAI (of ChatGPT fame)- Katelyn Gleason observed that no real generation-defining startup has been founded since 2014. But we now have one outlier - OpenAI (2015)
5. 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.)l. Ready to get started drafting some documents? Here are some great resources for free legal docs to stick to the mission: Avodocs - 3 free per month. In addition, 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.
6. IDP: You need your Tech Acronym Book open for a new entry. IDPs (Internal Developer Platforms). Stack Overflow's latest developer experience (DX) survey shows that most developers are running a bunch of CI/CD, DevOps, and automation tools. Still, only ~40% had a Portal or Platform to access the right tools and services. According to Forrester - good IDP is key to increasing productivity. Here are some popular players: Roadie, env0, and CloudQuery.
7. STATE OF STARTUPS: The 2023 edition of Pilot's State of Startups is out. The first slide shows we're an optimistic bunch - with 74% of those surveyed being optimistic about their startup's outlook (and view on layoffs) - but less optimistic about revenue growth compared to last year (2x vs. 4.9x). In addition, 56% are remote/office-less, and just over half of startups surveyed have more than 12 months of runway.
8. DEMO: For my daytime business, demos play a pivotal role in our sales process to experientially show and discuss the value we can bring to a prospective customer. The team at Content Beta analyzed a bunch of Product demo videos (100+) and reported back on places where these videos went wrong, so yours don't have to.
9. VENTURE: This is a bit of a pitch deck - but the PDF is packed with really interesting slides on Venture - it's called the Data-driven VC Landscape 2023 (report, I guess?). The pitch is........that VC is pretty latent in terms of digitization - hah! 84% of VCs want to increase data-driven capability, but only 1% have initiatives deployed, and Machine learning models can outperform human investors in deal screening. Talent is distributed equally, but capital is not, with North American startups raising more capital proportional to population than anywhere else, and in terms of accuracy and recall, Machine learning models are on par with the best investors (80%) and relatively outperform the average/median investor by 40%/33%."
10. CASE STUDY: The path to ChatGPT from Rama Ramakrishnan of MIT - Rama gives a long (104 Slide) informal explainer on how ChatGPT was built (including what GPT actually means - slide 42, of course).
POD OF THE WEEK: If you have yet to see SuperPumped (aka Uber: The Travis-blitz scale years), you should, as it's part 1 of this podcast post. Part 2 is the un-ubering of Uber with the post-Travis CEO, Dara Khosrowshahi, turning that toxic, blitz-scale culture around.
1. SaaS METRIC OF THE WEEK: ARR per FTE: Capital Efficiency is a new-fangled metric we all want to track in these LeanOps times. Benchmarking this - the median is $143K per FTE according to the 2022 KeyBanc Private SaaS Report. With public companies, it's double that, according to data from Maritech and Kyle Polar from Openview, breaks this down to tell whether you're on the right track.
2. AD BOT: The internet is only half human - Imperva's annual Bad Bot report revealed almost half (47.4%) of all internet traffic was from bots, with bot traffic of the bad kind accounting for over a quarter (27.7%) of all traffic.
3. DEX: Crack open your tech dictionaries for another acronym-based entry: Digital Employee Experience. This is all about your internal users - your team. In a surprise to mostly no one, 95% of employees say IT issues decrease workplace productivity and morale - which is a bigger deal AND a more significant challenge to solve now that digital tools are more mission-critical in today's WFH/Hybrid/Remote work environments.
4. SaaS (Born again): Great article from Harvard Business Review summarizes how the traditional sales model "funnel" does not apply to modern SaaS and equates a customer life-cyle to look more like a "Bowtie" rather than a funnel shape because most revenue takes place outside the marketing funnel (which is why modern Customer Success and NDR exists).
5. B2B SAAS: Silver Cloud lining time! Adding onto the Harvard Business Review article above is from Boston Consulting Group, who make the case that overall Tech may be cooling off, but B2B SaaS is not. They also bring receipts to back up that claim (B2B SaaS is outpacing Industry growth by 10x) and deliver a playbook that B2B SaaS companies can make to continue the growth trajectory
6. 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 easier than 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!
7. ENTERPRISE ADVICE: a16z convened some early-stage CEOs for a recent event, discussing business management need-to-knows like hiring, firing, scaling, sales, and marketing.
8. DOWN ROUNDS: According to data from Pitchbook, down rounds are on the rise but don't worry - read this article with the author making the point that down rounds won't kill you.
9. STATE OF WORK: A new report from software.com on the future of work (for Software Development) is an AI baseline of sorts that we should revisit next year. TL;DR - Devs have better work-life integration post-pandemic (with fewer late nights and weekend work), productivity remains unchanged (BUT devs are spending a little less time coding per week), and that's because AI is starting to show up. It will fundamentally change how Devs work.
10. CASE STUDY: I'm still trying to figure out why, but last week's article on Product Market Fit was very popular, so let's double down on how some popular companies got found PMF (via a Tweet Thread).
POD OF THE WEEK: As AI continues on a burn, founders and CEOs (me included) are discussing how to integrate this new superpower and also considering essential questions around data privacy, accuracy, and pricing (me included). Please take a listen to a16z's Podcast on what we are all already talking about.
1. SaaS METRIC OF THE WEEK: This week, you get to watch a video that should be mandatory for onboarding every person in a SaaS company and required watching annually. It's from David Skok (a legend in the SaaS world) 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.
2. AI LAYOFFS: According to Dropbox, AI-based Layoffs are here, same with Insider - not caused by AI but because they need more of it. Overall layoffs in tech remain strong (even though Google's AI is not happy about it), so the sound advice for those who are laid off seems to be to get into AI NOW! (from the former CEO of Reddit)
3. AI VENTURE: A few months back, I noted that Pitchbook had launched an AI platform called VC Exit Predictor. But I totally missed a complimentary report from them on recent VC investment into AI. VCs have steadily increased their positions in generative AI: $408 M in 2018, $4.8 billion in 2021, and $4.5 billion in 2022. So far, in 2023, we're at $1.7 Billion (announced).
4. VENTURE (Private Markets): According to Carta's State of Private Markets for Q1 2023, the total amount of capital raised by startups dropped 80% in the last 12 months (Q1 '22 to Q1 '23). Deal count fell 45% over the same span (an obvious indicator of smaller deal sizes), and 20% of all venture investments in Q1 '23 were down rounds.
5. INVESTOR UPDATES: The team at NFX has read a lot of investor updates and has published a guide where they share common mistakes and how you can avoid them (and also deliver hard news)
6. TALENT: 2023 has flipped from a candidate's to an employer's market, so even though things have changed, what talent is necessary at what stage? Openview has a 2023 Talent report for you and provides excellent insight into the mix of teams at different stages. Early-stage teams are product and engineering-heavy (56%). Past product-market fit, it's all about the go-to-market teams, and sales and marketing h overtake product and engineering.
7. PRODUCT-MARKET FIT: A long-running general rule (called a Growthism) in the Startup world is that getting to $1m of ARR is a strong sign of Product Market Fit (PMF). Kaitlyn Henry from Openview runs contrary to this Growthism, stating that there's no specific revenue indicator that defines PMF. Still, she continues to write about concrete signals of PMF available beyond a $$ amount and gut feel. Read more about all those signals here. This sits well with Brian Balfour's work, who wrote a fantastic article on the subject that is now almost 10 years old and still incredibly relevant for figuring out what stage(s) you may be at.
8. MISTAKES: I saw this original presentation from Anand Sanwal of CB Insights way back at SaaStr back in 2017 - but it's memorable because of its Silicon Valley-like (the TV Show) accuracy of things not to do. 100 things NOT to do when building a SaaS company.
9. ANNUAL PRICING: I'm sure you see this all the time, options to pay monthly or annually on a SaaS pricing page. Great for all you non-consumption-based folks out there. It's a great cash flow choice - but is it the right option for your business? Jason Lemkin has the low-down.
10. CASE STUDY: Ok - looking at #7 above - what could Product Market Fit look like experientially? Asking the PMF question, IMO is always the more noble focus (instead of being focused on answering the question). But sometimes - you gotta know, and here is a case study on how Superhuman did it.
POD OF THE WEEK: Carilu Dietrich of Miro, Segment, Atlassian, and 1Password discusses how to achieve hyper-growth via Lenny's Podcast
1. SaaS METRIC OF THE WEEK: Customer Renewal Rate measures the percentage of customers who renew their subscriptions at the end of each subscription period. High renewal rates inform companies about product-market fit, market, pricing fit, value, business model viability, etc. The authors of this article from Profitwell describe the formula and differentiate between renewal and retention - one is actively renewing, and the other is not actively canceling.
2. DOWN-ROUNDS: According to data from Pitchbook, almost 7.5% of all venture funding rounds in the U.S. in Q1 2023 were down rounds. They also note that over 400 unicorns haven't raised new funding since 2021, and 94% (of tech unicorns) are unprofitable.
3. VENTURE: But wait - there is more. The Q1 '23 Venture Monitor report from Pitchbook dropped last month, and we may have the beginnings of a Startup pipeline problem: The angel and seed markets are at a 2.5-year low. The early stage Venture is the same (A&B rounds), while the late stage is at pre-2018 levels (21-quarter low). CBInsights has the same news, just different graphs.
4. DEMO: This one interests me (and apparently some people reading last week's newsletter) - as the path to Demo is precisely the primary call to action my website is designed for. I assume it is the same for many of you B2B people, so....." Should Your Website Drive Prospects to a Demo?" Read the article to determine if this is a problem at your startup.
5. MARKETING: Bookmark this article from the MKT1 Newsletter that dives into how to organize a B2B growth marketing team as we move away from just a demand gen/Growth hacking worldview.
6. BOTTOMS UP: Crack (get it) open your tech dictionaries for this one. Stage 2 has a Go To Market Analysis Model called the Bottoms Up Model (Bonus Worksheet here), starting with Current State to assess if Sales & Marketing efforts are well matched to the products' finance plan and unit economics.
7. VIDEO: Complimenting the above, nailing introductory and Demo videos is an art form. Need help to figure out where to start or have 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)
8. INTERNET: Big earnings from Big Tech last week, and see #10 below for a reason for this post; over the past 30 years, the Internet has launched some of the world's biggest companies - Google (~$1.4 Trillion), Amazon (~$1.1 Trillion), Facebook (~$615 Billion), and Netflix (~$150b). BUT - growth was all almost single digit. AI has landed, and none of it is powered by Big Tech (yet). The next earning season will be informative on that front.
9. AI: Another week, another eternity of progress in AI: Italy restores access to ChatGPT, the Godfather of AI quits Google, StabilityAI releases a ChatGPT competitor, Palantir releases a Military AI Platform (and it's scary), and a study found ChatGPT outperforms Physicians both in skill and empathy.
10. CASE STUDY: The World Wide Web turned 30 years old (publicly) last week, and we've come a long way since the Web protocol and code became royalty-free in 1993. Here is a history of how that all started from the OGs of Web Tech (where it was birthed pre-public in 1991) - CERN - with the badass domain of home.cern. The Wall Street Journal has an excellent visual story of the Web with images of Mosaic (the first image-based browser), AOL Online CDs, and Y2K flashbacks!
POD OF THE WEEK: Complementing #6 above - Mark Roberge of Stage 2 covers common SaaS sales potholes and how to avoid them.