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​TOP 10 IN TECH

​a weekly newsletter
Curated SaaS and tech insight from around the web repackaged for people to put to good us

Top 10 in Tech - What to know for Week ending June 25, 2021

6/25/2021

 
  1. SaaS METRIC OF THE WEEK: LTV:CAC - the LTV:CAC ratio is often interpreted as a true value of a companies 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 has to be 3:1 - but is that true? The SaaSCFO takes a look  - TL;DR - kinda yup. It's a good rule of thumb.
  2. VENTURE: From Gabe Kleinman of Obvious Ventures a great article positing that the entire VC industry needs a reset. Gabe makes a strong case that VC's are missing out on the most transformative ideas of our time (opposed to incremental ones). PointNine ask from another angle: If entrepreneurs can come from anywhere, then why do all VCs look the same? There is a reason why the (kinda) parody site VCStarter Kit exists you know.
  3. PRODUCT LED GROWTH: Total banger of an article here this week (thanks for the link Christelle Blanchet-Aissaoui). It's a Product-Led-Growth playbook for B2B startups. complete with metrics, scale-up strategy, and experiments. Want to know how far along your organization is on the PLG maturity spectrum? Check this Product Led Growth Maturity Grader from OpenView.
  4. COLD CALLS: Cold calling and email are increasing as a tool during our new sales regimes but these methods historically have very low response rates (1.48% for cold calls and 1% for cold emails). Jason Bay has some methods to optimize response rates and Gong has some recommendations on cold calling.
  5. ZERO-BASED DESIGN: Another concept for the dictionaries: Zero-based design has emerged as a potent approach for businesses to improve performance and redesign their products, services, and even organizations. McKinsey go even deeper with a look at this from what they call Operations Practice and is the kind of modernization process problem that companies such as ProMapp help solve.
  6. LEGAL DOCUMENTS: In startup land, there is a veeeery long tail of legal documents that need drafting in order to run a business, never mind grow one. 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 For those of us in NZ, Simmonds Stewart has a comprehensive library of agreements and templates.
  7. MLP: For your tech dictionaries - 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.
  8. SUSTAINABILITY: There has been a major push throughout this pandemic - of survivability - that's transferring into sustainability in SaaS. Building and growing a SaaS company isn’t a sprint – it’s a marathon and while Growth is a great moat, sustainable growth is ultimately what we all need to be focused on (and this is a Pre-Covid Article) - so here are 5 tips to become more business and environmentally sustainable in 2021.
  9. NO, NADA, NOPE!: Two sides of the no-coin here….a bit of a NO deep dive. This first one was shared by one of my team and it's too good to not share. Learning to say no is the most important skill a programmer can learn - TL;DR - it’s all about keeping the codebase small and solving the right problems/jobs! On the flip side - when it comes to selling, "No" is almost a curse word. So this article goes into depth on ways to be 'Yes', rather than have to say no - it’s a great way to think about how to say yes through the product.
  10. CASE STUDY: Freemium: In a Profitwell report they demonstrate how Trello, Slack, WordPress, and Dropbox leverage Freemium to drive MRR they also dive into Notion's freemium strategy, noting how Notion leverage customer empathy in their packaging model.

POD OF THE WEEK: Expanding on #8 above Sustainable growth in SaaS using data and pricing, with Paul Lynch, the CEO of Chargify

Top 10 in Tech - What to know for Week ending June 18, 2021

6/18/2021

 
  1. SaaS METRIC OF THE WEEK: Last week I discussed how (often time) many base SaaS metrics are mainly in service to VC's - well here those are: A simple collection of the most common SaaS metrics (Churn, LTV, CAC, etc.) with clickable deep dives into each one AND interactive models - def a great bookmark-able page.
  2. PROFIT: There are myriad opinions on how well software companies perform, especially in public markets. SaaStistics analyze this across two articles. The first asks the question 'Are Software Returns Really That Good?’ TL;DR - heck yeah - I want to temper that by rephrasing as "can software returns be that good?" - only if you don't count margin. The second one asks - cool! So which ones are the best? TL;DR Shopify…..but also Zoom!
  3. GROWTH: SaaS Businesses have been on a bull market for well over a decade and though-out the pandemic. During this time it’s all been about growth and not necessarily profits (which is why Public Markets hit lately with inflation). A16z makes the case that to weather this pandemic storm and the new future, SaaS companies should be focused on efficient growth strategies and metrics. NfX compliments this by discussing the new rules of the historic Growth vs Profitability tension in SaaS.
  4. FINANCIAL MODELING: Fun fact: SaaS financial modeling is uniquely complex and requires careful thought. Luckily for you, there is a boatload of helpful content out 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. An actual Google Sheet ready to go (just make a copy).
  5. 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 pretty good guide on what this means (with examples) and Profitwell has a total guide on making it happen (and how to go about calculating/measuring it).
  6. VENTURE: Pitchbook released the Q1 for 2021 Venture report a few weeks back (downloadable PDF here): Stuff is NOT slowing down ($69.0 billion USD deployed). The first quarter of 2021 saw record activity from non-traditional investors, which means non-VCs - mutual funds, hedge funds, and private equity. But three-quarters of all these investment dollars (75.2%) were deployed in late-stage deals, which may be setting the scene for a bunch of future exists/acquisitions or public listings. At first stage funding there were 722 deals reported (a historically low figure), but averaged $4.7 million per deal i- which is among the highest on record.
  7. REMOTE SELLING: Hopefully you are fully prepped for onboarding remote AE’s and SDR’s but here is a run down if not of how to onboard WFH SDRs and AEs well. But how can you equip these people to sell remotely both tactically and strategically? Hunt Club has some suggestions.
  8. PERSONALIZATION: SaaS marketers have been turning to personalization more and more in recent years as a way to increase conversion rates, improve customer success, and increase the quality of sales/marketing funnels. So check 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.
  9. VIDEO CONTENT: Nailing introductory and Demo videos is a total 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).
  10. CASE STUDY: Adobe! Remember when Adobe products were just software licenses? This seems like a generation ago - in Tech years it was as Adobe Creative Cloud was launched in mid-2012 and the transition was fast. Creative Closed surpassed product revenues by mid-2013 - last Quarter they are now at a whopping $10.69 billion in ARR for subscriptions. Here are 7 lessons for us all on this transition and from ChartMogul here is a breakdown of the strategy that got them here.


POD OF THE WEEK: To compliment #6 above - it's the podcast version of the VC in Q1 2021 report by Pitchbook.

Top 10 in Tech - What to know for Week ending June 11, 2021

6/11/2021

 
  1. SaaS METRIC OF THE WEEK: CAC payback (and accounting for the upsell) Often time many of the base metrics (CAC, CAC/LTV, etc) are in service to VCs and operationally don't tell us enough to make great decisions. This article takes an operator view on CAC Payback that includes (and celebrates) the value of net revenue retention.
  2. CUSTOMER SUCCESS - Quota: this is an expansion of celebrating CS's contribution as NRR and CAC payback referenced in #1 above. In past newsletters, I have referenced AE and SDR metrics and quotas. But what about quota expectations in renewal and cross-sell/upsell within a Customer Success Team? Tomasz Tunguz takes a look based on a report a couple of years back from Gainsight. Most Customer Success Managers can handle between $2-$5M in ARR and somewhere between 10-500 accounts (but it varies based on segment/ACMR).
  3. FREE-ER: It’s not necessarily a time to rethink Freemium as a SaaS Go-To-Market strategy. But it’s probably a good time to think about more free-as-a-sales-strategy - according to Jason Lemkin from Saastr - more-free seems to be working well these days. BTW Freemium is not just for B2C businesses like Dropbox and Spotify. Freemium is now a strategy employed in gaming, Enterprise, Cloud, and Online Payments.
  4. SALES: 68% of Companies miss their forecasts by 10% or more according to this report - 2021 Sate of Sales Forecasting (this is from a survey of about 400 B2B enterprise organizations). It's a pretty good report and you can see other benchmarks (such as ARR and ACV) across industry peers. Great! So now what? Well get started by checking this article covering Sales Forecasts and Pipeline Reviews: Why and How from a cash perspective.
  5. AGILE MARKETING: Hold on to your hats Marketers - Agile processes are coming for ya! This is another one for our Tech Dictionaries - it's how to really validate learnings, make mistakes and deliver impactful results. Hubspot covers this concept in detail and outlines how DoorDash hardcore-leveraged this methodology to increase revenues from $885m to $2.89 billion in a YEAR!
  6. DUNNING: Hah - how did I not know this? I just learned about this term via a client who provided a requirement to me to automate a "Dunning Letter" - huh? What? Turns out it's a real term with a weird-ass name for involuntary churn (aka bad payments) - according to Baremetrics SaaS and subscriptions businesses lose around 9% of their MRR due to failed payments on average. Learn more about a successful dunning (and pre-dunning) process here.
  7. CX REPORT: According to Forbes, Customer-centric companies are 60% more profitable than companies that don’t focus on customers. All companies, not just SaaS, are under pressure, especially after 2020, to deliver optimal customer experiences (CX). It's difficult to know where to make investments that are likely to pay off when getting started so download and read this in-depth Report (78% of respondents said that customer-centric agility has increased in importance as a result of COVID-19).
  8. CLOUD: The 2021 Cloud Report is out (from Cockroach Labs) which is a benchmark comparison of performance across the three major cloud providers — AWS, Azure, and GCP. TL;DR. AWS continues to dominate public-cloud market share - but GCP performs the best with impressive throughput metrics.
  9. 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).
  10. CASE STUDY: Uber made the call to completely re-write their app in 2016 - with the constraint of this being less than a 100MB download (as that's the max size of an iOS app available for cellular download, which most first time customers need as they often decide to download the app while curbside). This is how they did it - it's a pretty crazy developer ride.


POD OF THE WEEK: Scale-up Marketing listening to compliment Agile Marketing in #5 above - How marketing delivers growth with the Chief Growth Officer of FreshWorks.

Top 10 in Tech - What to know for Week ending June 4, 2021

6/4/2021

 
  1. SaaS METRIC OF THE WEEK: CHURN: Profitwell has a complete guide to understanding, calculating, and reducing churn, which they call "the silent killer of subscription businesses”. This is much more than a download as it’s pretty much an eBook. After you have read that - head over here to benchmark your Churn based on growth rates and sector sourced by paddle.com (SaaS is overall on average 4.79%).
  2. MARKETING AND SALES: Hubspot continues to benchmark Pandemic-times data for core business metrics like website traffic, email send and open rates, sales engagements, close rates, and more (aggregated from their global customer base of over 70,000 companies). It’s an incredibly useful tool as a benchmark to measure your business against. Explore all the benchmark data here or check this week's summary here. 
  3. CUSTOMERS: What exactly is the difference between Customer Success and Customer Support? Get started here to understand the nuances, they are both parts of the same customer journey spectrum, and Totango posits, in this recent SaaStr Annual presentation, that we need a fresher look at Success and Support that they coin the “Customer Operating System” (Like the presso? Here are the Google Slides deck).
  4. DILUTION: Did I scare you? 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 the median. Obviously, there is a significant difference in Bootstrapped vs not in this dataset.
  5. PRICING: It's a new month - so time for a whole new pricing bit. This one 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 variant on how to research and implement a value-based pricing model.
  6. UNSHIPPING: Here is another term for your Tech Dictionaries - when is it time to remove or deprecate features and products? We all cheered when Microsoft announced the end of Internet Explorer last week, so how can you and your team make the decision of when to unship something? Check here - a great article covering this topic from Reforge with evaluation criteria and real-world examples from Slack and Mixpanel.
  7. HAMBURGER MODEL: The second (but weirder) one for the Tech Dictionaries this week. It's a modern go-to-market strategy in this PLG (Product Led Growth) SaaS era. The bottom bun is self-service PLG and the top bun is enterprise sales your product is the meat in the middle. Want an example? Check this week's Case Study on Vimeo - 75% bottom Bun - 25% top bun.
  8. SOCIAL MEDIA: When is the best time to post on social media in 2021 (where social media became more important than ever)? This article has your answer for Facebook, Instagram, Twitter, and Linkedin across a bunch of industries - cool stuff!
  9. UNICORNS: 2021 is not mucking around when it comes to these pointy-headed companies. There have been more unicorns minted in the past 5 months (Jan - May) than all of 2020. These aren't all SaaS companies - but most are.
  10. CASE STUDY: Vimeo is now at $330,000,000 in ARR - growing at 56% YoY with just 674 employees, 40% of which are female - and this growth is 75% Self-service PLG driven and 50% occurs outside of the US.


POD OF THE WEEK: Continuing from #1 above - customer churn is the bane of a SaaS business - data can help understand the causes of churn and take action to reduce it.

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