POD OF THE WEEK: Being first to market is not necessarily a winning advantage - 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: Not all metrics should be measured in isolation: The three siblings: CAC, LTV, and Payback period, are vital interrelated metrics you need to build a great SaaS startup.
2. WHAT TO SAY: For outbound messaging, how can you make customer communications effective, balancing business objectives with empathy, authenticity, and value for the recipient during these times? Here are some great templates from Close.com, and Wordstream has some great copywriting guidelines in the time of Covid.
3. CONTENT MARKETING: Now is the best time to double down on content - so get writing!. But be sure to read here on Startup content marketing mistakes. Also, spot quiz hot shot - how long should a Blog Post be? Hypothetically this long (but also literally not that long - it's a long-ass blog post).
4. VENTURE: Pitchbook's Q2 Venture Monitor report dropped earlier this week. In Q2 2022, VC investors remain cautious with dealmaking. This complimentary article to the report rounded up the major five trends - on the positive Seed valuations remain high, and Billion-dollar plus funds posted a record year.
5. CRYPTO: Complimentary to the Pitchbook report above, this article referencing Crunchbase Data notes that Crypto-based Venture Capital investments dropped by $3.2 billion (26%) in H1 2022 - but that still represents a massive $9.3B invested in cryptocurrency startups this year. The number of deals increased to 534 (up from 456 last year).
6. UX: Optimizing a User Experience is a key to the long-term success of any service or product. I've mentioned in prior posts that Google has Web Vitals. This program offers developers guidance about best practice benchmarks on user experience, but here is the why: From Forrester - the Business Impact of Investing in Experience. Bonus - First Round Capital has a DEEEEEP dive/crash Course for Founders on the principles of UX Research from the people at Zoom, Zapier, and Dropbox.
7. DEX: Crack open your tech dictionaries for another acronym-based entry: Digital Employee Experience. Kinda expanding on #4 above - but 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. This 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.
8. ONBOARDING: This was a definite add to my bookmarks of helpful sites. Mailmodo has a list of SaaS-specific Email flows, and tips across customer flows from cold nurture to Churn prevention.
9. APPLE: They haven't had a great week with current announcements matching the global economic slowdown. But let's get some perspective: Apple spends more money on R&D than the space programs of most countries, but it's still only 6.5% of their revenue, which is low for a technology company - how do I know this? Check out this glorious infographic from the genuine Impact Newsletter - All eight charts in the original post are amazing - read the whole thing here.
10. CASE STUDY: Product Led Groth hits security - see how Snyk snuck into some significant market share in the cybersecurity industry (150 ARR, 150% YoY growth) by following tactics from Atlassian, Slack, and Twilio.
POD OF THE WEEK: How to Prepare your Go To Market Strategy for a Downturn with Alexa Grabell of Pocus.
1. SaaS METRIC OF THE WEEK: People are the most important (and expensive) metric for any company, especially SaaS (yes, I would argue more important than the actual product). Revenue per FTE is one metric to measure when it comes to people efficiency, but a better one perhaps is the ROSE Metric (Return on SaaS Employees). This metric highlights the tradeoffs between a SaaS company's headcount, recurring revenue, and EBITDA growth.
2. BURN MULTIPLES 1 of 2: In last week's newsletter, I referenced that since Q1 '22, there has been lots of down-turn industry advice and not a lot of tactics, but operators are expected to find the balance between growth and efficiency. So it's time to brush up on those efficiency metrics in this 2 part post covering Burn Multiple and Sales Efficiency metrics. A Burn Multiple measures how much a startup is burning to generate each incremental dollar of ARR. The higher the Burn Multiple, the more the startup is burning to achieve each unit of growth. Here is how to calculate this metric, and here is an example.
3. SALES EFFICIENCY 2 of 2: Sales efficiency is a metric that allows managers to understand the direct revenue impact of each dollar spent on expenses or investments. It's how quickly your company, or team, creates value. Read this excellent primer article and get into a deeper dive here.
4. NETWORK EFFECTS: Building and scaling products like Slack and Zoom are still quite challenging, so take a read of this conversation between Andrew Chen and Des Traynor on how to build networks that make your product thrive.
5. ON-SITES: Lots has changed operationally in the past few years, and for many of us, remote teams, work-from-home, and flexible work policies are standard. But I have also been in many discussions lately about the return of the all-team on-site. If you and your team are rusty on executing well on these all-team meetups, bookmark this article for when it comes time to plan.
6. DUE DILIGENCE: Of the VC kind has gotten harder and longer. So read this article from Allison Weil Lechner at Hyde Park Venture Partners for great insight on what VCs expect when deciding on an investment. FE International has a similar piece but is written from an acquisitions lens.
7. SEARCH: I used to brag about my Google Search skills to help me solve problems, and anecdotally I have been feeling like my Google Search skills have been letting me down in recent years, and I've even had discussions with people around if it's Google, or I'm losing my one and only superpower. So, of course, it gave me tremendous relief to read this article last week - which validated that it's not me! Well, actually, it's not really Google either. It's the web that's gone to shit, and a lot of it has become "too inauthentic to trust."
8. COMPENSATION: The team at Carta has an excellent report on the State of Startup Compensation as of the end of the first half of 2022. They look into questions such as what makes up for the largest share of compensation spend, what roles get paid the most, and are startups still hiring remote workers (yes, remote hires now represent 62% of all new contracts).
10. CASE STUDY: Zendesk - I don't use them, but I know plenty of people that do; not surprising given that they are now at ~$16B in ARR! They have 140 $1m+ ACV - up 65% - wow - absolute whales of customers. While Zendesk still services thousands of SMBs, those customers (< $1,000 ACV) are less than 1% of total revenues (thanks a lot to those Whale Customers we can all dream of).
POD OF THE WEEK: From McKinsey - Forward Thinking on tech and the unpredictability of prediction with Benedict Evans.
1. SaaS METRIC OF THE WEEK: LVR (Lead Velocity Rate): LVR is the lead growth rate of qualified leads per month. This metric clearly explains a business's future revenue and growth. (see #2 below for why this is important in 2021). Setting a goal to increase LVR by 25%, for example, will enable you to equally increase the revenue generated for your business.
2. 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 validate learnings, make mistakes and deliver impactful results. Hubspot cover this concept in detail and outlines how DoorDash hardcore-leveraged this methodology to increase revenues from $885m to $2.89 billion in a YEAR!
3. JTBD: Jobs to be Done is one of my favourite frameworks - it's a way to make the process of innovation accessible and tangible in very pragmatic ways. Take a deeper read here on a lightweight JTBD framework - broken down with real-world business examples - or skip straight to the templates.
4. AHA: Not talking about the Band. Take a look at this great read on product design centred on discovery - what the author references as "Aha moments" - through a customer journey from first encounters to deep adoption that focuses on long-term retention. Go-Practice has a great complimentary article on how to design for Aha (with examples).
5. SALES: Brex (a financial services startup targeting Startups) tried to expand their services into SMB as part of their growth strategy a couple of years back, and, quite infamously, they ditched that segment last month because selling to startups is not the same as selling to SMBs.
6. 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, and at the end of the trial, they can either buy or downgrade to a fully free tier - this article also explains how Airtable do 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.
7. METAVERSE: According to this study from the Analysis Group, the metaverse could add $3 trillion to the global economy within a decade in a movement similar to the Smartphone wave of 15 years ago, and according to this McKinsey report, total investments into the metaverse surpassed $120B in the first half of this year, which is more than double the previous year ($57B). Bonus content of a beneficial Metaverse market Map from CB Insights.
8. GROWTH: Anna Khan rightly pointed out in this article that since Q1 '22, there has been lots of advice but not a lot of tactics. So here we go: The new 'Market of '22' expectations on good growth remain high, but with the new funding environment, growth at any cost is no longer rewarded. Operators are expected to find the balance between growth and efficiency. So it's time to brush up on Burn Multiple and Sales Efficiency metrics; there is more on that next week, but check this article to see what quadrants you may fall into.
9. VALUATIONS: VC firms value startups at 30% less than they did before 2022 as investors drive harder deal terms. Jamin Ball backs up this data, noting that public SaaS valuations, specifically EV/NTM revenue multiples are down about 50% from their peaks.
10. CASE STUDY: Continuing on the Plaid case study and Plaid vs Strip drama mentioned in the newsletter a couple of weeks back - this week is about Stripe and specifically from what Sam Gerstenzang learnt while he was there leading the 75-person payment UI group.
POD OF THE WEEK: See the video version of #8 above from SaaStr Europa '22 (and Point Nine Capital)