Top 10 in Tech A WEEKLY NEWSLETTER

Top 10 in Tech - What to know for the week ending August 27, 2021

8/27/2021

SaaS METRIC OF THE WEEK: THE ROSE METRIC: People are the most important (and expensive) metric for any company, especially SaaS (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 something called the ROSE Metric, which is a return per Employee. This metric highlights the tradeoffs between headcount, recurring revenue, and the EBITDA growth of a SaaS company.
CLOUD 100: Cloud computing powers pretty much every industry now so Bessemer Ventures/Forbes created a “Cloud 100” list a few years back, which is an annual ranking of the world’s top private cloud companies. This is the sixth year of this list and the number 1 atop of the list for 2021: Stripe (again! but now worth $95 billion). They were temporarily off the #1 spot last year due to Snowflake - which didn't last long as they IPO'd at the same time. Combined, the top 10 companies in this list are worth a staggering $190 billion and about 25% of the Cloud 100 top private SaaS companies are growing at 100% YoY or more at $100m ARR.
MARKETING: From Kyle Tibbitts - Marketing lessons learned over more than a decade growing startups. It all starts with the Product - 'Great marketing emanates from a great product.'
CONTENT STRATEGY: Hey - now is a great time to get writing everybody (I need to drink my own cool-aid here, so this is a bit of self-service) - CopyBlogger gives some tips on how to create content that resonates. Great complimentary user story for this on how Leadfeeder used Content marketing to increase their monthly signups.
PITCH DECKS: Why recreate the pitch-wheel? Alexander Jarvis has compiled a monster collection (139!) of funded pitch decks here (including the neo-classics: AirBnB, LinkedIn, Intercom, Transferwise, Canva, and Sendgrid).
DESIGNOPS: Another one for your Tech Dictionary: Listen up! Design isn't a thing, it's a process - the principles of which can be used and adopted across all lines of business (which is why design thinking is a very popular thing). Take a read here to get a much better rundown of what I'm trying to say. And then how to use design thinking (and OPs) in product teams to build better products and experiences.
ONBOARDING: Doing this well is key to increasing value, lowering churn, and creating advocates - so here is how some of the best do it: Leveraging email ZenDesk document their comms flow, and ChartMogul have a guide to their non-email version too. From HeavyBit here is a 4 phase plan and this article covers 5 Tips to Speed up Sales Onboarding without Sacrificing Quality.
CHURN: In our current tech and economic climate, crisis-driven product churn combined with saturation of choice are legitimate growth pressures, especially as many businesses are continuing with a more austere strategy facing uncertain economic recovery indicators. As I’ve mentioned quite often in the past acquiring new customers is much more expensive than retaining an existing one. Creating a culture of customer retention is one of the best things to do. This article discusses ways to make that happen.
DOCUMENTATION: A couple of weeks back I complained that building a comprehensive and useful customer Knowledge Base platform is difficult. But here is something to really consider (it's certainly a helpful article for my mindset) - there are probably stakeholders/purchases 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.
CASE STUDY: You ever heard of Avalara? I certainly had not until I read this article and as of Q1 '21 (as they are already publicly traded) they were generating $600m in ARR!!! All via selling directly to SME's and growing 38% year-over-year. Jason Lemkin has 5 interesting learning from their Q1 report.

POD OF THE WEEK: It's CloudTV week! Expanding off of #2 above is the full playlist of the video version of the Cloud 100 2021. Reese Witherspoon even shows up (as the founder of HelloSunshine)

Top 10 in Tech - What to know for the week ending August 20, 2021

8/20/2021

SaaS METRIC OF THE WEEK: RULE OF 40: What is the 40% rule for SaaS companies? This video explains more but basically, when a VC-backed SaaS business (of over about $2m in ARR) adds profit + growth rate, the total should be equal to 40% or more. This helps calculate the cadence of a business: The faster they grow, the less profitable they need to be. Rule-of-40 stocks have outperformed the broader indices and IT benchmarks over the last 15 years.
GROWTH: Five ways to build a $100M business - just follow this simple video, or read this article, find your target market animal spirit, and you are good to go. This is a fantastic way to think about customers, segments, pricing, and cohorts.
STRATEGY: As an expansion on above, because there are many different ways to build a SaaS business, it depends on the “animals spirit" of the target market as to which strategy is best.
MARKETING: There is a multitude of marketing strategies organizations can deploy that are relevant for their line of business and target audiences from pay-per-click to content marketing. Bloom list the differences between the three main categories. Cutting to the chase though, creating a solid marketing strategy is no walk in the park, so take a look here on how to create a solid one in 7 steps. (BTW - benchmarking budget - Marketing teams spend 5-10% of a companies ARR).
TEST TEST TEST: Evaluating the functionality of a software application at every stage is critical to shipping something awesome. Take a good read of this PDF guide (along with real-life examples) and then bookmark this Google Site page for a comprehensive list of the Stages of Test Development. That's list is kind of old school though - so take a read and sprinkle some of this more modern (ie Agile) take on testing. into your QA world.
CUSTOMER SUCCESS MODELS: Just like customers, not all CSM’s are built the same either. And it depends, based on stage and strategy, as to how your CSM teams will evolve…...but they will. Gainsight proposes 5 basic kinds of CSM, along with a corollary org chart. But keep in mind IRL they all will be different hues. SaaSx has this model. Which one best resonates with you?
DEVELOPERS: The results from the Stackoverflow 2021 Developer Survey are out and the report is full of insightful nuggets: Developers primarily learn online (60% of respondents learned how to code via online resources), AWS is the most widely used cloud platform but GCP and Azure made some gains, devs are still mostly men, and this year React.js surpassed jQuery as the most commonly used framework.
TIKTOK: Significant news in the social media circles and perhaps the end of an era: TikTok surpassed Facebook as the world's most downloaded app. And here is a fact that blew my little mind: Users spent 2.8 billion hours on the app, which equates to nearly 320,000 years last year.
STARTUP SALARY: How much should you pay yourself as a founder after raising some capital? There are lots of good answers and also lots of different situations. A good rule of thumb according to Nathan Latka is if you’re a two-co-founder business and just hit $1m in ARR, you should each be making about $100k per year and increase to $150k at $2m in ARR.
CASE STUDY: Excuse me while I clutch my pearls but this is a story about <gasp> a pivot from being a Product Led business to an Enterprise Sales based organization - but it's a well-documented story and a really important change in narrative focus from ‘Sell & Forget' to ‘Sell & Nurture'.

POD OF THE WEEK: Expanding on last week's popular post on Moats I'm delivering the Podcast version of Jason Lemkin's article on Top 10 Moats in SaaS.

Top 10 in Tech - What to know for the week ending August 13, 2021

8/13/2021

SaaS METRIC OF THE WEEK: PQL: Product Lead Growth is a relatively new SaaS strategy and there are all kinds of metrics that tie into this new category - Product Qualified Leads (PQL) being the lead indicator that the PLG stray a company is investing in is legit.
OUTBOUND SALES: Forget about Netflix, do you want to binge some Outbound Sales TV???? Yeah, that's the spirit!! The team at predictable revenue has been running over 50 outbound sales experiments using good ol’ scientific methods to find out what works best (and what doesn’t.). Watch the whole series on YouTube!
RECRUITMENT: It's always been a challenge but anecdotally, oh my word! Finding good people is so very, very, hard right now. Take a good read (and an even better bookmark) of this page from Heavybit - which is a comprehensive process and guide to developing a successful (and founder-led) recruitment strategy for those of us at the early stages.
ESOP: Employee Share Option Plans are a wonderful idea to incentivize and retain great staff. Not yet figured out your employee stock ownership plan? Check this cheat sheet or here’s a video version if you prefer to watch it. Obviously working out the dilution factor of an ESOP is an important metric to know - so check this page for more on that and finally here is a 9-part video post of the most common questions about startup options.
WRITING: Being able to write well is a skill that needs to sit with founders. So here is 3 step guide - Step 1. How to position your startup and achieve your unique value prop; Step 2. how to write well and one more version for good measure; and Step 3 top tips for telling stories.
KNOWLEDGE BASE: This is very relevant to my pain right now. Building a comprehensive and useful customer Knowledge Base platform is difficult. Keep in mind that 67% of customers prefer self-service (if executed well) and almost 90% of customers now expect a company’s website to include a self-service application.
SECURITY: The ever-increasing adoption of cloud-based software exacerbated by Covid also creates more exposure and risk to bad actors looking to exploit vulnerabilities. Tech companies should be continually concerned about the security of the software being built. OWASP can help you out here - it’s a foundation working to improve the security of software and maintains a Top 10 list of the most critical security risks to web applications. All of this makes Due Diligence for both raising capital and Enterprise based sales a lot trickier to navigate (there is a growing need for chief compliance officers for example). Take a review on what investors are looking for in a team's response to security and also how to pass that awkward, sales-friction-inducing, Enterprise Security Audits/Reviews….and finally how to get started as a startup.
SPEND: How much money do SaaS companies spend on everything? Well, check the first chart on SaaS company spend - remarkably to no one bootstrapped companies are being outspent by venture-backed companies - but the average is 80% of ARR to 115% ARR!! (operating at a loss to support growth - because growth is a Moat). Keep scrolling through - way more goodies in there (such as spending by ARR levels).
MOATS: Moats are one of the best ways to provide a competitive advantage for your business and moats come in all kinds of different flavors (such as speed, Brand, or growth). But here is a great one that conceptually covers b2b and b2c: Emotion. When it comes to B2B this post lists some popular and effective ways companies create moats for their products and Jason Lemkin is way better at this than me and lists 10 of them in this article - so what floats your Moat?
CASE STUDY: Netflix as I mentioned in the past they have (amazingly to me) de-prioritized uptime in favor of speed and also become their own CDN as part of their speedy-experience prioritization. Their recent deceleration in subscribers has created a bit of negative press but they are still over 200 million paid subscribers - here is how they got there.

POD OF THE WEEK: Nothing but rapid-fire VC jibber jabber this week from the team at the All In Podcast (Chamath Palihapitiya, Jason Calacanis, David Sacks, and David Friedberg) - discussing (among other things) their own funds, the rise of venture studios, deep tech challenges risk, Theranos (and fraud), etc, etc, etc.

Top 10 in Tech - What to know for the week ending August 6, 2021

8/6/2021

SaaS METRIC OF THE WEEK: EARLY STAGE BENCHMARKS - Metrics are only good if you know what to benchmark yourself against and Chartio has a list of 20 benchmarks for Growing Startups all handily broken down by department (such as Sales, Marketing, Product, Revenue) to make sure that the business is ready for scale
EXPANSION: This is a bit of a deep dive and check/bookmark here for benchmarks. Expansion revenue costs pennies on the dollar vs net new customer acquisition costs and also demonstrates that a business can deliver increasing value to customers (and monetize that value!). On average 37% of new ARR bookings are attributable to cross-sell/up-sell activities and improving retention or monetization can impact growth 2-4x more effectively than improvements in acquisition. (see slides 41-46 for the real nuggets). Tips on how to optimize this via renewal are available here. But I enjoyed reading this working example of what that means to a companies growth and revenues from a product perspective from the company Buffer.
GROWTH MARKETING: Want some solid pro-tips on growth marketing ideas that just plain work? Here are a bunch collated from Intercom - a lot is centered around being user-focused and if you don’t like that one, try this: Notion’s marketing secrets for those of us with small teams.
DO IT!: It's easy to get caught up in the debates, details, and troubles that work or projects throw our way. As a leader, keeping the beat and progressing the business forward during this time takes some help. So read this from Henry Ward from Carta on how to create a continued Bias for Action.
CUSTOMER SUCCESS: (Positive) Customer relationships are at the core of every SaaS and subscription company. Negative experiences lead to churn that has a direct impact on the bottom line (duh!). Getting started isn’t as obvious as that last sentence though - check this Profitwell article on how to get started with a solid customer success strategy.
ONBOARDING: Onboarding success is often de-prioritized with scrappy fast-growing business but giving customers all the tools they need to succeed with your product is the best way to ensure that they stick around. Profitwell reviews the importance of good SaaS onboarding and discusses steps to create an awesome program. Userpilot also has a great tactical complimentary post here on the best customer onboarding software options for SaaS companies.
MARKET SIZING: The dreaded slide on everyone's pitch deck. What's the size of the market. TL;DR if the market is not huge, same with your startup. Understanding the nuances of TAM, TOM and SOM is a great way to get started understanding market sizes as it applies to your business and the business problem your startup solves.
EMAIL: DEEP DIVE. When it comes to outbound marketing, email works best. Yes, organic search is consistently the biggest source of traffic (Driving up to 68% of all traffic). Email accounts for less than 5% of traffic, on average, but has an incredibly high ROI, upwards of 3,800%!!! Digital Olympus has a great guide on effective email outreach (HINT: This takes time and effort!), Andrea Bosoni gives an IRL story about how he worked hard to improve email open rates and Gong provides a bunch (43 to be exact) highly effective Call-To-Action templates you can use in email campaigns.
METAVERSE: This is not a reference to DC Comics - Add this one to your tech dictionaries. Facebook (or more accurately, Mark Zuckerberg) wants to reinvent Facebook Inc (Facebook, Insta, WhatsApp, et al) as a ‘metaverse company’. Here’s what that means - TL;DR: It's straight out of Ready Player One, spanning the physical and virtual worlds to represent a fully-fledged interoperable economy.
CASE STUDY: Spotify and its Squads. A few years ago a really inspiring and memorable video circulated (you know in one of those cutesy handwritten animation styles) describing the Agile Squads that Spotify employs in its, apparently cooler than cool, Utopian Developer department. Well, guess what, sorry to burst your Spotify bubble, but they abandoned it. (How Agile of them)…. In this post mortem assessment, the biggest key failure was such a SaaS-based one: It was solving the wrong problem.

POD OF THE WEEK: “Jobs to be done” isn’t a phrase, it’s a methodology for getting stuff done - listen more on the concept here.

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Top 10 in Tech - What to know for the week ending August 27, 2021

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