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TOP 10 IN TECH
​a weekly tech newsletter

Curated SaaS and tech insight from around the web repackaged for people to put to good use

Top 10 in Tech - What to know for Week ending September 25, 2020

9/24/2020

 

David Skok is a legend in the SaaS world and I have written about his work a little in the past, as well as convincing him to speak at an event - gifting South African born Skok with an All Blacks rugby top was an outstanding idea. 

The annual KBCM Technology Group SasS report which Skok is an endorsement partner for 2020 is now out and is a special COVID Edition. I’m dedicating this weeks newsletter to 10 top nuggets from this report as it’s the industry go-to benchmarking report. The full report can be downloaded as a nice PDF here (It’s also the ten year anniversary of the survey). There are way more nuggets in here than the ones below. So be sure to take a deeper read.
  1. GROWTH 1: Ouch! There is still growth, but the top line growth projections for 2020 have been pretty-much cut in half. 39% growth was expected as of January, by the end of June it was reduced to 20% (2019 was 36%).
  2. GROWTH 2: These two charts may show a better visual of what the above means. 2019 was a typical year in growth for SaaS and 2020 looked the same (at least in January) until COVID forced a massive change in 2020 revenue forecasts (green is more, red is less) with the end of June re-forecasts.
  3. GROWTH 3: If you don’t know by now, Silicon Valley has a bit of an obsession with SaaS growth. The 40% rule (nice little video explainer for ya) is an examples of that. TL;DW when a VC backed SaaS businesses adds profit + growth rate, the total should be equal to 40% or ideally more. This helps calculate the cadence of a business: The faster they grow, the less profitable they need to be. Here is Skok’s 40% rule chart of the companies surveyed. It’s a high bar with just a couple of dozen of the 200 respondents hitting or surpassing that line. 
  4. CHURN: Anecdotally in 2020 I have churned or reduced plans both professionally and personally with quite a few SaaS products in my desire for more work-life austerity. So how does my sentiment resonate across larger industry trends of churn? Covid Churn is definitely a thing and the report recognizes a YoY trend of a dollar churn increase from 12.5% in 2019 to 13.9% in 2020, 20% of which was attributed to Covid.
  5. CAC: Also increased across the board for 2020 (covering new, up-sell/cross-sell and blended CAC). Every dollar of new revenue in 2020 costs $1.60 (compared to $1.35 in 2019). Up-sell and cross-sell still remains the CAC bargain, but it’s still up YoY, with each dollar of new revenue costing $0.69 in 2020 (it was $0.61 in 2019). Big impacts to sales efficiency.
  6. CAC PAYBACK: Increasing CAC also stretches out the 2020 customer CAC payback period, from 1.9 years average in 2019 (which is a crazy big number IMO) to an even larger 2.4 years in 2020 for new customers. This means it will take a 2020 SaaS company 2.4 years to reach cash profitability per customer - that is an expansive trough! Up-sell and cross-sell remains much closer but still significantly up - 8 months in 2019 to 1 year in 2020. This really highlights what will be a deepening dependency on Capital to fuel SaaS companies growth.
  7. FUNDING: Adding on to my last sentence above, only 14% of companies surveyed were Bootstrapped or Independent.  A cool slide this year is breaking down performance based on funding type. VC-backed business demonstrate better growth, but at the total expense of margin, which is very much negative in comparison to their bootstrapped peers which YoY remained profitable (but with a significantly smaller average deal size). Correlating these deal size categories to forecast growth highlights that the low end of town retained the best re-forecast for 2020 (25% growth)
  8. SALES: The primary mode of Sales and Marketing efforts remains Field Sales based in 2020, but has shrunk from 54% last year, with Inside Sales taking a growing chunk of the remainder. (28% last year to 33% this year). Sales forecasting took a big hit too with over half (52%) of companies forecasting a reduction in revenue forecasts for the remainder of the year.
  9. DEAL SIZE: For the most part this is pretty evenly split between 3 categories: Sub $15k (32%), $15-$50k (30%) and $50k-$250k (29%). Over $250k deal size remains the exclusive group with just 9% of surveyed respondents. 
  10. DELIVERY: This is a great trend but lifted taken from the 2019 report (as it wasn’t reported this year), it's one of my favorite slides. How is a SaaS product shipped? 88% today use third-party cloud (up from just over 60% 4 years ago). AWS remains solidly dominant at 60%  but with drop from last year as Azure and GCP have seen gains and Hybrid-Multi-Cloud will be an emerging option as competitive pressures mount. AWS also dominates across companies of every scale but self managed infrastructure is more common at the high end of town.

POD OF THE WEEK: Of course it’s from our good buddy David Skok, choosing the right metrics for the right growth stage. 

Top 10 in Tech - What to know for Week ending September 18, 2020

9/18/2020

 
  1. SaaS METRIC OF THE WEEK: Customer success has many metrics to track (in 2020) - here is a comprehensive list of the top 15. NPS making the top of the list.  From Asknicely, This White Paper reviews NPS and some other common user experience metrics.
  2. SHAPE UP: A refresher for your tech dictionaries. Software product development requires innovative strategies based on today's cadence expectations of continuous integration, micro-services, feature delivery, and scale. The team at Basecamp (I’m an old school fan) have developed ShapeUp, their publications and toolbox of techniques designed to eliminate chaos when it comes to designing, prioritizing and shipping product/features.
  3. DIFFERENTIATION: Standing out in a saturated sea of SaaS is a tricky problem to solve - pro-tip - never do it on price alone. So ask yourself - why should someone buy from you? It requires balancing familiarity and differentiation - read this article to get you thinking on the topic more.
  4. CUSTOMER PROFILE:  Here is a great tool for anyone. Sales can be a real uphill battle when sales teams don't truly understand their ideal customer, building out customer profiles is an incredibly useful way to identify your best customers. So download this Profiler kit pdf and use these questions and survey generator to quickly generate the ideal questions and template for your customer profiles. The rest is all on you.
  5. DEADLINES: Author Douglas Adams once wrote “I love deadlines. I love the whooshing noise they make as they go by.”. It’s funny because it's true. So when it comes to software development, how do you make peace with that whoosh? Check this article from Free Code Camp that discusses the art of managing the deadline - part of it is complimentary to a reference to the sub-art of saying NO from a couple of weeks back.
  6. OUTREACH: Things like “Let's catch up for Coffee” is sooooo 2019. Given our less-social lives that are mainly digital, check these fantastic tips and tricks for creating outreach that matters. We can all do better.
  7. COOKIES: (not the chocolate chip kind). Love them or hate them, the reality is that browser cookies are headed the way of the Dodo, which creates a new attribution problem to solve. Conversion modeling is a way forward, so if attribution is a necessary part of your business or your channel/partners Business, take a read of this article from Google on why conversion modeling will be crucial in a world without cookies.
  8. EMAIL: A few weeks back I referenced a power point deck from Predictable Revenue on the four pillars they think constitutes a quality sales based email campaign. Quality resource for anyone with email marketing as part of their businesses. From Better Marketing this week is a complimentary deep dive into a single cold email and why the author actually opened it (TL;DR - yes it’s all about everything in the emails design, but more  about how targeted the message is).
  9. NOTE TAKING APPS: Yup - this is a random headline. But with all things 2020, this sector is pretty hot right now. Roam is a new competitor that has achieved a whopping $200 million valuation at SEED STAGE thanks to the shift to remote work (and some interesting pricing models). The other new competitor, Notion, is valued even higher - currently about $2 Billion. How???? Well, I got you covered with that question. Check this incredible deep dive from Foundation on how Notion used community and templates to scale.
  10. VIDEO: Nailing introductory and Demo videos is a bit of an art form. Don’t know 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)


POD OF THE WEEK: Trade shows/travel are so not 2020. So listen to predictable revenue talk about how to build a content strategy to replace trade shows and travel. 

Top 10 in Tech - What to know for Week ending September 11, 2020

9/11/2020

 
  1. SaaS METRIC OF THE WEEK - CHURN: Profitwell has the motherlode - a complete guide to understanding, calculating, and reducing churn, which they call "the silent killer of subscription businesses”. This is more than a download, it’s pretty much an eBook (and a downloadable PDF).
  2. CONTINUOUS INTEGRATION: CI is a process that dev teams use to iterate and ship software quickly, it can easily be confused with Continuous Deployment and Continuous Delivery - but they are not the same. This article from Angel.co helps clarify the differences and makes the case why CI is the optimal dev strategy for delivering great customer experiences.
  3. ADOPTION: A couple of weeks back I mentioned a comprehensive guide to measuring ways in which new users turn into paying customers (and which users are going to drift away). Now that you know how to measure it, check this great article from UserPilot discussing ways to increase product adoption, complete with real-life examples.
  4. CYBER-SECURITY: Threats are on the rise, as is the adoption rates of apps and products within large organizations. It’s a perfect storm of real risk that needs solid, strategic approaches to management. This article from McKinsey offers a risk-based approach to managing overall modern-day cyber-risk exposure. Great article from Mckinsey (downloadable PDF!) on how SaaS providers can meet the security needs of their enterprise customers. But as mentioned last week regardless of the size of your SaaS business, security should be part of your dev cycle. Not to freak all you CEO’s/founders out - but Gartner are also expecting more CEO/founders to be personally liable for cyber-physical security incidents in the future.
  5. PRICING: Product pricing is super hard. Here are top lessons learned from 25 SaaS companies, as well as what the impact pricing changes can have on your business and how to test it. Chargify has a list of 5 pricing scenarios to test as a SaaS company, with real examples to compare and Point Nine Capital has 9 awesome pricing strategy experiments.
  6. UN-SCALE: Sometimes, while building a repeatable scaleable business model, there a things that have to be done that are unsaleable.  This article highlights three specific non-scalable things sales teams should be doing right now.
  7. MVP CANVAS: OK - this is interesting (because visual frameworks are my jam). Y’all have heard of the Lean Canvas and the Business Model Canvas? Well check out this spin on applying the framework focused on designing and launching MVP’s (just don’t burn the Pizza).
  8. MOATS: Moats are one of the best ways to provide a competitive advantage for your business and can moats come in all kinds of different flavors (such as speed, Brand, or growth). This post lists some other popular and effective ways for B2B SaaS companies to create such moats for their products.
  9. BURNOUT: Anecdotally I feel like I have had more conversations about burnout in the past few months than ever. I’m glad people are talking about it, but it’s also very much a sign of the times. Check this very personal article from the CEO of Subbly on how he he recognized and managed his own burnout. Great lessons in here for everyone.
  10. AI and QUANTUM: Here is some great news - last month the White House announced a $1 billion investment into two of tech’s most promising frontiers, AI and quantum computing and announced the creation of the AI and quantum research institutes. (This is all likely in response to data on China’s spend on AI - $70b this year).

POD OF THE WEEK: From Invest Like The Best this week is an interview with Michael Seibel - the CEO of Y-Combinator's startup accelerator - he has reviewed literally thousands of applications to YC, so has a lot of experiential insight. 

Top 10 in Tech - What to know for Week ending September 4, 2020

9/4/2020

 
  1. SaaS METRIC OF THE WEEK: RETENTION is key to growth and profitability and businesses that truly want to put their customers at the centre of their business are the ones most likely to succeed. Check UserPilots article on how to build a marketing-based retention strategy that works and  how to measure it.
  2. SALES: It’s all about the journey! Take a good read of this “ultimate" sales pipeline guide from Close.com, covering stages, key metrics and templates (whaaaat! Oh yeah) - this guide is a keeper.
  3. CONTENT: Its a must have for a modern SaaS business, but good content (and not all that super fluffy stuff) is super critical not just for this newsletter (ahem) but is a must-have for a SaaS Sales Team - this article gives 3 solid reasons why you should double down on it.
  4. CYBER: With all kinds of cyber attacks happening lately (The FBI has see a 400% increase in reports of Cyberattacks since the Strat of Covid), it’s time to hammer this home: Regardless of the size of your SaaS business, security should be part of your dev cycle but also know your weak spots. Founder Institute discusses 6 points of vulnerability in a tech stack that may be a bit leaky. Security needs to be rolled up into the process - DevSecOps being the new port-portmanteau or is that SecDevOps? - anywhoooo……beyond the DevSecOps article, Heavybit also have a great article discussing cloud security challenges (as apparently, if we extrapolate this out, 88% of SaaS is now sitting on public cloud).
  5. MLP: Thats the adorable acronym -  Minimum Lovable Product. MVP (Minimum Viable Product) is OK but what if no-one likes it? FirstRound capital use 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. No-one likes burnt pizza!
  6. NO: Two sides of the no-coin here….a bit of a NO deep dive. This first one was shared by my one of my team this week and thought it was 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 code base small and solving the right problems! When it comes to selling No is almost a curse-word. So this article goes into depth of ways to be Yes, rather than have to say no - it’s a great way to think about how to say yes through product.
  7. COVID-CONSUMERS: Has there ever been a more dramatic and acute impact to global economies, peoples health, and consumer behavior than this pandemic? Not that I can think of. It’s been devastating. McKinsey have taken a deep dive exploring the pandemics impact on consumers’ lives and have some thoughts on what changes may be sticky/permanent. If your business engages with consumers (or even just a human) use this as a striating point to rethink how, what, and where people will gather information, procure, and experience purchases.
  8. PROCRASTINATION: I left this one for last. Warning! Adult content ahead. Cover your eyes for this next sentence if you don’t want to see. A wise, but juvenile friend once said this to me many moons ago: “procrastination is like masturbation, you just end up &^)$ing yourself”. It was funny at the time, but that statement has stuck with me through thick and thin in my adult life…. To be more like Nike and just do it. Chronic procrastination is real and, to be honest, something I struggle with at times especially given the current demand for my attention from a variety of sources - it’s the enemy of cranking out a weekly newsletter while trying to enjoy a morning cup of coffee for example. So don’t wait! Take a read of this two part guide to stopping procrastination using the Fogg behavior model: Part 1 and Part 2. (TL;DR: Behavior = motivation + ability + trigger)
  9. BURN RATE: Zoom is an astonishing success story in the SaaS world. Even this week, their earnings call caused over a 40% bump in their stock price in A SINGLE DAY (that delta is a sweet $5B to the CEO if anyone is interested). There are some great insights to the Zoom story and earlier tshie month, Jason Lemkin of SaaStr uncovered a fascinating one - Zoom had a burn rate budget. What the heck is that? Don’t worry, I had the same question. Zoom’s OpEx was the same as gross revenue - the CEO had told the team exactly how much they could spend — as an entire team. Jason sees this as nothing but upside: It will reduce your stress. Increase efficiency. Enhance focus. Not decrease productivity.
  10. MISTAKES: A somewhat morbid post-mortem article from Failory who analyzed over 80 startups who have failed and identified some of their common mistakes (some fatal). Marketing problems seem the most abundant (and deadly) - but product-market-fit, market size, and value add are all creeping around too.


POD OF THE WEEK: Learn Fast over Fail fast - this is a great podcast covering the Myths about Failure from Greylock Partners (and Reid Hoffman) 

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