I just spent the last two weeks binge-watching and listening to SaaStr 2022 sessions - so here are some of the binge highlights:
POD OF THE WEEK: Bessemer again - State of the Cloud 2022: The Centaur Report With Bessemer Venture Partners (Pod 593 + Video).
1. 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 ~ $2m 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.
2. ROAS vs. ROI: Which Metric Should You Use? First, let's define the differences; Return on ad spend (ROAS) is a metric used to measure the total revenue generated per advertising dollar spent. Return on investment (ROI), as applied to advertising, is the profit generated by the ads relative to the costs of the ads. Read more here on how to use each of the metrics effectively.
3. RENEWALS: Existing customers are the lifeblood of growth in a SaaS business, so making sure they renew is an exercise in revenue efficiency. New customer acquisition costs average about $1.10+ per $1 of ARR. Compare that to the cost of retaining or up-selling existing customers (about 12c-15c per $1ARR) - that's eight times cheaper. So take a peep at this article that lists 5 SaaS Renewal Best Practices and explains how best to calculate renewal rates.
4. BUYERS vs. USERS: The person writing you a check is not necessarily the same person getting value from your business. So read this insightful article from HeavyBit on differentiating messaging based on this premise and the different profiles.
5. HIRING: According to a recent Mulesoft/Salesforce report, 73% of Tech leaders said the current recruitment market is the hardest they've ever experienced for sourcing talent. Most (98%) say their organization suffers from a skills gap due to the "Great Resignation."
6. INFLUENCERS: A couple of years ago, I reported that Influencer marketing spend is projected to hit as high as $15 billion globally by 2022. Guess what? That number is now $16.4B. Why - as much as I don't like to hear this - across multiple forms of media, influencer ads spark a more significant emotional response and stick with users for longer than non-influencer ads.
7. FIGMA: In the newsletter a couple of weeks back, I discussed Figma. Adobe was probably paying attention because they acquired Figma late last week for $20 Billion. Yup, I said Billion, but that's not the most Bonkers metric because that $20 Bil is based on a 50X Multiple. Whoa! Is SaaS cool again? Welllllllll......maybe not.
8. VENTURE: In line with the Figma multiple above, Mark Suster thinks that SaaS companies should not trade at a 24x multiple as they did in November 2021. His perspective is that 10x (May 2022) seems more in line with a new long-term normal.
9. UBER: There was a big-time breach last week, and by big time, I mean all of it. From AWS to Slack and their internal systems. All apparently by an 18-year-old. I don't think we know how actually screwed they are yet.
10. CASE STUDY: Craigslist. If you haven't been on Craigslist for a while, don't worry. It still looks the same. 25+ years of the same-same. Here's why.
POD OF THE WEEK: Learn Fast, don't Fail fast - this is a great podcast covering the Myths about Failure from Greylock Partners (and Reid Hoffman)
POD OF THE WEEK: Complimenting #7 above - insight from running a Content Program (or is that Product?) as a one-person team.
POD OF THE WEEK: With Yuriy Timen, former Global Head of Marketing and Growth at Grammarly, discusses the ever-changing world of growth, emerging growth tactics, and how to find your growth engine.
1. 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.
2. PRICING SENSITIVITY: I post about pricing a lot (because a 1% increase in price can generate up to an 11% increase in your profits). So this week, let's take a more nuanced approach by looking at priced-based sensitivity - a measure of the percentage of sales you will lose or gain at any particular price point relative to another lower or higher price point. Profitwell can explain it much better - so take a read of their article about how to measure and optimize it (check the Van Westendorp's Price Sensitivity Meter")
3. UNSHIPPING: Here is another term for your Tech Dictionaries now that we have all poured one out for Internet Explorer - how can you and your team decide when to unship something? Check here - an excellent article covering this topic from Reforge with evaluation criteria and real-world examples from Slack and Mixpanel.
4. PRODUCT MANAGEMENT: Requires outstanding leadership - here is an interview with the Head of Growth at Reddit and the Head of Product at Twitter on how to create a good vision and strategy.
5. VENTURE: This week is a look at Silicon Valley Bank's biannual State of the Markets Report for H1 2022. Tech talent shortages, inflation pressures, and supply chain delays remain serious operational headwinds for startups. On the flip side, there is still an abundance of capital (about $228B in dry powder) - which could fuel growth as long as the money is affordable. SVB forecast Series A deals to break 2,000 (1,526 in 2021). This is in line with observations in the Wilsons Sonsini report discussed last week.
6. DEMO: I love a good demo (who doesn't?), and for me, Demos play a pivotal role in our sales process to demonstrate and discuss the value we can bring. 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.
7. BUDGET (PLG): Guess what everyone? It's friggin' September. a) How did that happen? b) It will be EOY before we know it, which means EOFY for many. Time to get next year's budget drafted, circulated, revised, completed, and Board approved! Don't panic. I have an article for you to read to understand better how businesses allocate their resources (based on interviews with over 600 SaaS startups).
8. AI: According to McKinsey, in their Technology Trend Outlook report, businesses spent $165B on artificial intelligence tools last year, up 150% since 2018 ($66B). But according to this Gartner report, only 54% of AI projects make it from pilot to production.
9. DIGITAL EXPERIENCE: Contentsquare has released a pretty extensive Digital Experience Benchmark Report for 2022 (PDF version is here). There are massive amounts of insight here (based on 46+ billion global user sessions). Here are some highlights: Conversion rates increased by 27% YoY, 2.3% average conversion rate, 58% of all web traffic is mobile, and on average, 1 in 2 visitors are returning.
10. CASE STUDY: Everyone loves a good old Pivot story - here are 5: The Hidden Backstory of 5 Startup Pivots That Grew to $43B, including Lyft and Discord.
POD OF THE WEEK: There is always a first. And for this newsletter, it's a link to a Joe Rogan Podcast. He spent over 2 hours with Mark Zuckerberg, who used this podcast to announce the launch of Meta's new virtual reality headset at its Connect conference in October.