1. SaaS METRIC OF THE WEEK: Start with a Point Nine Capital article on everything you always wanted to know about cohort analysis (but were afraid to ask), and here is a free Cohort Analysis template from the SaaS CFO. GoPractice has a Product-focused article on forecasting key product metrics through cohort analysis, and The Startup looks at this metric from a VC Due Diligence perspective.
2. DUNNING: Bringing this actual term with a weird-ass name back to the newsletter - it's a phrase for involuntary churn (aka bad or failed payments). According to Baremetrics, on average, SaaS and subscription businesses lose around 9% of their MRR due to failed payments. Learn more about a successful dunning (and pre-dunning) process. 3. TRIALS: Are proven funnel methods for a solid go-to-market strategy. Check this article on 9 ways to optimize your SaaS trial, and then note from Tomazs Tunguz how long your customer trial period should be?: TL;DR: Longer trials do not convert customers at greater rates. Two weeks, two months, same results. 4. DEEP TECH: Commercializing scientific research can take a longer horizon than most VCs are comfortable with. Bessemer Venture report on the sector this month and introduce us all to the XB100 - a ranking of the world's top private deep technology companies across AI, Aviation, AgTech, Quantum, and Space. 5. SALES TEAMS: Take a good read of this article from David Sacks on the simple math you can use to set up a sales team. Individual plans, team plans, and expansions/renewals are all considered for a high-growth sales team structure. 6. REFERRALS: Cracking the referral loop is a dream outcome, but making this work is pretty rare. Kyle Poyar has written a guide on how to do it ( a collab with Stefan Bader from Cello, makers of referral software). 7. TRUST: For #6 above to work, people trust people over brands when it comes to trust. Chart Mogul has posted an 'Ultimate' Guide to Using Customer Testimonials to Boost Sales, noting that a generic and insincere endorsement is just as helpful as not using anything. It's also possible to take it further by leveraging those frothiest customers into a referral channel. 8. AI: I find this topic fascinating - Mark Roberge of Stage 2 Capital looks at the hype cycle about AI and asks who could win the go-to-market AI race - Startups vs. Incumbents? Adding fuel to this one with CB Insights AI 100, the 100 most promising AI startups of 2023. 9. VR: Facebook's ambitions for the Metaverse were embarrassingly out shadowed by Apple's announcement of their Vision Pro earlier this month - but my biggest question with all things VR and a big hurdle given the price tag is: Why should I care? Ben Evans explores these same sentiments in this essay, exploring what the heck it is exactly Apple is trying to build. 10. CASE STUDY: Moving upmarket into larger organizations is a standard SaaS growth strategy. Increasing ARPU (Average Revenue Per Customer) is good! But there is a lot to learn and a lot of time, knowledge, and effort required to succeed in this market segment. It's not easy, but it can be done. Here is an excellent guide from Outreach on breaking into deals over $100k ARR. POD OF THE WEEK: From Lenny's Podcast this week is Melissa Tan (Webflow, Dropbox, Canva) discussing how to build high-performing teams. 1. SaaS METRIC OF THE WEEK: Value metric. Similar to the One Metric That Matters in that a Value Metric may be unique to your business or GTM model, these metrics directly align revenue models to the customer acquisition model. There are two types of value metrics: functional and outcome-based. Learn more here.
2. PRICING: This is an ongoing experiment, and we expect it to evolve forever (FYI, we are all not charging enough). Intercom makes the case that a solid pricing strategy should help shape an entire business model, and here is an excellent article on choosing the most suitable SaaS pricing model. 3. DOCUMENTATION: A few months back, I complained that building a comprehensive and helpful customer Knowledge Base platform is complex. Here is something to consider (it's certainly a helpful article for my mindset): There are stakeholders/purchases of your product who do not respond well to traditional marketing and 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 as part of your product. 4. VENTURE: This is a great Cheat Sheet from Antler - a guide for very early-stage founders on how much they can realistically raise in their first round. Especially if nothing has yet been built. 5. SALES: Insight Partners have their latest edition of the SaaS Sales KPI Report out. A couple of trends: Growth rates overall are normalizing after the 2021 COVID-19 digital push, and it didn't matter on company size - CAC payback is at least 10.5 months across all those surveyed. 6. GROWTH: Fast follow from above covering SaaS Growth Trends in 2023 via ChartMogul. The top quartile of SaaS business (ARR of $1 to $30 million) grew 62.1% in 2022 (vs. 93.4% in 2020), and retention strategies are now viewed as growth strategies. Lots of referencing of the SaaS Benchmarks Report in this one, and this Tweet is reporting that new revenue growth is falling across most enterprise tech companies. 7. CATEGORY CREATION: We all want to be up to the left in one of those fancy-ass Gartner/Forrester Quadrant reports. So watch this presentation on category creation from Neo4 and another version from Gett. 8. TAM: A critical question at the very early stages of startup land is, "What's the market size?" The size potential of this startup is directly proportional to the size of that market. Having a clear understanding of the Total Available Market (TAM), Serviceable Obtainable Market (SOM), and Target Market (TOM) can give all the confidence in the world to answer that question. But y'all really need to get started first with this TAM Masterclass. 9. ICP: Another entry for your Tech Acronym Dictionary. An ideal customer profile (ICP) is a detailed and specific profile of your startup's ideal customer. Being clear about your ideal customer profile (ICP), as it evolves is critical, as it drives everything in the business, including marketing, product, and engineering. 10. CASE STUDY: From Netflix to more modern apps such as Midjourney (via Discord), this is an excellent blog covering how the biggest apps acquired their first 50,000 users. Bonus Fact: It appears as if Midjourney is generating about $200M Annual Revenue. POD OF THE WEEK: #6 above in Podcast format - SaaS Growth Trends in 2023 from ChartMogul with Christoph Janz (Managing Partner at Point Nine), Daria Danilina (Co-founder, Salesroom), and Peter Walker (Head of Insights at Carta). 1. SaaS METRIC OF THE WEEK: SaaS Metrics 2.0. This is a big one - we all know the core SaaS Metrics - CAC, LTV:CAC, ACV, etc., etc. But Kyle Poyar from OpenView Partners is making the case for the next era of core metrics. Product lead, expansion, and margin profiles (such as ARRR per FTE) are at the core of this new potential playbook.
2. MARKETING: Marketing is an extensive practice covering many disciplines and specialties. Which one should be the focus of a startup's first hire? 3. ONBOARDING: Doing this well is critical to increasing value, lowering churn, and creating advocates - so here is how some of the best do it: Leveraging email, this is how ZenDesk document their comms flow, and ChartMogul has 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. 4. IDEAS: Everyone has them, like all the time. So here is a framework for managing them. This one is bookmarked for me, and the template is now on my wall! The HD version of it is here. A little bonus is a compilation of mental models that entrepreneurs and investors leverage to develop new startup ideas & venture theses from the same author. 5. CONTINUOUS DESIGN: My post on DesignOps was popular last week - so here is another design-based article: Thomas Sutton is pitching a new Continuous design framework to bridge this divide between theory and practice that I like to call "Everything everywhere all at once." A bonus here is the "How do you design" document that covers more than 100 design process models. Why are these important? This article makes the case that Agile and UX are a failed marriage. 6. FAILURES: According to data from this morbid Crunchbase page, at least 72 startups have shut their doors in 2023. This doesn't quite indicate the trend in terms of YoY spreads - but the fact they have built a page can not be because of positive trends. The hypothesis is that a disproportional amount of failures are now occurring due to the VC Boom that ended in 2021 and the hard-core tightening of VC Wallets that happened almost immediately after. 7. ESOP: Employee Share Option Plans are a fantastic idea to incentivize and retain great staff, but under the hood, ESOPs are complex, especially with changing valuations, both positive and negative, in today's market. Check out Airtree Venture's best practices for communicating the value of ESOP to teams. This article also has a bonus financial model template (value calculator, salary package calculator, and vesting schedule). Check this cheat sheet for standard ESOP terms. 8. ESOP BENCHMARKS: A fast follow from #7 above is this wonderful site that has compiled Option benchmark data comprising over 20,000 option grants from more than 1,650 startups across the US and Europe sorted by Seed or Venture stage. 9. BOOTSTRAP: This is a fun series just started from Inc mag (and currently at 2 parts) - part 1 here and part 2 here - covering How to start and grow a Tech company with less than $100 - it's all GTM, so make sure you have that whole product thing figured out first. 10. CASE STUDY: Spotify and its Squads. A few years back, a really inspiring and memorable video circulated (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 most significant fundamental failure was such a SaaS-based one: It was solving the wrong problem. POD OF THE WEEK: From the Invest Like the Best team - a recent interview with Bessemer Venture Partners (one of my favorites). It's actually a VC firm that is over 100 years old and has a unique operating model and plans for building a VC Firm that last centuries. 1. SaaS METRIC OF THE WEEK: Renewal rate: You have to scroll down to the bottom of this article before you get to the informative bit on measuring this metric, but don't! (I could link you to this one). Please read the first part, too - it's great. TL;DR: Don't be a jerk when it comes to renewals. If you have to be, maybe it's you, not your customers (and then keep scrolling again to see the 5 main reasons why people unsubscribe). This additional article from Profitwell on Renewal Rates also describes the differences between retention and renewals.
2. PRICING: Openview has surveyed well over 1,000 SaaS companies about pricing. Check out the pricing evolution as companies mature (TL;DR ACV increases by about 60% from seed to expansion). 3. DESIGNOPS: Here is 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 trendy). Please read here to get a better rundown of what I'm trying to say. Then, how to use design thinking (and OPs) in product teams to build better products and experiences. 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. M&A: According to this report from Kroll, M&A Deal value is down 52% in Q1 2023 (compared to Q1' 22), but deal volume is up 23% (compared to Q4' 22)? M&A may be something you are evaluating in the near future, so here is a guide to running an M&A process as a founder from First Round Capital. 6. COMPENSATION: This is a great dive into dilution from a CEO's lens- asking what CEO equity looks like by Fundraising Round or at time of IPO? 7. CASH: Here is an interesting analysis. According to Carta research, early-stage startups have to reduce spend (Series B and prior) and that that, which correlates to a decrease in the median daily cash spending ability for seed, Series A, and Series B startups by 25%, 57%, and 65% year-on-year, respectively. 8. AI-1: Uhoh. According to the May 2023 Challenger Report, AI has already begun replacing us humans in jobs. With nearly 4,000 positions lost last month due (including at IBM). Gizmodo has more details. 9. AI-2: I am (and I encourage my team to be) an avid user of AI tools to help complement productivity, learning, and administration. Happily, the HI (Human Intelligence) that is Tomasz Tunguz, did some analysis work for us all this week by asking the question we all need to be answered: "How much more efficient should a SaaS startup be when using AI?" TL;DR - about 13% overall - but Engineers should be smashing it. 10. CASE STUDY: Overhauling pricing is scary, but the payoff can be great for your balance sheet. Here's how Disco increased pricing by 5–10x!.......and more than doubled growth year over year. POD OF THE WEEK: Adding onto #10 above - How Spotify moved away from Squads and many other things in this 1:30 podcast from Lennys Newsletter with Gustav Söderström (Co-President, CPO, and CTO at Spotify). 1. SaaS METRIC OF THE WEEK: One I discussed in detail at a session last week: People are the most important (and expensive) metric for any company, especially SaaS (yes, more important than the actual product). Revenue per FTE is one metric to measure regarding company efficiency via 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. BENCHMARKS: ChartMogul launched their 2nd edition of the SaaS Benchmarks Report last week with data from over 2,100 SaaS businesses covering growth patterns and retention, churn, and growth rate benchmarks - LOTS to digest! 3. GROWTH: According to the report above and the SaaS growth in 2022 was the slowest it has been in years, and retention was a key driver of growth, and it caught the attention of Jason Lemkin, who has more to say. Today, top quartile SaaS companies are still growing 65% (and seem to be rebounding) - but in Q1 2021, it was 97%. 4. GROWTH 2: Testing new tactics for marketing growth takes a lot of resources, and most of us often need more time to run experiments? So check this Google Doc from Dashly, where they collected 100 growth marketing hypotheses tested by their experts. (includes advert retargeting, the wait list for product launches, niche glossaries, etc.) 5. SALES COMP: ICONIQ Growth partners just published their Sales Compensation guide (pdf) - a very detailed 77 pages with tons of content, but to tease you into the click: 50/50 base to variable remains the standard comp structure in B2B Sales, OTE/Quota is 4-5x, and Enterprise SDRs need to book 5 SQLs Per Month, but Mid-Market SDRs crank out about 20. 6. FREE TRIALS: According to Userpilot's State of User Onboarding for 2023,74% of SaaS companies now offer a free trial (way up from 43% in 2022). Openview Partners have a great article on how to optimize these free trials. BONUS: Tomasz Tunguz also conducted a survey on Free Trials a few years back, which has one of my favorite facts: Conversion rates aren't impacted by trial length (so make them shorter). 7. PATTERNS: The Data-Driven VC looked late last year at what data patterns can be analyzed across successful startups. Super interesting read, but TL;DR: most important is the number of executives, the split of business versus tech roles, the split of male versus female founders, and their age and degrees. 8. CAPITAL: Another week, another Pitchbook report - this one covers Enterprise SaaS, which remains pretty robust: In Q1 '23, U.S.-based enterprise SaaS startups raised $13.9B (across 363 deals). Funding remained strong for the enterprise SaaS sector last year, second only to the record-setting totals of 2021. YoY, this is tracking down by about 18.5%. But this figure is still way higher than 2020 by about 85% ($34B - $62B). 9. GROWTH LOOPS: Elena Verna (Head of Growth at Amplitude) had an excellent presentation at their Amplify 2022 event about predictable and defensible Growth Loops and how to make money from them. Elena makes the interesting argument that revenue is an outcome and should not be a KPI in Growth. Reforge now has a recent article with some examples and feedback on how to implement Growth Loops. 10. CASE STUDY: Adding onto #9 above, Growth Loops are hard to understand without a concrete example - Git Hub is a great one. This is how they built a 40M+ user platform via loops. POD OF THE WEEK: From Software Snack Bites, Kyle Poyar from Openview goes all in on tips & tactics, pricing & packaging, sales & marketing, and case studies across the PLG World (including how to make product-led sales work). 1. SaaS METRIC OF THE WEEK: Expanding on post #4 from last week is a revisit of NDR and its cousin, GDR. Modern SaaS is all about acquisition, retention, and expansion; it's a bowtie, not a funnel. Crunchbase has done the work to calculate what good NDR benchmarks should look like.
2. RETENTION: Now expanding on #1's bowtie above - I referenced Gross vs. Net Retention Rates a couple of weeks back, but Chartmogul also has retention trends benchmarks for 2023, which is essential because Companies with best-in-class retention grow at least 1.5-3x faster than their peers - but in this market, it's now more challenging than ever. BTW: According to a report from SaaS Capital, yearly contracts don't actually increase NRR. 3. 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. At the end of the trial, they can either buy or downgrade to a fully free tier - this article also explains how Airtable does 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. 4. PITCH: Want to compare how your Pitch Deck compares to others? Here is an absolute MONSTER resource link for you (and your pitch team). Pitches from AirBnB, Uber, Shopify, lesser-known startups, and famous flameouts (such as Fyre) can be found on Billion-Dollar Pitch Decks and Pitch Deck Hunt. A cool approach on OpenDeck that lets you search by Category/funding year. If you want to see a breakdown/analysis of pitch decks, then look at Alexander Jarvis - he has over 500 decks broken down by the good and the bad things people do. Added Bonus here - this tweet from earlier last year is liley now redundant thanks to OpenAI (of ChatGPT fame)- Katelyn Gleason observed that no real generation-defining startup has been founded since 2014. But we now have one outlier - OpenAI (2015) 5. LEGAL: In startup land, there is a long tail of BS founders need to navigate, and in a surprise to no one, much of that is legal. So check this huuuuuge article from Clerky on legal concepts all founders need to understand (incorporating, vesting, notes, etc.)l. Ready to get started drafting some documents? Here are some great resources for free legal docs to stick to the mission: Avodocs - 3 free per month. In addition, Cooley Go has a library of documents for the US and UK from Penn State Law School - a startup Kit bundle, and for all you Kiwis, Simmonds Stewart has a comprehensive library of agreements and templates. 6. IDP: You need your Tech Acronym Book open for a new entry. IDPs (Internal Developer Platforms). Stack Overflow's latest developer experience (DX) survey shows that most developers are running a bunch of CI/CD, DevOps, and automation tools. Still, only ~40% had a Portal or Platform to access the right tools and services. According to Forrester - good IDP is key to increasing productivity. Here are some popular players: Roadie, env0, and CloudQuery. 7. STATE OF STARTUPS: The 2023 edition of Pilot's State of Startups is out. The first slide shows we're an optimistic bunch - with 74% of those surveyed being optimistic about their startup's outlook (and view on layoffs) - but less optimistic about revenue growth compared to last year (2x vs. 4.9x). In addition, 56% are remote/office-less, and just over half of startups surveyed have more than 12 months of runway. 8. DEMO: For my daytime business, demos play a pivotal role in our sales process to experientially show and discuss the value we can bring to a prospective customer. 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. 9. VENTURE: This is a bit of a pitch deck - but the PDF is packed with really interesting slides on Venture - it's called the Data-driven VC Landscape 2023 (report, I guess?). The pitch is........that VC is pretty latent in terms of digitization - hah! 84% of VCs want to increase data-driven capability, but only 1% have initiatives deployed, and Machine learning models can outperform human investors in deal screening. Talent is distributed equally, but capital is not, with North American startups raising more capital proportional to population than anywhere else, and in terms of accuracy and recall, Machine learning models are on par with the best investors (80%) and relatively outperform the average/median investor by 40%/33%." 10. CASE STUDY: The path to ChatGPT from Rama Ramakrishnan of MIT - Rama gives a long (104 Slide) informal explainer on how ChatGPT was built (including what GPT actually means - slide 42, of course). POD OF THE WEEK: If you have yet to see SuperPumped (aka Uber: The Travis-blitz scale years), you should, as it's part 1 of this podcast post. Part 2 is the un-ubering of Uber with the post-Travis CEO, Dara Khosrowshahi, turning that toxic, blitz-scale culture around. 1. SaaS METRIC OF THE WEEK: ARR per FTE: Capital Efficiency is a new-fangled metric we all want to track in these LeanOps times. Benchmarking this - the median is $143K per FTE according to the 2022 KeyBanc Private SaaS Report. With public companies, it's double that, according to data from Maritech and Kyle Polar from Openview, breaks this down to tell whether you're on the right track.
2. AD BOT: The internet is only half human - Imperva's annual Bad Bot report revealed almost half (47.4%) of all internet traffic was from bots, with bot traffic of the bad kind accounting for over a quarter (27.7%) of all traffic. 3. DEX: Crack open your tech dictionaries for another acronym-based entry: Digital Employee Experience. 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 - which 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. 4. SaaS (Born again): Great article from Harvard Business Review summarizes how the traditional sales model "funnel" does not apply to modern SaaS and equates a customer life-cyle to look more like a "Bowtie" rather than a funnel shape because most revenue takes place outside the marketing funnel (which is why modern Customer Success and NDR exists). 5. B2B SAAS: Silver Cloud lining time! Adding onto the Harvard Business Review article above is from Boston Consulting Group, who make the case that overall Tech may be cooling off, but B2B SaaS is not. They also bring receipts to back up that claim (B2B SaaS is outpacing Industry growth by 10x) and deliver a playbook that B2B SaaS companies can make to continue the growth trajectory 6. PR: Getting good PR if you're an unknown startup is hard (and also can be seen as a low priority in the endless stable of things to get done) - but it's easier than you think without a publicist. Here is a great 101 article from Point Nine Capital (they call it PR for dummies) on how to get great press coverage. ChartMoguls also have this article late on PR for SaaS - with some sample scripts! 7. ENTERPRISE ADVICE: a16z convened some early-stage CEOs for a recent event, discussing business management need-to-knows like hiring, firing, scaling, sales, and marketing. 8. DOWN ROUNDS: According to data from Pitchbook, down rounds are on the rise but don't worry - read this article with the author making the point that down rounds won't kill you. 9. STATE OF WORK: A new report from software.com on the future of work (for Software Development) is an AI baseline of sorts that we should revisit next year. TL;DR - Devs have better work-life integration post-pandemic (with fewer late nights and weekend work), productivity remains unchanged (BUT devs are spending a little less time coding per week), and that's because AI is starting to show up. It will fundamentally change how Devs work. 10. CASE STUDY: I'm still trying to figure out why, but last week's article on Product Market Fit was very popular, so let's double down on how some popular companies got found PMF (via a Tweet Thread). POD OF THE WEEK: As AI continues on a burn, founders and CEOs (me included) are discussing how to integrate this new superpower and also considering essential questions around data privacy, accuracy, and pricing (me included). Please take a listen to a16z's Podcast on what we are all already talking about. 1. SaaS METRIC OF THE WEEK: This week, you get to watch a video that should be mandatory for onboarding every person in a SaaS company and required watching annually. It's from David Skok (a legend in the SaaS world) and covers hardcore B2B SaaS metrics such as Rule of 40, Repeatability, Net new ARR, Bookings, LTV:CAC, churn, etc., etc. - it's a metric-packed 20 minutes.
2. AI LAYOFFS: According to Dropbox, AI-based Layoffs are here, same with Insider - not caused by AI but because they need more of it. Overall layoffs in tech remain strong (even though Google's AI is not happy about it), so the sound advice for those who are laid off seems to be to get into AI NOW! (from the former CEO of Reddit) 3. AI VENTURE: A few months back, I noted that Pitchbook had launched an AI platform called VC Exit Predictor. But I totally missed a complimentary report from them on recent VC investment into AI. VCs have steadily increased their positions in generative AI: $408 M in 2018, $4.8 billion in 2021, and $4.5 billion in 2022. So far, in 2023, we're at $1.7 Billion (announced). 4. VENTURE (Private Markets): According to Carta's State of Private Markets for Q1 2023, the total amount of capital raised by startups dropped 80% in the last 12 months (Q1 '22 to Q1 '23). Deal count fell 45% over the same span (an obvious indicator of smaller deal sizes), and 20% of all venture investments in Q1 '23 were down rounds. 5. INVESTOR UPDATES: The team at NFX has read a lot of investor updates and has published a guide where they share common mistakes and how you can avoid them (and also deliver hard news) 6. TALENT: 2023 has flipped from a candidate's to an employer's market, so even though things have changed, what talent is necessary at what stage? Openview has a 2023 Talent report for you and provides excellent insight into the mix of teams at different stages. Early-stage teams are product and engineering-heavy (56%). Past product-market fit, it's all about the go-to-market teams, and sales and marketing h overtake product and engineering. 7. PRODUCT-MARKET FIT: A long-running general rule (called a Growthism) in the Startup world is that getting to $1m of ARR is a strong sign of Product Market Fit (PMF). Kaitlyn Henry from Openview runs contrary to this Growthism, stating that there's no specific revenue indicator that defines PMF. Still, she continues to write about concrete signals of PMF available beyond a $$ amount and gut feel. Read more about all those signals here. This sits well with Brian Balfour's work, who wrote a fantastic article on the subject that is now almost 10 years old and still incredibly relevant for figuring out what stage(s) you may be at. 8. MISTAKES: I saw this original presentation from Anand Sanwal of CB Insights way back at SaaStr back in 2017 - but it's memorable because of its Silicon Valley-like (the TV Show) accuracy of things not to do. 100 things NOT to do when building a SaaS company. 9. ANNUAL PRICING: I'm sure you see this all the time, options to pay monthly or annually on a SaaS pricing page. Great for all you non-consumption-based folks out there. It's a great cash flow choice - but is it the right option for your business? Jason Lemkin has the low-down. 10. CASE STUDY: Ok - looking at #7 above - what could Product Market Fit look like experientially? Asking the PMF question, IMO is always the more noble focus (instead of being focused on answering the question). But sometimes - you gotta know, and here is a case study on how Superhuman did it. POD OF THE WEEK: Carilu Dietrich of Miro, Segment, Atlassian, and 1Password discusses how to achieve hyper-growth via Lenny's Podcast 1. SaaS METRIC OF THE WEEK: Customer Renewal Rate measures the percentage of customers who renew their subscriptions at the end of each subscription period. High renewal rates inform companies about product-market fit, market, pricing fit, value, business model viability, etc. The authors of this article from Profitwell describe the formula and differentiate between renewal and retention - one is actively renewing, and the other is not actively canceling.
2. DOWN-ROUNDS: According to data from Pitchbook, almost 7.5% of all venture funding rounds in the U.S. in Q1 2023 were down rounds. They also note that over 400 unicorns haven't raised new funding since 2021, and 94% (of tech unicorns) are unprofitable. 3. VENTURE: But wait - there is more. The Q1 '23 Venture Monitor report from Pitchbook dropped last month, and we may have the beginnings of a Startup pipeline problem: The angel and seed markets are at a 2.5-year low. The early stage Venture is the same (A&B rounds), while the late stage is at pre-2018 levels (21-quarter low). CBInsights has the same news, just different graphs. 4. DEMO: This one interests me (and apparently some people reading last week's newsletter) - as the path to Demo is precisely the primary call to action my website is designed for. I assume it is the same for many of you B2B people, so....." Should Your Website Drive Prospects to a Demo?" Read the article to determine if this is a problem at your startup. 5. MARKETING: Bookmark this article from the MKT1 Newsletter that dives into how to organize a B2B growth marketing team as we move away from just a demand gen/Growth hacking worldview. 6. BOTTOMS UP: Crack (get it) open your tech dictionaries for this one. Stage 2 has a Go To Market Analysis Model called the Bottoms Up Model (Bonus Worksheet here), starting with Current State to assess if Sales & Marketing efforts are well matched to the products' finance plan and unit economics. 7. VIDEO: Complimenting the above, nailing introductory and Demo videos is an art form. Need help to figure out 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) 8. INTERNET: Big earnings from Big Tech last week, and see #10 below for a reason for this post; over the past 30 years, the Internet has launched some of the world's biggest companies - Google (~$1.4 Trillion), Amazon (~$1.1 Trillion), Facebook (~$615 Billion), and Netflix (~$150b). BUT - growth was all almost single digit. AI has landed, and none of it is powered by Big Tech (yet). The next earning season will be informative on that front. 9. AI: Another week, another eternity of progress in AI: Italy restores access to ChatGPT, the Godfather of AI quits Google, StabilityAI releases a ChatGPT competitor, Palantir releases a Military AI Platform (and it's scary), and a study found ChatGPT outperforms Physicians both in skill and empathy. 10. CASE STUDY: The World Wide Web turned 30 years old (publicly) last week, and we've come a long way since the Web protocol and code became royalty-free in 1993. Here is a history of how that all started from the OGs of Web Tech (where it was birthed pre-public in 1991) - CERN - with the badass domain of home.cern. The Wall Street Journal has an excellent visual story of the Web with images of Mosaic (the first image-based browser), AOL Online CDs, and Y2K flashbacks! POD OF THE WEEK: Complementing #6 above - Mark Roberge of Stage 2 covers common SaaS sales potholes and how to avoid them. 1. SaaS METRIC OF THE WEEK: Space Metrics. The biggest rocket in history launched (and exploded) last week, so here is a great deep dive into the relevant Space industry metrics, acronyms, and Market Sizing that's driving real competition (including the loss of Virgin Orbit earlier this month) - Why should we care? The rise of Heavy Launch Vehicles has just started, and see Pod of the Week for more details - TL;DL - it's all about the global movement of goods and materials.
2. SHAPE UP: A refresher for your tech dictionaries and reading list. 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) has developed ShapeUp, its publications, and a toolbox of techniques that can eliminate chaos when it comes to designing, prioritizing, and shipping products/features. 3. SALARY: Hey Founders, a recent TechCrunch article recommends that founders pay themselves rather than doing it for the equity - after all, paying people is what Venture should be for, right? So how much? This doesn't mean you get Market Rates; startup founder's and CEO salaries can often range from zero to a gated raise based on ARR. See here for lots of good answers and also lots of different situations. According to Nathan Latka, a good rule of thumb is that if you're two-co-founders and just hit $1m in ARR, you should make about $100k per year and Increase to $150k at $2m in ARR. 4. PRODUCT BENCHMARKS: I'm hoping for an updated report soon, but this report is a must-read for those of you starting or deep into product-led growth. It's year 3 of the Openview product Benchmark Reports - downloadable here. Products continue to perform well as acquisition, conversion, and expansion tools, so this is an excellent report to gauge what's good vs. what is great regarding product conversion. In a hurry to benchmark yourself? Use this interactive calculator to see how your user journey compares to businesses of a similar size and scale. FUN FACT: 61% of companies in the Cloud 100—including Calendly, Amplitude, and GitLab—leverage a PLG model. 5. GO-TO-MARKET: The team at ContentBeta has teased their now-released Go-To-Market Playbook for 2023. Check here for some great nuggets - guides, ebooks, and research reports are still the best content assets to differentiate your software (more than video), and cold email is still a strong go-to. 6. COLD EMAIL: So based on #5 above, cold email remains a go-to modern-day sales tool - but diving deeper, this method historically has a shallow response rate (1% for cold emails historically but has dropped below 1% in recent years). 1. Jason Bay has spot-on methods to optimize response rates, 2. Predictable Revenue has this PowerPoint deck on the four pillars they think constitute a quality sales-based email campaign. 3. This is a quality case study for anyone with email marketing as part of their businesses - a deep dive into a single cold email and why the author actually opened it (TL;DR - yes, it's all about everything in the design of the email, but its more about how targeted the message is). 4. So here (from LeadIQ) is their 3-step guide to getting noticed by email. And finally, with a VERY focused mission on getting to Demo - a guide to booking 70+ demos/month/rep using cold email. 7. SAAS SPEND: Maybe in part to the AI boom of '23, but there is a growing demand for cloud that will push spending to about $600 billion by the end of the year, according to a new report from Gartner, with 1/3 of that spending on SaaS (about $200 million up 18% YoY) 8. EARLY STAGE FUNDING: Startups go through various fundraising lifecycles. This article guides understanding startup funding/investing for all of you at the early stage of Startup life. 9. ONBOARDING: Userpilot has just released their State of User Onboarding for 2023. 74% of SaaS companies offer a free trial, up from 43% in 2022. There may be a bit of survey bias here as they state that only 4% of companies relied on demos for customer acquisition - prob a ton of enterprise b2b SaaS that would disagree. It may be a hangover from their prior MarTech focus. 10. CASE STUDY: AutoGPT: OK - it's been a couple of weeks since AutoGPT was launched (which is like a year in AI time); here is everything you need to know (via a Twitter thread) - until, of course, things change. POD OF THE WEEK: Complementing number 1 above. Why should we care about Space? Well, listen to the All In Podcast that hosted SpaceX investors and team members discussing how transportation (especially of goods and materials) could rapidly change in the next 10 years by traveling sub-orbital, at scale, and in big-ass rockets). 1. SaaS METRIC OF THE WEEK: OTMM - aka One Metric That Matters (to you!!!). Another acronym for your Tech Dictionaries. Metrics can be personal, ya' know. And sometimes, all you need is a singular focus to get stuff done. So to shift the needle, check this great article that reviews the methodology to uncover your unique OMTM.
2. DEAD or ALIVE? Time for some reality here. If you want to try (or are expected by your investors/Board) to operate with no growth capital for the foreseeable market future (18-24 months?), then the question to be asking is: Will your business reach profitability before running out of money? Time to take read this throwback article from 2015 that dives deep into this question and also has a great visual calculator. 3. CAPITAL: Tomasz Tunguz notes a strong (and strengthening) correlation between interest rates & venture capital investing. It is strong enough to build a simple prediction of early-stage venture capital activity in 2023. 4. SCALE: This is a must-download. Mark Roberge, the founder of Stage 2 Capital and member of the founding team at HubSpot, has launched this excellent playbook for scaling. In this detailed book, Mark has defined different stages of scale, established quantifiable measures for each stage, structured the sequence and signals of when to move from one stage to the next, and explored the optimal go-to-market design of each one. 5. REVENUE PER EMPLOYEE: As an operator - asking the real question on scale: What should my annual recurring revenue (ARR) be per employee? Here is the chart in one TL;DR visual, but if you want to read the whole article, you can check it out here and also here (PDF). 6. CRYPTO: a16z has released its specialized crypto publications for the year, including the 2023 State of Crypto report that tracks data, indicators, and trends - active users are still way up. They have also introduced their State of Crypto Index, a tool for cutting through the money hype and focusing on crypto as a tech tool. 7. GTM: Go-to-market motions can be pretty specific, and your GTM motions can impact your marketing strategy and your org chart. Mark Roberge at Stage 2 Capital gives some PLG context on Go To Market Strategies. It's a really great presentation - I've watched it twice :-). The slide deck from the presentation can be found here. 8. CHATGPT: ChatGPT has taken the world by storm, and the Product Management, UX, and UI design part of the world have some significant ChatGPT use cases. Lenny's Newsletter has some great examples for getting real PM stuff done leveraging ChatGPT, and FastCompany has some methods that designers can superpower their work. 9. ZERO-OPS: A new entry for your tech dictionary, ZeroOps is a set of practices that result in developers focusing solely on coding and creating, with 0% of their time spent on operations or infrastructure. 10. CASE STUDY: Freemium. It's not necessarily a time to rethink Freemium as a SaaS Go-To-Market strategy, but ProdCamp did and learned a lot after removing and bringing back their Freemium tier. POD OF THE WEEK: Complimenting #7 above - How to Prepare your Go-To-Market Strategy for a Downturn with Alexa Grabell of Pocus. 1. SaaS METRIC OF THE WEEK: RETENTION: Hey! Capital is currently costly for startups, so prioritizing customer retention is critical. Gross revenue retention (GRR) and net revenue retention (NRR) are key metrics to master. Here is a valuable guide to all things retention (and having merry customers).
2. VENTURE: New data out from Crunchbase last week puts the state of Venture Capital funding worldwide down 53% in Q1, and this includes the mega OpenAI (of ChatGPT fame) raise ($10B) and Stripes Series I (their 18th round overall) of $6.5B. 3. PRODUCT DESIGN: Getting better at Product is a '23 Goal, so I love this step-by-step guide (along with some solid examples/case studies) on how to package up and present all that extraordinary research, design, functionality, and user testing that product designers have to endure. 4. MISTAKES FEATURETTE: A morbid list of mistakes and failures to learn from this week. First up is a list of Seven deadly ones startups make. Next, Jason Lemkin lists his top 10. Failory has a free Notion Document from 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. CBInsights also lists their top 12 reasons Startups fail. 5. IP: If you have not noticed Facebook's general MO, many startups in the software space are vulnerable to their competitors producing copycat technologies. Now Twitter is in Zuck's cross-hairs. Please read this interview from Nico Hodel of Start It Up NYC on how to better protect your Tech IP and Entrepreneur magazine: 4 IP Mistakes startups make and how to avoid them. 6. CONTENT: Viewing content (of your content marketing) as a "product" was an aha moment for me, as was being told that the strategy of "producing ten blog posts" is wrong. Instead, read this Two-part blog (part 1 and part 2) to change your mindset on what good content should be. 7. SECURITY: It's table stakes that Tech companies should be continually concerned about the security of the software being built (it's why DevSecOps is a thing). But for all of you in the B2B Enterprise-y space, technical Due Diligence is also a critical part of the sales cycle (there is a growing need for chief compliance officers, for example). Having some kind of compliance, certification, or training, such as SOC-2 or ISO-27001, can reduce security/audit friction. Here is a guide to getting started on SOC-2 and an ISO-27001 guide. BONUS - I'm currently trialing trustshare.com as my compliance portal. 8. DIFFICULTY: Having all your security and compliance ducks in a row is MEGA hard, so the payoff (in terms of customer ACV) has to be worth it. Payoff > Difficulty. This is called the Difficulty Ratio - discussed more in a Substack post from David Sacks earlier this month. 9. AI: Weekly AI posts will likely be the norm for a bit - because the space is moving that fast right now. This week is a SaaStr Workshop Wednesday presentation from Tomasz Tunguz that he created via Ai Startups (Gamma, Midjourney, and IA Presenter) covering the four questions a startup should ask themselves about building a startup that uses generative AI. BONUS: The Video is a must-watch, too (starts at watch the whole thing as there is a BUNCH of value before Tomasz even gets to the presentation - and the Q&A after). 10. CASE STUDY: Complimenting #4 above: The top 10 Mistakes from the CEO of Gainsight - Nick Mehta - on his way to 100m ARR. POD OF THE WEEK: Complimenting #4 above and probably one we all need to share around - this brilliant video covering all aspects of failure and resiliency - and how to get back up when you get let down. 1. SaaS METRIC OF THE WEEK: Burn multiple measures the capital efficiency of a startup. Burn multiple calculated by net burn/net new ARR. In a surprise to no one (because Burn is now a terrible word in this new market), Startup burn multiples have changed markedly in 2023.
2. PRODUCT LED MARKETING: Here is the ultimate deep-dive into PLG from Kyle Poyar of OpenView, one of the OGs of the PLG world. It contains tactical advice, real-life examples, and actionable next steps. 3. TECH MACRO: Every year, Benedict Evans goes on an absolute blinder in PowerPoint, exploring macro and strategic trends in the tech industry. He's back with this year's version noting that (across his 104 slide deck!) big-tech is becoming bigger-tech and the ultimate gatekeepers of the tech economy. 4. PRODUCT DEBT: Modern-day businesses create Technical Debt via Product Debt. Stop taking shortcuts, as it's all the decisions that have been made, often tactical and acute, without a clear product vision or sufficient consideration about the long-term effects of that moment/decision. The link above also has a great case study of Google Messaging's product evolution, but this link also has a great PM-focused article on how to design out of it (or at least your backlogs). 5. CONSISTENCY: I have been delivering this newsletter weekly since December 2018, holy smokes - I even took significant breaks that no one noticed! So this article resonated this week on why being consistent matters - outside of his monetization, podcasts, etc. :-). 6. OPEN SOURCE: Here is an excellent dashboard of the top open source projects by growth, retention, and usage. It can be visually confusing, so read the Substack article outlining the dashboard in more detail here. 7. API: APIs allow different programs and services to get along and work together, which is why they're essential in today's crowded technology space. For your continuing education credits: A Full Guide: Understand Everything About APIs (with Examples). 8. AI: Stanford released a massive 386-page report on the state of AI, showing how heated the market has been getting for years - Newly funded AI startups have tripled in the last ten years, primarily in the US - and also showing how the past three years have been incredibly rapid paced across many measures (including AI-related lawsuits). 9. PRICING FEATURETTE: Optimizing Pricing is complicated, and it's never (ever) perfect. a) If companies decide to have a pricing page on their site (which is that whole other topic. Jason Lemkin lays out some thoughts of what makes a good pricing page. b) McKinsey gets technical, outlining how to leverage big data to make better pricing decisions. c) Want to look at competitor prices? Comptera has a great article on conducting a high-fidelity competitive pricing analysis project, and d) Productled has the ultimate "How to build the right SaaS pricing page" in 2023. 10. CASE STUDY: Down rounds are pretty standard this year (and probably next) - so what can we learn from Down Rounds of the past? Here is an excellent report about Docker which went through a down round and a 75% headcount reduction POD OF THE WEEK: Complementing #2 above - The ultimate (podcast) guide to adding a PLG motion from Hila Qu, former director of growth at Reforge and GitLab. 1. SaaS METRIC OF THE WEEK: TTV - Time To Value: This week, I've had some mentoring discussions about Time to Value. Great to bring it back - TTV is similar to ROI (return on investment). Still, instead of realizing the financial success of an investment, it implies achieving the effectiveness of an investment or for a customer to realize value out of your product. There is also a corollary "trough of disillusionment" your customers may need to navigate.
2. EXPERIMENTS: In another very enjoyable mentoring session last week, we took a deep dive into experimentation - because every day, every path you take towards growth and revenue should be a hypothesis in startup land - Time to upskill your experiment skills by reading how to run a growth experiment (in 4 easy steps!). Testing versions of things is something to embed across your company and culture as you experiment toward growth - it's why failure is vital to not failing. When conducting experiments such as A/B tests, start with this refresher and then this Step-by-Step Guide. Go Practice has some great advice on how to make these experiments run faster too. 3. SALES: Looking to establish your first (non-PLG) SaaS Sales Comp plan? So first, check this excellent report on the State of Startup Compensation from the team at Carta. They look into questions such as what makes up for the largest share of compensation spend, what roles get paid the most, and whether startups are still hiring remote workers (yes, remote hires now represent 62% of all new contracts). And then, read this post from Jason Lemkin on how to construct a framework for your first SaaS sales compensation plans. 4. SDR BENCHMARKS: The new 2023 SDR Bridge Group SDR Survey is out - answering all the great benchmark metrics such as How much time does it take for an SDR to ramp up? And how many calls does it take to book one meeting? What about the SDR:AE ratio? BONUS: SDR compensation calculator (Excel). 5. ASYNC CULTURE: Crack open your tech dictionaries again for this one - it's something we do at my day job; I just wasn't aware there was a label for it. Management and leadership can get asynchronous with 100% remote and distributed teams across different time zones. So this is a great Async playbook for those who need to practice this. It's going on my wall, so I can work on a couple of these pillars (especially around documentation). 6. SALES CYCLE: Ouch - According to Tomasz Tunguz and his 2023 Go To Market Survey, the typical Startup saw a 24% increase in sales cycle in 2023 in the past year. It's worse if you sell to Enterprise - up 36%. 7. AI: We're (un)officially in the "Age of AI" - and anecdotally to me, it seems about right as it's everywhere conversationally, and I use it daily (except in this newsletter because writing is a unique tool). It looks revolutionary - but here is how we got there. BONUS: A post looking into the origin, drama, and people behind OpenAI, the parent of ChatGPT (and, of course, Elon is there). 8. CRYPTO: Coinbase was served a Wells notice (I just heard of this term this week) for trying to follow the US guidelines for digital assets. A tougher environment for all Web3 companies is inbound, and a significant regulatory battle is incoming. 9. CAPITAL: Jason Lemkin notes that it's now year 2 of the venture downturn, and "No" is becoming the default response. According to another post from Tomasz Tunguz this week, the most challenging round to raise in 2023 is Series B (where most of those NOs are). 10. CASE STUDY: Complimenting #2 above on experimenting. On the extreme end of A/B testing is booking.com, which often runs over 1,000 tests simultaneously! But here is the payoff: That flywheel enabled Booking.com to compound at healthy growth rates while maintaining ~30% EBITDA margins and scaling Google ad spend to approximately $4 billion per year! POD OF THE WEEK: The extension of #5 above on how to go totally asynchronous with a distributed team with no internal meetings. 1. SaaS METRIC OF THE WEEK: 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 good guide on what this means (with examples), and Profitwell has a comprehensive guide on making it happen (and how to go about calculating/measuring it).
2. PRICING: This one is totally a follow-up to #1 above and 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 is a variant of how to research and implement a value-based pricing model. 3. ENTERPRISE: Moving upmarket into larger organizations is a standard SaaS growth strategy. Increasing ARPU (Average Revenue Per Customer) is good! But it takes a lot of work to pull this move off as a tiny startup selling to large organizations. Here are 10 tips for selling to big companies as a little guy. 4. PERSONALIZATION: SaaS marketers have been increasingly turning to personalization in recent years to increase conversion rates, improve customer success, and increase the quality of sales/marketing funnels. So check out 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. 5. PLG DATA: One of the keys to excellent product-led growth is capturing and leveraging the right data to determine what to build next. Here's how to do that (REALLY in-depth with great examples). 6. INFLUENCE MAPS: I love discovering great tools - especially visual ones, as my mind works mainly in diagrams. Add Influence Maps to your tech dictionary this week - as one of the coolest Marketing Frameworks I've come across in a while and is an excellent tool for answering strategic marketing questions. 7. DEV: Great report from HeavyBit covering Software and Development Trends for Engineering Leaders, 16 pages of quality, including best practices, top languages, trends, and spending forecasts (Productivity Tools are top). 8. FINANCES: For many startups across the globe, it's been a heck of a month for finance teams. So for pre or post-mortem reasons, look at these guides on cash management and treasury management to help with more strategic planning or finance-based BCPs going forward. They are Google Docs - so be sure to make a copy! 9. VC AI: Pitchbook has launched an AI platform called VC Exit Predictor. This new tool aims to answer the question, "Of all the startups and funds, which ones are worth putting time into?". A full PDF report can be viewed here. 10. CASE STUDY: The Airtable links last week were popular - so doubling down on journeys into the Enterprise this week with a great article from Canny on how (tactically) they did it. POD OF THE WEEK: From Ophelia Brown, the Founder of Blossom Capital, discusses why growth investors ruined the Venture market (mainly via follow-on investing), along with some insight into the European VC market. 1. SaaS METRIC OF THE WEEK: FINANCIAL MODELING: Fun fact: SaaS financial modeling is uniquely complex and requires careful thought and expertise. Luckily, there is a boatload of helpful content 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. A Google Sheet that is ready to go (make yourself a copy).
2. SILICON VALLEY BANK: This week started with absolute chaos in the startup world, and hopefully, the crisis has been diverted, as it would have been a global GFC-style event. For an accurate unit economics breakdown of what caused the run on SVB leading to its demise in under 48 hours, read this post - or here for a longer Twitter version. I can't wait for the movie. (note this is written as of Wednesday this week, leaving plenty of room for more chaos before publication). Tomasz Tunguz has some wise words though "Take a Breath." 3. DILUTION: I didn't mean to scare you with that word. 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 median. Obviously, there is a significant difference in Bootstrapped vs. not in this dataset. 4. SPEND: I can't report all doom and gloom this week. For startups that sell B2B, good news, the Q1 2023 Cloud Software Spending Survey from Battery details a robust software spending budget. 46 % expect to increase budgets in 2023. 5. EXPENDITURE: Rounding out above with some opposite state stuff: We all know running a SaaS business is basically a Ponzi Scheme of having to spend a bunch of money on other SaaS Products. So in these operationally critical times, what are ways to cut some spending, especially as SaaS pricing inflation is five times higher than market inflation? TechCrunch has an article promising to cut your spend by 30%. 6. SHERLOCK HOMEBOY: Crack open your Tech Dictionaries so you can add this awesome phrase. The Sherlock Homeboy Technique is a way to reverse engineer your Content Marketing strategy for the rest of the year. 7. CHURN: Churn is not a Customer Success problem- it's a business one. Check out eight ways to move the needle on churn in this current economic environment. 8. DEVS: What are the tools du jour for Devs? According to a StackOverflow survey, when it comes to Cloud, AWS is the most used cloud platform (51%), followed by Azure (29%) and Google Cloud Platform (27%). Node.js and React.js are the two most common web technologies; JavaScript is the most popular language, and unfortunately, according to the survey, it's a 91.88% dominated man's world. 9. AI: Sample size of 1 - NetDragon Websoft, a Hong Kong-based online gaming firm ($2.1B in annual revenue), has appointed an AI CEO (Ms. Tang Yu). Check out how Ms. Tang Yu outperforms the Hong Kong Stock Market by working 24/7 for $0 in salary. Not too bad considering that at Fortune 500 firms, the average CEO pay is now about $16m per year - time to take another look at #5 above. 10. CASE STUDY: Moving into the Enterprise is no mean feat. Here are the top 5 Lessons from Howie Liu, the CEO of Airtable, on their upmarket mission. Bonus content: how Airtable also leverages SEO. POD OF THE WEEK: Complimenting #10 is from Lennys Podcast on Lessons from Airtable's unconventional growth strategy and how Airtable found its first super-users. 1. SaaS METRIC OF THE WEEK: CAC PAYBACK: Cash is king in the SaaS world, and the shorter the payback period is for the acquisition (CAC), the better (getting to cash flow positive). Here is an article that looks at ways to shorten CAC Payback.
2. OUTBOUND vs. INBOUND: How you handle an inbound lead vs. an outbound lead is quite different. Check this article from Jack Jorgovan on how Outbound leads differ (and how to close them). Oh, and do you want to binge some Outbound Sales TV? The team at predictable revenue has been running over 50 outbound sales experiments to find out what works best (and what doesn't). Watch the whole series on YouTube. 3. MLP: For your tech dictionaries - that's 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. 4. SALES EFFICIENCY: Tomasz Tunguz has a banger of a post that takes a deep dive into Sales Efficiency through and after the COVID era. Since 2016, on average, Public SaaS sales efficiency has dropped from 52% to 47% (a drop of about 10%), and he notes that it isn't COVID - it's competition that's creating the slide. 5. PRODUCT MARKET FIT: To me, Product Market Fit is as constantly evolving (and never finished) as pricing. But way smarter people than me write about PMF in incredibly detailed ways - such as Brian Balfour, who wrote a fantastic article on the subject that is now almost ten years old and still very relevant for figuring out what stage(s) your startup may be at. 6. PRICING: Speaking of pricing never being finished (see above), here is a bookmarkable guide on leveraging product usage data to evolve your business and product packaging and pricing. 7. WEB3: The space has been quite volatile for several years, but investments and startups continue in the space, and McKinsey has a great article outlining the structures of Web3 that can take it beyond all of the hype and even have one for all you Web3-new CEOs. 8. FRAMEWORKS 1: HEART Framework - this was designed by Google'sGoogle's research team and is a methodology to improve software user experience (UX). It'sIt's an acronym for measurable UX evaluation: Happiness, Engagement, Adoption, Retention, and Task Success. 9. FRAMEWORKS 2: PIRATE METRICS (or AAARRR) were first proposed by 500 Startups. The great thing about this acronym-based grouping of metrics is that it can apply to non-software products or services as well as traditional SaaS as it's all about awareness/activation: Awareness, Acquisition, Activation, Revenue, Retention, Referral. 10. CASE STUDY: Sequoia Capital. According to a report from CB Insights (PDF version here), Sequoia Cap backed almost 100 startups last year. 1/4 of which were fintech startups. Three of the four deals in the capital markets sub-sector were follow-on rounds, meaning they remain pretty frothy in this category. POD OF THE WEEK: Being first to market is not necessarily a winning advantage (looking at you, Friendster). 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: Usage-based pricing and MRR/ARR models are often mentally hard to compute collectively (I know this from experience), so this article was a sight for sore eyes earlier this week, discussing the mental mapping required from Annual to Monthly and Usage-Based Metrics (and introducing Implied ARR) from David Kellogg. A recent analysis of usage-based pricing from Bessemer Ventures is here to help you think about your own pricing models.
2. CUSTOMER JOURNEY: What the heck is a Customer Journey anyway, and why do you need to create one? Now that you know you need one, mapping out a Customer Success Journey via a visual map is a great way to tell what areas a Customer Success Team needs to be involved in (and what their responsibilities will be) via various engagement models. And a "complete guide" with some great, modern templates can be found here. 3. VALUATIONS: AngelList keeps a comprehensive set of Startup Valuation Data. Here are the highlights: Average valuations for startups in Q1 2023: Pre-seed $10M, Seed $19M, Series-A $95M. 4. 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). 5. SLOW: One lesson my brain still resists thoroughly learning is that with any new technology adoption curve, regardless of how progressive or latent the core demographic is, customers will move way slower than you want them to. 6. REPRESENTATION - VENTURE: Women-founded startups raised just 1.9% of all VC funds in 2022, a drop from 2021. This comes at a cost for Female Founders who fundraise only from Female VCs. Women-led firms whose first round of VC funding was raised exclusively from female VC partners were two times less likely than those whose first round included male partners to eventually raise a second round. 7. REPRESENTATION - Web3: In Web3 only, well known for CryptoBros, 13% of Web3 founding teams include a woman, and only 3% have teams exclusively made up of women. Nasdaq has gone even further to ask what it is people are even building in the metaverse given the current gatekeeping status quo (and who's on a mission to fix it). 8. BUYOUT CONTRACTS: SaaS is increasingly competitive across markets and niches. To be successful, there are some cut-throat things you will have to do, one of which is offering buyout deals. If you want to steal a customer from the competition. Jason Lemkin goes into some detail on this topic via this post (including when Buy out contracts make sense and how to structure commission.) 9. ZERO-BASED DESIGN: Internal performance improvement may be higher on your agenda this year compared to previous years, so crack open your dictionaries to add Zero based Design. McKinsey goes even deeper than the Bain article linked with this paper, looking at what they call "Operations Practice," which is the kind of modernization process problem that companies such as ProMapp help solve. 10. CASE STUDY: Surely you have all tried ChatGPT out by now - but how the heck does it actually work? Here is an inside look into what ChatGPT is and how this kind of model (large language models or LLM - for your tech dictionaries) actually work. POD OF THE WEEK: The extension of #6 above, a Podcast from TechCrunch covering more in-depth numbers and subjects such as pitching bias, the complications of imbalance, and more 1. SaaS METRIC OF THE WEEK: Here is another list (seven) of the SaaS metrics that VCs evaluate Startups on - the bonus is that it comes with a downloadable Google Worksheet template (make a copy for yourself).
2. BUSINESS MODEL: You will be asked often, especially when pitching, about your go-to-market business model: This is a pretty long but very high-value read from Alex Jarvis with real-life examples of good business models (and some good humor thrown in). The business model is always more important than the product (but of course, they both matter - but so does timing. There is a more extended PDF version - so I got that for ya too. 3. MARKET SIZING: The dreaded slide on everyone's pitch deck that is required to outline the business model and pricing in #2 above. What's the size of the market? TL;DR if the market is small, same with your startup. Understanding the nuances of TAM, TOM, and SOM is a great way to complete the slide but get started with your TAM first via this guide from Bling Capital on how to size a market (in 30 minutes!). 4. VENTURE 1: A couple of weeks back, I discussed the potential of a mass extinction event coming for early & mid-stage startups (#8 and #9)- same is probably valid for Venture and, according to this article, a "horde of ailing venture capital zombies" will emerge in the coming years. 5. VENTURE 2: Adding to evidence for the impending VC Apocalypse above, January's VC funding landscape stats are in this Crunchbase report - all rounds were down except seed. And that includes the banger of a round from OpenAI (ChatGPT's Parent) of $10 Billion. 6. SMB: In general, the Old SaaS-Skool guidance was to start chasing the most significant contract values as soon as possible (hello Enterprise!). But according to Craft, newer school thinking is to focus on SMBs, as sales velocity is a better strategy than chasing contract size - and SMBs are plentiful. However - the downside of SaaS-for-SMB is discussed in this article from SaaStr - CHURN! 7. PRODUCT LED FRAMEWORKS: Bookmark this as it's the first part of a pretty amazing 3-part series from Calixa covering PLG fundamentals, starting with defining what a PQL (product qualified lead) is and how to find it. 8. B2B MARKETING 1: SaaS B2B Marketing is a unique beast. I'm running a new demand generation campaign and finding out the hard way that growth marketing and demand generation are different. So don't learn the hard way, as I did. Instead, read this too-late-for-me article from Emily Kramer if MKT1 on the difference (and how to organize your B2B growth marketing team). 9. B2B MARKETING 2: Now that market conditions dictate profits are more important than growth, what is the role of growth marketing? And is it even marketing in the first place? 10. CASE STUDY: According to the Bessemer Cloud Index, only 11 of its 75 companies earn a profit today, but here is Slab's path to startup profitability. POD OF THE WEEK: A great discussion in the Y-Combinator Podcast on the normalization of Startup jobs in the US and beyond (and how the drift from non-conformists (less than 15 years ago) to mainly conformity today. 1. SaaS METRIC OF THE WEEK: Net Dollar Retention is an essential metric in the new world of Product Led Growth. It's used to help answer the following: Does my Startup need to increase customer acquisition/marketing spend? Crunchbase has already done the work to calculate what good NDR benchmarks should look like, but this month, Tomasz Tunguz looks at what it takes to achieve 200% NDR!
2. POC: I switched to proof of concept (POC) based paid trials as part of our enterprise sales process last year, and I like it! It's working well as part of our customer journey and is the fastest time-to-value metric we can deliver for various enterprise stakeholders. Want to get your POC up and running fast? The team at Work-Bench has a step-by-step framework AND a template of a POC Agreement for you here. 3. CAP TABLE: How do you best manage dilution from a cap table perspective? Here is what is considered "Normal," and read this article from Heavybit that discusses Cap Table management in relation to growth and how to manage that Option Pool. 4. INCENTIVES: Need to move beyond Founder-led sales in your Startup? Close.com has a rundown of five different kinds of Sales Incentive programs, one of which I'm sure would be fit for purpose for you (along with incentives to keep a sales team motivated. This post from Jason Lemkin also outlines how to construct a framework for your first SaaS sales compensation plans. 5. PROFESSIONAL SERVICES: It's a weird open secret that many B2B SaaS businesses generate significant Revenue from implementation and deployment projects, often captured as Revenue from Professional Services. This week Dave Kellogg has a post - called the Professional Services Paradox, where there are times when only a Startup can deliver the services needed to execute a transformation strategy. BTW - on average, Service Revenue as a percentage of Total Revenue caps out at 11% with Enterprise focused businesses. However, even at the lower end of town, it's still 5% of revenues with SMB-focused companies. Fun fact: more professional services, less churn. 6. SALES: ZoomInfo has unleashed an excellent playbook for all your business development teams, which I've already shared with my team. The PDF contains 16 of the best go-to-market plays from B2B sales and marketing pros across different sales funnel stages. 7. DESIGN: One of my many startup hats forces me to spend more time in Canva than I should (even though I'm pretty much canceling my Adobe Subscription as Canva can manage about 95% of my needs) - so this article a) Is visually lovely to look at and b) is in my Bookmarks of guides to reference: Visual design rules you can safely follow every time. 8. GENERATIVE AI: I bet most of you are already dabblers or active users (<cough> ChatGPT <cough>, so this should already be in your tech dictionaries, and by all accounts, Generative AI will be the next Consumer Platform. The use cases are everywhere - at least for me - and in particular, my new evolving relationship with Search and Google, a targeted integration into the business (KB articles and User Manuals), and my proximity to code. 9. CAPITAL: The article above on Generative AI then leads into more essential questions as this is a new functional application layer, so where will the value come from? 10. CASE STUDY: Founder-led sales is a well-documented part of the startup journey, often with inexperienced or more technical founders. Here is a list of 10 Founder-Led Sales lessons learned from a recent Race Capital roundtable. POD OF THE WEEK: SaaStr is now running workshops every Wednesday - a great concept that hopefully lasts. Jessica Bartos of Salesforce Ventures was on the last one and noted that only 150 private SaaS companies have hit $100m+ ARR. |
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