Top 10 in Tech - What to know for Week ending August 16, 2024

1. SaaS METRIC OF THE WEEK: RULE OF 40: Back in 2021, OpenView observed that "investors have forgotten all about the Rule of 40." Last year's response: the Rule of 40 is "back from the dead." This year, it's increasingly essential but a very tough bar to continually achieve Quarter on Quarter (but see #3 below).


2. JTBD: Jobs to be Done is one of my favorite frameworks. It makes the innovation process accessible and tangible in very pragmatic ways. Take a deeper read here on a lightweight JTBD framework—broken down with real-world business examples—or skip straight to the templates.


3. PROFIT MARGINS: Great Rule of thumb from CJ Gustafson at Mostly Metrics this week, who states, "Make sure your target model shows +25%" bottom line at scale." This Rule is excellent for a number of reasons: It demonstrates a sustainable business model (not just a business with a revenue model), you can still plow 30% of revenue into sales and marketing, and you only need to grow 15% per year to achieve the Rule of 40% (see #1 above). Keep reading the article; he also outlines a few businesses with varying profitability ranges.


4. AHA!: Not talking about the Band. Take a look at this great read on product design centered on discovery - what the author references as "Aha moments" - through a customer journey from first encounters through to deep adoption that really focuses on the concept of long-term retention. Go-Practice has a great complimentary article on how to design for Aha (with examples).


5. CLOUD 100: Bessemer Ventures/Forbes created a "Cloud 100" list a few years back, an annual ranking of the world's top private cloud companies in its ninth year. The 2024 list is out, and things had already started to look different last year with the first-ever drop in overall aggregate value. This year saw a bounce back to strong valuations (median valuation of $1.7B), with companies staying private for longer (but demonstrating sustainable growth at scale - see #3 above). These top cloud companies had a median ARR of $170M and multiples at 23x. FUN FACT: A former Bessemer Ventures Alum just won 2 Olympic Gold Medals for the U.S. in Cycling after picking up a bike for the first time in 2017.


6. VENTURE 1: Last month, according to Crunchbase, VCs invested $23B+ into startups, it's a slight dip from June but a 20% rise YoY. Healthcare and biotech led ($6B), while A.I. funding at $5.8B (but this doubled for Q2). A.I. companies are absent from billion-dollar acquisitions as tech giants are opting for strategic licensing instead for now (to bypass regulatory hurdles).


7. VENTURE 2: PitchBook just released its quarterly U.S. Valuations Report and, as reported last month, there are a bunch of mixed signals: Flat and down rounds hit a decade high; median valuation growth for early-stage A.I. is a whopping 115% (see #9 below), which probably helped the average early-stage valuations to nearly double from 2023 ($169m)


8. A.I.: Always lots going on, but are we in an A.I. bubble yet? (there is definite over-investment, but maybe not a bubble yet.). Here is an estimated breakdown of OpenAI's revenue (55% B2C, 21% from B2B, and 15% B2D). But Chat A.I. isn't at PMF yet, even though 70% of us use it all the time.


9. GLOOM BOOM: Andrew Chen makes the case that starting a company in a recession is super advantageous. There is less competition, lower costs, more focused investors, etc. Founders can build stronger, more sustainable businesses and also be positioned for serious success when the market recovers.


10. CASE STUDY: This article showcases Hootsuite's effective content repurposing strategy. By converting existing material into many diverse formats unique to different platforms, Hootsuite maximizes its reach efficiently. Proactive content repurposing is a great brand approach to helping Marketers with #3 above: sustained and capital-efficient engagement and reach.


POD OF THE WEEK: A great podcast featuring Brian Halligan, co-founder and former CEO of HubSpot - consensus is the enemy of scale and other great snippets!