Top 10 in Tech - What to know for Week ending August 23, 2024

1. SaaS METRIC OF THE WEEK: Metric plot twist: ownership. Let's say you have done the hard work and clearly understand the metrics you want to measure in your business. So go check this framework for assigning metrics ownership within teams. After all, clear ownership helps drive better performance and data-driven decision-making.


2. 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.


3. PRODUCT MARKET FIT: A big Startup-ism -  More than 50% of the time, the lack of Product-Market Fit (PMF) factors into the reason a startup fails (keep reading this article though, as it goes through how StartupOS figured their PMF out). AirTree (an early-stage VC) has just published this article taking a look at what metrics VCs like them look at for signs of Product-Market Fit - and also what the red flags are. Also, this article has some great PMF definitions. PMF was called "the only thing that matters" to early-stage startups by Marc Andreessen 12 years ago. Now his team get a little more nuanced, suggesting to focus on Product-User-Fit as an indicator towards achieving PMF. A similar nuance is also true post-PMF with repeatable-scalable revenue models as a precursor to a repeatable-scalable business model (you know - the one with actual profits).


4. SEO: OK - rant time. It's actually more like S.E.Oh-No. I grow increasingly frustrated with Google Search and how the whole internet has gone to shit. It's gone even more to shit since last November, with changes to the Google Search Algorithm, which prioritized results from Forums such as Reddit and Quora (Side story - that created its own AI Hallucination Flywheel). So now brands are exploiting these forums, turning them into marketing channels and further diluting the authenticity of user-driven discussions. Can we not just have one thing?? This shift in Google's algorithm makes finding genuine, unbiased information harder as forums become overrun with brand-driven garbage-town content. Bring on SearchGPT! Time to optimize your website and keywords for Conversational Queries.


5. GTM 2.0: Now that tech companies are expected to show a balanced growth/efficiency strategy, what does that look like from a Go-To-Market Metrics standpoint? Growth Unhinged has you covered with a revamped approach to GTM metrics, spotlighting KPIs like CAC Payback, SaaS Magic Number, and Gross Margin and how to optimize these metrics for sustained profitability.


6. P&L + COGS: SaaS P&Ls are structured in specific ways, as defining what goes into the cost of goods sold (COGS) section is important. So, take a good read of what the SaaSCFO recommends to include for COGS as well as how to structure a SaaS P&L. According to the Author - 90% of them are structured incorrectly, 5% are close, and 5% are correct.


7. TITLES: Earlier this week, I discussed the importance of titles in startups with a startup co-founder. Titles shape perceptions, both internally and externally, influencing early team dynamics and culture. Stay away from the C-Suite title sinkhole early - this article outlines why titles in startups should not be ego-stroke labels but strategic descriptions to reflect the stage and structure of the biz.


8. VENTURE: VCs are facing a challenging moment, with many looking to exit their investments as the market cools and layoffs happening internally. Rising interest rates, slower growth, and reduced valuations drive the trend, prompting a reality check among investors (with a 50% drop in funds being raised from 2021). This is a big shift in VC sentiment. I don't know how permanent it will be, where the focus is now on sustainability and profitability, and I'm not sure what that will do downstream to fund returns.


9. COMPENSATION: The Carta State of Startup Compensation report for H1 2024 is out, and it looks like benchmarks have remained flat since H4 2023. Companies are also much leaner across the board. For example, seed-funded startups had an average of 5.3 employees, down from 6.9 in H1 2021.


10. CASE STUDY: Scaling your Dev team by Stage. Bessemer Venture Partners has a great article on scaling your dev team from 1-10, 10-20, and 20-50.


POD OF THE WEEK: Expanding on #9 above, Carta and Waseem Daher of Pilot discuss what founders should pay themselves, among other great SaaS financial metrics.