1. SaaS METRIC OF THE WEEK: TTV - Time To Value: Time to value is similar to ROI (return on investment), but 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. WEBSITE TRUST: Do you have a high churn rate on your home page or landing pages? If so, maybe you have a trust problem. This article outlining the Trust Pyramid is very much worth a read, but TL;DR A website must meet users' basic trust needs before a visitor can be expected to engage meaningfully. With the Trust Pyramid, there are 5 distinct levels of trust-based engagement, each with different design requirements.
3. SPEND: We are all aware of this industry open secret: - SaaS is just a giant Ponzi Scheme - because running a SaaS company requires you to spend a cloud-load of your hard-earned money on other SaaS products. But how much money do SaaS companies spend on everything? Take a read of this benchmarking report for your spending habits. Remarkably to no one, bootstrapped companies are being outspent by venture-backed companies - but the average is 80% of ARR to 115% ARR!! (operating at a loss to support growth - because growth is a Moat).
4. TECHNOGRAPHIC: The evil twin to #3 - Add this doozy of a Portmanteau to your dictionaries and spell checker as it is the label for the Ponzi scheme I described above: How Many Technologies Can a Company Adopt at Once? Answer - there is always one more (JK, but not really).
5. $100 MILLION DOLLARS!: (Insert Doctor Evil GIF in your mind right here). According to the Grandfather of SaaS, David Skok - The average SaaS company burns $52m to get to $100m in ARR, which takes under 9 years (8.7 to be exact). So how? Check this great article from Bessemer Ventures (it's also a little depressing). It's a benchmarking report, complete with a downloadable PowerPoint for what it takes to reach $100m ARR - asking the big questions: What should your gross margin be? How much should you be spending on R&D as a percent of revenue? How does your company's growth rate compare to peers?
6. THE GREAT RESIGNATION: It looks like we could be moving into a "Great Redundancy phase," - but what was the impact of the 'Great Resignation' on B2B SaaS Companies over the past couple of years? The Team at SaaS-Capital takes a look - There is a strong linear correlation between retention and ARR growth rate.
7. VENTURE: Here is some not-negative news: According to this article/report from Crunchbase, regardless of the current market conditions, the most active top 40 VCs have not slowed down, matching the number of investments from 2021. It looks like they are getting good deals, though, as the overall amount of money invested has decreased (which is more in line with the market downturn).
8. 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!
9. PRODUCT MARKET FIT: At an IRL meetup last week, some discussions were had about Product Market Fit and how to measure it. It's crucial because more than 50% of the time, the lack of Product-Market Fit (PMF) factors into the reason a startup fails. Sure - there are ways (listed in the archives of this newsletter) to measure it - but it's an Art more than a science - so read here on how Product Market Fit should make you feel.
10. CASE STUDY: Expanding on #1 above, Time to Value is front of mind for me right now - so, of course, I found a case study on it (its' a LinkedIn post) - but it gives excellent examples of what quality TTV looks like.
POD OF THE WEEK: Unpacking Product Market Fit - #9 the podcast version - this episode references different examples and strategies to understand what kind of PMF would work for your startup.
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