Welcome to the last Newsletter of the year! Happy Holidays everyone. We're taking a break, too, and will be back with more for your inbox in mid-January
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 many things - product-market-fit, market, pricing fit, value, business model viability, etc. The authors of this article from Profitwell describe the formula and also make a point of differentiating between renewal and retention - one is actively renewing, and the other is not actively canceling.
2. PRICING PAGE: This is an excellent article from Chart Mogul outlining why pricing is the centerpiece of any startup/growth company's monetization strategy. They have reviewed over 600 pricing pages to gather best practices on how startups communicate their monetization strategy, starting with "Should you list your pricing?", "How many plans?" plus info on Free Trials, all with great case studies.
3. CAPITAL: According to analysis from Tomasz Tunguz, on average, in 2023, a startup is raising their Series A around ~15+ months after their seed round, a year ago, that would have been 3 months earlier and 3.5x the valuation. Keep this in mind for 2024, as check the 11 months it took for John Li to raise.
4. BENCHMARKS: KeyBanc Capital Markets (KBCM) are returning for their 14th annual SaaS survey for Private Startups (download the PDF here). This report includes responses from execs across companies at various stages. Note - this year's sample size remains very small (104), especially compared to Openview's 3500 respondents, which is why it doesn't get its own Newsletter. But with Openview's future up in the air, we may see a much larger sample size for KeyBanc next year. Unsurprisingly, KeyBanc is also observing a drop in ARR growth and NDR; they also have an excellent slide on Sales and Marketing conversion rates and note that public market software valuations are returning to more normalized levels - about 6x forward multiple.
5. METRICS: David Kellogg lists 15 SaaS metric misuses and a 5-layer maturity model to enhance metrics handling in SaaS companies. He emphasizes avoiding metrics abuse (don't club people with numbers!) and suggests focusing on linking metrics to strategy, fostering a metrics-driven culture, and defining strategic trajectories.
6. AI: 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 87-page slide deck, it's all about AI.....from Silicon to big tech, to all business, to regulation.
7. MARKETING: There is a funny techism along the lines of "30% of marketing is effective, we just don't know what 30%". If this resonates with you, look at this post from MKT1 on measuring what marketing activities are actually driving revenue.
8. FIGMA: In September of last year, I reported on the acquisition of Figma by Adobe. It's now 15 months later, and the deal has been abandoned. Looks to be regulatory in nature and mutual - read Adobe's and Figma's press releases here. Most Figma users are relieved, and Figma has faired well, with a $1 Billion Cash reverse termination payout - Wow! Biggest non-dilutive raise ever????
9. WEB-DEV: Check out the new "The State of Web Development" report by Netlify; it offers web development insights, trends, and strategies for 2024 and beyond, focusing on composable architectures (a new term to add to your tech dictionaries) with 75% of those surveyed having used composable architectures in the last 12 months (surprise surprise - this is what Netlify does), the rise of generative AI (80% use it), and the growing popularity of the Astro framework over Next.js (even though it still remains the most popular). Bootstrap and Tailwind CSS were the most used CSS frameworks.
10. CASE STUDY: Pre Adobe debacle, FIGMA famously were wandering around in the wilderness in the early days until they found Product Market Fit. First Round Capital has broken its growth down (from stealth to enterprise) into 5 phases, and this article dives deep into Figma's Early Days and how patience & discipline fostered a killer product and PLG motion.
POD OF THE WEEK: The problem/solution presentation from Dave Kellogg outlined in #5 above from SaaStr Annual on the 15 types of misuse and abuse of SaaS Metrics is well worth watching. (I watched it twice).