Top 10 in Tech - What to know for Week ending March 18, 2022

1. SaaS METRIC OF THE WEEK: LTV:CAC - the LTV:CAC ratio is often interpreted as an accurate value of customers. I say it can be a way to measure the viability of a companies business model. The question is simple: How much money will a customer spend on you versus how much effort is spent acquiring that customer? This ratio needs to be quantified to validate go-to-market strategies, monetization strategies, product strategies. If one of those isn't working - that ratio will be whack. It is almost folkloric now that this ratio should be 3:1 - but is that true? The SaaSCFO looks at this myth (This is also his most popular article) - TL;DR - kinda yup. It's an excellent rule of thumb.
2. MISTAKES: A somewhat morbid post-mortem article from Failory who analyzed 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. CBInsights also lists their top 12 reasons startups fail.
3. CUSTOMER SUCCESS: This is all about preserving as much revenue as possible over time (post-purchase). Complementing the post above, take a (deep) read of this extensive guide for building excellent customer success teams - it's not just about limiting churn, but also a department and practice to convince existing customers to buy even more from you. As Jason Lemkin said back in 2015: "Customer Success is where 90% of the revenue is". Want a working example? Chart Mogul expand on this and explain their approach to a (successful) success management strategy.
4. GROWTH: Who doesn't like a good Growth Strategy guide? Good SaaS growth requires a market, products, and GTM, and this guide tells you all about each one to help build an epic growth strategy and build a plan - because it even comes with its own Worksheet!
5. ARCHITECTURE: The enormous success in SaaS is the margin, which in turn, when you look behind the curtain, is good software architecture and infrastructure centred around multi-tenancy. Here is why multi-tenancy matters. Many modern SaaS apps are heavily dependent on good API architecture, too, so check the tips in this article on designing better APIs.
6. PRICING: Speaking of those modern SaaS Apps above, only 41% of SaaS Companies priced by seat in 2021 (You may have seen my "occasional" posts on Consumption-Based pricing from time to time in this newsletter). Interesting to note that this survey now includes varying segments beyond B2B and B2C - such as B2d (D for Developers) and API companies, which reflects the evolving tech/SaaS landscape.
7. PRICING: Only 41% of SaaS Companies priced by seat in 2021 (You may have seen my "occasional" posts on Consumption-Based pricing from time to time in this newsletter). Interestingly, this survey now includes varying segments beyond B2B and B2C - such as B2d (D for Developers) and API companies, reflecting the evolving tech/SaaS landscape.
8. 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.). Ready to get started drafting some documents? Here are some great resources for free legal docs so you can stick to the mission: Avodocs - 3 free per month. 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.
9. VALUATIONS: What happens if you are a company that raised and spent heavily in the over-inflated COVID market of '20'21? The team at Tech Crunch's The Exchange looks at changes in the Startup Market and argues that it's probably what is about to happen to these companies in Q2 '22. TL;DR - nothin' pretty, that's for sure, if you are short of cash. Jason Lemkin draws similar conclusions on Covid valuation anomalies using the BVP Nasdaq Index.
10. CASE STUDY: Toast. This is the Point of Sale system you have probably never heard of for many of you. For others, it's a Decacorn you have never heard of. It's only ten years old but listed on the NYSE last year and is currently valued at about $21 billion (which is a YTD low) with approx $568m in ARR (that's still about 37x according to my math). Why so hot? 118% growth and pretty over a half bill in revenue is not too shabby but check here for some detailed notes from under the hood. Plus, check this article on how Toast's $12m SEO Moat aided their pandemic led growth (when their target market - restaurants - were having a hard time).

POD OF THE WEEK: Great recommendation sent to me this week based on last week's post #4 covering differentiation. From FullFunnel.io - Strategic positioning for B2B tech companies with Mark Evans