Top 10 in Tech - What to know for Week ending May 13, 2022

1. SaaS METRIC OF THE WEEK: CLTV: This metric represents the average revenue that a customer generates before they churn - Customer Life Time Value. ChartMogul has a great online calculator here. Go to 'advanced mode' as this calculator references the traditional formula and the David Skok version (which is the advanced one but viewed as being more realistic)....and check here for a thought-provoking read of why your LTV may be lower than you think.


2. SECOND ORDER REVENUE: Doubling down on LTV this week and a little contrary to the last link above, Jason Lemkin claims that CLTV isn't the whole story and often references a term called "Second-Order Revenue". He states that traditional CLTV analyses underestimate genuine revenue generated by customers by 50-100% (whaaaaat!!!) in most SaaS models selling to any businesses larger than SMBs.


3. GROWTH: Five ways to build a $100M business - just follow this simple video, or read this article, find your target market animal spirit, and you are good to go. This is a fantastic way to think about customers, segments, pricing, and cohorts.


4. USAGE BASED PRICING: v 2.0! Usage-based pricing aligns with customer growth and helps minimize friction during customer onboarding, as customers only pay for what they're using - it's right-sized. This strategy typically sees best-in-class net-dollar retention results. The cool thing is that the current understanding of ways UBP is being applied in forward-thinking SaaS companies is so fresh that this article is an updated understanding of UBP Article from November 2020 (but here is that playbook anyway as a downloadable PDF).


5. PRICING 1: Only 41% of SaaS Companies priced by seat in 2021. TechCrunch also notices that more and more SaaS companies are shifting to usage-based, not seat-based, pricing. They reference OpenView's annual Financial and Operating Benchmarks survey noting that startups that adopt product-led growth and UBP outperform their peers. With the more recent additional complexity introduced by B2D (D for Developers) models and Data/AI/Intelligence-based products, traditional pricing no longer works for many of us - and how do you even price intelligence as a product per seat?. Tomasz Tunguz breaks down pricing in Per-seat vs Usage-based scenarios. Bessemer Ventures also reports that UBP sees best-in-class net-dollar retention results.


6. PRICING 2: Speaking of that OpenView report - you can download that here. It's a survey of almost 600 SaaS companies, and it's fantastic, measuring a 2x adoption of usage-based pricing in companies surveyed since they started the survey back in 2018. There is also a great slide (#16) with a decision tree to decide if usage-based pricing is right for your business.


7. DATA: I don't think I have more to add than the title of this article: "You Cannot Be Data-Driven Without Experimentation" well, OK, fine, I do: The opposite of that is also a truth to hammer home "You Cannot run experiments successfully without being data-driven". We all overestimate our experimentation skills AND our Data collection skills.


8. CUSTOMER OPERATING SYSTEM: What exactly is the difference between Customer Success and Customer Support? Get started here to understand the nuances. They are both parts of the same customer journey spectrum. Totango posits, in this recent SaaStr Annual presentation, that we need a fresher look at Success and Support that they coin the "Customer Operating System". Like the presso? Here are the Google Slides deck.


9. PITCH: Getting a VC's attention in an initial pitch meeting is incredibly important. So here are 10 tips to help your pitch game from Fran Rotman presented in a 28-part Tweet-storm (and check these 16 rookie errors founder make pitching to VCs from Jason Lemkin). According to TechCrunch, these are the 5 most critical pitch deck slides most founders get wrong. Finally, here is a monster collection (139!) of funded pitch decks (including the neo-classics: AirBnB, LinkedIn, Intercom, Transferwise, Canva, and Sendgrid).


10. CASE STUDY: Upwork - I have fantastic full-time staff that originated from shorter-term gigs on Upwork, which is now worth $6 billion and at $400m+ in ARR. 2020+2021 gave them a chunky Covid boost, and they are only just getting started with the good ol' fashioned "move-upmarket" strategy, with an absolute classic 80/20 rule in effect. So 80% of clients are SMBs, but 80% of the revenue comes from 20% of clients.


POD OF THE WEEK: Financial Reporting for Startups is something every founder has to up-skill at - this webinar (replay) covers operational and financial forecasts. Answering all those hairy questions - how do I forecast ARR when in startup mode?