Top 10 in Tech - What to know for Week ending November 22, 2024

1. SaaS METRIC OF THE WEEK:  Consumption-based LTV. If you have a consumption/usage-based model (with other revenue sources sprinkled in), then, like me, you probably have revenue that is not quite consistent month on month.  Variable revenue is now a big thing in SaaS, which is evolving due to AI (see last week's newsletter for more on that - #3). Check out How to calculate LTV with variable revenue customers from the SaaS CFO (comes with a template!).  An analysis of usage-based pricing from Bessemer Ventures is here, to help think about your pricing models.


2. VENTURE: DPI (Distributed to Paid-In Capital) is a measure of the total capital that a fund has returned to its investors (to date), and when looking at their portfolio companies, VCs balance art and science in their exit strategies by selectively selling to secure early DPI gains without losing out on long-term growth potential, while being mindful of the impact on fund performance and LP expectations.


3. GOVERNANCE: Last week's Board post was popular, so here is Mark Suster's series on his Medium Blog covering StartUp Boards. A follow-up article shows a board structure based on stage. He also provides a blog post AND a 43-slide deck.


4. OPEN CLOUD: Battery Ventures' 2024 OpenCloud report reveals enterprises are moving AI projects from experimentation to production, but the gaps between expectations and reality are very much still there (fewer than 30% of AI projects are in prod). But smelling opportunity, Cloud providers are ramping up AI infrastructure to capture a share of the estimated $2T incremental revenue opportunity by 2030; AI's having a pretty major impact on everything cloud. As I've mentioned before - the AI wars are here. One interesting side note slide (slide 15) is that valuations are up.


5. DEVS AI: Accel's 2024 Euroscape report highlights the growing adoption of AI use in software development. 84% of those surveyed (Accel portfolio companies) leverage AI tools like coding assistants to enhance developer productivity. Developers use AI to debug, generate boilerplate code, learn new skills, and drive faster software delivery cycles. GenAI is also reshaping enterprise applications (but only 30% of the time - see above), enabling hyper-personalized customer experiences, and transforming core business functions with AI agents.


6. PURCHASING: Lots of reports this week - Vendr's Q2 2024 SaaS Trends Report reveals a pretty big shift in the software procurement landscape. The big one is that over half (52%) of sellers on their SaaS Leaderboard are new. Despite a 37% decrease in purchase volume for the top 25 categories, the emergence of six new categories suggests that spending is becoming more distributed. Identity and Access Management, Project Management, and Cybersecurity (with Crowdstrike still there for now) continue their leads. And BI is seeing a decrease.


7. AI JOBS: Dragging this up from last year as I had a deeper discussion over the weekend with people convinced that AI will cause employment. Marc Andreessen makes the case in March 2023 that it won't.


8. VENTURE: Scott Hartley highlights the concept of VC "time dislocations," where the current market challenges we are experiencing (like fewer IPOs, lower valuations, and long time between rounds) create opportunities. Savvy investors can secure discounted stakes now, setting the stage for outsized returns when (fingers crossed) markets recover. This may partly explain the slide in #4 above (but probably not as much as Tech hype)


9. MOATS: Moats are one of the best ways to provide a competitive advantage for your business and moats come in all kinds of different flavors (such as speed, Brand, or growth). But here is a great one that conceptually covers B2B and B2C: EMOTION!  When it comes to B2B, this post lists some popular and effective ways companies create moats for their products (see more below).


10. CASE STUDY: Complimenting #9 and Pod of the Week (below) CB Insights reports on Moats IRL with 29 examples of enduring moats (from Amazon and Tesla to Starbucks and Coinbase). Key strategies include leveraging network effects, scaling through cost advantages, and capitalizing on brand loyalty.


POD OF THE WEEK: Expanding on numbers 9 and 10 above, here is Jason Lemkin's pod/vid on Top 10 Moats in SaaS.