Top 10 in Tech - What to know for Week ending September 3, 2021

1. SaaS METRIC OF THE WEEK: Cohort Analysis ( with a Cohort Analysis template for download). GoPractice has a Product focused article on how to forecast key product metrics through cohort analysis and The Startup takes a look at this metric from a VC Due Diligence perspective.
2. FORWARD MULTIPLES: This is a preferred metric used to value SaaS companies, who generally carry very few assets, little to no profitability, but all kinds of potential. That number is wildly variable and currently increasingly bonkers at a quarterly rate - as of the writing of this, the median SaaS valuation multiple for public companies stands at 21.1x, and check out Snowflake at 84.5x!!!. So how is that number calculated? .....it depends: But a companies revenue growth and sales efficiency dominate the model. Cash flow margins, net income margins (profitability), gross margins, and many other metrics are largely irrelevant.
3. GROWTH: Looking at those bonkers forward multiple numbers above, that metric represents an increase of over 150% in the last five years. Why? SaaS Growth rates that don't quit - the average is 40%
4. CUSTOMER PROFILE: Here is a great tool for anyone. Sales can be a real uphill battle when sales teams don't truly understand their ideal customer, building out customer profiles is an incredibly useful way to identify your best customers. So download this Profiler kit pdf and use these questions and survey generator to quickly generate the ideal questions and template for your customer profiles. The rest is all on you.
5. CAPITAL: Here is another term for your dictionaries - Entrepreneur Capital. It's a nuanced take on traditional VC - but one that is much more human-centric where the author differentiates VC and EC as Venture Capital = Companies + Money vs Entrepreneur Capital = Teams & Companies + Resources & Money. Seems superficial at first glance - but the more I sat with it, the more I realized it's all about assembling the right team.
6. A/B TESTS: Every path towards growth and revenue is a hypothesis in startup land and A/B testing is something to embed across your company and culture as you experiment towards growth - it's why failure is key to not failing. When conducting experiments such as A/B tests, get started with this refresher and then this Step-by-Step Guide. Go Practice has some great advice on how to make these experiments run faster. On the extreme end of A/B testing is booking.com who often runs over 1,000 tests simultaneously! But here is the payoff: That flywheel enabled Booking.com to compound at healthy growth rates while maintaining ~30% EBITDA margins and scaling Google ad spend to approximately $4 billion per year!
7. WHAT TO SAY: For outbound messaging, how can you make customer communications effective, balancing business objectives with empathy, authenticity, and value for the recipient during these times? Here are some great templates from Close.com and Wordstream has some great copywriting guidelines in the time of Covid.
8. CUSTOMER REFERRALS: Last week I referenced/suggested putting some effort and focus on Churn and optimizing ways to keep that number low. Let's take it a step further this week by leveraging those frothiest of customers into a referral channel. Here is a playbook from SaaStr.
9. REAL ESTATE: What the heck does this have to do with startups and tech? And no this isn't about WeWork - so hear me out: Due to the massive (and likely fairly permanent) shift in work from home culture, Q1 2021 saw the subleasing of vacant office spaces surpass the 2008 financial crisis and Dot Com bubble-era levels (this is in North America). Prop-tech is finding a new gear and a boatload of startups are retrofitting unused space with companies providing indoor farming, micro gyms, and local storage services.
10. CASE STUDY:  Some of you have signed up for this newsletter by a snappy little plug-in on the website. For a while, it was powered by Privy - and it worked really well. I had to bail once they monetized downstream because I'm a cheapskate and I now use a different product - but my whole Privy onboarding experience was something I took note of - as it was so easy. But they didn't start that way. Before the team discovered the power of an integrated app store discovery and distribution strategy, they were relying 100% on outbound!

POD OF THE WEEK: Don't want to read #10 above? You can just listen to the podcast version. Great notes on achieving scale via App Stores