Fresh Insights

Analyses, Musings & Observations

ACV is a vanity metric

There, I said it. Average Contract Value is (“ACV”) is a vanity metric that does not deserve focus. It is a byproduct of your business model, not a driver of it. It shouldn’t be put on a pedestal. Here is why: The world’s biggest and best software companies tend to have smaller ACV’s. Below is…
Read More

Tech company revenue multiples in Q2

Below are revenue multiples for publicly traded consumer tech companies we follow (B2C). The data is as of June 30th. Industries and therefore multiples vary widely. Commentary is below.     Social media is back at 9.4x. The highs in 2017 were ~14x, but a more normalized multiple historically has been around ~9x. Snapchat is…
Read More

SaaS revenue multiples are incredible

Despite the current tumult, SaaS comps are showing unbelievable strength: of the 82 SaaS companies we follow, the average public SaaS business is trading at 17.9x revenue while the median is 11.3x. Interestingly, the gap between the average and median is larger than ever (6.6x), meaning more attractive SaaS companies are being rewarded with big…
Read More

How to ask your investors for help

Every time you communicate with one of your investors whether it’s over email or over the phone, ask for something.  The right way to do this is to be specific.  Below are examples of the wrong way and the right way.   The wrong way is to be too broad.  For instance, “we’re looking for…
Read More

Managing cash in this environment

Managing your working capital is a topic that glazes eyes, but in this environment it’s very important. In all likelihood, your customers are asking to delay payments and your vendors are asking to accelerate them, so if you don’t pay attention to working capital management, you could put yourself in a tough cash position. The…
Read More

Getting to exit wont be smooth

You probably won’t be a success from day 1. You’re going to struggle and may even come close to failure (more than once). The good news: there are plenty of examples of companies that had setbacks and bumps along the way, but were still a great success. Docusign is one such success story. Docusign went…
Read More

Good LTV and CAC trends

The most important metrics for B2C companies are customer acquisition cost or “CAC” and life time-value or “LTV”. The first measures the cost of acquiring the customer while the second measures the profits of the customer over it’s life with you. We found only 5 public companies that disclose real detail about the metrics, but…
Read More

The best metric in SaaS – Contribution Margin

Contribution margin is one of the most important metrics in SaaS. It is revenue from a certain set of customers (a cohort) less the cost of acquiring and servicing the customers over time. Customers are generally grouped into annual cohorts, so customers acquired in 2011 are the 2011 cohort, those acquired in 2012 are the…
Read More

Building SaaS pipeline – part 5

I read Trish Bertuzzi’s book ‘The Sales Development Playbook’ and it was by far one of the best sales books I’ve read in a while.  The book focuses heavily on building pipeline with SDR teams.  This is the fifth post I’ve wrote about this book: there was so much good information that putting it all…
Read More

SaaS measures of customer health

In software, there are a few ways to measure the health of the customer base and stickiness of the product. Zuora does a nice job of showing four measures of customer health in their S1. Processed Transaction Volume Zuora’s first measure of the overall health of the business is processed transaction volume. According to their…
Read More