Fresh Insights

Analyses, Musings & Observations

Benchmark’s early days

eBoys by Randall Stross is a classic. It chronicles the early days of one of the finest venture funds ever: Benchmark. Below are some of the excerpts I found most valuable.     “When Benchmark invested $6.7mm in eBay in 1997, the auction company’s valuation was put at $20 million. By the next spring, the…
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One time revenue matters in SaaS

Everyone loves recurring revenue and rightly so: it’s far more valuable than one-time revenue to VC and acquirers. But, don’t forsake one-time revenue. Whether it’s for services, onboarding, licensing, or some other one-time event, revenue of this type is incredibly valuable especially at early stages. There are three big reasons it’s valuable: It’s a Source…
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VC dont add value

One question I get from entrepreneurs frequently is “so what value are you going to add?” It’s a fair question that should be asked of every VC, and my answer every time is “none”.  Don’t get me wrong, I sit on multiple boards and I think every one of the CEO’s of those companies would…
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Navigate the complex sale

I recently re-read “Hope is not a Strategy — The 6 Keys to Winning the Complex Sale” by Rick page. The book is fantastic and while below are some excerpts which I found valuable.     “The shrinking half life of technology means the window of competitive advantage for products is getting narrower. In today’s high tech…
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Dont limit users

In our view, it’s folly to price SaaS contracts on a per user basis. Instead, a value based approach should be taken whereby the customer will see a 5x+ return on your software while you also earn 3x to 5x on your S&M spend to acquire the customer. Once you’ve figured out the price, delight…
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What SaaS margins really are

The general rule of thumb for spending in SaaS is 40/40/20. In other words, 40% of operating expense should be on R&D, 40% should be on sales and marketing, and 20% should be on G&A. 21 SaaS companies have gone public from 2018 to today, so we wanted to see what their ratios are. Perhaps…
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SaaS performance during recessions

We took a look at the data from 15 publicly traded software companies during the recession. The data is below.   1. Growth fell 15% on median. During the first 4 quarters of the recession highlighted in yellow, YOY growth fell 15% on average across those quarters. Only 4 companies showed more significant YOY drops…
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SaaS Insights from a SaaS lender

If you haven’t subscribed to SaaS Capital’s emails, you should.  They put out fantastic data on the SaaS market.  The release below came from Managing Director Rob Belcher recently.  In it, he shares some observations from the past year.  The below is verbatim from Rob.   “SaaS is about to enter its third decade, and…
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The most entertaining book on SV

I read “Chaos Monkeys, Obscene Fortune and Random Failure in Silicon Valley.” The book is a 2015 vintage, but a lot of the lessons and take-aways are relevant today. It’s a great read that I would highly recommend; key excerpts are below.   FB’s data isn’t that valuable. “The miserable conclusion was that Facebook, though…
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Finding your churn floor

Peloton’s prospectus (known as an S1) is fantastic in that the company shares a lot of data about the business. One trend however, really jumped out at us: while user engagement is increasing dramatically, churn is not declining. Below is a more detailed graphic which shows the trend. As you can see, old cohorts are…
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