Fresh Insights

Analyses, Musings & Observations

Average contract value in SaaS

Average Contract Value is an important metric in SaaS. If it’s trending up and to the right, it’s a sign that customers are upgrading more than they’re downgrading, the base is getting more “enterprisey”, and you’re really focusing on the ideal customer. However, the last 73 SaaS companies to IPO had a modest median ACV…
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The 12 commandments of customer success

We’ve had the good fortune of learning from and investing in SaaS businesses with excellent customer retention and upsells. Below are some of the key learnings we’ve gathered over time. The Customer Success Team is not the only group in charge of customer success. Preventing churn is everybody’s job, so your engineers should talk to…
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What big VC look for in a CEO

Recently, we got a hold of an investor letter from one of New York’s finest late stage venture funds. The letter shared insights into what the fund looks for in a management team, which resonated with us. Below we share these points, verbatim. We like CEOs that are patient with us and believe that all…
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Layoffs at a startup done right

At some point you may have to lay off a chunk of your team to reduce burn, especially now. Large layoffs at a startup are particularly challenging because the team is small, everyone works in the same office or at least closely, and the impact to the culture can be dramatic. Additionally since group layoffs…
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Pulling off the acquihire

We just watched a company go through a very intense, distressed M&A process that fell apart in the final hour. It was an acqui-hire which has its own nuances relative to traditional M&A. Below are some tips to pulling off your own acqui-hire should it come to that. Protect your team from getting poached. An…
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Q4 Consumer Tech Multiples

Below are revenue multiples for publicly traded consumer tech companies (B2C). Industries and therefore multiples vary widely. If you’re looking for data on SaaS multiples, that blog came out a week ago.   Social media trades at 6.1x. Multiples rose steadily through 2020 peaking at 22.7x on median in Q1 2021. YOY growth in the…
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SaaS Venture Capital – the current state

From time to time, we’ll share our views of what we’re seeing in the market for software venture capital. Below is the latest. The bid-ask spread is very wide. The “bid-ask” is as wide as we’ve ever seen it. The bid is what venture funds are willing to pay for equity in a company and…
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Software Venture Capital – the current state

From time to time, we’ll share our views of what we’re seeing in the market for software venture capital. Below is the latest. The bid-ask spread is very wide. The “bid-ask” is as wide as we’ve ever seen it. The bid is what venture funds are willing to pay for equity in a company and…
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Learnings from the best VC ever – Benchmark

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 company was…
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SaaS Profitability vs Cash Efficient Growth

Right now there is an extreme focus on profitability in SaaS, but perhaps we’re overdoing it. The real focus should be on cash efficient growth. Cash efficient SaaS companies that retain the customer scale really nicely and build a lot of value. The math below shows good SaaS gets more cash efficient over time (beware,…
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