Fresh Insights

Analyses, Musings & Observations

SaaS performance in a recession

SaaS Capital, a lender to software businesses, published an excellent research piece which examined the performance of publicly traded SaaS businesses during the 2008/2009 recession. We decided to summarize some of the findings — if we’re heading into another recession, the data and observations below provide excellent context as to what could happen.   The companies grew….
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Negotiating with anyone – part 2

Below is a continuation of a recent blog post about a book called Never Split the Difference by Chris Voss. Chris was one of the premiere FBI Hostage Negotiators in the world, and his tactics could be useful for negotiating with customers, vendors, and of course your VC. The original blog we wrote highlighted some…
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Is Freemium the Right Pricing Model

Some SaaS businesses selling to enterprise customers have a freemium model, whereby they offer free use of a lower tier version of their product. The goal is to entice the prospect to upgrade to a full-use, fully featured paid product. Does it work? Absolutely. Below are examples of recent SaaS IPO’s with a freemium model….
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Negotiating with everyone, especially VC

I just read a book called Never Split the Difference by Chris Voss. Chris was one of the premiere FBI Hostage Negotiators in the world, and his tactics could be useful for negotiating with customers, vendors, and of course your VC. Excerpts from the book are below. Create warmth by using first names. “I’m sorry,…
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Years to exit for tech co’s

How many years will it take you to exit? We looked at 224 tech companies in various industries that have IPO’d to determine the answer. The list has been updated for recent IPOs. Software is a long road. SaaS businesses take a long time to get to a critical mass to exit/IPO, taking on median…
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Average Contract Value data in SaaS

Average Contract Value is (“ACV”) is a vanity metric that 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 a data set of 73 publicly traded SaaS companies…
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Learnings from Docusign’s long road

You probably won’t be a success from day 1. Most founders struggle and may even come close to failure (more than once). The good news: there are plenty of examples of companies that had setbacks along the way, but were still a great success. Docusign is one such success story. Docusign went public in 2018…
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B2C Tech Multiples - it’s bedlam

Below are revenue multiples for publicly traded consumer tech companies (B2C). Industries and therefore multiples vary widely. Commentary is below. If you’re looking for data on SaaS multiples, keep scrolling. Social media is at an all-time low of 4.6x. Multiples rose steadily through 2020 peaking at 22.7x on median in Q1 2021. YOY growth in…
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LTV, CAC, and payback in B2C

The most important metrics for B2C companies are payback period, customer acquisition cost or “CAC”, and life time-value or “LTV”. Payback measures the speed at which you payback customer acquisition costs, CAC is the cost of acquiring the customer, while LTV estimates the profits of the customer over their life with you. We found a…
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Measuring customer health in SaaS

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…
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