Fresh Insights

Analyses, Musings & Observations

Sales & Marketing spend doesnt scale in SaaS

Do big companies benefit from economies of scale? While the default answer may seem like ‘yes’, we wanted to see if that was really true.   We looked at the sales and marketing spend of SaaS companies at the time they went public and compared that figure to revenue growth.  Formulaicly, it’s revenue growth / sales…
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CAC doesnt have to rise as you grow

One of the most important metrics for B2C companies is customer acquisition cost or “CAC”.  One debate is whether the cost rises or falls over time.  The argument for rising CAC is the next marginal customer is generally harder to acquire than your last customer.  The argument for falling/stable CAC is that as companies get…
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How to sell code and patents

In 2017, we had a death in the portfolio.  Once all the employees left, the only remaining assets were some patents, servers, domains, and a lot of code.  Recently, we managed to sell that intellectual property (“IP”).  Here is what we learned.   Set expectations.  The value of IP is a small fraction of what…
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The best metric in SaaS – Contribution Margin

Contribution margin is one of the most important metrics in SaaS.  It’s 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 – in other words, customers acquired in 2011 are the 2011 cohort, those acquired in 2012…
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How to build 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…
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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…
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First to market means nothing

There are countless examples of ‘first to market’ not being a sustainable competitive advantage.  Comparing the 2018 public offering of Spotify to Pandora’s original IPO in 2011 is the latest major example.  Below are some excerpts from Pandora’s S1 (official IPO document filed with the SEC) that show its dominance at the time:   Pandora…
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How much SaaS revenue your marketing spend should generate

One of our SaaS portfolio companies recently shared their favorite metric to measure sales & marketing efficiency.  Specifically, they look at new revenue booked over a given time period divided by sales & marketing spend during that period (New Rev/S&M).  It’s one of many ways to measure sales & marketing efficiency, but it may be…
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How to build pipeline – part 4

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 second post of a few I’m going to share about this book: there was so much good…
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How to build pipeline – part 2

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 second post of a few I’m going to share about this book: there was so much good…
Read More