Fresh Insights

Analyses, Musings & Observations

The acceptable level of SaaS operating loss

Profitability is not a requirement in SaaS. Of the 64 SaaS IPO’s below, 53 of them were not profitable at the time they went public (83%). Clearly a certain level of burn is ok so long as you’re growing, but what is that level? On median, the operating margin was -23%, meaning for every $1…
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No two startup stories are the same

Below we present the graphics of two startup stories: Casper and Zoominfo. Both companies went public, both are venture backed, and that’s where the similarities end. Casper is an ecommerce company that sells mattresses online. They IPO’d 6 years after founding and grew organically thanks to $248mm in equity funding. Zoominfo provides data on leads….
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Your ‘Break the Glass’ Plan

Sequoia put out a great post with their take on the coronavirus and suggestions for adapting to the oncoming business slowdown.  You can find it here.  I’ve spoken with quite a few of our founders as well; insights from our portfolio are below.   It’s ok to lose a year.  We’ve let our founders know…
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Growing your SaaS cohorts

Growing SaaS cohorts Before we get into the meat of this post, first, a quick refresher: a cohort is a group of customers acquired at a particular time; for instance the “January 2018” cohort would be those customers who were acquired in January 2018. One very important measure in SaaS is cohort growth. Often times this…
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Tech may be recession proof

That’s an aggressive title for a blog, but the data shows it may be true. We looked at the quarterly revenue growth of 47 tech companies before and after the recession and remarkably, the sector performed well. Below is the data. Software. Only 4 companies showed real YOY drops during the recession and as a group,…
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How to price SaaS

Price Intelligently put out phenomenal content on how to price your SaaS product.  A link to the full report is at the end of this blog and it’s well worth the read.  Below are our biggest takeaways.   Don’t use competitors’ pricing as your basis.  “the biggest downside of competitor based pricing should be obvious….
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SaaS revenue per employee: ~$250k

We took a look at the employee count and revenue of 77 publicly traded SaaS companies to determine revenue per employee. The data is below and shows a median of $263k. For newer companies that IPO’d after 2018, the median was $245k. Observations are below: Correlation is strong. The correlation between employee count and revenue…
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What great cohorts look like

The holy grail of ecommerce is to grow your cohorts over time. In other words, the customers you acquire today spend even more the following year and year after that, such that your existing customer base is a source of growth. It’s a very healthy position to be in as you aren’t dependent on acquiring…
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The story of Twitter’s founding

Recently I read Nick Bolton’s book “Hatching Twitter.” It is the story of Twitter and it is fantastic. Below I paraphrased some of my favorite sections, but if there is any book about startups to read, this is it. One of the founders had started Blogger. “Ev explained that Google had approached Ev to buy…
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Profitability isnt a must to exit

I cringe writing that title because we’re sticklers for cash efficiency and achieving cash break even. However, we looked at 123 tech companies at IPO: 87 of them were not profitable (71%) and 74 were not generating positive cash flow (60%). The data and additional observations are below. Ecommerce, Hardware, and Gaming more often generate…
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