Fresh Insights

Analyses, Musings & Observations

Selling a solution in SaaS

I just finished reading Strategies That Win Sales by Mark Marone & Seleste Lunsford.  It’s worth a deeper read, and below are some of our favorite excerpts.   Support depends on complexity.  “Organizations with highly technical products will require live support through distributors or in-house sales representatives, whereas those who sell less complex product sets…
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The holy grail of ecommerce

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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Autopsy of a venture backed startup

In 2017 we had our first zero at Blossom Street Ventures.  I’ll withhold the name of the company, but I do want to share key learnings from that experience. Below is an autopsy of a dead company.   Build a product for one market.  Our portfolio company built phenomenal technology but didn’t actually productize for…
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cash efficiency in tech

Cash efficiency, measured as revenue per year / equity + debt invested, is every bit as important as revenue growth. Spending too much to grow at best dilutes away your return and at worst will lead to a company’s death.   We did an analysis looking at the revenue, equity, and debt of publicly traded…
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One big investor is a mistake

Whether you’re raising debt or equity, our advice is to get as many investors/lenders as possible.  While there are drawbacks to having a lot of investors, in our view the pros far outweigh the cons. The biggest cons of having lots of investors are that it makes the cap table larger meaning you may have…
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The LTV of $1 invested in SaaS is $6+

We recently did some research showing the typical SaaS company generates $0.58 of revenue per $1.00 of investment at the time they go public.  At that level of annual revenue, the lifetime value of a SaaS customer is anywhere between $6.93 and $13.14 for each $1.00 of investment assuming your net dollar retention is 110%…
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How much cash your SaaS co should burn

Cash efficiency is one of our favorite metrics in SaaS.  Measured as recurring revenue in the latest year / equity + debt invested, it’s every bit as important as growth.   We did an analysis looking at the revenue, equity, and debt of 88 publicly traded SaaS companies at the time they went public.  Using…
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Negotiating with investment bankers

Selecting an investment banker is a lot of work.  Below are the things you need to watch for in the engagement letter with an investment banker.   Term.  The term of the engagement is generally set at 1 year.  Anything beyond that is non-market.  Note that to run a responsible sales process, it will likely…
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The best M&A advice we’ve read

Recently an investment banker named Tom Metz was kind of enough to share his book with me entitled “Perfect Your Exit Strategy”.  It’s about going through an exit with an investment banker.  Below are direct quotes I found most informative.   Plan for the exit.  “Business owners should begin thinking about their exit strategies two…
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Advice on VC from great founders

The book ‘Founders at Work’ interviews well known tech founders about their earliest days.  It’s well worth the full read, but below I summarized portions that really stood out to me.     Introduction   “Perseverance is important because, in a startup, nothing goes according to plan. Founders live day to day with a sense…
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