Fresh Insights

Analyses, Musings & Observations

2019 observations from 100+ SaaS companies

If you haven’t subscribed to SaaS Capital’s emails, you should.  They put out fantastic data on the SaaS market.  The latest release came from Managing Director Rob Belcher.  In it, he shares some observations from the past year.  The below is verbatim from Rob.   “SaaS is about to enter its third decade, and technical…
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Product & Dev Spend at 86 SaaS co’s

Building out, maintaining, and upgrading a technology stack requires a constant commitment to developers and engineers, so what is an appropriate level of development or R&D expense for a successful SaaS business? We looked at 86 publicly traded SaaS businesses at the time of IPO and 2 years prior to get a sense for how…
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Negotiate with Investors – 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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‘Perfect is the enemy of good’ and other startup advice

Over the Thanksgiving holiday, I read “Chaos Monkeys, Obscene Fortune and Random Failure in Silicon Valley.” The book is a 2015 vintage, but a lot of the lessons and take-aways are relevant today. It’s a great read that I would highly recommend; key excerpts are below.   FB’s data isn’t that valuable. “The miserable conclusion…
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Negotiate with your 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…
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Tech founder ownership levels

Snapchat cofounders Evan Spiegel and Robert Murphy owned a combined 44% of Snapchat before it went public. Mark Zuckerberg owned 31% of Facebook, Sergey Brin and Larry Page owned 31% of Google, the founders of Eventbrite owned 35%, and Reed Hastings owned 24% of NetFlix. These are remarkable levels of CEO ownership upon going public/exit,…
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The acceptable level of SaaS burn

Of the 62 SaaS businesses that have gone public which we follow, 51 of them were not profitable at the time they went public; that’s 82%. Clearly a certain level of burn is ok so long as you’re growing, but what is that level? Can you lose $1 for every $1 of revenue? Can you…
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SaaS best practices

Last week we met with a SaaS business that in our view is doing literally everything right.  Below some of my notes which I think any software executive will find helpful.   Customer Success.  At this company, customer success reps are specialized by industry so that they can speak the customer’s language and develop some…
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Protecting founders from dilution

Valuation is more important than capital raised to preserve your ownership. To determine this, we looked at founder ownership relative to equity raised for 110 publicly traded tech companies. Our goal was to see if founders that raised less capital owned more equity upon exit, and vice versa, founders that raised more capital owned less…
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VC may not be for you

A good friend of mine just exited the business he founded for $25mm. Since he built the business on so little outside investment, he owned 52% at exit and took home $13mm. This type of exit brings up an important point: too many founders take a typical venture approach which is to focus on the…
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