You probably won’t be a success from day 1. You’re going to struggle and may even come close to failure (more than once). The good news: there are plenty of examples of companies that had setbacks and bumps along the way, but were still a great success. Docusign is one such success story. Docusign…
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One SaaS metric we monitor closely is net dollar retention. It measures what percent of revenue you retained from the prior year after accounting for upgrades, downgrades, and churn. Formulaically it’s beginning of period revenue + upgrades – downgrades – churn all divided by beginning of period revenue. If that formula yields a number greater…
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Are startups a young man’s/woman’s game? No. We have 19 portfolio companies today of which 4 of them have CEO’s who are over 45 and has a family. To me, that’s enough proof to indicate you don’t have to be fresh out of college to launch a startup. That said, being young is definitely an…
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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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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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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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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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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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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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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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