This happens. Occasionally you and your investors/VC won’t see eye to eye or worse yet, you’re sideways with your VC and the relationship is acrimonious or hostile. While I’ve never had a hostile relationship with a founder, certainly there are times where we’ve been in disagreement on major issues or a founder isn’t happy with us for…
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Venture backed companies like Airbnb, Uber, WeWork, and Spotify, are unprofitable. Is this the norm or just a trend for the more recent vintage of high flying companies? To answer that question, we took a look at the operating income and free cash flow of 123 tech companies at the time they went public going…
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There, I said it. Average Contract Value is (“ACV”) is a vanity metric that does not deserve focus. It is a byproduct of your business model, not a driver of it. It shouldn’t be put on a pedestal. Here is why: The world’s biggest and best software companies tend to have smaller ACV’s. Below is…
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Below are revenue multiples for publicly traded consumer tech companies we follow (B2C). The data is as of June 30th. Industries and therefore multiples vary widely. Commentary is below. Social media is back at 9.4x. The highs in 2017 were ~14x, but a more normalized multiple historically has been around ~9x. Snapchat is…
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Despite the current tumult, SaaS comps are showing unbelievable strength: of the 82 SaaS companies we follow, the average public SaaS business is trading at 17.9x revenue while the median is 11.3x. Interestingly, the gap between the average and median is larger than ever (6.6x), meaning more attractive SaaS companies are being rewarded with big…
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Every time you communicate with one of your investors whether it’s over email or over the phone, ask for something. The right way to do this is to be specific. Below are examples of the wrong way and the right way. The wrong way is to be too broad. For instance, “we’re looking for…
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Managing your working capital is a topic that glazes eyes, but in this environment it’s very important. In all likelihood, your customers are asking to delay payments and your vendors are asking to accelerate them, so if you don’t pay attention to working capital management, you could put yourself in a tough cash position. The…
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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 went…
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The most important metrics for B2C companies are customer acquisition cost or “CAC” and life time-value or “LTV”. The first measures the cost of acquiring the customer while the second measures the profits of the customer over it’s life with you. We found only 5 public companies that disclose real detail about the metrics, but…
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Contribution margin is one of the most important metrics in SaaS. It is 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, so customers acquired in 2011 are the 2011 cohort, those acquired in 2012 are the…
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