28 January / management / best practices
Your startup is growing quickly. To hit next year’s target, you may need to hire many people. Where do you start? Bottoms up or top down? Both are viable strategies, but hiring a strong management team at every level provides some key benefits. First, they help you hire more effectively. Second, they will guide new additions to the team to success. Third, they will reduce unnecessary turnover. As you grow, your company well need to interview and hire large numbers of new people.
How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment. The charts above display Gainsight’s data. I’ve reformatted them to compare segments side-by-side.
24 January / customer support
Last year, I talked wrote 1% of Salesforce’s Revenue Makes a Unicorn.The post talked about the potential in the SaaS ecosystem for startups to identify underserved customers in existing installed bases of incumbents and build big companies serving them better. Kustomer is a customer support software business based in New York that is doing just that. And today they’re announcing two milestones for the business: their $35M Series C and 5x annual growth.
23 January / trends
In the car yesterday, I listened to an interview with Eugene Wei, who described the dynamics of consumer technology as if they were plain as day. It’s rare to hear someone lucidly describe complex topics like the reasons for Twitter’s success and struggles. Eugene wrote many of his ideas in this post though there are some ideas that I found only in the podcast. Eugene was an early PM at Amazon, SVP of Product and Marketing at Hulu, Head of Product at Flipboard, and Head of Video at Oculus.
21 January
I’m thrilled to welcome Travis Bryant as an entrepreneur-in-residence (EIR) to Redpoint. I first heard Travis speak at a technology conference a few years ago. I noticed then that his thinking on go-to-market strategy is among the most modern in Startupland because it combines all of the key aspects of SaaS go-to-market in novel ways. Travis started his career in technology as an Oracle database administrator but moved into sales. He became VP of Commercial Sales at Salesforce, then SVP Sales at Optimizely and helped them grow from single digits to tens of millions of ARR.
17 January / trends / saas
In 2015, I wrote about the trade-off facing vertical SaaS companies. Vertical SaaS companies focus their efforts on a particular group of customers. Procore targets construction with their software and Veeva targets pharmaceuticals with their CRM. This concentration limits the market size, but improves product market fit. Both of those businesses are now worth more than $3B. There is a new twist in SaaS with a parallel dynamic. I’ve started to call them AI Agencies.
09 January
In their book,It Doesn’t Have to Be Crazy at Work, Jason Fried and David Heinemeier Hansson, the founders of 37Signals share how they’ve built and run their very successful company Basecamp. There’s a novel idea in the book: your company is a product used by its employees. [W]hen you think of the company as a product, you ask different questions: Do people who work here know how to use the company?
07 January / financials
In the public stock market, share repurchases/buybacks have reached more than $1 trillion in 2018, a historic high. As the amount of private capital increases, share repurchases in startups are popping up. Typically, they are a very inefficient use of capital. A share repurchase occurs when the company uses cash on its balance sheet to buy shares from an existing shareholder, typically an employee or an early investor. For public companies, buying shares is a way of using excess capital to increase the earnings per share (EPS) and other metrics that investors care about.
04 January / benchmarks / saas / fundraising
How far along was the typical SaaS Series A in 2018? The median business was at $1.8M in ARR and growing at 250%. The chart below shows a representative sample of SaaS Series As’ ARR and projected ARR growth rate for 2018. Breaking this down a bit more into quartiles, the ARR quartiles were: 25th 50th 75th 1.4 1.8 3.0 And the ARR growth rate quartiles were:
26 December / exits / trends / data analysis / saas
Reading the news in the past week made me wonder. Just where are we pricing SaaS companies today? The Nasdaq and the S&P have toyed with a bear market. Many stocks are down 10 to 50%. Absolute valuations are one consideration, but let’s understand it at a deeper level. Have multiples compressed? The answer is yes, they have, but enterprise value to forward revenue multiples are still at some of the highest levels for SaaS companies in the past eight years.