Boards
I'm a SaaS metrics nut and I go to a lot of SaaS board meetings, so I'm constantly thinking about (among other things) how to produce a minimal set of metrics that holistically describe a SaaS company. In a prior post, I made a nice one-
Metrics
Enterprise SaaS and retailers have more in common than you might think. Let's think about retailers for a minute. Retailers drive growth in two ways: * They open new stores * They increase sales at existing stores Opening new stores is great, but it's an expensive way to
Finance
In this post we’re going to look at the management accounting side of multi-year SaaS deals that grow in value over time. I’ve been asked about this a few times lately, less because people value my accounting knowledge [1] but rather because people are curious about the
Metrics
Neeraj Agrawal and Logan Bartlett of Battery Ventures recently published the 2019 version of its outstanding annual software round-up report. I highly recommend this report -- it's 78-pages chock full of great data about topics like: * Why Battery is long software overall * The four eras of software
Churn
In looking at this issue across several companies, I've noticed a disturbing trend / missed opportunity in how many SaaS companies classify the reason for customer churn. Roughly speaking, if companies were hospitals, they'd too frequently be reporting the cause of death as "stopped breathing."
Churn
Enterprise SaaS has drifted to a model where many, if not most, companies do multi-year contracts on annual payment terms. How did we get here? * Most enterprise SaaS products are high-consideration purchases. Buyers typically perform a thorough evaluation process before purchasing and are quite sure that the software
Leadership
I've been making a few presentations lately, so I thought I'd share the slides to this deck which I presented earlier this week at the All Hands meeting of a high-growth SaaS company as part of their external speaker series. This one's kind
IPO
Enterprise SaaS companies need a lot of money to grow. The median company spends $1.32 to acquire $1.00 in annual recurring revenue (ARR) [1]. They need to make that investment for 14 years before getting to an IPO. It all adds up to a median of $300M in
Metrics
Thanks to the folks at Piper Jaffray and their recently published 2018 Software Market Review, we can take a look at a recent chart that plots public software company enterprise value (EV) vs. Rule of 40 (R40) score = free cash-flow margin + revenue growth rate. As a reminder, the Rule
Churn
While I've blogged about this presentation before, I only recently stumbled into this full-length video of this very popular session -- a 30-minute blaze through some subtle SaaS basics. Enjoy! I look forward to seeing everyone again at SaaStr Annual 2019.
Churn
Most of the thinking, definitions, and formulas regarding SaaS unit economics is based on assumptions that no longer reflect the reality of the enterprise SaaS environment. For example, thinking in terms of MRR (monthly recurring revenue) is outdated because most enterprise SaaS companies run on annual contracts and thus we
Metrics
How many times have you heard this conversation? VC: how many sales reps do you have? CEO: Uh, 25. But not really. VC: What do you mean, not really? CEO: Well, some of them are new and not fully productive yet. VC: How long does it take for them to