Management
[Editor's note: revised 3/27/17 with changes to some definitions.] It’s been nearly three years since my original post on calculating SaaS renewal rates and I’ve learned a lot and seen a lot of new situations since then. In this post, I’ll provide a
Boards
[Updated 5/1/18 to add net new ARR, LTV/CAC, and both customer and employee NPS.] In the course of my board and advisory work, I get to look at a lot of software as a service (SaaS) startups financials and I'm often surprised how people choose
Metrics
There are a lot of SaaS posts out there with some pretty fancy math in them. I'm a math guy, so I like to geek on SaaS metrics myself. But, in the heat of battle running a SaaS company, sometimes you just need to keep it simple. Here&
Enterprise
The single most misunderstood software-as-a-service (SaaS) metric I’ve encountered is the CAC Payback Period (CPP), a compound metric that is generally defined as the months of contribution margin to pay back the cost of acquiring a customer. Bessemer defines the CPP as: I quibble with some of the Bessemerisms
Management
This post reviews Aaron Ross and Jason Lemkin’s new book, From Impossible to Inevitable, which is being launched at the SaaStr Conference this week. The book is a sequel of sorts to Ross’s first book, Predictable Revenue, published in 2011, and which was loaded with great ideas about
SaaS
In response to my post, SaaS Stocks: How Much Punishment is in Store, a few of my banker friends have sent me over some charts and data which shine more light on the points I was trying to make about SaaS forward twelve month (FTM) enterprise value (EV) revenue multiples,
SaaS
The stock market feels like Nordstrom Rack these days: * Salesforce at $56/share * Tableau at $38/share * ServiceNow at $47/share * Zendesk at $15/share * Workday at $49/share * NetSuite at $54/share Redpoint's Tomasz Tunguz points out that SaaS forward revenue multiples have been more than cut
SaaS
The more I hear about SaaS companies talking up big total contract value (TCV) figures, the more I worry about The Tightening, and the more I think we should create a new SaaS metric: TTCV = theoretical total contract value. TTCV = PCV + NPCV Prepaid contract value (PCV) is the prepaid portion
CAC
I'm working on my CAC calculations and I'm trying to determine if I should include all marketing costs or just my direct demand generation costs? I've talked to many of my CMO peers and can't get a consistent answer to the question?
Metrics
It’s a frothy time and during such times people can develop a tendency to get sloppy about their numbers. The first sign of froth is when people routinely discuss company size using market capitalization instead of revenue. This happened constantly during Bubble 1.0 and started again several years
Churn
I was chatting with a fellow SaaS executive the other day and the conversation turned to churn and renewal rates. I asked how he calculated them and he said: Well, we take every customer who was also a customer 12 months ago and then add up their ARR 12 months
Cloud
I love metrics. I live for metrics. Every week and every quarter I drown my team in metrics reviews. Why? Because metrics are the instrumentation -- the flight panel -- of our business. Good metrics provide clear insights. They cut through politics, spin, and haze. They spark amazing debates. They
