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[Note: This post first appeared as a guest post on Andrew Chen's blog. Andrew is a writer and entrepreneur and has written a large number of must-read essays on topics such as viral marketing, growth hacking and monetization. He was kind enough to publish my post on his blog, and I am republishing it here.] If you’re a long-time reader of my blog (or if you know me personally) you’ll know that cohort analyses are one of my favorite tools for getting a deeper understanding of a product’s usage.
SaaS product management professionals should always remember that there are four P’s in marketing , one being product. Unfortunately, software companies have a bad habit of thinking about product in isolation from the rest of the marketing mix. This is a particularly costly mistake in SaaS and is the root cause of many a SaaS Don’t. Unlike other businesses, SaaS creates a real-time, always-on connection between the customer and the company through the SaaS product.
One number investors use to benchmark SaaS startups across sectors and industries is sales efficiency. There are a handful of variants of this metric, sometimes called the magic number, but ultimately they all aim to provide some sense of the incremental revenue returned by sales and marketing investment. To make it more concrete, if a startup invests $500k in marketing and sales this quarter and generates $1M in incremental revenue, net of the cost to provide the service, for the next 12 months
There's a guy in my town who advertises himself as "The Bulkhead Man." What he does is install the entryways that go from the outside of a house into a basement. Most are heavy steel doors that are mounted onto the concrete foundation. Here's a photo of mine, partially obscured by a very healthy holly bush. I assume "The Bulkhead Man" could probably handle a lot of other construction projects around the house: build a deck, hang new cabinets, replace siding, whatever.
Your payments integration is more powerful than you think. In today’s complex business landscape, treating payments as just a software feature is a missed opportunity for significant growth and customer acquisition. With the right partner, payments can become a strategy that leads to competitive advantages. Designed for software leaders, this playbook outlines how to harness the full power of a payments strategy to drive substantial revenue and enhance the overall customer experience.
Driving sustainable growth is a challenge for every SaaS business from startups to public companies. In the beginning, the SaaS recurring revenue model seems like a dream compared to the revenue fits and starts of licensed enterprise software. But within one short customer lifetime, every SaaS CEO startles awake to the fact that the churn monster is always looking over your shoulder.
Driving sustainable growth is a challenge for every SaaS business from startups to public companies. In the beginning, the SaaS recurring revenue model seems like a dream compared to the revenue fits and starts of licensed enterprise software. But within one short customer lifetime, every SaaS CEO startles awake to the fact that the churn monster is always looking over your shoulder.
Paying for an Uber is a breeze. I step out of the car and go on my way. Behind the scenes, Uber has identified me, recorded my fare, added a gratuity, and sent me a digital receipt that I can easily forward to Expensify. That’s the way I want all my payments to be. Paying for Uber with a mobile phone is less work than using a credit card, which is the biggest competitor for share of wallet of in-person payments.
At all hands meetings on Tuesday afternoons, our 75 person AdSense Ops team reviewed the most important metrics for the business: top-two box customer satisfaction scores, revenue growth and customer churn. But unlike every other all hands meeting I attended, these meetings ended with a monkey and a dog. Our director, Kim Malone, would stand up and call for two stuffed animals, first, Whoops the Monkey and Second, Duke the Dog, both of whom employees had carried to the meeting.
This week, Netflix announced its US userbase grew to 31M subscribers surpassing HBO for the first time. The magnitude of Netflix’s milestone is hard to overstate. In a bid to compete with Netflix, HBO has partnered with Comcast, which serves 21M subscribers, to trial an Internet-only subscription plus HBO , the first time HBO is available to US consumers without a full cable subscription.
Quietly mentioned in yesterday’s press conference about Google’s Android update is a new feature that will change the way people use their mobile phones, search deep-linking. With KitKat, Google is applying its world-class crawling and search technology to the content and data within mobile applications. Quoting from the Verge, >A search for a restaurant will offer a link directly to that restaurant page in the OpenTable app if you have it installed, allowing you to set up a reser
Incorporating generative AI (gen AI) into your sales process can speed up your wins through improved efficiency, personalized customer interactions, and better informed decision- making. Gen AI is a game changer for busy salespeople and can reduce time-consuming tasks, such as customer research, note-taking, and writing emails, and provide insightful data analysis and recommendations.
Every SaaS business suffers from churn. If churn isn’t managed properly, the lost revenue from churned customers offsets new revenue and the business flat-lines or suffers negative revenue growth. I’ve seen startups employ three patterns for offsetting churn: acquiring new customers faster, upselling existing customers to buy more software, or structuring pricing to grow with customers.
How do you validate an idea for a software startup before the product is built? Last week, a founder of a SaaS business and I were wrestling with this problem. It’s a question without a universal answer. After a while, we came up with quick and dirty rule of thumb for his business. Can he hit his quota? Suppose this founder wasn’t the founder, but the first inside sales hire for the startup.
There’s an interesting phenomemon occurring in founder compensation for post-Series A companies: founding CEOs are swapping cash for larger equity stakes in their companies. Founding CEO salaries, post Series A, have fallen by about 24% while founder equity has increased by 32%. This trend is broad. Each year, Redpoint portfolio companies participate in a compensation survey along with the portfolio companies of about 50 other firms, totaling about 800 startups.
There’s a perpetual and roaring debate in Startupland about the ideal founding team. Should the ideal team be entirely computer scientists? How important to success is having an MBA/business person? What about the stories of billionaire dropouts? To answer that question, I’ve aggregated the academic backgrounds of 30 of the top startups of the past few years and analyzed the make up of each of those founding teams.
A failed payment isn't just a lost transaction - it could mean a customer churning for good. But not all payment declines are the same. For SaaS businesses, decline reasons vary, shaped by customer demographics and the nature of your service. Understanding your decline reason make up can be a game changer when it comes to improving retention and revenue.
Intent to purchase is the engine of the consumer web. Creating and capturing intent motivates almost every dollar invested into ecommerce and advertising. Intent is also the fuel for the Internet’s most successful business model, Google’s AdWords + Search. As the internet has evolved, so have the ways of creating and capturing intent. From display to search to retargeting to collections, each new technique has leveraged data in a novel form to discover consumers’ wishes.
Financial statements are the Rosetta Stone for a business. They are the most succinct way of communicating how a business operates to management teams and boards, who weigh the trade-offs of different investments. In the early stages of the startup, financial statements aren’t used much as a management tool. They are most often used to keep an eye on monthly burn rate.
In the past 24 months, something extraordinary has happened. The value of publicly traded SaaS companies has grown by 200 to 400% while the underlying customer unit economics of those businesses hasn’t changed. Below is a chart of the ratio between enterprise value to revenue for two segments of SaaS companies. The All Segment contains 36 publicly traded SaaS companies.
When I was a teenager I read a book called Barbarians at the Gate about KKR’s leveraged buyout of RJR Nabisco. Two journalists detail the dramatic struggle for power and control of the company between Henry Kravis of KKR and Nabisco’s CEO Ross Johnson. From that point, I was hooked on business history. In the valley, there’s a massive collection of verbal history that is passed around.
Transitioning to a usage-based business model offers powerful growth opportunities but comes with unique challenges. How do you validate strategies, reduce risks, and ensure alignment with customer value? Join us for a deep dive into designing effective pilots that test the waters and drive success in usage-based revenue. Discover how to develop a pilot that captures real customer feedback, aligns internal teams with usage metrics, and rethinks sales incentives to prioritize lasting customer eng
Freemium SaaS and free-to-play games have a lot in common. If you’ve ever harvested crops on Farmville or raised an army in Dragons of Atlantis, you’ve experienced an aspirational product. The same is true if you’ve signed up to use a freemium CRM, expense reporting tool or note taking app. Freemium SaaS businesses, like free-to-play gaming companies, seek to build a large funnel, extract data from the free users, and leverage that data to increase the conversion and retention of users into long
It’s an important question and one that arises most often as a SaaS startup scales. Churn, masked by growth, becomes a limiting factor of growth. How much should the business invest in managing churn? Our SaaS benchmarks from earlier this week tell us the average public SaaS company has a 3% monthly revenue churn or a 2 year lifetime and a sales efficiency of 0.8, which implies a 5 quarter pay back period on cost-of-sales and cost-to-serve.
Bhutan, the world’s largest book at UWashington Library. Anyone who has ever penned a blog post has asked, how long should this post be to maximize viewership? I’ve often wondered the same thing, particularly in the moment before I click the publish button and broadcast a perhaps-too-short-perhaps-too-long post into the Interwebs. I’ve written 256 posts in the past 18 months and I sought to understand the impact of word count on every metric I could measure: page views, time on site, time on pag
If a typical SaaS business loses about 2 to 3% of their customers each month to churn, the business must grow by at least 27% to 43% annually to maintain the same revenue. The idea written as an equation: Revenue Growth = Customers x Avg. Contract Value x (Growth Rate - Churn Rate). At the beginning of a SaaS startups' life, when the company generates $1M in annual revenue, churn in absolute dollar terms is small, about $300k for the year.
Large enterprises face unique challenges in optimizing their Business Intelligence (BI) output due to the sheer scale and complexity of their operations. Unlike smaller organizations, where basic BI features and simple dashboards might suffice, enterprises must manage vast amounts of data from diverse sources. What are the top modern BI use cases for enterprise businesses to help you get a leg up on the competition?
For most startups, a website or mobile app is the primary place to establish and reinforce a brand, a critical part of building a valuable company. But brand health tends to be a hand-wavy, amorphous concept. A founder and head of marketing at a company I worked with posed this simple but brilliant question to concretely gauge brand health: If you removed the logo from the website/mobile app, could our customers identify the experience as ours?
Over the course of the past few months, I’ve built six projects that use APIs from Twitter, Google, LinkedIn, Mailchimp and others. These APIs enable me to extract data that I use to analyze this blog and build tools to be more effective. Once I extract the data from their platforms, no API platform understands why or how I use the data. While web companies measure many things on websites and mobile apps, very few apply the same rigor to APIs.
On this blog, Twitter is the second largest source of traffic. Twitter yielded 21% of visitors in the last 30 days. Because I suspect that tweets containing my blog’s links don’t reach a very large proportion of my Twitter followers, I’m experimenting with traffic recirculation techniques by retweeting older articles periodically. Of the approximately 150 posts on Svbtle, I have recirculated 30.
Deserve is a toxic word. During my junior year in college, I trained like crazy to make the varsity boat on the crew team. Two workouts per day for six days a week during the four week Christmas holiday and on through winter training. That winter, I set a personal record for a 2000m sprint. In April, we left for Georgia and Augusta River for spring training where our coach seat raced the team to decide the varsity lineup.
Speaker: Jay Allardyce, Deepak Vittal, Terrence Sheflin, and Mahyar Ghasemali
As we look ahead to 2025, business intelligence and data analytics are set to play pivotal roles in shaping success. Organizations are already starting to face a host of transformative trends as the year comes to a close, including the integration of AI in data analytics, an increased emphasis on real-time data insights, and the growing importance of user experience in BI solutions.
Credit: O'Reilly. Startups, you are doing data science wrong. That’s the title of a post penned by Ryan Weald in GigaOm this week. Weald echoes DJ Patil’s idea : “product-focused data science is different than the current business intelligence style of data science.”. Weald points to a different model of data scientist, an engineer, not a statistician, who can perform queries and based upon some insights, improve the product with a few code changes and a push to git.
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