Tom Tunguz

NOVEMBER 28, 2017

Above, I’ve charted the headcount growth rate for 10 of the fastest growing software companies in recent history. I’ve normalized the years for when all the businesses were roughly at the same headcount - fewer than 50 people. This is a proxy for when the business established product market fit.

Headcount 187

Headcount Scaling Software Business 187

SaaStr

SEPTEMBER 28, 2024

Kyle Norton CRO of Owner is kicking off a new podcast for Pavillion with revenue leaders, and we were lucky enough to be guest #001 here: It’s a great convo on many SaaStr themes — but from the perspective of a VP Sales / CRO. Never play the blame game As a revenue leader, it’s crucial we take accountability for sales performance.

Technical Review 291

Technical Review Sales Hiring Sales Recruiting Revenue 291

SaaStr

FEBRUARY 18, 2022

Sales-driven SaaS startups end up with about half their headcount in sales and marketing. One thing that sneaks up on you in SaaS is just how many sales, marketing and revenue professionals you are going to need: First it sneaks up on you in the early days because the initial tiny team become so efficient. Sales doesn't.

Scale 351

Scale Sales Hiring Scaling Headcount 351

SaaStr

NOVEMBER 18, 2022

There is almost no software and non-headcount budget for CS. 64% of CS teams spend $200,000 or less a year on non-headcount, with growth stage companies spending the least, just 0.1% of revenue. 41% of CS Teams Own Revenue Expansion — More Often Than Sales. This data is interesting. This really surprised me.

Customer Success 346

Customer Success Headcount Churn Revenue 346

SaaStr

JANUARY 29, 2021

Let’s say you are at $10m ARR and decently funded, you’ll probably have 100 headcount by this point, or at least, by $15m ARR. You’ll probably want to add field sales (for Big Deals) by $10m ARR or so, another 2-3 headcount here, minimum. Let’s assume that takes 5 headcount, minimum, ideally 6. >>

Sales Hiring 348

Sales Hiring Headcount Scale Engineering 348

SaaStr

MAY 24, 2023

That doesn’t mean huge enterprise customers, but here it’s their $50k+ ACV ones, which now represent 28% of revenue, up from 22% just a year ago. At least in the short term, it is turning most of us can do more with about the same headcount in SaaS. #4. 47% Of Revenue Outside the U.S., 47% Of Revenue Outside the U.S.,

Headcount 321

Headcount Sales Hiring Scale Enterprise 321

SaaStr

MAY 29, 2024

Growing Headcount and Expenses, Just More Slowly Than Revenue The story for most SaaS and Cloud leaders. But they are growing all expenses more slowly than revenue. Sales & Marketing expense is up 9.8% — but that’s on 22% revenue growth. Grow headcount and expenses, but more slowly than bookings. #5.

Scale 292

Scale Headcount Sales Hiring AI 292

Tom Tunguz

JUNE 25, 2020

Marketing teams spend 5-10% of ARR on programs (non-headcount expenses), and this is pretty consistent across ARR. Engineering:Account Executive headcount ratios scale from about 3:1 down to 1:1 as a company scales revenue. Most sales teams ramp AEs (both inside and outside) on six month time periods. This was surprisingly low.

Headcount 364

Headcount Scale Benchmarks Retention 364

SaaStr

SEPTEMBER 21, 2023

That works for a while, but you end up with not enough headcount if you do freeze hiring but still want to grow. But it’s still going to hire more slowly than revenue growth, and that’s the key. More on this in our deep dive with co-CEO Eran Zinman: You can’t grow forever with no growth in headcount.

Sales Hiring 321

Sales Hiring Headcount Scale Cloud 321

SaaStr

JUNE 22, 2021

They all either have in their back pocket, and/or are constantly on the prowl for, the next 2-3 great reps because sales is a lead-driven but headcount-closed business. In sum -> Learning and understanding how to maximize the revenue per lead. >> The VP of Sales and VP of Marketing need to be the Mom and Dad of Revenue.

Sales Recruiting 306

Sales Recruiting Scale Sales Hiring Revenue 306

Tom Tunguz

DECEMBER 13, 2022

So, did headcount at the Series A. In 11 years, the median headcount at Series A swelled from 15 to 28. [1]. Series A dollars provided the business 17 months’ of runway at constant burn assuming no revenue. 1] Thank you to the Pitchbook team for running the headcount analysis data. [2] Round sizes ballooned.

Headcount 316

Headcount Venture Capital Finance Startup 316

SaaStr

JULY 24, 2023

2 — New Workloads Are Only A Small Percentage Of Today’s Revenue, But Are The Majority Of Tomorrows. They milk the base, and the new customer account doesn’t remotely approach the new revenue growth rate. Adding new customers does, and ideally, growing new customers at least half as fast as revenue. Revenue growth.

Revenue 245

Revenue Scale Sales Hiring Cloud 245

SaaStr

SEPTEMBER 19, 2023

Some of the changes we’ve seen in the last year or two include: CAC reduction Headcount optimization Price complexity Quality of revenue A different environment means a different strategy, and Notion Capital lays out four business model changes that could be helpful based on what peers are doing. Strive for $150k of revenue per FTE.

Business Model 293

Business Model SaaS Payments Payments Headcount 293

SaaStr

MAY 10, 2023

Revenue Up 30%, but Employee Count Only up 10%, to 7,055. At the end of the day, in SaaS, efficiency really comes from growing revenue faster than headcount. Almost everyone is doing more with … yes, more headcount, but only a smidge more. 40% of Their Revenues Comes from Partners. Including HubSpot. #4.

Scale 317

Scale SMB Headcount New CTO 317

SaaStr

JANUARY 4, 2023

Very Few Professional Services — Only 3% of Revenues. ProServ is only 3% of Okta’s revenues. International Revenue Steady at 22% of Revenues — and EMEA is strong. Customer Count Up 22%, While Revenues Up 37%. High NRR leads to revenue growing faster than your new customer count. #7.

Scale 306

Scale Headcount Sales Hiring SMB 306

SaaStr

MAY 12, 2021

You can back into it: First, figure out how much revenue you need to close in the next twelve months. But in theory, higher quotas should “pay” for specialization so in theory, this won’t impact headcount too much. But in practice it often adds 20% or so to the headcount in the model. Because that’s a lot more than now.

Scale 306

Scale Sales Hiring Headcount Sales 306

Tom Tunguz

DECEMBER 6, 2022

The chart above shows the combined Sales & Marketing + Research & Development Costs divided by revenue. PLG companies spend 9 percentage points of revenue more on S&M + R&D than sales driven companies (p value < 0.001 since Covid). S&M Spend / Revenue. R&D Spend / Revenue. Total Spend / Revenue.

Headcount 344

Headcount Market Research Acquisition Education 344

SaaStr

NOVEMBER 16, 2022

Free Cash Flow up from 3% of revenue at $400m in ARR to 10% at $550m in ARR. From $11m in annual revenue in 2017 to $500m+ in 2022. 50k+ customers are 26% of revenue today, and 10+ seat deals are 76%. Still, a quarter of their revenue is still from smaller customers. And a few other interesting learnings: #6.

Headcount 312

Headcount SMB Engineering Scaling 312

SaaStr

MAY 30, 2023

And very few of you are doubling headcount, vs everyone in 2021. There’s just so much more revenue to close. Hiring has way slowed down, but many folks are still hiring, albeit at a reduced rate. 56% of you aren’t hiring, or barely hiring. But a good chunk of you are still hiring, albeit in moderation.

Sales Hiring 268

Sales Hiring Headcount Engineering Revenue 268

SaaStr

JUNE 4, 2022

But a few thoughts on “the hardest part” for the first few stages: From $1-$100k in ARR, the hardest part is often how little revenue you get from each customer. So much work, so little revenue. And each month, you barely add enough new revenue to hire just one of those great engineers you need. You have 2,000 customers now.

SaaS 350

SaaS Headcount AWS Churn 350

SaaStr

JULY 31, 2020

Founded in 2015, Chorus operates a SaaS platform that provides valuable insights from conversations – say with calls, video conferences and emails — for revenue teams. Last year, the company doubled its headcount, tripled revenue and landed on G2’s Top 100 Global Software list. .

Scale 359

Scale Artificial Intelligence Payments Payment Services 359

Tom Tunguz

JUNE 20, 2020

We can derive the table above if we look over the entire respondent base and bucket headcount by ARR. But if you were curious about what to expect at each stage of revenue growth, the data illustrates common patterns. Today, we’re answering the question: how do teams grow as a startup scales?

Scale 363

Scale Scaling Sales Hiring Software Review 363

Tom Tunguz

AUGUST 2, 2023

If a startup raised a top quartile Seed round, Series A, B, & C, they typically would have grown headcount by about 6% in the last twelve months. The headcount growth rate for all other companies? No statistically significant difference in headcount. Why look at headcount growth? About double at 12%.

Headcount 244

Headcount Startup AI Scaling 244

SaaStr

NOVEMBER 15, 2020

And Box’s revenues are now 99% through the sales team, from 0–1% when it started as a pure freemium product. You don’t need 100% sales-driven revenue to Go Big. Many of Twilio’s bigger customers go through sales, but then a huge amount of the downstream revenue is “automatic” as customers use more. Hybrid models can be great.

Scale 339

Scale Sales Hiring Sales Headcount 339

SaaStr

NOVEMBER 22, 2023

market cap (11x) – Growing 29% a year — efficiently – Only 30% of revenue from software, rest payments + services – 20% Free Cash Flow, 16% non-GAAP margins – Frozen… pic.twitter.com/8PLvYP1JRz — Jason ✨Be Kind✨ Lemkin  ?? Freezing Headcount is How They Got So Much More Efficient Again, a common story.

Payment Services 278

Payment Services Payment Solutions SaaS Payments Payments 278

SaaStr

MAY 31, 2023

It’s one of the few still commanding a premium multiple in today’s world, and still growing at tremendous rates: Snowflake is also a barometer of everything in SaaS and Cloud, because a significant amount of its revenue is consumption-based, at least in part. Growing Headcount, But Much More Slowly That Revenue.

Headcount 246

Headcount Scale Sales Hiring AWS 246

SaaStr

NOVEMBER 25, 2020

Hoping headcount (alone) will drive revenue. At some point, every SaaS company gets big enough where headcount does drive revenue. Before then, leads drive revenue. The flip side at the VP of Sales level, is excessive confidence around the roadmap as a top revenue driver makes everyone nervous.

Sales Hiring 359

Sales Hiring Sales Recruiting Sales Headcount 359

SaaStr

AUGUST 16, 2021

The best place to put that incremental dollar on the revenue team is in existing customers. “Adding headcount in customer success dept” — Hoala Greevy, CEO, PauBox. You can’t cut corners in headcount in success with automation. You just make the headcount more effective. Hire 9s & 10s ONLY.

Churn 321

Churn Sales Hiring Headcount Technical Review 321

Clouded Judgement

AUGUST 16, 2024

Today, IT budgets are roughly broken down into: ~50% headcount / personnel, ~25% software, ~15% hardware, and ~10% outsourcing / consultants. As software grows as a percentage, I think we see headcount / outsourcing shrinking. Revenue multiples are a shorthand valuation framework. Let’s discuss why this matters.

Outsourcing Services 274

Outsourcing Services Cloud Software Outsourced Development 274

SaaStr

MARCH 1, 2022

30% New Customer Growth Fueling 37% Revenue Growth. 30% of their revenues are still from customers running Jira and friends on their own servers. Headcount up 7%, while revenue is up 37%. But that only increases total headcount 7% which revenues went up 37%. 5 Interesting Learnings: #1. Impressive leverage.

Scale 261

Scale Marketplace as a Service Headcount Cloud 261

Tom Tunguz

JUNE 26, 2022

The market values COIN, Coinbase’s stock, and UNI, Uniswap’s token at about 3x trailing 12-month revenues. As the market has corrected, so have the trailing 12-month revenues (TTM)/Market Cap multiples. Coinbase and Uniswap generate billions in revenue. Coinbase’s trailing revenue in Q1 2022 approached $7.5b

Benchmarks 299

Benchmarks Headcount Government Business Model 299

SaaStr

JULY 25, 2021

First, figure out how much revenue you need to close in the next twelve month s. But in theory, higher quotas should “pay” for specialization so in theory, this won’t impact headcount too much. 30 sales professionals to add that net $10m in new revenue, even with a $600k quota! You can back into it. SDRs, BDRs, etc. 22 heads /.75

Scale 294

Scale Sales Hiring Sales Headcount 294

SaaStr

AUGUST 21, 2024

Only 18% of Revenue From SaaS. Shopify and Bill both also get the majority of their revenue from financial fees and transaction fees, not software subscriptions. But Toast even more so, at 18% of revenue. They are now profitable, but it’s not easy when 80% of your revenue only has 20%-28% gross margins. #4.

Scale 294

Scale Payment Methods SaaS Payments Payment Solutions 294

SaaStr

MARCH 8, 2023

Atlassian is trading at over $40B with revenue north of $3B. Don’t Tie Revenue To Headcount “You want to get away from a business model where every incremental dollar requires incremental hiring,” says Deatsch. So instead of focusing on scaling headcount quickly, work toward growing revenue quickly.

Sales Hiring 258

Sales Hiring Enterprise Headcount Scale 258

Tom Tunguz

JUNE 1, 2023

A mental model like this should guide both software procurement on the buyer side & product management on the vendor side especially in an procurement environment where every software vendor must justify their cost-savings or revenue increase. Assume a 15% productivity improvement that results in a 1.5% improvement across the company.

AI 312

AI Startup Scale Headcount 312

SaaStr

APRIL 7, 2024

Unlike building a product team, there is no efficiency when building a sales org: half of your headcount will be in sales at $10m, $50m, or $100m in revenue. It’s tough for founders to grok 40%+ of their headcount forever may be in sales. Add more structure here, and everything gets better. #6.

Sales Hiring 305

Sales Hiring Scale Headcount Sales 305

SaaStr

JANUARY 21, 2022

Dorian Stone , Head of Organizations Revenue at Grammarly, is here to share lessons from his experience of scaling the company from consumer to SMB to Enterprise to help you steer your expansion efforts in the right direction. When Dorian stepped into his current role, they promised the board a strong growth on the revenue line.

Scale 246

Scale SMB Enterprise Sales Hiring 246