For an enterprise software company, what percent of total expenses should the marketing department take up?

In the end, you probably don’t want to spend too much more than 20% of the first-year customer value in marketing. You can justify spending more if you have a long customer lifetime (e.g., true enterprise customers), material upsell down the road (then the deal size is really larger), and if you have a lot of capital to spend to grow faster. So maybe 20% if you are leanly funded or not funded, maybe up to 50% if you have a ton of capital. Remember, if you have a sales-driven model, sales costs are probably going to eat up 30% of that first-year revenue on a fully-burdened basis. More on the math here: How Much Can You Really Spend on Marketing? (And The “Problem” With The S+M=ACV Axiom) | SaaStr But … The thing is, if you have super happy customers, Second Order Revenue really matters. Getting the Continue reading "For an enterprise software company, what percent of total expenses should the marketing department take up?"

SaaStr Podcast #183: Eoghan McCabe, Co-Founder & CEO @ Intercom on The Right Way To Structure Your Org Chart

Welcome to Episode 183! Eoghan McCabe is the Co-Founder & CEO @ Intercom, one of the fastest growing SaaS companies of the day, providing a new and better way to acquire, engage and retain customers. Due to their phenomenal growth they have raised over $240m in funding from some of the best in the world including Kleiner Perkins, Social Capital, Bessemer, and Index, just to name a few. As for Eoghan, prior to co-founding Intercom, he founded an award-winning software design consultancy called Contrast, and co-founded Exceptional, a developer tool startup acquired in 2011 and now a part of Rackspace. In Today’s Episode You Will Learn:

Zero to 100 – A High Growth SaaS Playbook

I have great pleasure in announcing a new program called Zero to 100 – The Growth Academy. This program is my response to what so many of you have been asking for: a detailed instruction manual for how to take your startup from zero to $100m, with a particular focus on the area of building...

How to be a Manager

When I graduated college, I felt the insatiable pull to join a startup. I became Chief Operating Officer at a bootstrapped tech startup in Boston and stepped into the role with the overconfidence that only a naive recent-grad could have. Not surprisingly, everything I tried to do to build our business was much harder than I could have possibly imagined. I found myself bombarded with internal questions such as:
  • How do we build a qualified sales pipeline?
  • What do we do when a customer is upset?
  • How do we make sure to pay the right amount of taxes?
While these questions kept me up at night, perhaps the most difficult question that I faced was: how do we build a great team and manage people effectively? I’m not unique: most founders or newly promoted managers have no formal management training and instead are learning by trial and error. Needless to
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Should you introduce Freemium in a B2B SaaS startup to boost growth?

Probably not — because it’s too late. If you don’t start Freemium, it’s very very hard to add that DNA later, once you have real revenues, processes and software optimized around larger customers and deal sizes Freemium:
  • Requires a much more elegant onboarding (no human assist) that most enterprise software
  • Requires millions of users to make the conversion funnel work. More on why here: Why You Need 50 Million Active Users for Freemium to Actually Work | SaaStr
  • Requires that the users get huge value out of the product in minutes, without human interaction to explain that value
  • Distracts the sales team
  • Distracts the marketing team
  • Etc.
If you start there, and do OK there, you can then go upmarket. Your product and your team will have the DNA. But if you have a product today that has thousands of users (not millions) and requires onboarding, selling, training … the Continue reading "Should you introduce Freemium in a B2B SaaS startup to boost growth?"

As a SaaS founder, can you tell us the story of how you found product-market fit?

I had to brute force it, at least the second time at EchoSign. When we launched we had a small but decent number of sign-ups, and once we had a paid product in a few months, a small number of reasonably happy paying customers. Not many. But at least a few that were happy. Enough to say “push on”. But it wasn’t enough. We only got to about $200k in ARR by the end of the first year, and were running low on cash. We had something for sure — but not enough, and not growing fast enough, for true product-market fit. In the end, we had to go more enterprise, and have a richer product, and develop more critical integrations (Salesforce, etc.) to find true product-market fit for real, which in the end took probably 18 months from Day 1. At that time, there wasn’t a big enough
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How to Position Your Startup to Private Equity

The word is out: private equity has solidly emerged as the year’s best exit opportunity in SaaS. When I wrote about the trend last November, the top private equity firms had rapidly ramped up the pace of deals, raised record funds, and become much more comfortable with growth rather than just EBITDA. PE firms haven’t shown any signs of slowing down. Over the course of 2017, private equity buyers officially spent as much as large strategic acquirers on buying SaaS companies. What’s more is that they’ve been paying attractive prices (9.1x and 7.1x revenue for SolarWinds and Cvent, respectively) while continuing to offer best-in-class deal dynamics like a faster and more predictable closing. This inevitably begs the question, how should SaaS companies position themselves to be attractive to private equity buyers? To find out, I sat down with two experts. The first was Darren Abrahamson, Managing Director
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Exits: Bain Capital on the Right Time to Exit [Podcast]

As Season 2 of BUILD comes to a close, it’s only natural to examine the exit landscape. OpenView’s VP of Corporate Development, John McCullough, discusses the current exit landscape and the importance of creating relationships with strategic buyers well before a deal is done. Then Darren Abrahamson, Managing Director at Bain Capital, talks through the merits of private equity as an exit option and how a CEO can choose between several buyout offers. Prefer to listen on iTunes? Access the episode here.
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