The Best Way to Benchmark a SaaS Startup


This post is by Tomasz Tunguz from Tomasz Tunguz


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Following this week’s post Benchmarking HubSpot’s S-1, Josh and Nikos raised an interesting question on Twitter. What are the right ways to benchmark SaaS companies from their early days through IPO? I have always used years-since-founding as the time axis to compare companies, because if I were a founder, that’s how I might think about benchmarks. But after their comments I wondered if there were better ones. Some potential alternatives are:

The Best Way to Benchmark a SaaS Startup


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Following this week’s post Benchmarking HubSpot’s S-1, Josh and Nikos raised an interesting question on Twitter. What are the right ways to benchmark SaaS companies from their early days through IPO? I have always used years-since-founding as the time axis to compare companies, because if I were a founder, that’s how I might think about benchmarks. But after their comments I wondered if there were better ones. Some potential alternatives are:
1. Using time before/since-IPO for the time axis.
2. Grouping companies by ACV to compare growth rates
3. Grouping companies by Revenue at IPO to compare growth rates First, let’s compare using years-since-founding to years before/after-IPO. Below I’ve plotted revenue growth for each of these two timelines. I’ve applied a basic predictive function (loess), which is marked in blue. In the first chart, the predictor does a fairly good job of capturing the spirit of the data. There are
Continue reading "The Best Way to Benchmark a SaaS Startup"

Benchmarking Hubspot’s S-1 – How 7 Key SaaS Metrics Stack Up


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




One of the best ways I’ve found to understand SaaS companies is to pore through their public filings. A few months ago, I analyzed Box’s S-1. In this post, we’ll look at HubSpot’s IPO filing and compare their journey to a public company with a basket of about 40 other publicly traded companies, in the hopes that this data will help other founders chart their path to IPO. In the next seven charts, we’ll explore how HubSpot built their business.

Benchmarking Hubspot’s S-1 – How 7 Key SaaS Metrics Stack Up


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




One of the best ways I’ve found to understand SaaS companies is to pore through their public filings. A few months ago, I analyzed Box’s S-1. In this post, we’ll look at HubSpot’s IPO filing and compare their journey to a public company with a basket of about 40 other publicly traded companies, in the hopes that this data will help other founders chart their path to IPO. In the next seven charts, we’ll explore how HubSpot built their business. We will explore revenue growth, average revenue per customer, sales efficiency, payback periods, net income, gross margin and engineering spending. In these plots, I’ve used HubSpot’s colors as a consistent legend. HubSpot company data is orange, median values are black, and other company values are gray. HubSpot has achieved amazing revenue growth in their first 7 years as a company growing by more than 12x from $5.7M in 2009
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The Impact of a Startup’s Location on its Acquisition Potential


This post is by Tomasz Tunguz from Tomasz Tunguz


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Does a startup’s location impact its M&A prospects? We’ve already determined there is no material difference between the follow-on financing rates by geography. But do acquirers behave similarly to investors? To answer the question, I’ve prepared three charts used Crunchbase data and focused on the seven states with more than 20 acquisitions since 2010. In the first two charts, we’ll compare the share of acquisitions by state to the share of financings by state in both number and dollar value, to get a sense of relative performance by state.

The Impact of a Startup’s Location on its Acquisition Potential


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Does a startup’s location impact its M&A prospects? We’ve already determined there is no material difference between the follow-on financing rates by geography. But do acquirers behave similarly to investors? To answer the question, I’ve prepared three charts used Crunchbase data and focused on the seven states with more than 20 acquisitions since 2010. In the first two charts, we’ll compare the share of acquisitions by state to the share of financings by state in both number and dollar value, to get a sense of relative performance by state. The third chart shows the distribution of acquisitions by state. The chart at the top of the post plots the share by state of number of acquisitions and financings. Californian startups raise 53% of the rounds in this subset of state but see 60% of the acquisitions. It’s the only state to see a higher ratio of acquisitions than financings, although
Continue reading "The Impact of a Startup’s Location on its Acquisition Potential"

Not A Conventional Company


This post is by Tomasz Tunguz from Tomasz Tunguz


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Earlier this week, Google celebrated the tenth anniversary of its IPO. I re-read the Founder’s IPO Letter and found this passage which captured so much about Google’s values: Google is not a conventional company. We do not intend to become one…We will not shy away from high-risk, high-reward projects because of short-term earnings pressure. Some of our past bets have gone extraordinarily well, and others have not. Because we recognize the pursuit of such projects as the key to our long-term success, we will continue to seek them out.

Not A Conventional Company


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Earlier this week, Google celebrated the tenth anniversary of its IPO. I re-read the Founder’s IPO Letter and found this passage which captured so much about Google’s values:
Google is not a conventional company. We do not intend to become one…We will not shy away from high-risk, high-reward projects because of short-term earnings pressure. Some of our past bets have gone extraordinarily well, and others have not. Because we recognize the pursuit of such projects as the key to our long-term success, we will continue to seek them out.
Visiting the campus for the first time in 2005, I felt different than any other workplace I had been to. So much excitement and ambition. But that feeling was more than just a product of the rocket ship growth of the ads business. Google had grown from $220k in revenue in 19aw99, to $19M in 2000, to $86M in 2001, to Continue reading "Not A Conventional Company"

The Four Kinds of Social Capital that Matter When Building Products


This post is by Tomasz Tunguz from Tomasz Tunguz


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Though the term k-factor, a measure of the virality of an application, has waned in popularity since Facebook’s sheep-throwing glory days, the idea of spreading a product through referrals lives on. We all know a good referral mechanism when we see one. Dropbox’s invite-a-friend feature which awards free storage for both the inviter and the invited is the canonical example and resulted in torrid growth for the company. In April 2010, Dropbox users sent 2.

The Four Kinds of Social Capital that Matter When Building Products


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Though the term k-factor, a measure of the virality of an application, has waned in popularity since Facebook’s sheep-throwing glory days, the idea of spreading a product through referrals lives on. We all know a good referral mechanism when we see one. Dropbox’s invite-a-friend feature which awards free storage for both the inviter and the invited is the canonical example and resulted in torrid growth for the company. In April 2010, Dropbox users sent 2.8M referral emails. It’s these kinds of referrals, those that align the incentives of both parties and ones that are natural to the product, that seem to work the best. But what theory, which frameworks, can help a startup think through the rich mechanisms for creating social sharing features that feel right? I believe it’s social capital. The notion of social capital is a relatively new one. First coined by a Frenchman in the 1890s, Continue reading "The Four Kinds of Social Capital that Matter When Building Products"