The 2018 Ultimate Guide to Artificial Intelligence

Editor’s Note: You can read our 2017 Ultimate Artificial Intelligence Resources Guide here. 2017 was a big year for artificial intelligence. We saw the first human Go player defeated by a machine (AlphaGo), Saudi Arabia grant citizenship to an ‘empty-eyed humanoid’ named Sophia and – more practically – the expansion of ‘smart speakers’ like Google Home and Amazon Echo. From agricultural software to B2B marketing applications, from robotics to medical care, last year’s achievements shifted the perception of AI from an emerging technology to a maturing market segment. There is no doubt that in 2018 the ‘race for AI‘ will continue to guide startup companies and tech giants alike to push to achieve that next big breakthrough. But, as the focus on AI continues to intensify, one top challenge remains: the already visible shortage of qualified AI talent. To put this into perspective, a 2017 New York Times
Continue reading "The 2018 Ultimate Guide to Artificial Intelligence"

5 Simple Pricing Hacks to Jumpstart Your Startup’s Growth

Pricing can be scary. Even slight changes can result in upset customers, bad PR, and, worse still, lost deals. Unfortunately, taking a scientific approach to optimizing your pricing can be complicated and time consuming. Getting pricing right involves hard work like quantifying your buyer personas, gathering data on price sensitivity and willingness to pay, and carefully designing A/B tests. Let’s face it, if you’re running an early stage startup, you don’t have the time or resources for all that complicated analysis, research, and testing. The consequence? Pricing doesn’t get touched at many startups. In fact, Price Intelligently found that an average company has only spent 8 hours on pricing. That’s not 8 hours in a year, that’s 8 hours over the company’s entire history! We understand you’re likely strapped for time and resources. You’re probably looking for a simple answer. So what can you do to move pricing in
Continue reading "5 Simple Pricing Hacks to Jumpstart Your Startup’s Growth"

Netflix Quietly Perfected Their Pricing. Here’s What You Can Learn.

You know the story. Back in 2011, Netflix restructured their pricing in a big way. . They unbundled streaming plans from the traditional DVD-by-mail business, increasing the price of the combined offering from $10 a month to $16 a month. And they rebranded their DVD-by-mail business to Qwikster. The public reaction was staggeringly negative. Netflix lost a whopping 800,000 subscribers in Q3 2011. Their stock price plummeted immediately following their Q3 2011 earnings release. Over the course of four months, Netflix’s stock price dropped by almost 80% compared to July 2011. In the chart below, you can see the painful progression (courtesy of Yahoo! Finance). NFLX_YahooFinanceChart When asked about the 2011 price change, Netflix’s CEO Reed Hastings said he wasn’t sure if the company had run customer focus groups before announcing the new plans. And, if they had run focus groups, he wasn’t sure what those focus groups had said. All of
Netflix pricing
NFLX_YahooFinanceChart (2)
Continue reading "Netflix Quietly Perfected Their Pricing. Here’s What You Can Learn."

Why SaaS Companies are Moving Away from Pricing Transparency (and Why That’s a Bad Thing)

Back in June 2016, I reported on a relatively new phenomenon in SaaS: the rise of pricing transparency. We investigated pricing practices at 87 of the largest public and private software-as-a-service (SaaS) companies in the US. That study revealed that more than half of private SaaS unicorns (55%) were publishing their pricing online for the world to see, as opposed to only 28% of public SaaS companies. These SaaS unicorns seemed to embrace a new ethos. Rather than being opaque and hard to do business with, like enterprise software companies of yesteryear, the SaaS company of the future had nothing to hide. They would be friendlier to their buyers, who often didn’t want to waste cycles talking to a sales rep just to get basic pricing information about a product. Well, the pendulum has swung back the other direction. I revisited the private SaaS unicorns that I had analyzed back
Publish vs don't publish pricing
InsideSales pricing evolution
Continue reading "Why SaaS Companies are Moving Away from Pricing Transparency (and Why That’s a Bad Thing)"

Stop Making These Seven Fatal Pricing Mistakes

Ask yourself, how many hours have you spent optimizing your pricing in 2017? Odds are, not nearly enough. That’s a serious problem. Why? Pricing is the foundation of how you make money as a business, and nailing your pricing is critical to the long-term viability of your company. First Round just released some sobering new evidence to back this up in their newest State of Startups report. After surveying more than 800 venture-backed startup founders, First Round identified key differences between companies that struggled to fundraise compared to their peers that see fundraising as a breeze. It turns out, according to the survey, that companies that struggled struggled with funding are:
  • 3x more likely to say that they monetized too late
  • 2x more likely to say that they pursued the wrong business model
  • 40% more likely to say their burn rate got too high (a symptom of monetizing too late)
Pricing mistakes
Pricing mistakes
Pricing mistakes
Pricing mistakes
Continue reading "Stop Making These Seven Fatal Pricing Mistakes"

Private Equity is Your New (and often best) Exit Opportunity

Last year Salesforce went on a SaaS buying spree. The CRM giant gobbled up the likes of Demandware ($2.8B), Krux ($800M), Quip ($750M), Beyondcore ($110M) and at least eight other technology companies. This year, they haven’t made a single notable SaaS acquisition to date. Marc Benioff And Salesforce isn’t the only major strategic sitting on the sidelines. Oracle made nine acquisitions in 2016, including Netsuite ($9.3B), Textura ($600M) and Dyn ($600M). This year they’re down to only three according to data from Crunchbase. Likewise, IBM went from thirteen acquisitions last year to a measly four in 2017 (at the time of this article’s publication). This downturn is more than just an anomaly. While venture funding continues to flow to startups, strategic buyers have done 20% fewer deals, from 1,173 to 911, over the last year.MA tech deal activity Strategic buyers have hit the pause button for a few reasons. Some, like Oracle and
Continue reading "Private Equity is Your New (and often best) Exit Opportunity"

4 Traits of Fast-growing SaaS Companies

Editor’s Note: This article first appeared on VentureBeat here. You can find fast-growing software companies in almost any vertical, but there are certain characteristics they all share. To find out which of these features are most key, my investment firm combed through our 2017 SaaS Benchmarks data, which covers 300 SaaS companies ranging from pre-revenue to more than $20 million in ARR. Here’s what we found.

1. Fast growers are extremely efficient at acquiring new customers

As investors, we keep a close eye on customer acquisition cost (CAC) payback. This metric represents how long it takes, in months, to pay off the costs of acquiring a given customer on a gross margin basis. We use it as an indicator that a company has the right fundamentals in place to effectively ramp up customer acquisition. Despite how important it is to properly understand CAC payback, our data shows that companies consistently
CACY payback period
Sales Channel Mix
Retention Rates vs. growth
sales and marketing spend vs. growth
2017 SaaS Benchmarks
Continue reading "4 Traits of Fast-growing SaaS Companies"