You Know What’s Even Better Than MRR? POGR. Plain Old GAAP Revenue.

There’s a trend that’s accelerated in the past year or so with companies I meet with, advise, track, mentor, have invested in, etc. The trend is that I have no idea what their revenues are 🙂  What I mean by that is that in an effort to present all different types of revenue as “recurring”, the whole meaning of MRR has been corrupted.  On the one hand, I’ve seen many startups start to include non-recurring revenue in “MRR”.  Hmmm.  Which of course you can’t, since the the second R means Recurring.  On the other hand, I’ve seen companies not give themselves enough credit for all their revenue streams.  And really worst of all, I’ve seen so many startup craft new metrics I simply can’t understand.  XYMRR.  This-AND-ThatMRR. There’s nothing wrong with any of this, as long as you do one key thing:
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Jennifer Tejada (CEO, PagerDuty): How Selling Sunny Delight and Software are Similar 5 Truths of B2B2C (Video + Transcript)

Who knew that selling Sunny D would help Jennifer Tejada, CEO of PagerDuty, learn how to sell software? Jennifer shares a humorous story about a grocery store, her grumpy customer, and five truths that will help you sell better regardless of your market. One thing you should definitely try to avoid is getting caught with Shiny Object Syndrome. It’s easy to focus on the next big thing, especially in SaaS, but by doing so, we lose sight of solving the bigger issues for our customers. Speaking of the customer, a lot of them want frictionless product engagement without a person involved, but when it comes to bigger deals, it’s all about having that real communication between humans. No matter what you do, you must understand that time is the most valuable and irreplaceable currency in the market. You can view Jennifer’s slides here. And if you haven’t heard: SaaStr Annual
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Becoming a Beloved Brand: Lessons from JetBlue’s VP of Marketing

Airlines are notorious for pissing people off. And unfortunately for the industry, much of what drives customer experience – the weather – is beyond anyone’s control. But some airlines, like JetBlue, inspire heartfelt customer advocacy in an industry not known for rave reviews. So how do they do it? To learn more, we invited Jamie Perry, former VP of Marketing at JetBlue, to share how the airline leverages customer feedback to thrive and evolve – an important lesson for anyone running a business. First Jamie shares a brief video in which a JetBlue customer named Paul Brown tells the story of his relationship with the airline in a way that reads more like a bonafide love story than a customer review. Paul actually refers to JetBlue as the “love of my life, the person that puts the wind beneath my wings.” He then goes on to describe how he and
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What is considered a fair or happy medium secondary amount for the founders to take off the table at a Series B VC funding round?

I’ve come up with a rough guideline:
  • If valuation is > $100m pre,
  • And founder sells < 5% of her holdings,
  • It’s not that big of a deal, and probably a good idea. If it makes things less stressful for the founders, that’s better for everyone.
Where I get anxiety is if it’s neither of those too cases. If the founder is selling > 5%, she’s not just getting a little liquidity … she’s selling out a material amount of her stake. That’s worrisome. And if the price she or he is selling is less than $100m pre, it sort of tells me they aren’t really building a Unicorn. If you think you are building a Unicorn, why sell > 5% of your shares at < 1/10th the exit price? No one would. It’s just getting good. Anyone would want to hold in that scenario, other than to get some
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How big should the addressable market be to go into vertical SaaS? Is it a good idea to avoid the addressable market if it appears small?

I try to look at two things in Vertical SaaS:
  • Will everyone in the industry use it? and
  • Is the app so core, they can charge $20,000+ a year for it?
Even a fairly small business can pay $20,000 a year for one app, usually. Oftentimes, only one. But if it’s the core ERP of their business, what they truly run their company on, that one app … they often can afford $20,000+ and up. If I see evidence of that, I get very bullish, even if the market doesn’t seem huge. Now what if you just can’t get $20k+ up from SMBs and SMEs in a vertical? Then market size starts to be super important. There’s a whole other category of apps SMBs and SMEs can afford that cost $99-$299 a month or so. There are a ton of apps that end up being $3k-$6k a year. The good
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If you just received your Series B funding (10-15 million USD) for your B2B SaaS company focusing on SMEs, what would you use the funds for?

If you’ve raised $10m-$15m, I’m assuming you are somewhere between $2m and $10m in ARR (revenue). The answer is almost always the same: double down on what is working. You’ll be tempted to use the capital to enter new markets, to expand into new segments, to try out new verticals. Tiny experiments are OK. But almost always, the fastest and easiest way to go from $1m to $10m is to double down on what is working:

The Rising Stakes in SaaS

Last week, I participated in two discussions about the changes in the SaaS world. I believe they are fundamental. The most important force shaping the industry today is competition. The level of competition in many core SaaS segments is intense. Why? The SaaS era is about 20 years old. Salesforce was founded in 1999. Since then, many major categories of software have been saasified. Venture capitalists have financed many of those businesses. Over that 20 year period, annual SaaS investment has increased 20x, peaking in 2014 at $7B. Those venture dollars have financed a panoply of competition. In 2012 ChiefMartec landscape counted 350 vendors selling to sales and marketing. Today, that figure is 5000. The landscape is so vast - and the logos so minuscule - that it’s useful only as an illustration of competition. This sea of SaaS startups have reshaped the market. Incumbent client/server technologies have lost their
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