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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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:

SaaStr Podcast #147: Shan Sinha, Founder & CEO @ Highfive On Why Payback Period Is The Critical Metric

Shan Sinha is the Founder & CEO of Highfive, the startup that quite simply makes insanely simple video conferencing. They have raised over $45m in funding from some of the best in the business, including a16z, Lightspeed General Catalyst, and Founder Collective, and then individuals including Aaron Levie, Drew Houston, and Marc Benioff. Prior to Highfive, Shan was the Group Product Manager for Google Apps for Enterprise, which he joined following Google’s 2010 acquisition of his prior company, DocVerse, which later became part of Google Drive. In Today’s Episode You Will Learn:

Catch Up on the The Amazing Sessions from the Summer Social!

Missed the SaaStr Summer Social? Good news: all the sessions are now on-line! We’ve got:
  • The CEOs of red-hot PagerDuty + Algolia, talking about how to scale sales and culture, with customers Small, Medium and Large
  • The co-founder and President of unicorn Medallia with Sequoia Capital + CEO of Clari, on all the lessons learned building an inconic SaaS company
  • The VPs of Sales of newly-minted unicorn Duo Security + LinkedIn/EchoSign/Talkdesk on hiring a Great VP of Sales and more;
  • The CIOs of Uber and Netflix talked about how and why big companies really buy from SaaS startups (you will learn a lot from this one)
  • and more!
These really were great sessions. Check ’em out here:   The post Catch Up on the The Amazing Sessions from the Summer Social! appeared first on SaaStr.