Nailing Your Startup’s Value Proposition


This post is by Tomasz Tunguz from Tomasz Tunguz


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What are the pains and aspirations of your customer? Does your product truly solve your customers problems? And fulfill its promise of doing something in a better way? Most startups wrestle with these questions at their outset, when they are in the customer discovery and customer validation phases of the lean startup cycle. But all startups should reevaluate these questions periodically. After all, a company’s customers evolve with time and so do their jobs.

Nailing Your Startup’s Value Proposition


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




What are the pains and aspirations of your customer? Does your product truly solve your customers problems? And fulfill its promise of doing something in a better way? Most startups wrestle with these questions at their outset, when they are in the customer discovery and customer validation phases of the lean startup cycle. But all startups should reevaluate these questions periodically. After all, a company’s customers evolve with time and so do their jobs. The product-market fit assumptions that held true six months or year ago or three years ago may no longer be valid. It can be challenging to succinctly communicate a startup’s value proposition even to people who are intimately familiar with a company or sector. In this sequel to Business Model Generation called Value Proposition Design, Alex Osterwalder and his team have published a value proposition diagram that solves the problem of articulating the match between Continue reading "Nailing Your Startup’s Value Proposition"

The Fundamental Unit of SaaS Growth


This post is by Tomasz Tunguz from Tomasz Tunguz


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After your SaaS startup has found product market fit, the next evolution of the business is to discover the fundamental unit of SaaS growth. A fundamental unit is the atomic go-to-market team: the minimum number of people in the marketing, sales and support roles to be able to support X customers and generate Y in revenue. At the point that a startup has discovered their fundamental unit, time, cash and execution become the limiting factors of the business.

The Fundamental Unit of SaaS Growth


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




After your SaaS startup has found product market fit, the next evolution of the business is to discover the fundamental unit of SaaS growth. A fundamental unit is the atomic go-to-market team: the minimum number of people in the marketing, sales and support roles to be able to support X customers and generate Y in revenue. At the point that a startup has discovered their fundamental unit, time, cash and execution become the limiting factors of the business. Most of the other risks in a company’s path have been mitigated. In other words, it’s time to raise a growth round to scale the business. The key members of a fundamental unit are depicted above. These are the questions when determining the composition of a fundamental unit: How many marketing team members and how much marketing spend are required to create enough leads to feed a Sales Development Rep (SDR) who
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How Much Should Your Startup Spend on Customer Account Expansion?


This post is by Tomasz Tunguz from Tomasz Tunguz


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It’s hard to overstate how powerful negative churn is for a SaaS company. Both New Relic and Zendesk have grown to billion-dollar-plus publicly traded businesses by achieving fantastic negative churn figures: 114% and 120% respectively. in other words, each year existing customers pay these businesses 14 and 20% more than last year. The recent 2014 SaaS benchmark survey aggregated by Pacific Crest and Matrix indicates that expansion revenue accounts for between 8-26% of total annual bookings, increasing as the company scales.

How Much Should Your Startup Spend on Customer Account Expansion?


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




It’s hard to overstate how powerful negative churn is for a SaaS company. Both New Relic and Zendesk have grown to billion-dollar-plus publicly traded businesses by achieving fantastic negative churn figures: 114% and 120% respectively. in other words, each year existing customers pay these businesses 14 and 20% more than last year. The recent 2014 SaaS benchmark survey aggregated by Pacific Crest and Matrix indicates that expansion revenue accounts for between 8-26% of total annual bookings, increasing as the company scales. There are many different ways of achieving this kind of account expansion. In some cases, customers use more of a product over time and consequently increase their spend without help from a salesperson. In other cases, startups rely on upsell teams to entice and encourage customers to increase their spend. Often, these upselling teams operate within the customer success organizations, structured as parallel sales organizations with quotas similar to
Continue reading "How Much Should Your Startup Spend on Customer Account Expansion?"

Why 2015 Will be a Great Year for Startups


This post is by Tomasz Tunguz from Tomasz Tunguz


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At the DEMO conference, Danielle Morrill, the founder and CEO of Mattermark presented an impressive statistic. Seed, Series A, Series B and Later Stage startups employ 1M people, up from 650,000 just six months ago, according to Mattermark’s data sources. While it’s logical to think that the largest and fastest growing startups might employ the majority of startup employees because they hire at stupendous rates, this isn’t the case today.

Why 2015 Will be a Great Year for Startups


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




At the DEMO conference, Danielle Morrill, the founder and CEO of Mattermark presented an impressive statistic. Seed, Series A, Series B and Later Stage startups employ 1M people, up from 650,000 just six months ago, according to Mattermark’s data sources. While it’s logical to think that the largest and fastest growing startups might employ the majority of startup employees because they hire at stupendous rates, this isn’t the case today. Impressively, Pre Series A company employment has boomed, increasing by more than 2x in the past six months. These seed-stage companies employ 450k. Mattermark’s employment statistics proxy the startup formation rate. The fertile fund-raising environment and the accelerating rates of new technology adoption have been enticing a substantial number of potential founders to take the leap of faith required to start a business. The doubling of employees in Pre Series A companies presages a boom in Series A financings over Continue reading "Why 2015 Will be a Great Year for Startups"

How Important are Professional Services to Your Startup?


This post is by Tomasz Tunguz from Tomasz Tunguz


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Hortonworks filed their S-1 last week. Reading through the document, I noticed the company had quite a substantial fraction of professional services revenue; 41% of trailing 12 month revenue is services. Of the companies we have studied in our S-1 analyses, Hortonworks generates more professional services revenue as a fraction of total revenue than any other company. But, many companies do book a meaningful amount of revenue from professional services.

How Important are Professional Services to Your Startup?


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Hortonworks filed their S-1 last week. Reading through the document, I noticed the company had quite a substantial fraction of professional services revenue; 41% of trailing 12 month revenue is services. Of the companies we have studied in our S-1 analyses, Hortonworks generates more professional services revenue as a fraction of total revenue than any other company. But, many companies do book a meaningful amount of revenue from professional services. The chart above shows Veeva, Workday, Responses and MobileIron each generate 20% or more of their revenues from professional services (PS). Typically, professional services revenue isn’t valued very highly because there’s no leverage in this model. To increase revenues, a PS-heavy company must hire people to perform the work, so revenue is a function of hiring pace. Consequently, these companies trade at smaller multiples than pure software companies. For example, Accenture, one of the world’s largest consulting companies, trades
Continue reading "How Important are Professional Services to Your Startup?"