Cloudflare is one of those iconic Cloud companies most of us use, and know about as a product and vendor … but perhaps we don’t think as much about as a public company. And quite an epic one it is, at $300m+ in ARR and a $25B+ market cap!!
What can founders learn from them as a public SaaS / Cloud company? Here are 5 Interesting Learnings:
#1. 3,200,000 Total Free+Paid, ~100,000 Paid Customers, with 736 at $100k+ in ACV and 16% of the Fortune 1000. We’ve seen a lot of leaders with tons of SMB customers and a smaller number of $100k+ deals, but Cloudflare is perhaps the most extreme here. Over 3m+ sites and services use Cloudflare, and then 736 of them end up paying $100k+. Cloudflare really does serve every size customer, with a classic funnel of 3m free, 100k paid, and
A little while back, I gave a great SaaS Founder CEO a Gift.
A real gift.
This founder CEO was at about $1m in ARR, doing well, but with only a smidge of angel funding and limited resources.
And I gave him an insanely great VP of Sales candidate. An amazing fit for his company, his target ACV, his lead velocity and structure.
And let’s be clear: the CEO was incredibly lucky to get this candidate. Not because the company wasn’t a great, cool company. But because the company wasn’t really big enough, funded enough, with enough going on to really attract a candidate of his caliber (at that time).
But like any candidate, this VP of Sales wasn’t perfect. He was an up-and-coming candidate and had the full package, but it was his first time to really own it all.
The CEO saw it … almost. He hemmed and hawed.
Q: Your sales manager is under great pressure to increase sales. At a recent meeting of the entire sales staff, this person said, “We have to hit our numbers no matter what it takes!” Does this emotional appeal change your way of dealing with customers?
The struggle to hit the base plan can indeed produce some less than ideal behavior in sales teams:
As you try to hire up for your SaaS company, you’re going to be faced with a lot of choices and trade-offs. No hire is the perfect package. Do you take a risk on someone a little more junior than you’d like? Someone from a company a little larger than you’d like? Someone from a very different industry?
I don’t have all the answers here.
But there’s one thing I can tell you in SaaS, at least: Almost Everything Except the Product Itself is Sort of the Same at a Given ACV (Annual Contract Value) Level.
By that I mean:
What does it mean to make your product the star in your SaaS growth strategy? It’s imperative to incorporate critical elements in your product-led strategy to ensure its success. Ciara Peter (Gainsight VP of Product & Design) and Mickey Alon (CTO & Founder of Gainsight PX) share their practical tips for product leaders looking to achieve business growth.
Product-Led Growth: The Disruptive GTM Strategy
A product-led growth strategy relies on the product itself as the primary vehicle for customer acquisition, conversion, retention, and expansion. But why is product-led growth such a disruptor in the software industry? Every year, millions of new products are created and launched. Growth is becoming more costly than ever, with companies pressured to outspend each other on sales and marketing budgets. Here are the ways that product-led growth cuts through the noise and proves effective in connecting with customers.
We checked in on Twilio at $1B in ARR, but it’s interesting to check in again at $2B+ in ARR as the engine just hasn’t stopped worth. Twilio is still growing an epic 53% at $2B in ARR; has diversified its product portfolio further acquiring Segment; and now has a stunning $60B market cap! Up from $3B at IPO!
5 Interesting, Updated Learnings:
#1. Dollar-based net retention is still the key to almost all the winners in SaaS and remains at ~140%. Twilio’s NRR hasn’t come down as it’s scaled, and remains at 137% at $2B in ARR — essentially the same as at IPO and at $1B inARR.
#2. Big customers aren’t increasing as a % of revenue. We’ve seen in this series in the case of many SaaS leaders from Atlassian to Salesforce to Pagerduty to SurveyMonkey that eventually, the bigger customers grow faster
*This guest blog post was contributed by Mark Faggiano, CEO of Taxjar.
I’m a lifelong learner — and I like to surround myself with lifelong learners. It’s a mindset. People who see themselves as always learning are naturally curious. They find unexpected connections. They try new things. They test and experiment, and when they fail, they try again. Lifelong learners are always trying to get better. Learning is energizing. And it can be humbling. It helps us not take ourselves too seriously.
I’ve learned plenty from books and classes, but as a startup founder, there are a few lessons I’ve had to work out on the job. We’re all bound to make mistakes, but in the hope that you might make different ones than I have, here are three of the things I’ve picked up:
We’ve talked a lot about hiring a VP, Sales. It’s just such a critical accelerate-or-decelerate decision for a post-Initial Traction SaaS company. We’ve talked about the 48 Different Types of VP Sales, What a VP Sales Really Does, and a Script to Use When Interviewing a VP Sales.
But even armed with all that, I’ve gotta admit, I’ve helped several friends hire a VP Sales recently and even with that we have barely batted .500
In those cases, no “big mistake” hire was made. But still, some hires didn’t work out. It took me a while to figure out why. In one case, one of the investors thought it was just too early, too hard to get a great VP Sales — in this case, at a $6m in ARR, growing 100% YoY, kick-arse SaaS company. To that, I say — Rubbish. Joining a medium-hot SaaS start-up with
$30B+ Datadog became the great darling of developers and devops years ago, and never stopped pushing on the accelerator. It’s expanded its product portfolio with Logs, APM and more to build an incredible observabillity engine approaching $1B ARR. At ~$700m ARR, Datadog was still growing an incredible 61% year-over-year.
Let’s take a look at 5 Interesting Learnings:
1. $100k+ customers generate 75% of revenue, even though just 7% of customers. Even with Free and Cheap editions to start, 75% of customers are or grow into $100k+ deals. Datadog has 1,107 $100k+ customers out of 13,100 total customers. That means the top 7% of customers generate 75% of revenue.
2. 20%+ of customers now use 4 or more customers, and 70% use 2 or more products. This is a theme we’ve seen on this series. At Box, at Salesforce, and more, customers that
One thing that is great in SaaS, from a 20,000 foot perspective at least, is You Can See The Future.
It’s the benefit of a recurring revenue stream in a B2B model. If you did $100k last month, and have grown 6% a month each month for the last 12 mos, I can pretty much say you’ll be a $2m+ ARR business in the next twelve months or so.
The thing is, sales is variant, and sales pipelines have big data quality issues — and worse, sales as a metric is a lagging indicator. In fact, your monthly sales tell you about the past. Pipelines are cr*p for predicting the future. Pipeline for This Month is useful, but still dependent on how various reps get probability right. Pipeline for Next Quarter is almost useless for most SaaS start-ups, even once you get pretty big. And actual sales are