Jason Cohen, the CTO and co-founder of WP Engine wrote a very interesting POV on “The Unprofitable Saas Business Model Trap” exactly about 6 years ago. Now you will think that articles written so long back must have lost relevance – but surprisingly for SAAS startups there is a lot to mull over.
Jason Lemkin, Founder SaaStr in a recent Q&A addressed this question. The pro for the selling organisation is obvious. Predictable revenue – irrespective of usage. But is it sustainable and will users continue to pay based on this model? He raises important questions like : “….
….and more.
At Collision, one of the largest tech conferences in the world which shifted its latest version to Toronto, Des Traynor, C0 Founder Intercom – focused on Retention being more important than conversion. This resonates with me because we have been talking about “Buying is the new Selling” for a while and it sort of dovetails into this major shift happening in today’s transaction ecosystem. Traynor reiterates some known points and makes some new connections :
An IDC Survey found that up to 80% of marketing generated content goes unused by sales teams. While building Pitch.Link one key issue we wanted to address was sales and marketing alignment. This we did by ensuring that while Marketing is building entire pitches (not only a particular collateral – but the flow where they envisage it will be used) they could ask for feedback from the sales team and fine tune the messaging and narrative to make it most useful for the value communication process.
This is one interesting analysis by Fred Wilson in his AVC column posted in 2017. What burn rate is acceptable and sustainable? Understandably the discussion with founders and boards could be emotional at best when discussing burn rate. All companies and their backers want to get to the Unicorn status as soon as possible and no spend is enough to get there.
Tomasz Tunguz is the one you turn to for analysis when watershed events happen. Salesforce Tableau acquisition is one such event in a string of similar ones (although the most expensive by value by far) playing out this month. It follows Google’s Looker acquisition and Sisense’s acquisition of Periscope Data.
When asked whether he saw any pattern in the recently listed software co’s wrt sales efficiencies Tomasz Tunguz found one –
“All of these businesses sell bottom up with small initial ACVs that grow dramatically. Atlassian, Zoom, Twilio, Slack, New Relic, Elastic. All of them target small groups of users within larger organization who introduce the vendor. Over time, usage grows, accounts expand. Some acquire through open source, others through virality (Zoom).”
Like my post yesterday about the must have strategic plan which is simple and easily measurable, I found a 2013 post by David Cummings on SAAS Metrics dashboard. With all the discussions I have with SAAS founders, it is the rare ones who had these numbers on their finger tips or those who are measuring them at least on a monthly cadence.
The simplicity of the Rule of 40 and the definitive value it provides keeps the topic upfront on my mind and I landed on this wonderful article by Ben Murry in his blog thesaascfo.com.
Jason Lemkin, thought leader and one of the most prolific bloggers in the SaaS space built SaaStr to what it is practically with singular effort, by bringing compelling content to his readers. He authors a series in SaaStr titled ‘5 interesting things….’
