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Stuck in the Middle With You

By Mark Suster on May 5, 2016

Stuck in the Middle With You

Reservoir Dogs … If it’s lost on you Google it

It’s safe to say that all eyes globally are on the United States right now with an election that feels more like a script of House of Cards than the sad reality we’re living.

There are reasons to be despondent on both sides of the aisle. We are in the midst of global economic changes and challenges and both extremes seem to have formulas more pointed at the past than the future.

It seems well understood and agreed that economic inequality has widened and that traditionally middle-class, white, male, non-college-educated workers have less relative money, stature and influence than they once had.

It should be said that African Americans and Latinos of lesser economic means are also suffering but lately that seems to capture less press attention — mostly because everybody is trying to understand the rise of Trump fueled by: Xenophobia, misogyny and isolationism.

What ails?

There seem to be four macro trends driving the economic malaise many middle-class workers face.

1. Globalization

We all know that markets have globalized over the past forty years. This has positive and negative consequences but the easy press stories cover the negative outcomes.

On the positive side of course globalization has benefitted US companies including technology companies like Microsoft, Apple, Google, Facebook, Oracle, Salesforce.com and so forth who have built global businesses and benefit from global audiences.

US consumers have also had tremendous gains in the dramatic lowering of costs of household goods and unprecedented improvements in convenience and capabilities of goods and services that make our life qualitatively better.

And there is an obvious negative externality that manufacturing jobs have shifted from the industrial heart of the US.

This should come as no surprise and we should focus on how to deal with the consequences of globalization rather than try to roll back the clock and pretend it doesn’t exist. Trying to disavow globalization is no better than the luddites of England trying to deny the industrial revolution.

The movement of jobs is a well understood economic phenomenon as outlined by the father of international trade economics David Ricardo in 1817 in which he posited that jobs should go to locations in which there was a “comparative advantage.” Anybody who studied economics would be familiar with this theory.

Said simply: if lower-wage countries have a comparative advantage in manufacturing due both to lower costs and a large availability of labor (the two are related) then manufacturing should be shifted. And in wealthier nations there is often a comparative advantage in jobs that are higher up the value stack including: innovation, design and management.

As manufacturing booms in lower-income countries wages rise, conditions improve and these countries develop new skills and new comparative advantages and more developed nations must continue to adapt.

If you want to understand the narrative of this trend there is no better book than Pulitzer Prize winning novel American Pastoral, by Philip Roth, amongst my favorite novels of all time. It profiles a multi-generational immigrant family and the journey from laborer to store owner to entrepreneur to industrialist to globalizer to break-down and rebellion.

American Pastoral also captures the impact of globalization on towns and workers and the shift from urban to suburban and takes on difficult topics such as the role that unions play in both improving workers rights and also in driving US companies to be less “comparatively” competitive.

What is most disheartening in the past six months is to watch both sides of the political spectrum regress and cater to the fears of those economically impacted by globalization.

For starters, Donald Trump is a moron with no coherent political or economic policy. He would have us start trade wars with China and real wars through carpet bombing and would encourage torture. I’ll address immigration later.

But equally I don’t feel the Bern. Six months ago some younger friends of mine started inviting me to Bernie Sanders dinners and rallies and I thought they had lost their minds. Cancel NAFTA? Are you kidding me? Trade with Canada and Mexico will be our single most important differentiator in the future world in which we become more isolationist (see my section on demographics).

And I feel the same about the far-left’s resistance to the TPP (trans-pacific partnership). Globalization won’t stop. So we can stick our heads in the sand and watch China dominate the next century by forging trade throughout its region and becoming a hegemonic power in Asia or we can engage.

No trade agreement will be perfect just like no laws are perfect as both are crafted through compromise by people with vested interests on all sides of an issue. But have a seat at the table and get the best deal you can and then fight to make it better — don’t crawl into a cave and light fires.

I understand the frustrations of the left who feel they have stagnant wages and fewer savings and frankly — those are also the fears of the right. The problems are very real and need to be addressed but Sander’s solutions are a step in the wrong direction.

2. Automation

Of course automation plays a large part in the economic disparities that exist. We have replaced many line workers with machinery and require less jobs through IT systems automating what others did with pencils and paper.

We have obliterated entire job functions that seem archaic now such as a travel agent. telephone operator or newspaper distributor and we can already begin to see the decline of more jobs such as taxi driver or x-ray technician.

Comparative economics through automation will push jobs to corners of the world where skilled people can write copy, edit videos, read x-rays, create graphics or perform quality assurance on software. This was well captured by Thomas Friedman in The World is Flat.

Anybody at the forefront of the technology world also knows that huge expected gains in AI (artificial intelligence) and robotics will continue to gut jobs and in this instance probably cause a massive disruption to white-collar workers as computers learn to do our jobs that require thought much better than we can do.

If you want to understand what a low bar the human brain actually has in performing data analysis relative to computers you might read Daniel Kahneman’s great work Thinking, Fast and Slow. It basically shows how fallible “experts” are in solving problems they are supposed to be expert in solving— and he doesn’t spare the investment industry.

The answer to automation and globalization is NOT to deny them — they are here and won’t go away. The answers of course are: education, training and retooling of workers at the same time as we incentivize innovation and entrepreneurship. In short, we live in a market. We can lead change or somebody else in the world will. Markets don’t stop because we stick our heads in the ground.

But I also believe we have a responsibility (and a benefit) to invest our profits from companies and from wealthy individuals to help our economies retool. It can’t be that we simply keep more profits and capture more wealth and don’t invest this in the future of our areas and people more impacted by change.

3. Demographics

The third major issue for our economy is demographics. We know some obvious things: our population is living longer and our healthcare costs are increasing. We also know that our aging population doesn’t have the savings it needs to properly retire.

Every country has different demographic trends driving its future but know that economies only grow by either getting more people working or making each worker more productive. These are the two drivers of GDP.

And here’s the thing you need to understand about the US economy. Baby Boomers are now retiring en masse. They were born between 1946–1964, are now between 52–70 years old as of 2016 and there were approximately 76 million Baby Boomers born. The term comes from the explosion in the population post World War II.

As they retire they stop paying taxes and they massively decrease their spending in the economy as they switch to fixed incomes. The decreases in the tax base and spending of course fall to the next generation — my generation — of Generation X.

So what you have is a slightly reduced population behind the Baby Boomers who are going to have to fund people who are living longer and costing more. And because we have a “geriocracy,” in which older people vote more frequently and therefore highly influence government policies it doesn’t seem that costs will go down to fund retirement benefits.

This demographic trend is highlight in my favorite book of the past 5 years: The Accidental Superpower by Peter Zeihan. He lays out more brilliantly than any other analysis I’ve ever read about the roles of demography and topography in influencing the future of world order.

In short he predicts economic stresses to the US as Baby Boomers retire for about 15 years at which point the rise of Millennials invert the curve back to more favorable tax bases vs. retirees. He also goes through demographics of other world populations including Russia, China, Japan, Germany and so forth and the role this will have on their economic futures.

Zeihan’s work also inadvertently makes the strongest case I have ever read for doubling down on NAFTA and creating a regional superpower that will benefit all countries in our region.

Put up a wall? Keep immigrants out? That’s the exact opposite policy we need to compete effectively in the next hundred years.

4. Climate

Of course the other macro trend is climate change and fortunately it seems that all climate-change deniers have now left the election cycle.

The role of climate change is of course hard to predict but the combination of growing world population plus raising temperatures spells future world conflicts.

Some good primers for you here on the role of climate and economic order are: Thomas Friedman: Hot, Flat & Crowded or my favorite book to shock the system on the topic is Collapse, by Jared Diamond. I read it a long time ago so let me paraphrase. Professor Diamond argues that the world reaches maximum sustainability at about 10 billion people and thankfully population predictions have human population slowing before this level.

But.

And this is a big but. The sustainability models were built around the world staying roughly at today’s economic development levels and as China and India reach Western standards of consumption this would be the equivalent of the world reaching something like 30 billion people.

Gulp.

Professor Diamond does a wonderful job of dissecting populations that have gone through collapses throughout history and while we always know the proximate cause (war, starvation, natural disaster) it has exclusively been through over exploitation of local resources.

We know what some of the obvious climate battles will be. The most obvious being clean water. But we also know that as the drive for alternative energy sources has increased this has and will continue to have an impact on the economic conditions of the Middle East.

Breaking down how this will happen, why this will happen and the role of fracking in all of this is Zeihan’s Accidental Superpower. You simply. Must. Read it.

And before you start celebrating about the decreased importance of the Middle East — and lest you forget to consider the human plight of the poor and innocent people in this region — remember the roles of 1, 2 and 3 above.

Globalization is driving accessibility to foreign territories with relative ease, automation is driving drones and autonomous devices with small cameras and sensors (and possibly one day less friendly things) and demographic trends will drive masses of populations in search of economic survival to seek out consequences in the world.

So putting our heads in the sand won’t help. Closing our borders and becoming anti-Muslim won’t help. Isolationism won’t help. And developing alternate energy sources without also helping to figure out how to help these petro-economies that we have historically helped prop up transition to the modern world economy will leave whole populations economically diminished and angry at those relatively better off. In many ways it will echo the frustrations we see at home but on a global scale.

So as a look at all of this I eschew the right and the left. I reject rejectionists. We need to lead from the center. We need leaders that speak the truth to their populations or we’ll see far-right movements in places like France, Denmark, the Netherlands or the US continue to rise along with far-left movements in the UK and US and elsewhere.

Nobody gains from this. Let us be rational. And whatever you think about the last woman standing, we have only one choice: to reject the fools to the left of us and jokers to the right.

Here I am. Stuck in the middle with you.

(Cross-posted @ Both Sides of the Table)

Posted in Featured Posts, Trends & Concepts

When the Player-Coach is Just That. And No More.

By Jason M. Lemkin on May 4, 2016

We’ve talked a lot on SaaStr about not screwing up that VP of Sales hire. Done right, it will accelerate your company to the next level. Done wrong — you can lose the better part of a year, and half of your last round of capital.

And we’ve talked a lot about the trade-offs in the hire, including how to think about Stretch VPs … the ones that haven’t quite done it yet, but working for you is their shot.

luke-walton

The reality is, most of you are going to hire a Stretch VP for your first VP of Sales, or at least, your first VP of Sales that works out. More on that here and here. Otherwise, you’ll probably be stuck with a Failed VP, or someone from Too Big a Company that never did it, etc. etc.

Once you’ve made the hire, then you have make sure you’ve got it right.

I’m going to suggest two gates, two quiet check-in points:

First, revenue per lead has to go up within one sales cycle. It just has to. We talked a lot about this here. If a VP of Sales can’t take the leads you already have, and at least, get more money out of them than you did … he has failed.

When we first wrote about this here, it was controversial, a lot of people said “you have to give a VP of Sales more time”. But I think once everyone that’s done it thinks about it, they agree. Any decent VP of Sales drives revenue up at least within a number of months equal to your average sales cycle.

OK, if she passes this test, if she increases revenue within one sales cycle — then good news! She can sell, and sell with spirit, authority, and chutzpah. She can take over for you as the interim head of Sales. Which is great. She can close deals, and take a lot off your plate. That is a big deal.

But next up is a second test, and one that ultimately is just as important for a VP of Sales:

The second test is if, within a second sales cycle, by say month 5 or 6 at the very latest … has she scaled up at least one (and ideally two) other sales rep that has truly hit quota?

Because there’s a pattern I see with maybe 30-40% of Stretch VPs. They are great individual contributors (or you never would have hired her). They are aggressive, so they can bring in the first batch of hires for her team.

But sometimes, the management and training skills aren’t there. At least, not yet. She doesn’t yet, at this stage of her career, have the ability to get folks she hires to hit quota repeatably.

And this will be super frustrating all around, because in this scenario, she’ll still be hitting quota herself … either literally, by carrying her own quota as VP of Sales, or by so backfilling the team that she essentially closes all their big deals for them.

This is when, often sadly, you have to make a change. You have to. When, by the second full sales cycle, she hasn’t been able to truly grow the team into multiple quota-achievers.

OK, so that’s the problem. Don’t let it drag on any further. She’ll never hire and scale a good enough team under her to hit the plan. She never will if she hasn’t gotten 1-2 AEs to hit full quota by say month 6. It’s not even her fault in this case. She just needs to still report to a great VP of Sales. Which isn’t you.

So, my suggestion, is sit down with her at this point and be honest and appreciative. Because if you are both, there’s still a chance you can make this all work and not lose your best closer. You can tell her we need a VP of Sales that can truly build a team, and that’s not her — yet. But you want her to stay. As a Director of Enterprise Sales. As a Senior Sales Lead. As something. And that you aren’t going to cut her OTE comp (ideally).

After all, in this case, it’s not her fault. It was just a stretch too far. After another few years reporting to a great VP, she may well be ready. And if you can keep your top closer in an IC role, or team lead role for a while, your revenue won’t take the hit it would if you lose her.

(Cross-posted @ SaaStr)

Posted in Business, Featured Posts | Tagged 1 - Stage, 2 - Topic, 5 - Feature, Building a Sales Team, Getting to Initial Scale, Hire VP Sales, Hiring & Operations, Hiring & Retention, sales, Sales & Customer Success, scale, Traction & Scale

#CXOTALK: Open data and APIs at The New York Times

By Michael Krigsman on May 2, 2016

The New York Times is one of the most venerable and well-known newspapers in the world. Despite its long history, the Times faces significant disruptive pressure from the competitive media environment.

Proliferating sources of content, changing expectations of information consumers, and shifting sources of revenue have forced the New York Times to reconsider how it creates and distributes content.

Open APIs are an important part of that new distribution strategy. Using APIs, the Times is increasing the value of its content by making it available to developers to build applications that can drive broader distribution.

For episode 161 of the CXOTALK series of conversations with innovators, I spoke with Scott Feinberg, API Architect at The New York Times. Scott is the person responsible for designing APIs used at The Times.

Watch the conversation below and read a complete transcript at the CXOTALK site.

Here is an edited excerpt from our conversation. In this segment, Scott explains why APIs matter to The Times and describes some of the issues involved with creating those APIs:

Your APIs are available free to the public. How are they used?

A lot of the people who use them are researchers trying to find patterns. We’ve got 165 years of content to research how the spoken word has changed or which stories have been popular between 1940 and 1970, for example.

Others want all the articles about a certain topic, or use our APIs with IFTTT (If This Then That), integrating with us using point and click. They can have it go into their Evernote. Whatever they want to interact with our content. Public libraries use our Best Seller list to decide programmatically which books to buy.

There’s been a lot of interesting uses, and we’re always looking to learn from our users and put those experiences back into our main product.

How do APIs support the mission of The New York Times?

The core mission of The Times is to enhance society by creating, collecting, and distributing high-quality content. Most of the time, APIs are used to distribute that great content; without them, it would be very hard for us to provide information in the different places people want it. We want to inform and give you the news and the information in whatever way makes the most sense for you.

For example, our cooking website started with the realization that we have 17,000 recipes dating back to the 1800s. Because we have a service that already stored all that content, were able to build and reuse it.

Cooking was a hard API to build. Recipes are an incredibly hard domain to model because you have unlimited sizes, like a dash of sugar. How do you represent that when it’s a metric of size, but at the same time you can have two dashes?

Representing food and recipes is hard, so we push people to spend time upfront designing the interfaces, thinking about what a recipe looks like. Working with domain experts in recipes gives developers a greater understanding of the content and how to add new ways to present recipes, sizes, measurements and things like that.

How do you encourage adoption of your data and content?

You can’t be stingy; you have to give it out.

When we launched our developer portal there were a lot of questions like, “Are people going to steal our data?” Questions like that. Just give it away. You don’t have to give it all, but don’t be stingy.

Eventually, you’re going to find passionate people who are interested in using your data in new ways. Enable your users to build the experience they want.

(Cross-posted @ ZDNet | Beyond IT Failure Blog)

Posted in Application Software, Featured Posts | Tagged #cxotalk, The New York Times

Why on Earth Would Anybody Post Business Videos on Snapchat?

By Mark Suster on May 1, 2016

Why on Earth Would Anybody Post Business Videos on Snapchat?

By now if you follow me on Twitter you probably know that I do near daily “Snapstorms” or a collection of short videos (usually < 5 mins in total) with entrepreneur advice on Snapchat. Here’s a recent one I did on Fund Raising in tough markets. You can follow me on Snapchat at msuster.

Suster Doing a Snapstorm

Honestly, it kind of drives people nuts that I do these on Snapchat and it makes me laugh a bit simply because it drives people bonkers.

Nope! Every platform has its unique strengths. YouTube is great for longer-form for me and could be a great repository. Snapchat has an enormous audience of mobile-first consumers tuning in every day looking for content to consume in a way that YouTube doesn’t. Of course YouTube has huge traffic, but it’s different.

Ah, but I’m doing both! Snapchat for my “original run” and I’ll also store each video to be watched later.

Immediacy. People tune in every day.

I know some people have anxiety over Snapchat. Once you learn it it’s pretty straightforward. Here’s a Snapchat 101 Guide I wrote for people if you haven’t yet grokked it.

(Cross-posted @ Both Sides of the Table)

Posted in Application Software

Lead, Follow or Get the Fuck Out of the Way

By Mark Suster on April 28, 2016

Lead —

It’s hard to be a real leader. Decisions are never black or white, so most people fudge. The straddle middle grounds to keep everybody happy. They make compromises to try and hold together constituencies. On business decisions they want to hedge their bets so they do a little bit of everything but nothing extremely well.

As highlighted by Brad Garlinghouse years ago in the famous “peanut butter manifesto”— it’s like spreading peanut butter evenly over a piece of bread. And of course fudging never produces world-class results, so many companies suffer from mediocrity.

The problem with hard decisions is that you can never make everybody happy. There is always somebody impacted or somebody who thought “plan B” was better. Leadership is about listening to multiple opinions but in the end trusting your instincts and deciding. Leadership is about not worrying about how people will think about you for hard calls. It is about being willing to be wrong.

Leadership, as I’ve pointed out before, is about being respected more than loved.

As somebody fortunate enough to spend time with senior people from our tech and investment sectors I can tell you that even at the upper echelons people struggle to make hard decisions and the people willing to forge difficult paths are few and far between.

It was not a popular decision at all when Steve Jobs chose to open retail stores. People laughed at Google buying YouTube for $1.65 billion. Evan Spiegel was thought an idiot for not selling Snapchat for $3 billion. Netflix was widely criticized for breaking their business in two.

Leaders have well-formed opinions that go against the grain, the temerity to sell their vision to skeptics, the tenacity to stick to their ideas when they are inevitably criticized, the resiliency to wake every day when they’re being kicked by everybody for their beliefs but also the willingness to look at data and re-chart their course when they got it wrong.

Leaders need to be early, have conviction, be persuasive and get others to follow when rational people should not. And trust me, the world is FILLED with naysayers. Whether they succeed or not does not defeat their leadership and willingness to try.

Follow —

There truly aren’t many leaders, it’s a thankless and stressful job. And leaders aren’t always right and even when they are they don’t always win. And while leaders set direction, of course it is teams that deliver results. The leader can only point and recruit world-class people but the results are owed to the team.

In every team you need the majority of people who excel at their job functions. They are great at their respective fields whether they be marketing, sales, programming, PR, whatever. People running these job functions are also leaders — don’t get me wrong — on each team you still need leaders & followers. You simply can’t have a team of people all pulling in different directions and death by a thousand cuts is having multiple departments all moving in their own direction.

While the overall leader must set the direction of the top, the goal is each department must be to align the objectives of that group with the overall goals of the organization. When done well companies have a system like OKRs (objectives and key results) or V2MOM (vision, values, methods, obstacles, measures).

If an organization and its people won’t align themselves with the direction from the top you will also end up with mediocrity. Only aligned orgs excel.

Get the Fuck Out of the Way —

Dissent is fine. Dissent actually makes groups stronger. I love being challenged because it forces me to think harder about what my convictions are. I love when people come with ideas that conflict with my world view because the conflict either ends up giving me more confidence in my convictions or helps me to evolve. Sometimes it even causes me to consider revolution.

But dissenters need ideas of their own. Dissenters need facts and logic. Dissenters need to be willing to roll up their sleeves and help do the work. Dissenters need to be willing to have their own necks on the chopping block and admit that they were wrong in the end.

Dissenters don’t get to be “back benchers.” They don’t get to yell from the peanut gallery but never own results or the consequences of decisions. Dissenters don’t get to second guess but never lead.

Throughout life I’ve realized that many people are back benchers. “That will never work” is their motto. They like to criticize but they don’t have strong ideas of their own. They “know” what’s wrong but they never do anything about it. They never lead. Yet they don’t follow.

“We’re Doomed. It will never work. We’ll never make it.”

When you spot people like that in your company you have no choice but to part ways with them. If you wake up one day in any organization and you realize that you’re no longer “part of the solution” it’s time to get the fuck out of the way. This is especially true when you’re senior and too many people are looking at how you react to change or when your disbelief undermines the confidence of others.

When you get the fuck out of the way you either find out that the other leadership was right or you get the chance from the outside to later say they were wrong. But either way you at least let your organization have cohesion in the plan.

And if you can’t lead, follow or get the fuck out of the way — have the decency to move on to another organization.

(Cross-posted @ Both Sides of the Table)

Posted in Business, Featured Posts | Tagged startup leadership

Never Ask Two People to do One Person’s Job

By Mark Suster on April 28, 2016

Why you do me like that?

Over the year’s I’ve tried to offer some tangible, practical advice to help people communicate more effectively.

I’ve weighed in on:

But one thing really drives me nucking futs and that’s asking two (or more!) people to do the job of one person.

If you want somebody to action email one person and make it clear whom you’re asking. The cc line is to inform people who are not taking action.

These days everybody goes bonkers with how many people they cc on emails. If you want to inform somebody — great! If they don’t need the email why not save them the hassle and time and avoid sending it to them! If you send it unnecessarily you’re simply adding to their to-do list because now they have to read the bloody thing.

Of course I cc people on emails. But I try to do it sparingly and when I know it is relevant for them. Occasionally in stead I will bcc an email to myself and forward it to a couple of people. I do this for long emails where I may or may not think that person needs to read the email. When I forward I will say something like, “FYI only — no need to action or even read if you’re busy.” Sort of, reader’s choice!

Ok. So most people understand that cc’ing the world unnecessarily is wasteful of others’ time. But I have two more quick tips for you.

If you are soliciting input from a group of people and if they don’t all need to see each other’s responses — obviously use bcc. That way the people you’ve emailed don’t get bombarded by dip shit responses from the masses. You know what I’m talking about — we’ve all been on that list. But you’d be surprised how many people still cc large groups. Oy.

Now. For my main point, and yes, I really did just bury the lede. There is one big mistake many people make and especially with VC firms but of course it’s broadly applicable.

On a regular basis I get emails introducing me to a deal that somebody wants me to review. Great. Awesome! Thank you. I’m reasonably efficient at quickly reading a deck or email backgrounder and knowing whether it’s a good fit for me or for the firm. If it’s a better fit for: Yves, Steven, Greg, Kara, Kevin, Jordan or Hamet I immediately forward it and I bcc our deal-tracking system so the new owner is logged. Easy peasy. We don’t have special incentives for who reviews or does a deal so I really just want to route it to the expert or the person with capacity.

The same happens in reverse. If it’s video, SaaS or data-oriented businesses it tends to flow my way.

But many people send deals to us and copy 2, 3 or even 4 people with “Hey, team, I thought you might like this deal!!”

I call these “credit emails” because they only reason I can figure for asking 4 people to respond to an email that only requires one is that they want everybody to know they sent you a deal. Credit emails are not productive for the recipients. Each individual would have to read the email, open the deck and consider what to do.

But.

Here’s the rub.

You’re actually doing yourself (and in the case of an intro, the company) a great disservice. When you send an email to multiple people for action nobody knows who owns responsibility for the response.

So you’ll sometimes get group emails where nobody responds because they assume somebody else is actioning it. Internally I solve this by emailing everybody and saying “I’ll own this one” or “Kara, why don’t you weigh in on this one” but you’re making the group do extra work and in many cases they won’t.

It’s actually “a thing” know as

The Bystander Effect; or
The Diffusion of Responsibility

And of course it doesn’t just apply to VCs. Think about it: If you get an email that says, “Hey, Sarah, I wanted to ask for a small bit of help …” or even “Sarah, I’m hosting an event on Feb 17th and I’d like to ask if you could make it” you feel it’s a personal appeal to you. If you don’t reply you’re letting down the sender who is seemingly asking you personally, individually and solely.

The minute you send out an email to a group and say, “I was wondering if anybody could help with …” each person thinks that somebody else is going to help.

So there you have it. Ask one person to do one person’s job. If you don’t get a response then ask a second person. If you don’t get a response from a group — now you know why.

(Cross-posted @ Both Sides of the Table)

Posted in Featured Posts, Trends & Concepts

At $50k in MRR, Running Out of Money Is No Longer an Excuse

By Jason M. Lemkin on April 27, 2016

We’ve talked a lot about SaaStr on the challenges in getting from nothing to that first $1m-$1.5m in ARR, “Initial Traction”. That is takes longer than you think. That if you get 10 customers, you can get another 10, 100, and so on.

There’s a particular moment in time I want to focus on here on the path to Initial Traction. It’s when there isn’t enough revenue to make it, to get there. But there’s too much that you just can’t quit. You can’t. Period.

I think that’s around $50k MRR. At this point — Money Is No Longer an Excuse.

This doesn’t mean money isn’t an issue. Money really won’t “not be an issue” usually until about $6-$8m ARR, sometimes later. By that point, you’ll have enough cash coming in to fund the core team of 50-60 you need to properly run a SaaS company. As you approach $10m ARR, Initial Scale, money per se shouldn’t be an issue, other than the rate at which you can and should invest it. But the core business will be self-sustaining as long as you have happy customers, a mini-brand, and strong word-of-mouth and second order revenue.

So let’s roll back in time to $50k MRR.

This is enough to pay for a couple of engineers, below market rate. A cr*ppy office. And a couple of sales guys, running in part, on commission. And maybe almost nothing for you and your co-founder.

And this is the time when it can start to get hard. Yes, you finally got 10 Unaffiliated Customers! That felt great. And then as you approach $10k a month, $20k a month in MRR … that’s no longer beer money. It starts to feel real.

Then at $50k in MRR, yes it’s real … but you still can’t really afford anything. Every hire is just too expensive. But assuming you are growing > 10% a month (which you sure better be) … you will get there. You will eventually get to Initial Traction, to $1.5m+ in ARR, to a self-sustaining engine. And eventually to $500k MRR (10x where you are today), when you can afford to pay yourself a living wage, get out of that horrible co-working space, hire more help, get ahead of things — finally.

At $10k MRR I’m not sure. I can’t be sure you’ll really get there. But at $50k MRR, if you are growing, I know if you will it to the next level, if you don’t quit, if you still run sales, marketing, customer success, and support all by yourself … you will get there.

So what do you do, if you are $50k MRR, but it’s just not quite taking off yet, and the VCs won’t fund you yet, and you can’t afford to hire that Great VP of Sales with her $500k OTE?

A few meta-suggestions:

Take a deep breath and settle in at $50k MRR. This is the time to get a little zen. Yes, you aren’t Slack yet. But Slack didn’t start off as Slack, either. I know you can’t even afford to take your husband out to dinner. But this thing you brought into the world, this start-up, it won’t fail if you don’t quit. That’s something real.
Upgrade one position. Just one. I know there isn’t enough money in the bank to really do all that much. But pick one position and upgrade it. One great sales rep. One amazing engineer. This will pay off. You’ll be able to close one more $50k ACV customer. To convert those leads at a higher rate. To get outbound actually working. Don’t try to fix everything. Or even every area. Just pick one core position to upgrade.
Don’t listen to the VCs. At $50k MRR, you will either be Hot or Not. It’s OK if you aren’t Hot today. Get to $1.5m or $2m in ARR, growing 8-10% a month, in a good space, and you will be then. You may get 100 “No”s at this phase. It s**ks, but it’s OK. Don’t take it personally, or even, too seriously. You just haven’t really proven it yet, in the right way, mitigating the right risks. But you may well do that by $1m+ in ARR.
Drive upmarket. I know I say this a lot. But do it — now. At the high end. If you have 100 customers, the pattern is set. I know there aren’t enough leads, and you aren’t growing fast enough. And also, upgrades and upsells are happening, but it’s too early for this to be too material yet. So find the confidence to double your pricing, at least at the high end. This is a phase when sometimes we lose our confidence to ask for more money. Don’t. This is the fastest, easiest way to get to Initial Traction, and get you out of this tough time.
Spend more time with customers. Don’t crawl back in front of the monitor. Get out there. Meet every customer that is local. They will want to meet with you. This is the best way for you to learn how to grow faster.
More importantly — No More Optionality Talk. This is banned effective at $50k MRR, if it was ever allowed. Maybe you allowed folks pre-revenue to “give it 12 months”, or whatever. Maybe at $5k in revenues, you said “we’ll see.” Well, if you did so be it. But effective today, that talk is banned. At $50k MRR, there is zero excuse to fail. So it’s no longer OK to even discuss it.

The best SaaS companies scale faster than ever today. But there are so, so many of them. So product-market fit is harder than ever. Achieving it is magic, that first 10, then 100 customers. The next bit of magic is being just big enough that no one can question you’ll get there. That’s around $50k MRR. Even though it won’t really feel like it.

(Cross-posted @ SaaStr)

Posted in Business, Featured Posts | Tagged 1 - Stage, 2 - Topic, Early, Getting Going, saas-startups, The Journey

Why Misunderstanding Startup Metrics Can Cost You Your Business

By Mark Suster on April 27, 2016

There has been a lot of public debate over the past several weeks about whether it’s a good thing to be “gross margin positive” or not and commentary always reminds me that some people at startups don’t quite understand financial metrics or even how to think about which ones are healthy.

When I publicly Tweeted that all companies should be gross margin positive many people pointed out that Amazon wasn’t profitable for many years. Gross margin positive != profitable and companies like Amazon who chose to focus on growth > profitability were not losing money on each book sale (ie they were gross margin positive).

The key to being able to run a business that isn’t yet profitable (on operating margin) is availability of capital to finance losses and preferably at a cost that isn’t too punitive to the founders and employees. The reason one would accept losses is when they are investments in fueling faster growth.

There are good reasons for one would raise capital and make investments that lead you to be unprofitable (hiring more sales people in an organization that has found product/market fit or hiring engineering to expand product lines to have more products to sell to existing customers) and bad reasons (having bad unit economics but raising money to “figure it out.”).

In general I find that raising large amounts of money when you haven’t figured it out ends up papering over problems more then helping solve fundamental issues in the business. It’s funny how scarcity of capital can focus one’s mind.

I’ve written about the trade-offs between growth and profitability before and if you don’t fully grok the topic I suggest you clicking through to that post.

Perhaps the most misused terms I see these days from entrepreneurs involve CAC (customer acquisition costs) and LTV (life time value) and a lack of understanding these critical components is driving many companies to premature failure.

The tl;dr version is this: Many have been taught to focus on LTV/CAC ratio and if that number is substantively > 1 said entrepreneur feels great. That can be a trap for three primary reasons:

Payback period may be long even of LTV/CAC is large and having a long payback period requires you to be able to raise capital to fund this deficit period. So if you’re able to raise easily no problem. If you can’t raise — you’re dead. End of story. No matter what you were taught about this fucking ratio. So I spend an inordinate amount of time with entrepreneurs focused on payback.
LTV is imprecise. In product business it is often measured over multiple purchases and assumptions are made about the repeat rates and in the enterprise or services world LTV can be based on churn rates, which are notoriously hard to predict in an early-stage business. Poorly calculated LTVs can become BVs (bankruptcy values).
CAC is often measured incorrectly and doesn’t often doesn’t capture the true costs of acquisition. And even when calculated correctly often CAC’s are assumed to be constant but of course they’re not. If you acquire 10 customers a month at $100 per customer and this scales to 100 customers at the same price you may make assumptions about 1,000 customers that don’t hold. The reality of CAC is both the when you scale your acquisition “channel” costs usually go up plus when you find a great channel others notice it and drive up the costs as they compete with you in that channel.

So here are some more details ….

CAC

Let me start with the easy stuff and graduate to the punch line in the final section.

The first input is CAC. Customer acquisition cost. This is how much you spend to get a new customer. That bit is easy. In an eCommerce or Internet Services business it is often the marketing costs (if purchased online) and in an enterprise software company it is often marketing plus enterprise sales reps.

The first mistake that mostly only rookies make is to measure the CAC by looking at the attributable marketing costs of acquiring a user. So if you paid $100 for a customer who converted via a Facebook ad or Google search ad (SEM) that is not your CAC.

Let’s say you had a budget of $1,000 to spend on Facebook Ads and they cost you $100 each and you got 5 customers. If you had no other spend in your company to acquire the customers then your CAC is $200 / customer, not $100. That’s because CAC needs to take into account all of your marketing spend to truly understand how much each customer costs you.

If you’re spending $200 to acquire a customer and you want to spend less you can either test out other channels to see whether you can acquire customers more cheaply or you can try to optimize your funnel through your Facebook Ads to convert better. This is often called “funnel optimization.”

If you converted one more customer (6 in stead of 5) your CAC just went down to $167.67 ($1,000 / 6). So it might actually be more productive for you to improve your conversion than to improve your ad buying, for example.

But often this doesn’t tell the whole story because often companies are also spending money on PR and other marketing activities in order to support the sales process. Generally you should take your full marketing spend including PR divided by your customers acquired to get your “fully loaded CAC.”

Of course this is an imprecise science which is why you measure both methods. PR and non programmatic marketing often have a lagging affect so if you ran a big out-of-home marketing campaign that created brand awareness you may find that conversion actually takes place 60–90 days later.

In many senses the KPIs of a business should be driven by the finance / ops team more than the sales & marketing teams because the latter is wont to use the most liberal definitions of CAC to justify spend where the former has to make sure you don’t run out of cash. Of course it’s a collaborative effort — I’m just saying to involve bean counters in the discussion!

Enterprise software companies also should measure CAC even though it, too, is an imprecise science. SaaS companies needs to estimate the amount of sales resources spent on clients (can be measured by activities like visits, sales calls, etc) / the clients who convert to look at sales productivity.

Equally you’ll want to measure the total sales costs / clients converted to get a fully loaded sales rep cost / acquisition. And then of course you need to layer in marketing to understand the true SaaS customer acquisition costs.

I’m sure there are way more detailed blogs than this one that can help you with a deep dive on CAC methodologies — my point is the bring the issue to the attention of more early-stage founders who probably aren’t developing enough cycles to thinking about metrics.

LTV

The second TLA (three letter acronym) all entrepreneurs are now taught to measure is LTV or “life time value.”

In eCommerce it’s easy to measure the first time purchase value (AOV, average order value) but that doesn’t tell you the “life time” value. To understand that you need to understand repeat purchase rates and of course that is harder to know in a startup company. Estimating your assumptions and testing how cohort perform over time is critical to perfecting your LTV calculations over time.

In SaaS (or any recurring revenue business) this is also a very difficult task. What you need to figure out is “churn” or the number of customers (and dollar of customers) that leave your business every month. So measuring LTV requires that you look at cohorts of data over time to see how they perform and then make assumptions for the rest of the data set.

The problem with LTV is that many SaaS companies assume customer lifetimes of 5+ years and of course you can’t reasonably predict that because doesn’t take into effect technology or competitor disruptions that may have profound impacts on churn or pricing.

One big, beginners mistake people make in LTV is to measure revenue. The correct way to think about LTV is to measure the profits gained by the customer. The reason is that you’re trying to understand whether you’re cost effectively acquiring customers.

So in the case above if you are spending $200 to acquire a customer who buys 3 times from you at $100 each time ($300) this may seem like a great idea. But if your profit margin is 50% then you’re only making $150 in profits. So you actually lost $50 acquiring that customer. This is a simple example but I promise you as businesses layer on complexity they often make simple accounting mistakes that can lead to disastrous results.

Now. The thing about LTV is that you may rationally make assumptions that would persuade you it’s a good idea to lose money on acquiring customers. An example is that you may assume you’re going to launch a second product line that you can market to existing customers and if you had strong penetration rates that might layer on profitability.

If your economic case is built on increasing LTV over time or on retaining recurring revenue streams please remember to layer on “re-marketing or retention” costs into your equation. In this case, CAC isn’t sufficient to look at long-term profitability.

I’m guessing much of this was 101 to many readers. You were taught diligently to look at LTV / CAC ratios and somebody told you a magic number (maybe 2 or 3, preferably 4 or 5) that they asserted was the magic number to know whether you had a healthy business. Some even suggestion and LTV/CAC ratio of 1 while you’re growing to capture market share.

But LTV / CAC is just one measure. There is another that is critical and that surprisingly few have paid attention to in the past few years. I have been shouting it from mountaintops to companies I’ve invested in for years.

“Payback Period!!!”

Payback Period

In eCommerce it may be a perfectly reasonable assumption to wait for the second or third purchase to make a profit. In enterprise software it likely makes a ton of sense to sell to customers who don’t churn and who yield recurring revenues for 5 years and hugely positive LTV/CAC ratios.

But none of this matters if you run out of money. Sustaining short-term losses is all predicated on ability to finance the losses through venture capital or other means. The dreaded trade-off between profitability and growth!

What I talk with entrepreneurs I like to focus on:

What is the fully burdened CAC?
What are the re-marketing or retention cost assumptions?
What is the LTV? And …
What is the payback period?

The payback period is when you have paid off your CAC. I am on the board of some companies with multi-million dollar LTVs calculated over a 7-year period (with proof over time that they do retain these customer) but where the payback is longer than 18 months. This can be a spectacular situation IF there is freely available capital to fund the company at good valuations. That is what finances rapid growth.

But when the venture markets slow down, when capital is less freely available, when prices start to decline — the balance shifts from growth-at-all-costs to profitability. And this isn’t theoretical and it isn’t just about your company. It’s also about how much you pay to acquire customers and how long it takes you to recoup this investment.

I would say that the obsession with LTV/CAC and the laissez-faire attitude to Payback Period is amongst the chief reasons you have a lot of companies that have raised a lot of capital and are now struggling.

In a market less focused on hard metrics sales growth feels amazing and validating. In a market that discovers sobriety, investors start asking the tougher questions about acquisition costs. In a market where capital is no longer freely available and always increasing prices, people start to focus on payback on spend. And of course ultimately on profitability.

It’s probably worth boning up on these metrics in your business.

(Cross-posted @ Both Sides of the Table)

Posted in Business, Featured Posts | Tagged Churn rate, customer acquisition cost, Gross margin, revenue, software as a service

The Importance of Teams and Why the Best Leaders Cultivate Them

By Mark Suster on April 18, 2016

I was watching my favorite show on TV this morning – GPS (Global Public Square) with Fareed Zakaria. It is a hugely compelling show because Zakaria covers world issues that will affect all of us in ways that are accessible and with frameworks for processing disparate information. He brings knowledgable experts from varying points of view but never books anybody that engages in yelling matches.

The show has become my best curator of which books to read (including my favorite of last year, The Accidental Superpower) and my go to for understanding geopolitics of: Russia, Iran, Pakistan, China, India and of course the US. But they also take on issues in science, technology and management. Essentially it’s a replacement for reading The Economist every week (which I would do if I could find more time!). Example from this morning was a quick discussion on the “Brexit” and wether the UK will exit Europe.

This morning’s show took on the topic of “teams” and highlighted research that Julia Rozovsky and Google has conducted called Project Aristotle and profiled in Charles Duhigg’s book Smarter, Faster, Better. I haven’t read the book nor deeply reviewed Project Aristotle but the conversation on this morning’s show really resonated with me.

Rozovsky basically said that having studied 180 teams at Google over the past several years and trying to determine what made some teams perform better than others (despite every team being filled with over-achievers who work at Google) one factor stood out more than others: Creating “psychologically safe environments.” The idea is that teams that allow everybody to speak, allow dissent, encourage safe discussions where it’s ok to be wrong – succeed more.

I’m recounting this from having watched the show (I’m sure it will be online within the week) and I’m going to spend some more time reading about Project Aristotle. But the conversation rang very true for me.

It’s stating the obvious to say that great teams matter and that cultivating them will drive higher company performance vs. a group of individual contributors. But in my experience it’s surprising at how little time we as investors and as board members and startups as management teams spend thinking about how to create the best team dynamics. My observation is that many companies become Game of Thrones with warring factions and competing interests. It is not uncommon for founders to fight amongst themselves or teams to develop silos that simple can’t stomach talking with other groups so they avoid human contact and revert to flaming wars on email or Slack.

I have a board meeting coming up this week and I just reviewed the agenda. My first reaction was to wonder why no time was allocated to discussing the executive team, how people were getting along, any conflicts that exist and wether any changes would be required. In fact, I’d observe that most board meetings don’t on this important topic. Increasingly I find myself engaging executive coaches at companies an trying to help executive teams get 360 degree feedback.

The best leaders I work with tend to obsess about teams. I would observe that they’re always recruiting and trying to figure out how to bring on other talented employees at senior ranks. The best leaders I work with think about what the company culture is and how to foster it. The best leaders I work with are implementing programs like OKRs (objectives & key results) or a version of V2MOM (vision, values, methods, obstacles & measures) popularized at Salesforce.com. Programs like these seek to define a set of company objectives and then make sure that every team’s objectives are tied to the same core.

The best leaders I know encourage coaches to come in and are willing to listen to feedback about themselves. The best leaders I know are great at asking questions of others and finding ways to draw people into conversations. This was highlighted by Rozovsky / Duhigg on Zakaria’s show. The best leaders pay attention to group discussions and stop conversations that are dominated by a few key players to try and draw in the opinions of others.

Basically, the role of management discussions is very similar to my outlook over all in life – it’s about seeking out many opinions, hearing many views, testing views against your own frameworks and then making decisions once you have tested your theories and approaches. I call this process “triangulation” and highlighted it that blog post I wrote on the topic.

What watching Rozovsky on the show made me think more about was the role not only in leaders asking great questions to make sure they have complete information but also the role in team members feeling safe in being able to contribute and the fact that having safe teams produces better results because it fosters creativity, risk-taking, personal ownership and motivation. It seems obvious but I’m sure attention needs to be paid to whether we’re creating “psychologically safe environments.”

It seems strange to me that we don’t take team dynamics more seriously at startups. It seems to me that we obsess too much with product features, sales pipelines, competitive pressures, fund raising and such. I often find myself having the opposite reaction. I often find myself coaching people, “Of course we could come up with an informed view on [this topic] but I’d rather we dedicate even more time to recruiting an expert we trust to run this function.”

In the past 30 days alone I’ve had this discussion about hiring a CMO at a growing consumer startup, hiring a head of product strategy & operations at a SaaS company, hiring a CFO a rapidly growing company and hiring a Chief Creative Officer at a successful consumer products company.

And it is very common for me in coaching sessions with CEOs to spend an inordinate amount of time asking about team members: How is she doing? Is she feeling motivated? Have you challenged her enough? Is she getting enough board exposure? Have you thought about giving her a bigger role / more responsibility? Is she feeling burned out? Do we need to find a way to dial back her hours for a bit?

I think I obsess about teams because I know what a hit companies take when star performers leave. I know that bad apples in a company can bring down the productivity of everybody, which is why they need to be culled and why I recommend hiring for Attitude over Aptitude. Whenever I’m looking at new investments I pay really close attention to verbal queues given between founders or management members. I watch whether the CEO talks over other people or lets them participate. I look for non-verbal queues such as eye-rolls or sighs that people have a hard time disguising.

In short I look at team dynamics and it forms a very important part of my investment decision. I have found over time that teams that bicker publicly have deep discord internally and that teams that aren’t totally aligned in the early days of a startup become unhinged pretty easily.

I can’t say that all great leaders are warm and cuddly or are people oriented. That wouldn’t map to my interactions of senior executives at very successful tech companies. But I can say that in startups a highly functional team beats groups of individuals pulling in different directions every time.

(Cross-posted @ Both Sides of the Table)

Posted in Featured Posts, Trends & Concepts | Tagged leadership

#CXOTALK: Workday CEO explains his top priorities

By Michael Krigsman on April 13, 2016

Aneel Bhusri, CEO, Workday Workday is one of the few pure software-as-a-service vendors operating at large enterprise scale. The company’s products fall into two broad categories: human capital management and financials. Both HCM and financials are backbone applications used by every large organization, and Workday’s customers are among the biggest companies in the world.

During a conversation with Workday’s co-founder and CEO, Aneel Bhusri, we spoke about a range of issues, including why he and co-founder Dave Duffield started the company; how Workday prioritizes customer feedback when making investment decisions about new products and features; and the CIO role in today’s changing environment.

Watch the entire video below and go to the CXOTALK site to read the complete transcript:

[embedded content]

Among the most important points that Bhusri emphasizes are how employee satisfaction and corporate culture drive innovation and lead to customer success. Although this perspective has emerged recently during CXOTALK conversations with other senior leaders, Bhusri articulated the point especially clearly.

Here are some of Bhusri’s comments [edited for length and clarity] from our discussion:

Why is culture your top priority?

My number one job in the next few years is to ensure this culture remains special and unique and attracts the best and brightest and keeps the best and brightest we have here. That will keep us on the cutting edge of innovation and allow us to maintain high levels of customer satisfaction.

All the rest, all the other metrics, like financial metrics, come from having great employees innovating and having happy customers. All the rest follow from those things, so that’s my job.

How do you ensure the Workday culture remains alive and well?

First and foremost Dave [Duffield] and I interviewed the first 500 people who joined Workday. We did not interview them for their skill set in marketing or engineering or sales; we assumed our teams got that part right. We interviewed them specifically for cultural fit. We believed that if we got the first 500 right, they’d get the next 5,000 right. It really has played out that way.

During that interview cycle, we looked for people who use “we” versus “I.” We work as a team, and that is a huge part of why we have been successful; we run fast as a team.

We invest very heavily in the employees. We get the return, and the employee gets the return if they stay with us for a while. So, we focus on people that will commit to us for the long run.

Part of it is the tone that you strike. Dave and I sit in cubes, and my cube is no different than other people’s cubes. We sit in the middle of the cubes, and we are very accessible; I think that creates a culture of being accessible, open, and friendly.

As the company grows, how do you avoid creating a bureaucratic organization?

When you get big, there’s a tendency to get caught up in process and bureaucracy. We probably have some of that and strive to drive it out.

The best way to avoid bureaucracy is to have small teams who are empowered to make decisions and get their work done. You want to keep driving towards small teams and ensure that those teams embrace the culture.

We put a lot of emphasis on our management style and philosophy, and we can’t have managers and leaders that are, frankly, overhead. They have to be able to do the job and be hands on enough to help drive the organization forward.

Where do you invest time at Workday?

I try to divide up my time a third, a third, a third and then plus 10 percent; that adds up to 110 percent, and I have to figure out how to make it work better. A third on employees; a third on products and strategy; and a third with customers; the 10 percent is with investors. When we go through volatile periods in the market, that time probably pops up.

Join CXOTALK every Friday at 3:00 Eastern time for conversations on leadership, innovation, and digital disruption. Follow the discussion on Twitter with @cxotalk.

(Cross-posted @ ZDNet | Beyond IT Failure Blog)

Posted in Business, Featured Posts | Tagged @aneelb, #wday, workday

Understanding the Rich Tapestry of American Culture as Experienced Through Food

By Mark Suster on April 12, 2016

magret-de-canard-4eb695f30d15198006c330597d17b4a975a5912b

Like many immigrant families and many Jewish families I grew up around a kitchen table, often outside my house and experiencing food, culture, life and other people through meals. I remember fondly my dad (from Colombia) wanting to eat out of the house and experience the best multi-cultural foods one could actually find in middle-class, suburban Sacramento in the 70s & 80s. It wasn’t much but it’s a memory of father and son, a deeply engrained and nostalgic part of childhood.

My mom an even bigger driving culinary and cultural force. She opened a bakery and a California-French restaurant so when I say I grew up around food I mean it literally. And she pushed me to do my first trips to Paris and Tel Aviv that helped inspire what became more than a decade of living abroad across many countries and experiencing the world as it exists from humble street car food to haute cuisine.

Our first night in a Paris restaurant in 1993 I forced my mom to sit in the non-smoking section, which at that time meant sitting upstairs and eating on our own while the lively entertainment was downstairs. That was the last time I remember trying to impose my American value system on the world, the last time I tried to be “apart” from the crowd versus embracing it.

I ordered as best I could from my broken French. “Canard, s’il vous plaît.” I thought I’d try the duck. The bastards brought me beef. Some sort of steak and I was sure they had done it on purpose. I was warned about the rude Parisian waiters and their distaste for les Américains. Well, it turns out the French prepare duck differently than our local Chinese restaurant Peking Duck I was accustomed to and in fact the image that leads this post was the French Magret des Canard (duck). I never knew this until 2 years later when I moved to France and was served it again, a humbling experience. But also a rich one because it book-ended the cultural journey my mom & dad had set me on.

As a parent, the circle of life is a rich one. Yesterday I took my family to eat lunch at one of my favorite new spots in Santa Monica: Ox & Son. My wife still finds it funny that I want to eat out all the time since she didn’t grow up in a family of obsessive out-of-home diners. But for me it’s where family time is sacred and cultural journeys are experienced together. I ordered the “Bahn Mi Breakfast Bowl” – a Vietnamese inspired dish with a “California bowl” flair in stead of on bread. How very LA!

My younger son ordered the “Adult Grilled Cheese” (that’s the actual name), which has raclette cheese, fig mustard caramelized onions, parmesan herbs and a side salad. He diligently searches menus for items with “caramelized onions” on them, a source of pride for me in expanding his palette at the age of 10. He told us how he loved “this kind of lettuce” (Romaine) and actually ate his salad. We played 20 questions (animal, mineral, vegetable) and laughed wholesomely. If we stayed home of course our minds would have wandered towards iPhones, Minecraft, television or house chores. For me – meals are family escapes.

And yesterday’s lunch was inspired by a family outing to see City of Gold one of the most human and endearing documentary films I’ve seen since Supermensch. After months of enduring the utter nonsense of Donald Trump and Ted Cruz talking about how America has lost its way I can’t recommend City of Gold highly enough as an antidote. The film is a reminder of what is magical about the United States. It’s a story of many cultures and people who flock to this land of opportunity and the multi-generational batons handed off to make us second-generation folk mostly American but one foot in the cultures of our forefathers. You will leave newly inspired, heart warmed, proud of our country & people and stomach aching to try the rich tapestry of food and culture we have on offer.

The film is an onion layered with different stories revealing the most magical truths about the rich tapestry that is “American culture,” which is essentially a mélange of every world culture adapted to our local norms. The outer layer tells the story of Jonathan Gold, LA’s most famous food critic and perhaps one of the best known in the country. I had always respected Gold’s writing and reviews but after seeing a glimpse of his life I respect him even more as as human.

Gold is a quirky, eccentric, self-proclaimed procrastinator who is unashamedly a man of the people with no pretenses. He covered the dawn of the LA rap scene before he became an Pulitzer-prize winning food critic and was in and around the recording studio for Snoop Dogg’s career emergence. He played in a punk rock band in his youth but in a typical nebbish journey of a young Jew in Los Angeles he was the Cello player who was all too happy to find his outlet to be counter-cultural.

This layer of the film, not lost on Jewish people like me who grew up as “outsiders” or “others” is a really endearing. It is Gold as a human, not superhuman anointing successes and failures through his prose. I didn’t grow up hard scrabbled or poor but I always grew up with a sense that I wasn’t part of the mainstream so I’ve always had a healthy disregard for upholding its privileges or advantages.

The most obvious narrative of the film is the Los Angeles layer and it is here where the film shines. It tells the beauty that is our mixture of South Koreans, Thai, Filipino, Mexican, Central American, Jewish, Black, Vietnamese, Persian cultures amongst so many more. Gold eschews the trappings of posh haute cuisine restaurants and eats at the taco trucks, the local neighborhood favorites and wants to now the history behind the foods and migrations of the people who created it.

If you leave this part of the film without your tongue salivating you have no palette to speak of. He shows you Oaxacan food as handed down many generations and brought to the US. He shows Southern Thai food and spices that require an appreciation for the punch in the mouth one receives to consume them.

But if you leave the inner layer of the onion and are not deeply moved by the family transitions and opportunities of the US then you may have to check your empathy. I for one was bravely hiding my verklempt cheeks so my boys might not know how much the stories of family journeys shake me to the core. The woman from Southern Thailand who broad her son to the US to learn to study medicine at the age of 5 and the payback as he helps her get the loans required to go from waitress to restauranteur and then receive the imprimatur of Jonathan Gold that can lift ones ranks.

There is the Oaxacan family who are relegated to indigenous Mexican populations who can suddenly feel proud as their second generation food makes are having an impact on the overall LA food scene and culture.

It is my story. It is your story. It is the American story. We came here striving for more. Our parents made sacrifices we only appreciate in our adulthood as we consider what sacrifices we would make for our offspring.

Gold made all of the people richer. And I think he would define it as “richer in life” and let the spoils fall where they may.” He seeks no credit or glory or kick-backs on their profits. Watching the migration stories of fighting to come to American, figuring out how to sell products / services in our country and then figuring out how to grow from entry level to sustainable is really our story.

Gold chronicles LA in a unique way that isn’t matched in many novels. He captures the daily life of working class Angelinos in a way that would make Mike Leigh proud. You go into the neighborhoods. You get a taste of their foods, culture and lives. You get to pry on their journey. And after watching this film it’s clear that you’re ever richer for us and ready to dig into Jonathan’s writing.

Gold. Pulitzer Prize winning author. With a different craft, matches the legendary Philip Roth’s novel examination of the same trends through the equal Pulitzer prize winning, “American Pastoral.” They are the same stories. They are the inverse stories. Roth portrays the gutting of the American urban core and its impacts on communities. Gold chronicles the survivor stories of those left to pick up the pieces and keep on keeping on. Two Jews doing what we do. Observing and chronicling the world around us.

I have do doubt the City of Gold eating guide will be created and I’ll make it to his hot spots. I’m certain I’ll be there with my children as we dare each other to try new meal types which usually means my bribing them to eat escargot or similar.

Food is culture. Food is family. Food is history and sociology. And City of Gold is a magical tour through the eyes of our guide who has done his 10,000 hours to help us better understand the journey. Thank you, Jonathan Gold. Inspiration. Unintentional moral compass for the work of the rest of us. Thank you for the reminder that through food we experience family, friendships, experience and life.

Thank you for reminding us to look past the 2016 campaign rhethoric that America as “lost its way” and show us that at the street and community level we are doing what America actually does best: Immigrating, Integrating and evolving. This is all of our country. There is no “white narrative” of WASPs with primacy. America is us. And as we speak up the systems will realize this and our demographic trends will continue to favor tolerance of skin color, gender, religion and sexual orientation. This is our future and we must seize it.

Bravo to the makers of City of Gold and to Jonathan Gold for having so much impact on the lives of our city. What a beautiful film. Please go see it.

(Cross-posted @ Both Sides of the Table)

Posted in Featured Posts, Trends & Concepts | Tagged startup lessons

SaaS Financial Plan 2.0 (from Christoph Janz)

By Jason M. Lemkin on April 11, 2016

Recently on SaaStr, we did an important post on a simple Trailing Four Month Financial Model. This is one of my best hacks. If you average the growth rate over your last four months, and keep updating it — you’ll have a real-time model that keeps you honest. More on that here.

But what about just building a model in the first place? I’ve seen terrible ones. I’ve seen 100% Gross Margins. I’ve seen terrible misunderstandings of the differences between MRR, ARR, and revenue.

Get help. Get at least an outsourced controller that has done SaaS.

And if you don’t have a strong core financial model and plan — use Christoph Janz’s model here and below. Christoph is my co-investor in Great SaaS companies, co-founder of Point Nine Capital, and just as passionate about the operating side of SaaS as any of us.

I’m reproducing his post in its entirety below and also read it here.

It also has a great list of core dashboard-level metrics to track (the second image below). I had to figure this out myself. You shouldn’t be.

— Jason, ed.

SaaS Financial Plan 2.0

Almost exactly four years ago I published a financial plan template for SaaS startups based on a model that I had created for Zendesk a few years earlier. I received a lot of great feedback on the template andthe original post remains one of the most viewed posts on this blog up to this day.

In the last few weeks I’ve finally found some time to create a “v2” of the template … just in time for a little Easter gift to the SaaS community. 🙂 I’d recommend that you read this post first since it includes some important notes, but if you prefer to check out the template right away click here to download the Excel sheet.

The original v1 model was a very simple plan for early-stage SaaS startups with a low-touch sales model. As I wrote in the original post:

It’s a simple plan for an early-stage SaaS startup with a low-touch sales model – a company which markets a SaaS solution via its website, offers a 30 day free trial, gets most of its trial users organically and through online marketing and converts them into paying customer with very little human interaction. Therefore the key drivers of my imaginary startup are organic growth rate, marketing budget and customer acquisition costs, conversion rate, ARPU and churn rate. If you have a SaaS startup with a higher-touch sales model where revenue growth is largely driven by sales headcount, the plan needs to be modified accordingly.

The new version comes with a number of improvements:

Support for multiple pricing tiers
Support for annual contracts with annual pre-payments
Much more solid headcount planning
Better visibility into “MRR movements”
Better cash-flow planning
Charts galore 🙂

The downside of these improvements is that the spreadsheet has become significantly larger and more complex, but I tried my best to find the right balance. Also, the vast majority of the numbers in the sheet are calculated and the number of input cells is fairly limited.

The spreadsheet should be pretty self-explanatory but I’ve included a number of comments in the spreadsheet. Make sure to check them out – some of them are important in order to understand the model (in case you’re not familiar with that Excel feature, hover over the little red triangles).

Here are a some additional notes:

1) General comments

The sheet is hot off the press and given the large amount of formulas I can’t rule out that there are bugs. If you find one, please email me at and I’ll fix it ASAP.
Blue numbers indicate data-entry cells. Black and grey numbers are computed.
The model contains a lot of simplifications. Don’t expect that it will perfectly fit your specific business – consider it a starting point.

2.) “Summary” tab

The “Summary” tab contains only two types of input cells: Your starting bank balance and cash injections from financings. Everything else is calculated, mostly using data from subsequent tabs.
As with all input cells in the model, consider the values that I’ve put in to be dummy data. Fill those cells with your own data and assumptions.
The model doesn’t take into account interest or taxes (except for payroll taxes).
The “Revenues” line shows your end-of-month MRR for the respective month. This is notcompliant with the US GAAP definition of “revenues”, which uses different revenue recognition rules, but since SaaS companies live and breathe MRR I think it’s the right approach for a SaaS financial model.

3.) “Revenues” tab

The model assumes that you have three pricing tiers. I’ve called them “Basic”, “Pro” and “Enterprise”. If you have more or fewer pricing plans you can of course adjust the model accordingly (with some effort). It is further assumed that all Basic and Pro customers are on monthly plans and that all Enterprise customers are on annual plans.
The model assumes that you’re getting signups organically and via paid marketing and that you’re converting a percentage of them into Basic customers and Pro customers. You can change the key assumptions such as your organic growth rate and your conversion rates in the grey area on the left.
The Enterprise customer segment follows a different logic, based on the assumption that Enterprise customer acquisition is sales-driven as opposed to the marketing-driven low-touch sales model for Basic and Pro customers. The key drivers in the Enterprise segment of the model are your revenue targets, sales team quotas and your assumptions for churn and upsells.
The spreadsheet shows the impact of e.g. Basic customers who upgrade to Pro and Pro customers who upgrade to Enterprise, but to keep things simple it doesn’t support each and every possible movement between plans. For example, I didn’t include the option for Basic customers to upgrade to Enterprise straight away or for Enterprise customers to downgrade. If this is a relevant factor in your business, you can of course accommodate for that by adding a few extra rows.
For Basic and Pro customers, the model allows you to project ARPA development using a given ARPA at the beginning of the planning period along with assumptions on monthly ARPA increases. For Enterprise customers, the model assumes pricing increases at the time of renewal but not during the term of the subscription. Depending on your specific pricing model you’ll have to modify that, e.g. to allow for Enterprise customers to add more seats continuously.
In order to be able to calculate churn for Enterprise customers in the 1st year of the plan, it is assumed that existing Enterprise customers have been acquired over the course of the previous 12 months. This is of course a somewhat theoretical assumption and you need to adjust the model to include your actual numbers.
As you can see in one of the charts below the numbers, the model allows you to calculate your “MRR movements”. It’s worth pointing out that the model currently doesn’t show “Expansion MRR” and “Contraction MRR” separately but only the delta of the two, which I’ve called “Net Expansion MRR”. In order to calculate Expansion MRR and Contraction MRR separately I’d have to add a couple of additional rows. To avoid making things too complicated, I decided against doing that for now. Fortunately ChartMogul (a Point Nine portfolio company, sorry for the plug) makes it super easy to drill down into all of your MRR movements.
Please note that the CAC data and “CAC payback time” calculation are based on pretty crude simplifications. A solid planning of CAC payback times, CAC/LTV ratios etc. would require a lot of additional input data.
The rows with the “Thereof bonuses…” label contain matrix formulas. Handle with care. 🙂

4.) “Costs” tab

In order to adjust headcount planning in the G&A, R&D and marketing departments, change the assumptions for start date, base salary and bonus in the grey “Assumptions” area. You can remove, change or add roles in column H.
With the exception of the VP of Sales role, sales staff headcount planning is done on the separate “Sales Team Hiring Plan” tab (re-using a model that I’ve built for this post). It calculates the number of sales people that you need based on the growth targets for your Enterprise customer segment, the quota of your sales people and a few other variables.
Headcount planning for the Customer Success team is (again with the exception of the VP) done formulaically as well, based on assumptions on how many customers a customer success team member can handle.
It is assumed that there’s only one team, which I’ve called Customer Success, which does both customer support and customer success. Many SaaS companies have different teams for the two functions; if you’re one of them you can adjust the plan accordingly.
The costs for the Customer Success team are attributed to CoGS. This is debatable – if your Customer Success team plays an important role in converting signups or upselling customers you should consider allocating at least a portion of these costs to S&M and include those costs in your CACs. Please note that changing the “cost type” in column I will not automatically move the costs to a different category on the “Summary” tab so you’ll have to do that manually.
The model assumes that payroll tax is the same for all employees. This may have to be adjusted, e.g. if you have people in different countries.
Regarding the cash impact of expenses, the model assumes that:
- payroll taxes are paid monthly
- bonuses are paid yearly (except for the sales team)
- sales team bonuses are paid quarterly (since bonuses/commissions play a much stronger role in sales compared to other departments)
The model (somewhat simplistically) assumes that there are no capital expenditures. If you make investments into things like servers, computers or office furniture you should add these expenses accordingly.

If you’ve made it this far and haven’t downloaded the Excel sheet yet: Here it is.

If you have any questions, comments or suggestions, let me know in the comments or email me. And if you like the model, tweet it out. 🙂

Finally, big thanks to Chris Amani, Sr. Finance Director at Humanity, as well as to Pawel and Dominik of Point Nine, for reviewing drafts of the model and for providing valuable feedback.

(Cross-posted @ SaaStr)

Posted in Business, Featured Posts | Tagged 1 - Stage, 2 - Topic, Getting to Initial Scale, growth, Hiring & Operations, Metrics & Operations, Traction & Scale

How to Avoid Being Disrupted as a VC

By Mark Suster on April 11, 2016

Greg-Bettinelli-1024x656-ecdab6b01d18ca3a0f6111d3f0110437c9878e88

My partner Greg Bettinelli (worth following on Twitter) was recently named by The LA Business Journal as the “Top deal maker in Los Angeles in Venture Capital.” Numero uno. I was nowhere to be found. And that’s a true reflection of just how successful and prolific Greg has been in LA.

In a world that is hyper competitive – even amongst VCs – I can honestly say that not only is the media recognition accurate but it is amongst the proudest days I’ve had in developing Upfront Ventures and our future. Earnestly. No false praise (which anybody I work with can tell you I don’t do). In the end, if you’re not developing a deep bench of talented professionals who keep you on your toes, you’re bound to be disrupted. And Greg has had the most influence on Upfront Ventures’ strategy since he joined.

I joined Upfront Ventures in 2007 and took over as co-Managing Partner in 2011 along with the founder, Yves Sisteron. I asked for the responsibility of setting out the firm’s future strategy and our daily operating tasks. I laid out the following goals:

Hire investment partners with operating experience combined with investment experience and deeply committed to LA Tech, but with strong relationships in SF, NYC and beyond.
Create diversity of thought, experience and backgrounds in our senior ranks
Build out our junior staff including pulling through some younger professionals into the investment ranks
Invest more heavily in platform services
Rebrand with a name that would authentically lay out our values. Upfront: “Direct, Approachable, Early-Stage, WYSIWYG & Unmistakenly Los Angeles” (Upfront is also a term from the media sector)
Move our offices to Santa Monica so we could be closer to the early-stage companies being created in LA
Build a long-term LP based, anchored by diverse asset types (Universities, Endowments, Family Offices, Pensions, Insurance Companies, Sovereign Wealth Funds & Fund of Funds)

My first task was to expand the partnership and my first hire was Greg Bettinelli. In a way it’s hard to hire self-confident, successful, opinionated people like Greg because for all of these reasons they’re willing to challenge your views and conventions. Trust me when I tell you I get no free passes from Greg. But his challenges only make us a better place, he’s pushed us to make sure we’re building systems to better track our markets and measure performance. He’s pushed us to be out in the community more. He’s even challenged some of our sacred cows on investment philosophy.

From 2007-2012 I scoured LA constantly. I tried to be at every event. I created an accelerator & mentor network (Launchpad LA). I sat on panels. I keynoted. I held breakfast roundtables. As a result I felt like I always knew what was going on and constantly received inbound intros / deals. But over time I found that with broader responsibilities (fund raising, recruiting, biz dev, etc.) I simply couldn’t be at everything.

Greg came along at the perfect time. He’s proved much more efficient that I ever was at tracking the activities of the community. He’s a force of nature. 7 times out of 10 he knows what’s going on before I do and is either slipping a paper on my desk, texting me or emailing me something about to go down. I realized 18 months ago what the LA Business Journal just recognized last week. Greg truly is a prolific deal maker and is amongst the most helpful people to entrepreneurs in our ecosystem.

I also noticed that inbound emails were no longer directed at just me. They now were often copying Greg and me (and now Greg, Kara and me!). And I realized that this meant the community recognized that we were truly a team and that Greg was as likely (if not more likely) to champion something than I was. Greg was instrumental in helping us build out our associate ranks and also was the initial champion of our hiring Kerry Bennett to head marketing. Yes, she’s worth following, too.

Upfront is now truly a team. We have 5 full-time investment partners, 1 full-time chief operating partner (who basically runs the firm other than investments) and 1 part time venture partner in addition to a great staff of principals, associates, platform professionals and our broader team of professionals. After Greg we hired Kara Nortman (make it a Twitter follow trio :)) as an investment partner and while she’s newer I have no doubts about the contributions she will make to our firm.

Having great partners and colleagues has made us a much better firm. Of course in many ways the easier solution is to keep all of the control, power & economics in the venture business and truthfully you could run this way for years before the outside world (or ever yourselves) would realize that a generation of firms has surpassed you. But I didn’t join Upfront to be complacent. And I didn’t make false commitments to the LPs who entrusted me to be a good steward of our values and to be inclusive in allowing others to help chart our evolution.

Greg and Kara won’t be the last full time partners Upfront hires. We don’t bring on staff lightly and we’re in no rush to add to our ranks. But we all believe deeply in the need to evolve, challenge ourselves and willing to even let ourselves be disrupted from within. If we don’t, we’re be disrupted from external sources.

But today is a moment to congratulate Greg. He’s not the sort of guy who takes compliments easily so I apologize to him in advance. But if you know Greg please reach out and say “thank you” and congrats. I don’t meet anybody in the LA community (and beyond) who doesn’t say that working with Greg has made them better and made our community better.

At 47, I’m nowhere near beginning to think about “succession planning” in its most formal sense. Yet I’m always thinking about it. I give advice to entrepreneurs constantly that “there should be no critical points of failure in key roles in your company – including at the CEO level” and if I weren’t thinking about our future I’d be a hypocrite. Great firms evolve and share power. Great firms find future leaders and develop them. Great firms build teams and empower them through autonomy and decision authority.

Great firms adapt. Or die.

(Cross-posted @ Both Sides of the Table)

Posted in Business, Featured Posts | Tagged Upfront Ventures, VC Industry

Is it SaaS? Is it ARR?

By Jason M. Lemkin on April 5, 2016

A lot of us SaaS old timers feel like it may almost be time to retire the SaaS acronym. Isn’t everything SaaS now? No one is building on-prem software from scratch anymore, are they?

It’s a fair point. I remember when Salesforce used “No Software” as their tag line. I was at a Salesforce event, seated next to a VP from Microsoft. He learned over to me and said, “Enough with the No Software. You won. It’s all on demand.” Salesforce had a good run with that, but mostly retired it with good reason. No one wants to buy packaged software anymore.

But fast forward to ’16, and once again, things are confusing.

Is a subscription delivery service “SaaS”? Is free software, with services attached, like Zenefits or Weave “SaaS”? Is a 100% API-based service like Twilio or Checkr or Algolia “SaaS”? Or what about software with a human component underlying it?

Even more confusing is — what is “ARR”? If you attend Demo Days of any sort these days, you’ll see every start-up now talks about ARR, not revenues. Including e-commerce companies. Including hardware companies. Are all recurring revenue subscriptions “ARR”?

I get a headache, and want to make a few simple observations and suggestions.

First, it’s only SaaS and software if the gross margins are > 70%. More on gross margins here in a strong post by Tomasz Tunguz. The beauty to software is you write a few (million) lines of code, compile them, upload … and then it cost $0.02 to ship those bits anywhere in the world. The more you ship, the more you make, at almost no variable cost. If your variable cost is high — if it’s > 20-30% of revenue — it’s not software. It’s something else. It’s a service. And services are great. But they usually are valued much, much less than software.

Second, it’s only ARR if the gross margins are > 50%. Gross and net revenues are very confusing terms in software. Confusing in that they shouldn’t exist. Gross and net revenues, GMV, and all that make a lot of sense I guess in ecommerce, adtech ad sales, etc. But again, not in software. The appeal to recurring revenues, the whole point, is that they are sort of a cash annuity. You do have to nurture these customers, maintain them, enhance the service. But do it right, and they stay for years at very low cost. If that’s not the case — it ain’t ARR. And your revenue doesn’t deserve ARR multiples.

If you use these terms and don’t meet these criteria, it’s a confusing game. But maybe you’ll get a few bucks on uncapped notes played it. More power to you, in that case.

(Cross-posted @ SaaStr)

Posted in Business, Featured Posts | Tagged Metrics & Operations

Research: Why CIOs fail and how to fix it

By Michael Krigsman on April 4, 2016

trainwreckatmontparnasse1895-2-e831de136fd6e17c492c31aba7c5837337c076ee Digital transformation has placed CIOs under tremendous pressure. As expectations of IT increase, CIOs must adapt to a business environment where innovation, speed, and solution precision are essential.

Unfortunately, the historical relationship between IT and the business has been fraught with difficulty. With IT failure rates estimated between 30- and 70-percent, CIOs have significant baggage to overcome.

The problem is especially acute when a new CIO takes the reins. For this reason, conventional wisdom describes the importance for CIOs to make a mark during their first several months on a new job. Gartner, McKinsey, recruiters and others all explain why the CIO’s initial 100 days are so important.

University professors Tony Gerth and Joe Peppard researched causes of “CIO derailment” by interviewing over “100 CIOs, CDOs, non-IT executives, and board members;” they also surveyed almost 700 CIOs globally. They published results in a paper available as a case study from Harvard Business Review titled, The dynamics of CIO derailment: How CIOs come undone and how to avoid it.

The paper describes five reasons that cause CIOs to fail – they call it “derail.” Semantics aside, the point is creating situations where the CIO meets business expectations.

In my experience studying IT failures, success is defined by how well the CIO and IT meet customer and business goals. Regardless of any other measure, if the business perceives IT as achieving its objectives to a sufficient degree, then the CIO is successful by definition.

Here are the causes of CIO derailment presented in the report:

Misunderstanding the transition. CIOs must be clear about why the organization has hired them. Is it to jumpstart innovation, save a failing project, or get a new IT program underway? To succeed in the role, the CIO must understand the goals.

Ambiguity in defining IT success. Many CIOs operate in an environment where business leaders define IT success as delivering projects on-time and within budget. However, such metrics leave out the all-important concepts of outcomes and value.

To achieve success, the CIO must establish rules of engagement, or:

face a conundrum: [being] held accountable for benefits but hav[ing] little authority over what needs to happen in the organization for benefits to be achieved.

Ambiguity in role expectations. Organizations may want the CIO to play different roles. For example, some companies expect the CIO to provide technology services and infrastructure while others recognize the CIO as a full strategic partner. To meet these expectations, the CIO must identify what the organization wants and meet those goals.

Some non-IT business executives:

view the role as encompassing strategy and innovation but still treat the CIO as a service provider only. Failing to see the contradiction, they want their CIO to be a miracle worker and achieve major impact without having to trouble them.

Poor relationship management with peers. As technologists, many CIOs do not place sufficient emphasis on the need to collaborate with business leaders in their organization.

In my own research into the issue of CIO relationships in higher education, we offered this advice:

Although the top decision-maker and other senior executives shape an institution’s organizational culture, IT can take a variety of steps to facilitate opening the culture to improvement and innovation. However, IT’s historical reputation for being insular and unwelcoming may create negative perceptions that require significant effort to overcome. By establishing processes and workflows for listening to, and engaging, stakeholders, IT can build the relationships needed to support institutional change.

Pushing change at the wrong pace. Although transformation and innovation are synonymous with change, they are among the most difficult challenges facing any organization. Therefore, every CIO must determine the right pace of change for her or his company and situation. However, it is also true that figuring this out is not easy:

Clearly, new CIOs must make an impact, but at what pace? While creating change too slowly can cause derailment, so can implementing change too quickly.

As with all organizational issues, there is no silver bullet for addressing the points raised here. However, the authors suggest:

Clearly understanding the CEO’s vision for IT
Recognizing the ambiguity of the CIO role
Delivering on service and solution commitments
Building a relationship strategy
Proactively defining IT success
Managing the pace of change
Speaking the language of the business

For many CIOs, these issues may seem obvious and hardly worth research or thorough evaluation. However, in my discussions with many CIOs on the CXOTALK platform and in advisory situations, it is precisely these organizational issues that deserve the greatest attention.

Buying technology products and capabilities is easy; developing strategic clarity and the political savvy to execute an innovation agenda requires far greater subtlety and skill.

(Cross-posted @ ZDNet | Beyond IT Failure Blog)

Posted in Featured Posts, Trends & Concepts | 1 Response

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SaaS Financial Plan 2.0 (from Christoph Janz)

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Is it SaaS? Is it ARR?

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