Why Misunderstanding Startup Metrics Can Cost You Your Business
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 […]
Roundtrip Revenue: Probably, Just Do It.
If you’ve been around since the Web 1.0 days, a certain phrase may send shivers up your spine — “Roundtrip Revenue.” People went to jail at AOL for this, folks, overstating revenue by as much as $1 billion that wasn’t really real. It was just matched against AOL purchases, making the revenues in essence nonexistent. […]
Don’t Forget the Services Revenue
If you’re doing SaaS for the first time (or even the second), the whole idea of charging for “Services” may seem an anathema. It sure did to me. If your product is so easy to use that you barely need sales people, why in the world would I need to charge for implementation? For support? For […]
Don’t Fire Your “Worst” Customers. Hire Them a Psychiatrist Instead.
There’s a lot of Internet advice that makes a lot of sense, but not necessarily in SaaS. Somewhat bad advice that entrepreneurs share again and again, without having really tested the ideas behind that advice. One bit of advice you hear again and again, that I 93% disagree with, is “Fire The Customers That Don’t […]
Why You Need to Ring the Freaking Cash Register
I work with a lot of startups. I start to notice when bad behavior creeps into the system as a whole. I have seen much of that behavior over the past 2 years get worse. Nobody seems to want to make money any more. I remember just a decade ago in 2003 when we all […]
Prisoners, And Why It Doesn’t Really Matter Your App Is So Hard to Rip Out
There are two things I see SaaS entrepreneurs who are post-Traction and post-Scale say again and again: We’re So Sticky. Once we’re in, it’s so hard to rip us out. Our Churn is Basically Zero in the Enterprise. We’re doing great because No One Leaves. If you’re coming from a Freemium background, or B2C, that […]
What is MRR Churn? | SaaS Metrics FAQs Part 2
Why measure SaaS MRR churn? Show me the money! SaaS MRR churn is an important SaaS metric that measures the financial impact of churn. While customer churn is an important operational metric, CFOs always prefer MRR churn. In this second SaaS Metrics FAQs article, I explore ways to analyze SaaS MRR churn.
Want to Understand SaaS? If Nothing Else — Understand That It Compounds
If you haven’t done a SaaS start-up before, it’s different. The reasons are many, but I think they can almost all be summed up in one key factor: SaaS compounds. What does this mean, that SaaS compounds? It means it’s really, really hard to get revenues going. You close a customer for $120 in annualized […]
The End of Legacy
The first time I heard “Legacy Systems” was in the early 90s when working at Coors. It was in reference to the mainframe and dumb terminals around the campus. I was far more excited about the cutting edge stuff like Windows For Workgroups including Schedule Plus. We were busy installing this stuff via Novell Netware […]
It Takes at Least 7 Years in SaaS: Can You Do The Time?
I was recently at a dinner with a founder of a pretty successful web company, and he asked how long I had worked on EchoSign, and he nodded his head, and he said “Yeah same for me. It takes about 7 years”. People know SaaS takes longer than consumer web to scale. But it’s not […]
Traditional system integrators 2004-2011 financials
Traditionally, 31st of March is the date that all my favourite system integrators (SI) have released their annual report for the previous year. Oddly, however, I’ve seen some strange changes this year – for the first time. I could -and will- even say that traditions have been broken with I had to look hard and […]
Should Startups Focus on Profitability or Not?
There are certain topics that even some of the best journalists can’t fully grok. One of them is profitability. I find it amusing when a journalist writes an article about a prominent startup (either privately held or preparing for an IPO) and decries that, “They’re not even profitable!” I mention journalists here because they perpetuate […]
AMZN ‘Other’ Revenue in 2011+
I had meant to put more content together around these numbers, but due to time constraints I won’t be able to. Regardless, the picture speaks for itself. Here’s my AMZN ‘Other’ revenue numbers with the blue bar representing my estimates of AWS revenue with the green bar representing the rest of AMZN’s ‘Other’ line. The […]
SaaS Benchmarks | Acquisition Cost and Churn Challenges
What is a typical churn rate for SaaS? What is a good time frame to recover CAC? As SaaS companies mature, high quality SaaS benchmark studies are appearing.
Ask not what your company can do for you, …?
John F Kennedy to me was one of the finest presidents of the US. Shot and killed before I was even born, but still. During his inaugural address on January 20th 1961, one of his now famous quotes was: “Ask not what your country can do for you – ask what you can do for […]
