Category: growth
March 8, 2021 Sammy Abdullah via Medium : Net dollar retention from 59 SaaS co’s
Focus on the customers that matter. You shouldnt care so much about losing customers that weren’t a good fit (every SaaS company is guilty of signing up customers they shouldn’t have), whereas you should obsess over customers you lost that are a good fit. Creating real value means driving upgrades. The difference between 90% gross dollar retention and 95% gross dollar retention is meaningful, but not huge. However, the difference between 99% net dollar retention and 147% net dollar retention is massive. Net dollar retention needs to be above 100%. SaaS is a beautiful business model when net dollar retention is 100% or higher. It means you’re effectively keeping the customer for life. (read more…)
November 23, 2020 Jerry Neumann : Productive Uncertainty
Uncertainty, generally, is something to be avoided. If you can’t predict the outcomes of your actions you will have a hard time planning and managing. And if others see that your business proposition is uncertain they will shy away from including your product in their plans. But uncertainty can also shield against competition, allowing you to create excess value. If it does, it is productive uncertainty. Innovations, because they are new, usually come with uncertainties of one sort or another. Founders have to choose the subset of innovations where the uncertainty is productive to have the best chance of succeeding. (read more…)
CATEGORY: growth, product-market fit
September 30, 2020 Harvard Business Review : What’s Next for Silicon Valley?
Over the last 20 years, Silicon Valley has benefited from a once-in-a-lifetime alignment of advantages. American primacy, the ubiquity of cheap capital, the arrival of the smartphone (among other widely adopted tech innovations), and, perhaps most significantly, a benign regulatory environment have all conspired to create a historic concentration of wealth and power. The titans of the Valley and their heirs have been free to roam far ahead of lawmakers, watchdogs, and tax codes. That might not be true for much longer, however. Despite the fact that many public tech companies saw their valuations skyrocket during the lockdown and that the Covid-19 pandemic has accelerated mass adoption in e-commerce, online payments, telemedicine, and video conferencing, there are signs that the gilded age for consumer internet businesses may be drawing to a close. (read more…)
July 6, 2020 Avi Eyal via Medium : Burn Baby, Burn
Revenue often costs too much. One will often face a tradeoff between cash flow paid annually at a discount and higher revenues from customers. Revenue is Vanity, Profit is Sanity …. and Cash is Reality! Cash upfront helps fuel growth which has a multiplier effect — especially if the business has high gross margins. (read more…)
CATEGORY: customer acquisition, growth, profitability
June 16, 2020 Allen Miller via Medium : The Return of Capital Efficiency
Capital efficiency has long been a desirable trait in early/growth stage businesses. But over the last few years, an abundance of capital combined with a “growth at all cost” mindset, allowed founders to deprioritize efficiency. Ignoring efficiency, however, can lead to making cardinal mistakes like misreading true product-market-fit, over-hiring for the stage you are in and burning through too much money too quickly. Furthermore, growth rate and top-line progress are a function of how much capital a business has consumed to get to that point (i.e. getting to $10M in revenue is less impressive if you spent $50M to get there vs spending $5M to get there.) (read more…)
CATEGORY: customer acquisition, growth, product-market fit
June 14, 2020 Jennifer Alsever via Medium : Indie vc: Unicorns Are Out, Profits Are In
But the model is now proving prescient. Over five years, Indie.vc has backed 34 companies — half of which are women-led companies and 20% are Black. And while there haven’t been any big exits yet, the companies that receive Indie.vc funding seem to be much more robust than their peers, especially in a challenging economic climate. On average, they’re growing 100% in the first year, and 300% the second year, says Roberts. Plus, the fund’s mortality rate is 10% — compared to about 44% with traditional VC-backed companies. (read more…)
CATEGORY: customer acquisition, growth, valuation
March 9, 2020 Tytchme : When Exits Go Wrong: The Trados Case Study
The Trados case is a rare window into how VCs manage their portfolio companies when things don’t go as planned. Although the company’s revenues doubled between 2000 and 2005, this was not enough growth for VCs to make significant money on their investment. A sale was deemed a better route to move on and spend their precious time on other deals. Thanks to their sale rights and liquidation preference, investors could time an exit that would not hurt them too badly. (read more…)
CATEGORY: growth, valuation, VC
March 9, 2020 Maya Kosoff via Medium : Why All the Warby Parker Clones Are Now Imploding
Perhaps the original mistake of the DTCs wasn’t in their vision, but in their decision to take the venture capital in the first place. Now under pressure to grow even faster and at greater scale than they otherwise would have had to naturally, they are being confronted with what happens when growth slows down, the cash starts running out, and investors are expecting their returns. (read more…)
CATEGORY: customer acquisition, growth, product-market fit, winner take all
March 1, 2020 Imad El Fay via Medium : Why more money leads to more problems in consumer startups
As VCs flooded the D2C space, they started throwing money at founders, granting them the valuations they asked for, however setting targets/ expectations, which almost always linked back to growth. As a result, D2C founders found themselves chasing growth at all costs, which meant spending most of their cash on Facebook and Google ads. The increased competition for marketing space on these platforms spiked CPMs, which further increased customer acquisition costs and deteriorated unit economics for these companies. (read more…)
February 23, 2020 San Francisco Gate : As the startup boom deflates, a reckoning is coming for Silicon Valley
Over the past decade, technology startups grew so quickly that they couldn’t hire people fast enough. Now the layoffs have started coming in droves. Last month, robot pizza startup Zume and car-sharing company Getaround slashed more than 500 jobs. Then DNA testing company 23andMe, logistics startup Flexport, Firefox maker Mozilla and question-and-answer website Quora did their own cuts. (read more…)