Tom Tunguz

AUGUST 9, 2022

In 2020, revenue growth was the most important factor explaining a public software company’s forward multiple. Net income has surged to the highest correlate of a public software company’s multiple surpassing revenue growth. The formula has changed since then. Preference changes pop out of the data.

Software 364

Software Revenue Metrics Sales 364

Tom Tunguz

APRIL 7, 2021

More than a year after Covid washed over the software ecosystem and the tide ebbs, it’s revealing the impacts on fundamental metrics of public software companies. Across public software companies, the average sales efficiency fell from 0.6 In contrast, sales efficiency improved throughout 2020.

Software 343

Software Sales Travel Metrics 343

SaaStr

OCTOBER 10, 2024

He summarized the M&A (acquisitions) of The Top 10 Software Acquirers. And there hasn’t been for a while: It was great times for SaaS liquidity in late 2020 through the end of 2021. The Top 10 Software acquirors’ M&A activity is down -90% or more from 2021. Epic times. A record low. See above from Thomasz.

SaaS 304

SaaS Acquisition Cloud AI 304

SaaStr

APRIL 14, 2020

We know this because hundreds of them told us so in a joint study PandaDoc did with G2 in January of 2020. The results culminated in a comprehensive research report titled: 2020 The State of Deals Report. Only 27% of vendors report using a software tool to aid in creating, editing, sending, or tracking their sales docs.

Technical Review 307

Technical Review Marketplace as a Service Construction Software Review 307

SaaStr

SEPTEMBER 14, 2020

. — Janelle Teng (@NextBigTeng) September 2, 2020. And while we had to re-imagine the Annual as an At Home event for 2020, both Byron Deeter and Elliott Robinson of BVP were gracious enough to update the State of the Cloud 2020 to include their learnings of COVID-19’s impact on the market. 2 Cloud is Eating Software.

Technical Review 349

Technical Review Cloud Software Review Technology 349

Tom Tunguz

APRIL 28, 2024

In the last decade, the total number of venture backed software M&A by count has remained relatively constant. Nevertheless, there are huge differences between the total value created by software M&A annually. In 2014, 2016, 2020, 2021, these big mergers drove the figures into the tens of billions. X 2021 43.8%

Acquisition 314

Acquisition Startup Venture Capital Software 314

SaaStr

JANUARY 5, 2021

It’s been a fun experience being on Quora for … a decade We’ve crossed 60,000,000 views of our answers there, so let’s take a look at the Top 50 most viewed SaaStr Answers on Quora in 2020: Why do many startup owners sell their firm and move on instead of planning on making it a big player like Google, Microsoft, etc.?

Software Review 286

Software Review CTO Coach Technical Review Sales Recruiting 286

Tom Tunguz

JANUARY 15, 2023

I reviewed the roughly 560 US software acquisitions under $400m since January 1, 2020. “The Startup M&A Market Fell 94% Year over Year - But One Segment Thrives” , a post from last week, elicited the same question from many readers. Just who are the most active acquirers for smaller takeouts? To answer the question.

Acquisition 290

Acquisition Software Review Software Startup 290

SaaStr

DECEMBER 27, 2024

“The universe slammed SaaS down at the beginning of 2020, then splashed it way up, then slammed it down again. “It felt like we came out of the recession in Q3 of 2024,” Brian noted. Now it’s flashing back up.” “We had the best board meeting we’ve ever had,” according to Brian.

AI 278

AI Marketing SaaS Interviewing 278

Tom Tunguz

JANUARY 17, 2021

Quality Assurance is truly about the automation of certain parts of software testing. The automation of QA is a secular trend that perhaps accelerated with more software engineers working from home. Life insurance and emergency medicine certainly fit the COVID-19 narrative.

Startup 362

Startup Software Engineering Finance Engineering 362

Tom Tunguz

FEBRUARY 26, 2025

Many mid-market software companies price with the goal of revenue maximization, negotiating for the highest possible price in each sale. There are exceptions: Oracle’s database, Tanium’s security product, Workday’s human capital management software. Application software companies typically sell seats.

SaaS Payments 283

SaaS Payments Pricing Strategy Scale 283

Clouded Judgement

JUNE 19, 2024

Q1 was a very weak quarter of software earnings. I’m calculating FCF by taking the Operating Cash Flow and subtracting CapEx and Capitalized Software Costs. The graph below shows the median net retention going back to 2020. Some software companies also have seasonality in the “payback.”

Cloud 318

Cloud GCP(Google Cloud Platform) Software Azure 318

SaaStr

NOVEMBER 6, 2023

If you’re selling software to SMB merchants and outside of tech like Shopify and Toast and Monday , things are pretty, pretty good, if in some ways still harder than before. If you’re selling sales and marketing software, like Zoominfo, it can seem a lot tougher than 12-18 months ago. So where does this all net out?

Merchant Services 300

Merchant Services Azure Software AWS 300

SaaStr

JANUARY 25, 2020

It’s still early — the 2020 SaaStrAnnual.com isn’t until March 10-11-12 in the SF Bay Area — but we can already start seeing some of the hottest VC sessions at Annual. The Next Iteration of “Software is Eating the World” 2020 with Atrium and Andreessen Horowitz. There will be almost 1,000 (!)

Trends 229

Trends Venture Capital Scale PayPal 229

SaaStr

DECEMBER 10, 2024

As software continues to “eat the world” (as Marc Andreessen famously predicted), developers have gained significant influence in purchasing decisions. The days of pure top-down enterprise sales are over when it comes to technical products.

Engineering 278

Engineering Development CTO Leadership 278

SaaStr

OCTOBER 28, 2020

No, the biggest change in Venture Capital in 2020-2021 is what he called “The Postmates Effect” That Postmates was arguably #3 to Doordash and UberEats, and still was worth billions. Winner doesn’t take all in software, but it often takes most. Look at the massive investments in productivity software.

Venture Capital 256

Venture Capital Cloud Investment Software 256

SaaStr

APRIL 4, 2020

Here are the top stories of the week if you want to catch up: #1: “SoftBank Abandons $3 Billion Deal With WeWork Investors” #2: “Salesforce promises no ‘significant’ layoffs over the next three months, even with coronavirus spreading” #3: “Tech billionaire Marc Benioff wants every CEO to take a ‘no layoff’ (..)

Cloud 222

Cloud Software 222

SaaStr

DECEMBER 1, 2021

The state of software buying has changed. SaaS spending dipped in the first half of 2020 at the start of the pandemic but has since reaccelerated. During SaaStr Annual 2021, Amanda Malko, CMO at G2, shared a fascinating look at the data that reveals shifting patterns in the way consumers purchase software. .

Software Review 278

Software Review SMB Enterprise Software 278

SaaStr

APRIL 14, 2022

Enterprise software spending globally was $529B in 2020, per Gartner. The latest Gartner data backs that up: The big takeways: Gartner is predicting acceleration of business software spend in 2023, up to 11.8% That’s just jaw-dropping acceleration in enterprise spend for SaaS and business software. growth from 9.8%

SaaS 71

SaaS Enterprise Software Data 71

Tom Tunguz

JANUARY 18, 2022

The public software sector is weathering the second deepest multiple contraction in the last decade. The question on every software founder’s mind today must be, how will this affect the private financing markets? For the next 3 years, Series Ds increased in size until the late 2019/early 2020 correction of 41%.

Marketing 362

Marketing Startup Finance Technology 362

SaaStr

MARCH 23, 2021

Battery Ventures recently put out its Software 2021 report with a ton of interesting learnings across the leaders in SaaS and Cloud. Revenue growth slowed in 2020 for the average public SaaS company — but accelerated for the largest ones. The growth in venture in 2020 was really all in Series D+ rounds. ” #2.

Investment 305

Investment SMB Acquisition Cloud 305

Tom Tunguz

MARCH 10, 2022

Both startups provide database software to developers to build applications. In fact, their revenue trajectories through 2020 are nearly identical. They would both exceed $400m in 2020. I’m going to tell you a bit about two startups and I’d like you to guess the name of each company. Both have grown very fast.

Startup 338

Startup Pricing Revenue Development 338

Tom Tunguz

DECEMBER 12, 2021

Since 2016, public software has witnessed four corrections. Till 2020, the growth rates of the private market valuations and the public valuation multiples paralleled each other at the highest level. Today, we’re in the midst of the fifth. Also, 2014 to 2016 saw a 57% reduction in multiples and of course after 2008.

SaaS 361

SaaS Cloud Enterprise Software 361

Tom Tunguz

OCTOBER 18, 2020

Most high-growth software investors value public companies on enterprise value to forward revenue multiple. What if we could compare the relative valuation multiples of public and private high growth software companies? What if we could compare the relative valuation multiples of public and private high growth software companies?

Software Review 363

Software Review Finance Enterprise Acquisition 363

SaaStr

DECEMBER 9, 2020

— Ben Chestnut (@benchestnut) November 12, 2020. But every business leader has a few top pressing problems that a software vendor can solve. But VPs are still sitting on their computers, struggling to hit their plans, manage their teams, hire the next great engineer, deploy their software releases, and hit their number.

Sales Hiring 356

Sales Hiring Outbound Sales Team AWS Engineering 356

Tom Tunguz

SEPTEMBER 19, 2021

GitLab is the first fully remote software company to go public. More than 2000 employees work all over the world and have collaborated to build a massive software business. GitLab provides a suite of DevOps tools that enable engineering teams to build and deploy software, and then secure it. Revenue, $M. Revenue Growth. -.

Metrics 315

Metrics Outsourced Development Scale Cloud 315

Tom Tunguz

APRIL 14, 2020

62% have or will change quota in 2020. Business travel, new hires, and new software purchases were the top categories of budget reductions. A majority of revenue leaders believe the impact of COVID-19 will persist through 2020. Only about 1% have seen a benefit and are increasing their forecasts. About 15% will see an increase.

Sales Hiring 334

Sales Hiring Sales Forecasting Travel 334

SaaStr

SEPTEMBER 11, 2020

jasonlk) September 2, 2020. So the recent SaaStr Annual 2020 at Home was a smashing success. Mailchimp took years to transition from an agency to a software business, and then years until it finally took off when they added freemium. Went from agency -> software company only once they had enough cashflow to support it.

Branding 354

Branding Scale Software Business Model 354

SaaStr

DECEMBER 26, 2022

Amanda Malko is CMO at G2, a software marketplace and review site that reaches over 60 million buyers annually across 2000 software categories. In this session, she shares insights and trends from research conducted this year that can help software buyers and sellers make smarter decisions about software and the market. .

Software Review 245

Software Review Software Azure Cloud 245

SaaStr

APRIL 17, 2021

As a result, it’s quite profitable, with $150m in free cash flow in 2020. #2. Rather, it charges for software subscriptions to take payments on its websites. Rather, it charges for software subscriptions to take payments on its websites. This ecommerce revenue was $143m in 2020, about 22% of total revenue.

Payment Methods 334

Payment Methods Merchant Services Payments Payment Services 334

Tom Tunguz

SEPTEMBER 1, 2021

Amplitude’s revenue growth rate is in the top quartile for modern software companies at 49%. The company spent $47m in 2019 on sales and marketing, and $52m in 2020, an increase of $3m or 6%, while growing revenues 49%. The 2020 sales efficiency is 0.54. Revenue, $M. Revenue Growth. -. Gross Margin. Sales Efficiency. -.

Metrics 294

Metrics Benchmarks PayPal Enterprise 294

SaaStr

JANUARY 17, 2021

— Jason BeKind Lemkin (@jasonlk) July 18, 2020. And I didn't really know how to build software. — Jason BeKind Lemkin (@jasonlk) October 16, 2020. You'll see. As we’ve talked about before, the great thing about SaaS, is it compounds. Once you have something, it builds on itself. But it takes time.

Acquisition 361

Acquisition SaaS Software Business 361

SaaStr

MARCH 1, 2025

The last IPO of the 2020-2021 era was HashiCorp in December 2021. With over 20 years in the infrastructure software space, Dave previously held executive roles at Microsoft, VMware, and GitHub. And it’s one of the first to be acquired! IBM just closed on its $6.4 Billion acquisition of HashiCorp.

Scale 168

Scale Systems Review Scaling Leadership 168

SaaStr

AUGUST 3, 2022

Zoom came out of 2020-2021 with SMBs no longer growing, but a huge boost in the enterprise. during peak Covid in Q3 2020. Software is more profitable than payments, usually, and Shopify is no exceptions. And once gross margins fall below 50%, a company really isn’t a software company anymore. #5. More on that here.

Payment Methods 276

Payment Methods Merchant Services SaaS Payments Payment Solutions 276

SaaStr

MAY 1, 2023

UiPath has had an incredible history, taking 10 years to get to that first $1m in ARR … and then turning into one of the fastest growing software companies to $1 Billion in ARR ever ! Today, Dines’ vision is to make software robots , powered by computer vision and AI, as common as PCs in the workplace. seed round 2015: $1m rev.

Company Culture 278

Company Culture Innovation AI Enterprise 278

SaaStr

APRIL 8, 2020

And in the end in 2020, they can create a buying process that for us at least, is just way too hard and long. Don’t hide your software if it is so easy to use. We can all smell good vs. bad software. A bad sales process says bad-to-mediocre software, even if it’s not the case. Especially now. SaaS buyers are veterans now.

Construction 363

Construction Pricing Software SaaS 363

Tom Tunguz

JUNE 20, 2020

This post is part of a series leading up to SaaS Office GTM Edition on June 24 in which we’re reviewing the results of the 2020 Redpoint GTM survey. Software companies invest in engineering early and then the product matures, complement that engineering and product investment with go to market teams to commercialize the product.

Scale 363

Scale Scaling Sales Hiring Software Review 363