SaaStr

SEPTEMBER 29, 2022

Dear SaaStr: How Do I Do My Retention Negotiation in an Acquisition? Extra payments if your business hits $YYm in revenues. But the sticks come out of the purchase price. The post Dear SaaStr: How Do I Do My Retention Negotiation in an Acquisition? A few thoughts on retention compensation when you are acquired.

Acquisition 243

Acquisition Retention Payments Compensation 243

Clouded Judgement

MARCH 22, 2024

Subscribe now ARR (Annual Recurring Revenue) vs ERR (Experimental Runrate Revenue) ARR (Annual Recurring Revenue) is one of the most popular SaaS (Non-GAAP) metrics. Many investors laugh (and some rightly so) at the fact that software companies’ valuations are often described as a multiple of revenue.

AI 183

AI Revenue Cloud Technical Advisors 183

Tom Tunguz

JUNE 11, 2019

in revenue, growing at 29%. Let’s put this acquisition in context. First, it’s the third business intelligence related acquisition in the past month. Google announced the Looker acquisition last week. in acquisitions suggests that 2019 will be similarly active as 2018, which saw $66B of acquisitions.

Acquisition 271

Acquisition Pricing Startup Software 271

SaaStr

JULY 13, 2022

Co-founder and CEO of Insider , Hande Cilingir, talks about what it takes to write a successful revenue growth story. Contract processes, packaging, and pricing might change. However, the revenue forecast accuracy and the realization of that revenue each month are more important. Mistake 1: Not accepting your mistakes.

Scale 211

Scale Sales Hiring Revenue Marketplace as a Service 211

User Pilot

SEPTEMBER 20, 2023

Optional product pricing can help SaaS companies earn more money while charging less for their otherwise premium product. TL;DR Optional product pricing is a strategy where you sell your core product at a low cost and then encourage consumers to buy more accessories, features, or complementary products.

Pricing 102

Pricing Customer Lifetime Value Advertising Strategy 102

Tom Tunguz

OCTOBER 27, 2018

Over the weekend, IBM announced the largest software acquisition of Red Hat, an open-source software company, for $35B. It is the largest software acquisition in history, and the third largest technology acquisition (Dell/EMC at $67B and JDS/SDL for $41B were both larger hardware mergers). This price values the company at a 10.6x

Acquisition 203

Acquisition Application Development Software Engineering Pricing 203

User Pilot

SEPTEMBER 20, 2023

Working out pricing for a SaaS can be difficult, so consider using a cost-plus pricing method. TL;DR Cost-plus pricing, or markup pricing, is where you add a set to a product’s unit cost, often overlooking competitive market prices. Justifying price increases is easier when adopting a cost plus strategy.

Pricing 103

Pricing Software Review Market Research Acquisition 103

ProfitWell

SEPTEMBER 16, 2019

During our conversation, Hiten and I walk through how freemium acts as an acquisition strategy as opposed to a revenue driver, how product teams need to think about things differently, and why it’s important to understand customer psychology when building your own freemium product to make everything work together. Subscribe and Listen.

Acquisition 99

Acquisition Revenue Scale Retention 99

SaaStr

APRIL 19, 2024

EchoSign, which Adobe bought, had $12M in ARR, growing 100%, with 120% revenue retention and cash flow positive. Today that would be a dream, but in 2011, people didn’t understand the metrics around recurring revenue businesses, so investors weren’t sure it was a good business. You Want One-Third of Your Revenue Outside the U.S.

Engineering 228

Engineering Business Model Pricing Scaling 228

Tom Tunguz

AUGUST 28, 2021

Should you price your SaaS per seat or per use? The first thing to state is that massive companies have been built using both pricing structures: Salesforce and Adobe bill per seat while Snowflake and Twilio charge per use. When to use per seat pricing. Would they switch if the pricing weren’t predictable?

Pricing 279

Pricing Strategy Startup Scale 279

Tom Tunguz

JANUARY 28, 2024

Security companies as a group average 29% expected revenue growth in 2024, compared to 23% for Data (or DaaS which stands for data-as-a-service). Security & data top the charts at on average 10x enterprise-value-to-forward-revenue, compared to 5x for the others. Anticipation of this growth propels multiples.

Software Review 321

Software Review Software Finance Acquisition 321

SaaStr

MARCH 27, 2024

Revenue Growth is Up Just 24%. HubSpot’s revenue growth of 24% (21% in constant currency) is basically equal to its net new customer count. Despite raising prices and selling more products, HubSpot ACV is basically flat at $11,365. Clearly, even SMBs are working to moderate spend, even as vendors increase pricing.

Scale 231

Scale Cloud Pricing Scaling 231

Tom Tunguz

JANUARY 4, 2023

The total quantity of acquisitions demonstrated greater resilience shrinking by 56%, while the median acquisition value tumbled from $81m to $22m (-72%). A $22m median M&A price implies most of these transactions were acquihires - acquisitions that value a company for its team. in Q4 2021 to a paltry $2.1b in Q4 2022.

Startup 327

Startup Marketing Acquisition Pricing 327

SaaStr

JANUARY 24, 2024

Solving High Volume, Low Conversion at Lattice Dini Mehta joined Lattice at $3M in revenue when it had just 10 people in seat for Go-To-Market and 7 salespeople. Joining Box as CRO When They Had a Churn Issue Mark joined Box four years ago at $600M in revenue and 4-5 years past IPO. The result?

Scale 216

Scale Sales Hiring Scaling Revenue 216

SaaStr

FEBRUARY 17, 2023

While the allure of customer acquisition can pull a founder’s attention, it’s equally important to dedicate resources to fighting churn and expanding revenue from existing customers. They discuss how Fox helped build a churn-fighting, upselling, and cross-selling machine that continues to generate revenue. Something missing?

Retention 199

Retention Revenue Startup Sales Hiring 199

Tom Tunguz

JUNE 9, 2018

It’s a massive acquisition at a massive price relative to other software acquisitions. The Skype acquisition was also about identity, consumer identity. This acquisition capstones the commitment. Mix the two, chill, and shake, and you have a new billion dollar revenue business unit for Microsoft.

Acquisition 203

Acquisition Azure Cloud Enterprise 203

SaaStr

DECEMBER 30, 2022

DigitalOcean has done that and grown beyond $150M in revenue in Q3 2022. Cliff Bockard, Senior Vice President of Revenue at DigitalOcean, joined us at SaaStr Scale to discuss how businesses can serve SMBs and still bring in large numbers of revenue. . Market understanding. SMBs have restricted budgets.

Scale 188

Scale Scaling Revenue Enterprise 188

Baremetrics

AUGUST 8, 2021

For most SaaS businesses, customer acquisition is one of the most challenging stages of growth. For most, the easiest ways to increase customer acquisition rates are to offer a freemium model or price your product on the lower end of the spectrum. Results in an Increase in Revenue 2. Raise Prices for New Customers 2.

Pricing 111

Pricing SaaS Scale Churn 111

Tom Tunguz

OCTOBER 14, 2023

Within the last few weeks, we’ve seen two significant exits in Startupland, the first new pricing information we received in many quarters. Atlassian’s acquisition of Loom is also the first unicorn sale in about the same time frame. But the market has changed enormously since the market set those prices.

Acquisition 240

Acquisition Pricing Enterprise Startup 240

Blulogix

FEBRUARY 9, 2024

How Recurring Revenue Sustains Modern Businesses Amidst Uncertainty By BluLogix Team The Vital Role of Recurring Revenue In an era marked by rapid technological advancements and shifting consumer preferences, recurring revenue models have become the lifeline for modern businesses.

Revenue 52

Revenue Business compliance B2B 52

SaaStr

MARCH 12, 2024

It’s a common dream for founders to hope their startup be acquired one day, but what is a company, like Google, really looking for in their acquisitions? First, there are three types of acquisition deals: Talent — To get the expertise on your team and more firepower. You only make money after your investors get their money back.

Software Review 212

Software Review Technical Review Acquisition Scale 212

Chart Mogul

AUGUST 20, 2020

4x entrepreneur Andrew Gazdecki shares how you can better prepare yourself for your startup's acquisition, and make the journey a rewarding one. The better prepared you are for an acquisition, the smoother it’ll go, leaving you financially, operationally, and psychologically stronger during negotiations. Speak to other founders.

Acquisition 105

Acquisition Startup Technical Review Scale 105

Tom Tunguz

OCTOBER 23, 2023

” “Higher-than-expected AI consumption contributed to revenue growth in Azure.” “In Azure, we expect revenue growth to be 26% to 27% in constant currency with an increasing contribution from AI. At the time of acquisition, Github had about 25m users & projected to reach 100m in 2025.

AI Search 312

AI Search AI Cloud Azure 312

SaaStr

SEPTEMBER 29, 2022

Free user acquisition. Stage 3: Prove scalable quality user acquisition. It’s time to reduce the customer acquisition cost by experimenting with content marketing and virality. As a result, your growth team gets limited to user acquisition. Mistake #4: Pricing that creates friction for free user adoption and virality.

Technical Review 232

Technical Review Technical Advisors Scale Compensation 232

Tom Tunguz

DECEMBER 26, 2022

From 2003 to 2014, Constellation’s revenues compounded from $80m to more than $5b, an average of 25% annually. In 2014, Constellation grew revenues 40%, which today would place the company in the top quartile. Acquisition. Price Increases. Acquisitions increased revenue 33%. New Bookings. Net Growth.

Software Review 295

Software Review Investment Software Acquisition 295

Subscription Flow

JANUARY 3, 2024

Consider the potential for growth if you make your pricing model a consistent priority for your company. Most SaaS companies, on the other hand, treat pricing as an afterthought, setting it and then forgetting about it, rather than viewing SaaS flexible pricing strategies as ongoing processes critical to their success.

Pricing 52

Pricing Payment Features SaaS Marketplace as a Service 52

FastSpring

MARCH 9, 2022

Answer: It’s the pricing page. The path to a signup or purchase may include a variety of page views, but it almost always includes the pricing page. In this article, we’ll show you examples from a variety of SaaS pricing pages. 7 SaaS pricing page examples. Add a summary table for pricing plans. How do we know?

SaaS Payments 122

SaaS Payments Pricing Payments Payment Methods 122

Tom Tunguz

MARCH 19, 2018

The company generated $297M of revenue in 2017 at a 73% gross margin, and grew by 58%. Salesforce is acquiring the business for an astounding 21x enterprise value to trailing twelve months revenue multiple - nearly 2x the next closest. Price ($M). Year of Acquisition. Transaction. TTM Rev ($M). Growth Rate. Gross Margin.

Acquisition 189

Acquisition Marketing Enterprise Revenue 189

Neil Patel

NOVEMBER 9, 2020

Plus, the price tag on those more established businesses often run into the billions. Micro startup acquisitions. But before we dive into that, we need to look into what micro startup acquisitions are and why you need to sit up and take notice. Micro Startup Acquisitions: What Are They, and Why Should I Care?

Technical Review 144

Technical Review Payment Methods Acquisition Development Team Review 144

Tom Tunguz

DECEMBER 31, 2023

The anticipation of a rate change drives fear of target acquisition valuations. In the last two years, M&A has totaled about $49b & it surges to above $60b driven by AI acquisitions. The winter forced many companies to evolve from open-source projects to revenue-generating businesses. The Fed cuts rates, which helps.

AI Search 240

AI Search AI Scale Headcount 240

Tom Tunguz

SEPTEMBER 20, 2023

Earlier today, Cisco announced its intention to acquire Splunk for $28b , a 30% premium to the closing price. Metric Value Revenue, $b 3.64 Revenue Growth 37% Gross Margin 77.7% in revenues growing at 37% places the business in the top quartile of public software companies. Metric Value Revenue, $b 3.64

Trends 209

Trends Software Review Acquisition Pricing 209

SaaStr

JULY 10, 2022

Let’s take a look at 3 B2B acquisitions from a few years back as an example. Let’s first start with the $35m acquisition of TokBox after 11 years and the $220m acquisition of SpringCM after 13 years. talking about “tuck-in” acquisitions that can attach to existing revenue streams.

Venture Capital 354

Venture Capital Acquisition AI Pricing 354

SaaStr

SEPTEMBER 19, 2023

Some of the changes we’ve seen in the last year or two include: CAC reduction Headcount optimization Price complexity Quality of revenue A different environment means a different strategy, and Notion Capital lays out four business model changes that could be helpful based on what peers are doing. Strive for $150k of revenue per FTE.

Business Model 237

Business Model SaaS Payments Payments Headcount 237

Baremetrics

AUGUST 22, 2021

Subscription revenue can be defined most simply as a model which generates income from customers through recurring fees that are paid at regular intervals. Before we get into the more complicated stuff, let’s consider the difference between earning revenue and collecting revenue. Subscription Revenue is Easier to Scale 3.

Payment Features 90

Payment Features Payments Subscription Revenue 90

Clouded Judgement

JANUARY 12, 2024

The ZIRP period created a lot of confusion given software buying was happening at a break neck pace - and it was easy to think you had differentiated product market fit because your business momentum (ie revenue) suggested you did. Revenue multiples are a shorthand valuation framework. Have these conversations today.

Cloud 284

Cloud Venture Capital Acquisition Metrics 284

SaaStr

APRIL 26, 2023

Only 32% of Revenue From Websites. The majority of its revenue comes from ecommerce. Their pure website revenue, which they call “Presence”, is just 32% of their revenue. #2. Most of the website / presence growth came from price increases, which saw limited churn as a result. 68% From Ecommerce.

Scale 217

Scale SMB Churn Pricing 217

Baremetrics

SEPTEMBER 30, 2021

Cost plus pricing is one of the many pricing strategies employed by companies in an attempt to increase their revenue and profit. The basic idea behind cost plus pricing is to base your prices on the cost of production plus your desired profit margin. This makes it a very simple and safe pricing strategy.

Pricing 96

Pricing Outsourced Development Systems Review Strategy 96