The Angel VC

OCTOBER 24, 2013

[Note: This post first appeared as a guest post on Andrew Chen's blog. Andrew is a writer and entrepreneur and has written a large number of must-read essays on topics such as viral marketing, growth hacking and monetization. He was kind enough to publish my post on his blog, and I am republishing it here.] If you’re a long-time reader of my blog (or if you know me personally) you’ll know that cohort analyses are one of my favorite tools for getting a deeper understanding of a product’s usage.

Customer Lifetime Value 211

Customer Lifetime Value SaaS Churn Growth Hacking 211

Chaotic Flow

OCTOBER 29, 2013

Driving sustainable growth is a challenge for every SaaS business from startups to public companies. In the beginning, the SaaS recurring revenue model seems like a dream compared to the revenue fits and starts of licensed enterprise software. But within one short customer lifetime, every SaaS CEO startles awake to the fact that the churn monster is always looking over your shoulder.

Strategy 165

Strategy Customer Lifetime Value SaaS Acquisition 165

Tom Tunguz

OCTOBER 20, 2013

At all hands meetings on Tuesday afternoons, our 75 person AdSense Ops team reviewed the most important metrics for the business: top-two box customer satisfaction scores, revenue growth and customer churn. But unlike every other all hands meeting I attended, these meetings ended with a monkey and a dog. Our director, Kim Malone, would stand up and call for two stuffed animals, first, Whoops the Monkey and Second, Duke the Dog, both of whom employees had carried to the meeting.

Management 115

Management Data Analysis Interviewing Churn 115

Practical Advice on SaaS marketing

OCTOBER 8, 2013

There's a guy in my town who advertises himself as "The Bulkhead Man." What he does is install the entryways that go from the outside of a house into a basement. Most are heavy steel doors that are mounted onto the concrete foundation. Here's a photo of mine, partially obscured by a very healthy holly bush. I assume "The Bulkhead Man" could probably handle a lot of other construction projects around the house: build a deck, hang new cabinets, replace siding, whatever.

Marketing 100

Marketing SaaS Underperforming Technical Team Acquisition 100

Speaker: Timothy Chan, PhD., Head of Data Science

Are you ready to move beyond the basics and take a deep dive into the cutting-edge techniques that are reshaping the landscape of experimentation? From Sequential Testing to Multi-Armed Bandits, Switchback Experiments to Stratified Sampling, Timothy Chan, Data Science Lead, is here to unravel the mysteries of these powerful methodologies that are revolutionizing how we approach testing.

Innovation

CloseSaaS

OCTOBER 18, 2013

Close is at today’s Sales Hacker Conference in San Francisco and we’ll be taking notes and sharing the best talks of the conference with you. List of all talks. What is this talk about? How to hire, treat and train your salespeople so that you get predictable, scalable revenue growth.

Sales Hiring 52

Sales Hiring Revenue Sales Startup 52

Tom Tunguz

OCTOBER 9, 2013

One number investors use to benchmark SaaS startups across sectors and industries is sales efficiency. There are a handful of variants of this metric, sometimes called the magic number, but ultimately they all aim to provide some sense of the incremental revenue returned by sales and marketing investment. To make it more concrete, if a startup invests $500k in marketing and sales this quarter and generates $1M in incremental revenue, net of the cost to provide the service, for the next 12 months

Benchmarks 112

Benchmarks Sales Recruiting Startup Sales 112

Tom Tunguz

OCTOBER 25, 2013

This week, Netflix announced its US userbase grew to 31M subscribers surpassing HBO for the first time. The magnitude of Netflix’s milestone is hard to overstate. In a bid to compete with Netflix, HBO has partnered with Comcast, which serves 21M subscribers, to trial an Internet-only subscription plus HBO , the first time HBO is available to US consumers without a full cable subscription.

Subscription 108

Subscription Payment Features Startup Trends 108

Tom Tunguz

OCTOBER 31, 2013

Quietly mentioned in yesterday’s press conference about Google’s Android update is a new feature that will change the way people use their mobile phones, search deep-linking. With KitKat, Google is applying its world-class crawling and search technology to the content and data within mobile applications. Quoting from the Verge, >A search for a restaurant will offer a link directly to that restaurant page in the OpenTable app if you have it installed, allowing you to set up a reser

Payment Methods 100

Payment Methods Payment Solutions Payments Application Development 100

Tom Tunguz

OCTOBER 30, 2013

Every SaaS business suffers from churn. If churn isn’t managed properly, the lost revenue from churned customers offsets new revenue and the business flat-lines or suffers negative revenue growth. I’ve seen startups employ three patterns for offsetting churn: acquiring new customers faster, upselling existing customers to buy more software, or structuring pricing to grow with customers.

Churn 100

Churn Startup Strategy SaaS 100

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Payments

Tom Tunguz

OCTOBER 29, 2013

How do you validate an idea for a software startup before the product is built? Last week, a founder of a SaaS business and I were wrestling with this problem. It’s a question without a universal answer. After a while, we came up with quick and dirty rule of thumb for his business. Can he hit his quota? Suppose this founder wasn’t the founder, but the first inside sales hire for the startup.

Product Marketing 100

Product Marketing Sales Hiring Sales Funnel Marketing 100

Tom Tunguz

OCTOBER 28, 2013

There’s an interesting phenomemon occurring in founder compensation for post-Series A companies: founding CEOs are swapping cash for larger equity stakes in their companies. Founding CEO salaries, post Series A, have fallen by about 24% while founder equity has increased by 32%. This trend is broad. Each year, Redpoint portfolio companies participate in a compensation survey along with the portfolio companies of about 50 other firms, totaling about 800 startups.

Compensation 100

Compensation Trends Startup Benchmarks 100

Tom Tunguz

OCTOBER 27, 2013

There’s a perpetual and roaring debate in Startupland about the ideal founding team. Should the ideal team be entirely computer scientists? How important to success is having an MBA/business person? What about the stories of billionaire dropouts? To answer that question, I’ve aggregated the academic backgrounds of 30 of the top startups of the past few years and analyzed the make up of each of those founding teams.

Technical Cofounder 100

Technical Cofounder Startup Education Enterprise 100

Tom Tunguz

OCTOBER 23, 2013

Intent to purchase is the engine of the consumer web. Creating and capturing intent motivates almost every dollar invested into ecommerce and advertising. Intent is also the fuel for the Internet’s most successful business model, Google’s AdWords + Search. As the internet has evolved, so have the ways of creating and capturing intent. From display to search to retargeting to collections, each new technique has leveraged data in a novel form to discover consumers’ wishes.

Scale 100

Scale Advertising Innovation Business Model 100

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Development

Tom Tunguz

OCTOBER 22, 2013

Financial statements are the Rosetta Stone for a business. They are the most succinct way of communicating how a business operates to management teams and boards, who weigh the trade-offs of different investments. In the early stages of the startup, financial statements aren’t used much as a management tool. They are most often used to keep an eye on monthly burn rate.

Sales Recruiting 100

Sales Recruiting Communication Sales Hiring Startup 100

Tom Tunguz

OCTOBER 21, 2013

In the past 24 months, something extraordinary has happened. The value of publicly traded SaaS companies has grown by 200 to 400% while the underlying customer unit economics of those businesses hasn’t changed. Below is a chart of the ratio between enterprise value to revenue for two segments of SaaS companies. The All Segment contains 36 publicly traded SaaS companies.

SaaS 100

SaaS Trends Startup Revenue 100

Tom Tunguz

OCTOBER 17, 2013

When I was a teenager I read a book called Barbarians at the Gate about KKR’s leveraged buyout of RJR Nabisco. Two journalists detail the dramatic struggle for power and control of the company between Henry Kravis of KKR and Nabisco’s CEO Ross Johnson. From that point, I was hooked on business history. In the valley, there’s a massive collection of verbal history that is passed around.

Business Model 100

Business Model Technology Startup Business 100

Tom Tunguz

OCTOBER 16, 2013

Freemium SaaS and free-to-play games have a lot in common. If you’ve ever harvested crops on Farmville or raised an army in Dragons of Atlantis, you’ve experienced an aspirational product. The same is true if you’ve signed up to use a freemium CRM, expense reporting tool or note taking app. Freemium SaaS businesses, like free-to-play gaming companies, seek to build a large funnel, extract data from the free users, and leverage that data to increase the conversion and retention of users into long

SaaS 100

SaaS Retention Acquisition Metrics 100

As companies strive to boost revenue, deliver customer value, and stay competitive, they are increasingly embracing the potential of usage-based pricing.

Pricing

Tom Tunguz

OCTOBER 15, 2013

It’s an important question and one that arises most often as a SaaS startup scales. Churn, masked by growth, becomes a limiting factor of growth. How much should the business invest in managing churn? Our SaaS benchmarks from earlier this week tell us the average public SaaS company has a 3% monthly revenue churn or a 2 year lifetime and a sales efficiency of 0.8, which implies a 5 quarter pay back period on cost-of-sales and cost-to-serve.

Churn 100

Churn Startup Management Scale 100

Tom Tunguz

OCTOBER 13, 2013

Bhutan, the world’s largest book at UWashington Library. Anyone who has ever penned a blog post has asked, how long should this post be to maximize viewership? I’ve often wondered the same thing, particularly in the moment before I click the publish button and broadcast a perhaps-too-short-perhaps-too-long post into the Interwebs. I’ve written 256 posts in the past 18 months and I sought to understand the impact of word count on every metric I could measure: page views, time on site, time on pag

Metrics 100

Metrics Engagement Data 100

Tom Tunguz

OCTOBER 10, 2013

If a typical SaaS business loses about 2 to 3% of their customers each month to churn, the business must grow by at least 27% to 43% annually to maintain the same revenue. The idea written as an equation: Revenue Growth = Customers x Avg. Contract Value x (Growth Rate - Churn Rate). At the beginning of a SaaS startups' life, when the company generates $1M in annual revenue, churn in absolute dollar terms is small, about $300k for the year.

Customer Success 100

Customer Success Startup Scale SaaS 100

Tom Tunguz

OCTOBER 8, 2013

For most startups, a website or mobile app is the primary place to establish and reinforce a brand, a critical part of building a valuable company. But brand health tends to be a hand-wavy, amorphous concept. A founder and head of marketing at a company I worked with posed this simple but brilliant question to concretely gauge brand health: If you removed the logo from the website/mobile app, could our customers identify the experience as ours?

Branding 100

Branding Startup Mobile Engineering 100

Advertiser: Data Robot

The buzz around generative AI shows no sign of abating in the foreseeable future. Enterprise interest in the technology is high, and the market is expected to gain momentum as organizations move from prototypes to actual project deployments. Ultimately, the market will demand an extensive ecosystem, and tools will need to streamline data and model utilization and management across multiple environments.

Generative AI

Tom Tunguz

OCTOBER 7, 2013

Over the course of the past few months, I’ve built six projects that use APIs from Twitter, Google, LinkedIn, Mailchimp and others. These APIs enable me to extract data that I use to analyze this blog and build tools to be more effective. Once I extract the data from their platforms, no API platform understands why or how I use the data. While web companies measure many things on websites and mobile apps, very few apply the same rigor to APIs.

Mobile 100

Mobile Data Revenue 100

Tom Tunguz

OCTOBER 6, 2013

On this blog, Twitter is the second largest source of traffic. Twitter yielded 21% of visitors in the last 30 days. Because I suspect that tweets containing my blog’s links don’t reach a very large proportion of my Twitter followers, I’m experimenting with traffic recirculation techniques by retweeting older articles periodically. Of the approximately 150 posts on Svbtle, I have recirculated 30.

Content Marketing 100

Content Marketing Scale Marketing Subscription 100

Tom Tunguz

OCTOBER 2, 2013

Deserve is a toxic word. During my junior year in college, I trained like crazy to make the varsity boat on the crew team. Two workouts per day for six days a week during the four week Christmas holiday and on through winter training. That winter, I set a personal record for a 2000m sprint. In April, we left for Georgia and Augusta River for spring training where our coach seat raced the team to decide the varsity lineup.

100

100

Tom Tunguz

OCTOBER 1, 2013

Credit: O'Reilly. Startups, you are doing data science wrong. That’s the title of a post penned by Ryan Weald in GigaOm this week. Weald echoes DJ Patil’s idea : “product-focused data science is different than the current business intelligence style of data science.”. Weald points to a different model of data scientist, an engineer, not a statistician, who can perform queries and based upon some insights, improve the product with a few code changes and a push to git.

Sales Recruiting 100

Sales Recruiting Startup Data Sales Hiring 100

Speaker: John Mansour - President, Product Management University

You know that sinking feeling. You’ve come up with a winning product strategy, everyone’s on board and energized, and you’re halfway down the path to execution only to have it submarined by something someone convinced your leadership was more strategic! It’s a scenario that’s all too familiar, and it exemplifies one of the biggest struggles with individual product strategies.

Strategy

CloseSaaS

OCTOBER 18, 2013

Close is at today’s Sales Hacker Conference in San Francisco and we’ll be taking notes and sharing the best talks of the conference with you. List of all talks.

Sales Hiring 52

Sales Hiring Sales 52

CloseSaaS

OCTOBER 18, 2013

Close is at today’s Sales Hacker Conference in San Francisco and we’ll be taking notes and sharing the best talks of the conference with you. List of all talks.

Sales 52

Sales B2B 52

CloseSaaS

OCTOBER 18, 2013

Close is at today’s Sales Hacker Conference in San Francisco and we’ll be taking notes and sharing the best talks of the conference with you. List of all talks.

Engagement 52

Engagement Sales B2B 52