Tom Tunguz

SEPTEMBER 21, 2020

High growth software companies are valued based on forward revenue multiples. I pulled together the data for the basket of the roughly 60 publicly traded SaaS companies and ran a linear regression to understand the predictive power of the many key metrics reported by public companies. But, how does the market set the multiple?

Software 363

Software Enterprise Metrics Revenue 363

Tom Tunguz

APRIL 21, 2024

In “Do software companies actually have good margins?”, ”, Benn Stancil makes a case for a counterintuitive point : Software companies are much less profitable than they might seem. Because the research & development costs associated with software should be part of their cost of goods sold.

Software 297

Software Business Construction Government 297

SaaStr

OCTOBER 25, 2024

For the subsequent ten years in software, we’ve optimized every little bit of how we sell it. But today, it’s different because the kinds of software we sell aren’t the same. Six months ago, security was the number one prohibition preventing businesses and software companies from buying AI. It isn’t predictable.

Venture Capital 333

Venture Capital Marketing AI SaaS 333

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. Net income surges to 0.71

Software 364

Software Revenue Metrics Sales 364

SaaStr

DECEMBER 1, 2024

I think Lotus Software (of 1-2-3 fame) must be close. It shipped Lotus 1-2-3 in January ’83 and sold $50m in software in its first year on the market — that must be $100m+ in today’s $$$. “No software” and the internet are great. But a useful metric to understand nevertheless. to Wikipedia.

Startup 264

Startup Finance Software Metrics 264

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 316

Metrics Outsourced Development Scale Cloud 316

SaaStr

FEBRUARY 12, 2025

The Evolution of Vertical SaaS The shift from horizontal to vertical SaaS solutions represents a fundamental change in how enterprises buy and implement software. They don’t just build software they become construction industry experts. This helps ensure they’re creating real value, not just growing revenue.

Construction 255

Construction Scale SaaS Travel 255

Clouded Judgement

JUNE 19, 2024

Through these interactions, I’ve built up mental benchmarks for metrics on which I place extra emphasis. My hope is that this analysis can provide startup entrepreneurs with a framework for how to manage their businesses around SaaS metrics (e.g., Q1 was a very weak quarter of software earnings.

Cloud 318

Cloud GCP(Google Cloud Platform) Software Azure 318

SaaStr

SEPTEMBER 14, 2020

2 Cloud is Eating Software. The astonishing fact is: cloud is eating software. In just five years, Cloud will become the majority of the software market. By 2030, it is predicted to take over all technology and software. Hardware is turning soft, and software is empowering innovation. Conduct 360 feedback. .

Technical Review 350

Technical Review Cloud Software Review Technology 350

SaaStr

MAY 8, 2024

As a SaaS veteran who built and sold a software company for nine figures, invested in startups since 2013, 10x-ing his fund, and continues to build a powerhouse community of SaaStr fans, he offers some hot takes on the communities’ burning questions. What metrics should we expect in this environment? Let’s start with the meta. “I

Metrics 276

Metrics Scale Sales Hiring SaaS 276

Payrix

NOVEMBER 19, 2024

In the latest episode of PayFAQ: The Embedded Payments Podcast, Ian Hillis speaks with Brad Pinneke , VP of Business Development at Payrix and Worldpay for Platforms, about one of the most important decisions software companies face today: choosing the right payments partner. How do those goals align with potential payments partners?

Payments 130

Payments Embedded Payments Payment Solutions Payment Services 130

Clouded Judgement

AUGUST 16, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Subscribe now The Great Services-To-Software Rotation There's a lot of debate right now about the economic impact of GenAI. They contend that AI agents, capable of handling infinite workloads, will ultimately reduce the need for software spend.

Outsourcing Services 274

Outsourcing Services Cloud Software Outsourced Development 274

Tom Tunguz

NOVEMBER 12, 2023

Recently, I was on the HR Heretics podcast and we talked about the increasing efficiency of software companies (in addition to other topics including the implications of AI for executives, how to diligence a candidate, & what board members expect of their people leaders).

Software Review 331

Software Review Trends Revenue Software 331

SaaStr

MAY 4, 2025

The Top 10 Customer Success Metrics Investors Care About in 2025 with Gainsight CEO Nick Mehta #5. Rippling CEO Parker Conrad’s Theory of the Compound Startup: Disrupting How We Think About Software Why Im Scared to Buy New SaaS Apps Now with SaaStr CEO and Founder Jason Lemkin #4.

AI 273

AI Venture Capital Sales B2B 273

Clouded Judgement

MARCH 28, 2025

Every week I’ll provide updates on the latest trends in cloud software companies. Starting and scaling a software company was really hard. If you, as a software company, got to a certain scale and brand awareness, it was really hard for others to catch you. Follow along to stay up to date! So what was the implication?

Cloud 299

Cloud AI Scale Scaling 299

Tom Tunguz

SEPTEMBER 1, 2021

Amplitude’s revenue growth rate is in the top quartile for modern software companies at 49%. Amplitude offers three key products: analytics for measuring user behavior, experiment for testing new user flows, and recommendation which optimizes content for different user segments. Revenue, $M. Revenue Growth. -. Gross Margin.

Metrics 295

Metrics Benchmarks PayPal Enterprise 295

User Pilot

OCTOBER 19, 2024

Think of Net Promoter Score (NPS) software as a tool to measure your customers’ feelings about your product, and categorize them based on their level of loyalty (promoters, neutrals, and detractors). NPS Software FAQs What is NPS software? What is the best NPS software? The best NPS software depends on your needs.

Software Review 105

Software Review Technical Review Software B2C 105

SaaStr

DECEMBER 3, 2023

So over the past decade-and-a-half we’ve come up with a lot of yardsticks, metrics and rules for SaaS companies. E.g.,: CAC of < 12 months is Good-to-Great Paying sales reps 25%-30% of what they close is Good A burn ratio of 1 or less is Good These metrics do sort of work, if you have some capital to spend (i.e., They don’t.

SaaS Payments 284

SaaS Payments Metrics SMB Payments 284

Payrix

JANUARY 10, 2025

Ian Hillis welcomes David Blair, Senior Director of Product Management at Worldpay for Platforms, on PayFAQ: The Embedded Payments podcast to explore the critical roles of merchant underwriting and onboarding for software providers. Check out this helpful blog: The essential elements of merchant underwriting for software companies.

Merchant Services 130

Merchant Services Payment Services Payment Solutions Payments 130

Tom Tunguz

JULY 4, 2023

In the past two months, high-flying software companies have seen 40-112% increases in valuation. Above is a chart that shows the correlation to forward multiple for each of five metrics broken down by quartile. Efficiency metrics like sales efficiency, net income margin (profitability), gross margin are all negatively correlated.

Software 263

Software Marketing AI Metrics 263

Stax

MARCH 16, 2025

The average churn rate for the software industry as a whole is 14%. As a SaaS business leader, reducing software user churn is an important part of maintaining your customer base and increasing revenue. TL;DR The average software industry churn rate is 14%, but SaaS companies should aim for under 2%. Looking to measure churn?

Payment Solutions 88

Payment Solutions Software Review Churn SaaS Payments 88

Tom Tunguz

JULY 11, 2024

3x as productive as humans, which would parallel mechanical robots, how does a software company price? Building on yesterday’s post , pricing in software companies may change significantly when AI agents become the norm. What does a software seat mean when a human is no longer operating the software?

AI 240

AI Pricing Software Compensation 240

SaaStr

FEBRUARY 14, 2023

In this week’s Workshop Wednesday , Salesforce Ventures Investor, Jessica Bartos, shares the 5 metrics every SaaS company should care about in any market environment, especially the one we’re currently in. Growth Is Still Number One Growth is still the number one metric, but it’s not the only one. You do that by showing momentum.

Metrics 264

Metrics Marketing SaaS SMB 264

SaaStr

FEBRUARY 2, 2025

Activant Capital brought together at SaaStr Annua l a group of break-out next-generation AI enhanced vertical software leaders: the CEOs from Owner.com, Alloy Automation, and DoNotPay. At SaaStr Annual they shared their experiences and insights on implementing AI in vertical software companies.

AI 227

AI Technical Review Artificial Intelligence Systems Review 227

Tom Tunguz

JANUARY 8, 2024

Lines of code, like lines of a blog post aren’t a good metric. LinkedIn selected three metrics for most engineers & they all revolve around speed. Code Review Response Time : how long code awaits a peer-review Each of these metrics optimizes throughput or work-velocity by preventing bottlenecks in the development process.

Software Engineering 210

Software Engineering Software Review Engineering Software 210

SaaStr

SEPTEMBER 25, 2024

What data and metrics do you need to convince SaaS investors you’re in good shape and aligned with what they care about? These metrics are more targeted to those preparing for a Series A or B round and could make the difference between an excited-to-invest-in-you investor and a pass. There are a few cool ways to visualize this data.

Metrics 189

Metrics Sales Hiring Retention Churn 189

Tom Tunguz

JANUARY 19, 2020

Payback period is one of the best composite diagnostic metrics of product market fit. I've written before about the benefits of short payback periods. In short, startups with shorter payback periods require less capital and also grow more quickly. In 2020, what is an excellent payback period[1]?

Software 356

Software Acquisition Enterprise Startup 356

Clouded Judgement

MAY 31, 2024

Every week I’ll provide updates on the latest trends in cloud software companies. Subscribe now Software Sentiment Software sentiment is incredibly low at the moment - and rightfully so. Nearly 70% of software companies who reported Q1 with an April quarter end guided Q2 below consensus!

Cloud 184

Cloud Software GCP(Google Cloud Platform) AI 184

Tom Tunguz

DECEMBER 11, 2022

Average Software Public Value. Third, it’s the most substantive acquisition to announce this year after Figma’s announced its sale to Adobe. The M&A market may be thawing a bit. Revenue, $m. Revenue growth. Gross margin. Net income margin. -44%. Cash flow margin.

Acquisition 250

Acquisition Startup Software Pricing 250

The Daily Egg

OCTOBER 21, 2024

End user experience monitoring, or EUEM, is the process of tracking and evaluating how users interact with software. The post 7 Must-Have Metrics for End User Experience Monitoring appeared first on The Daily Egg. This could be an.

User Experience 182

User Experience Metrics Software 182

SaaStr

AUGUST 7, 2023

Learn about the most important SaaS metrics for founders in 2023 with the CEOs of the most metric-oriented company, monday.com, and the founder of SaaStr. For a quick recap on SaaS metrics: What is ARR in SaaS? So now we must be smarter about the most important SaaS metrics because they matter again. The takeaway?

Metrics 245

Metrics SaaS Sales Hiring Finance 245

SaaStr

AUGUST 19, 2023

So our good friend Lloyed Lobo as part of his new book and series on Building Community did a deep dive with Jason on how SaaStr built the world’s largest community for business software — somewhat on accident: Why do some companies have loyal, cult-like followings while others blend into oblivion?

Software 245

Software Business Social Media Government 245

SaaStr

MARCH 12, 2025

“Marketing is fluffy and unmeasurable” – Unlike sales, which has clear metrics like quota attainment, founders often believe marketing can’t be measured. Instead, focus on two key metrics: Pipeline coverage – Do we have a chance to hit our numbers? It’s messy.

Sales Hiring 207

Sales Hiring Marketing Technical Review Underperforming Technical Team 207

Clouded Judgement

MARCH 21, 2025

Every week I’ll provide updates on the latest trends in cloud software companies. With more recent cloud software companies, there was a lot of organic expansion - ie expanding into new markets and capabilities through internal product development. I created this subset to show companies where FCF is a relevant valuation metric.

Cloud 188

Cloud Pricing Payment Features Subscription 188

SaaStr

NOVEMBER 20, 2024

GitHub, founded in 2008, is a leading platform for software development and version control that has made waves since 2018 with its AI Copilot. Other places this feedback loop worked well were: Adoption loop metrics. Customers crave metrics about how teams are using all AI products.

Scale 264

Scale AI Scaling Marketing 264

SaaStr

APRIL 6, 2025

Thoma Bravo: Software Spend Will Grow 19% a Year Through 2028. The Top 10 Customer Success Metrics Investors Care About in 2025 with Gainsight CEO Nick Mehta #5. Top Posts: #1. The #1 Thing That Makes Enterprise Customers See Value: A Great Dashboard #2. AI is The Accelerant. #3. Yes, SaaS is Back. OpenAI to Hit $12.7

Scale 194

Scale Software Review Marketing Cloud 194

SaaStr

APRIL 15, 2025

With 17 years of venture capital experience, Ethan began his career in consumer investing before pivoting to B2B, where he developed particular expertise in developer platforms and B2B software. Focus on the right metrics : Be transparent about your key metrics rather than relying on vanity numbers.

Technical Review 162

Technical Review Venture Capital Outsourced Development ChatGPT 162