Blue Horizon’s reading list is a curated collection of articles for SaaS founders and management teams. We are entrepreneurs and operators who have lived through the process of founding and scaling software companies. Here are the articles and resources we found useful this week.

Crash Course in Customer Success SaaS Metrics
by Dave Kellogg

Gross revenue retention rate, and why it’s gathering steam as an important metric. (Sometimes great expansion is hiding major churn and just looking at churn before expansion will reveal that.)
Lifetime value (LTV), and its fairly severe limitations.
LTV/CAC ratio. An attempt to measure what something costs against what it’s worth, but one that has generally failed and is now being replaced by NRR.

Usage Based Pricing: 3 Questions to Ask Before Leaping
by Tomasz Tunguz

These three questions may help guide a startup to the best answer:
1.) Is my startup selling an application or infrastructure?
2.) What should my unit of pricing be?
3.) Can this pricing model achieve certain boundary pricing conditions?

5 Interesting Learnings from at $400,000,000 in ARR
by Jason Lemkin,

Monday is going upmarket. $50k+ customers are up 200%, to 793 from 264 a year ago.
10+ seat customers are now 72% of total revenue, up from 63% just a year ago.
NRR Keeps Going Up…From 105% in 2020 to 120% Today.

4 Simple Things You Can Do To Not Lose Your Top Customers
by Jason Lemkin,

What should we have done? We should have:
Visited the customer
Mapped out and met all the stakeholders
Done quarterly QBRs
Done monthly (at least) NPS surveys

ChurnZero’s You Mon Tsang on the link between onboarding & lower churn
by Patrick Campbell, ProfitWell

To be a competent and confident Customer Success Manager (CSM) you should know where your customers are in their journey at any given time, but especially during their onboarding process. If you don’t, your customer might be struggling and you would have no idea. To improve customer onboarding, you should always be able to answer the question: How many of my customers are on track, behind, or stuck in the process? (If you’re a high velocity team with thousands of customers, it may make sense to track progress as a percentage rather than an actual number.)

Unlocking Digital Transformation in SaaS Organizations
by David Appel, Sage Intacct

As a business grows, it’s critical to invest in innovative technology that offers a seamless flow of business information with customers and trading partners. SaaS finance teams need to create frictionless billing, comprehensive reporting, and deferred revenue from start-up to IPO. Automating key processes of prospect-to-disclosure and procure-to-pay to produce data for decision making is paramount to winning in SaaS markets.

How much?
Scale Together Newsletter

Pricing is important and requires a lot of thought. It is not just a direct measure for revenue. It also affects churn, retention, and growth. If you’re a venture-funded business, all of these are KPIs of your business that help you raise capital, grow faster, and take risks. Reports indicate that founders don’t spend enough time on pricing. Undercharging can give your customers an impression that there isn’t enough value in the product or service. And obviously, you’re reducing your potential to make money. Overcharging may make it difficult to upsell. It may also eliminate the right customer.

How Asset Managers Use CDPs To Create the MarTech Stack Of The Future
on Synthesis Technology

Asset managers must continue to drive down expense ratios and keep an intense focus on growth by leveraging modern technologies and improving operational efficiencies. For asset managers to deploy that technology, they need to invest in the marketing technology (Martech) stack of the future.

Entrepreneurs as Probabilistic Thinkers
by David Cummings

Growing up in the traditional K-12 and higher education world, most things were black and white — grades, test scores, etc. Only, the real world is dramatically different. Perfect information isn’t a thing. Decisions are made using the best available information and outcomes are much more nuanced. Then, layer in entrepreneurship and the quantity of decisions that have to made with limited information goes up even higher. A probabilistic thinker is someone who thinks through chance variations. What’s the likelihood A, B, or C happen? What can we do to change those probabilities? What decision do we make based on the probabilities?

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Blue Horizon acquires and invests in profitable software businesses with stable recurring revenue streams. The Blue Horizon platform combines long-term capital and industry expertise with an operating model that enables businesses and their leaders to focus on growth and profitability.