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.
Trove’s business got stuck between success and failure–and the only way out was a lonely road for founder Andy Ruben…As a founder, you’re so close to the business. You know when it’s really working, as opposed to when the metrics look good. You also know when it’s not working, when it’s time to raise more money, when it’s time to sell…The hard part is that when you’re doing something new, you really don’t know whether it’s hard because you don’t have the right model or because it’s never been done.
Churn is Always High for Single Seat Customers. 8 Ideas on What to Do About It
Jason Lemkin, saastr.com
Everyone talks about hitting 120%+ NRR these days But the truth is, single-seat users & very small businesses churn at a high rate. Often 3% a month…But because it’s so high, just doing >better< can have a huge impact. Even modestly decreasing churn in Very Small Business and single seat accounts can have a big impact.
Using the right conversational support tool and framework allows them to maximize their resources, so they can focus on solving complex queries and building long-term customer relationships. But conversational support doesn’t just benefit your support team. By capturing more data, enabling you to spot trends and opportunities, and improving the customer – and agent – experience, conversational support can be a game changer for every facet of your business.
Unpacking 2021’s Unprecedented SaaS Funding Market
Kyle Poyar, OpenView Partners
Today’s valuations are sky-high. That’s because investors view SaaS as having less perceived risk and uncertainty and greater upside than they did in the past. Maintaining sky-high valuations depends on a company’s ability to keep growing quickly at scale. That means at least 30% YoY growth, ideally 50%+, even after going public. But companies can’t just overspend their way to growth. There needs to be a healthy underlying economic model. Those who can’t keep up may be (harshly) penalized with declining valuations.
One of the most informative business analytics tools you should know as a business owner is cohort analysis. Using it gives you insight into the user behavior of various customer segments. With this insight, you’ll then be able to improve user retention.
Step 1: Define your cohorts
Step 2: Define retention metric and date ranges
Step 3: Graph the data and analyze curves
Core SaaS Metrics Interview at SaaSBoomi Now Available on the Orbit Shift Podcast
Dave Kellogg, Kellblog.com
– How to look at ARR (Annual Recurring Revenue) and its relation to the valuation of a company
– The importance on NDR (Net Dollar Retention)
– A good way to look at NDR for early-stage companies
– Why NPS (Net Promoter Score) is important? and when should you start tracking it
– Views on churn and CAC
The ubiquity of analytics hides the potential complexity underneath, especially when you start to consider products where the analytics are more front and center…Creating and maintaining pretty charts isn’t as easy as it seems:
1: The charts are just the tip of the iceberg
2: The virtues of transparency
3: The challenges of improvement
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.