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.
2021 State of Usage-Based Pricing
by Kyle Poyar, OpenView Partners
45% of SaaS companies say they have usage-based pricing, up from 34% last year.
Usage-based companies are split in how they incorporate usage in their pricing with half adopting a largely usage-based or pay-as-you-go model and the other half adopting usage-based subscriptions.
Enterprise-focused companies are somewhat more resistant to usage-based pricing as large customers still ask for the predictability of subscriptions.
The fastest growing companies are especially likely to leverage usage-based pricing, which coincides with best-in-class CAC payback and Net Dollar Retention (NDR).
The best usage-based companies reorient every team towards customer success.
They often treat R&D – not just sales and marketing – as a revenue-generating expense.
My Perspectives on Growth (Presentation)
by Dave Kellogg, kellblog.com
Next-levelitis, an obsessive focus on scaling everything to the next level. (Which is great if not overdone.)
Absorbing new leaders, (aka, “FBI guys”) and the challenges that come when hiring the wrong next-level people and they blow themselves up at the start.
Conflation of regional culture and opinion, a common problem in international expansion. (What’s a bona fide regional difference vs. a difference of opinion masked as one?)
Missing an opportunity that you want (aka, getting “passed over” for a promotion) and what to do about it.
Getting things wrong to get other things right. Startups are 100% about getting what matters right. Which begs the question, what matters?
Samsara S-1: How 7 Key Benchmarks Stack Up
by Tomasz Tunguz on TomTunguz.com
Because the contracts are secure and long term and the cash is collected up front, Samsara reinvests those dollars immediately into additional sales & marketing efforts, which produces a very efficient cash sales efficiency and presumably a very short days-sales-outstanding (though this isn’t disclosed. In addition, Samsara enjoys strong and improving accrual sales efficiency of 0.70.
Customer Obsessed and Competitor Aware
by David Cummings, davidcummings.org
With almost no effort you can spend hours doing what feels like real work: studying the competition. Only, it’s much more effort to do the more important work: talk to customers. Customers don’t usually write long blog posts about what they do and don’t like about your product. Customers don’t usually spend an hour on a podcast talking about what they’d changed with your service offering. Hard work is required to obsess over customers, but hard work isn’t required to obsess over competitors.
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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.