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.
Slides from my SaaStr 2021 Presentation: A CEO’s Guide to Marketing
by Dave Kellogg, kellblog.com
Dave Kellogg’s slides from SaaStr 2021. A CEO’s Guide to Marketing, which was designed to help startup founders, CEOs, and C-level executives have a little less angst when it comes to marketing in general and the marketing update at quarterly business reviews (QBRs). Interesting points include:
– Reverse-engineer marketing from buyer empathy
– Marketing is all about funnels
– Models are, at best, guide abstractions
Every Marketing Initiative, Every Channel…Plateaus. Plan for It.
by Jason Lemkin, saastr.com
Once you really dial-in a channel that works, you have to be searching out the next one. The two exceptions that never plateau:
– The first is Word of Mouth. The viral loop from happy customers telling their friends scales forever.
– The second is the % of revenue from your installed base. Net negative churn. Slack, Zoom, PagerDuty, all the latest ones to IPO all have net revenue retention of 140%+ still! You can keep that well above 100% forever. So if you don’t know what channel to invest in next, invest in that one. Invest in customer success.
Public companies are valued more highly (with a higher multiple) than private companies, all else equal. In 2016, we had estimated a 28% public-private “gap” in ARR multiples, which was a useful and data-driven starting place. Based on our database of private-company transactions, the observed gap has recently averaged just over 50% (the difference between around 16x public and around 8x private).
GitLab S-1 Analysis: How 7 Key Metrics Stack Up
by Tomasz Tunguz
The sales efficiency of 0.67 implies a 17 month payback period with a contract size of $55k, but the S-1 suggests the enterprise part of the business has been an important focal point. Customers paying GitLab more than $100k have grown 75% year-over-year to 383. More compelling than simply the growth in count is the disparity in Net Dollar Retention of these large customers. They expanded last year at 283% compared to 148% of the customer base broadly.
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.