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.
Per Seat or Per Use Pricing: A Framework for Evaluating the Right Strategy for Your Startup
by Tomasz Tunguz, tomtunguz.com
If your customers demand predictable bills, then perceived pricing is the way to go. The question is do they prefer it or do they demand it?
If your costs are material and scale with usage like Twilio, then usage based pricing aligns your costs with your customers’ spend. This prevents very large customers from being your worst customers, by generating lots of revenue, but costing you money because the account is gross-margin negative.
Usage-Based Pricing Playbook: Customer Success Is A Mindset, Not Just a Job
by Kyle Poyar, OpenView Partners
“45% of expansion stage SaaS companies now say they have a usage-based or consumption-based pricing model…One quarter of these companies started to implement usage-based pricing within the last 12 months…top usage-based SaaS companies instill a customer success mindset across every team. The entire company needs to be set up to do what’s in the best interest of making sure customers are seeing value.”
6 Lessons learned from funding startups with long sales cycles
By David Frankel, Founder Collective
Key points include:
– The sales uptick won’t come until year six. It can be tough to measure progress during this time.
– Product is important, and product-led growth is a viable strategy, but everyone on the team needs to think about “sales” as a core part of their job description.
– By all means, get fresh thinkers on your cap table, but be sure to balance them with seasoned investors who won’t shrink when Salesforce starts competing with you, or a big deal dies on the vine after a two-year courtship.
– Unless you are replacing an existing product in a well-understood category, you will need to educate the market. This is a slow, grinding, and often frustrating process.
– Nothing happens quickly or easily in the world of enterprise sales. Every victory is hard-won.
3 Tips to Beat Founder Stress
Anxiety is a normal part of your journey as an entrepreneur. Too much stress, however, depletes your energy and reduces your creativity.
10 Learnings from René Lacerte, CEO of Bill.com
by Jason Lemkin, saastr.com
Interesting points include:
You can’t rush a network.
You can’t always rush a fintech product.
Loving an unloved niche is a superpower.
NRR up to 124% — from SMBs.
A good acquisition expands the TAM.
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.