I'm a partner at Redpoint and write daily, data-driven blog posts about key questions facing startups including how to fund raise, startup benchmarks, management best practices and team building. Join thousands of others receiving these blog posts daily by email.


The Stability of the Current Tech Market

It's Q3 earnings season and about half of the major public tech companies and recent startup IPOs have reported their figures. I keep track of earnings to get a sense for how these companies perceive their markets. Meeting or exceeding earnings indicates companies can forecast their growth and demonstrates how predictable these businesses are. The more predictable, the more stable the business environment and consequently, the fund raising environment for startups.

Read More...


One of the Best Business Opportunities in the Next Decade

The real promise of the Internet of Things isn't simply linking millions of devices together, just like the real innovation of the web wasn't networking a bunch of computers. Instead, the true and still unrealized potential of IoT is to transform business models; it’s enabling companies to sell products in entirely new and better ways that benefit both the company and the customer.

Read More...


Four Important Data Points on Measuring Your Startup's Customer Happiness

At some point, most startups will begin to measure their customers' happiness. Customer satisfaction is an important predictor of loyalty and can foster fantastically efficient word-of-mouth growth. Many companies employ Net Promoter Score, a metric pioneered by Bain & Company, to quantify customer satisfaction. NPS estimates customer loyalty by measuring the fraction of a customer base which are promoters and detractors of a company's product. I've been told that NPS scores greater than 50 are impressive, but this is simply a rule of thumb. So what's the right way to evaluate a company's NPS report?

Read More...


The Impact of Investor Geography on Your Seed, Series A and B Check Size

When we analyzed the impact of location on a startup's ability to raise capital, we found no statistically significant difference. Startups in San Francisco, Seattle, Pittsburgh, Austin and many other cities all demonstrated similar ability to raise follow-on rounds. But is the same true for investors of various locations? Do investors across the US invest similarly across Seed, Series A and Series B? They do not. In fact, there is a statistically significant difference in investment patterns of investors depending on their location.

Read More...


Using Statements of Work to Accelerate Sales Cycle and Align Sales, Customer Success and Marketing

I met a really smart vice president of sales a few weeks ago working in a company with mid-market customer values in the $10-100k per year range. When I asked her about her sales process, she described how her team employs statements of work (SOW), which isn't something I hear about very frequently in startups, despite the fact they are very powerful sales tools.

Read More...


The Obscure Economic Idea Behind SaaS Pricing Challenges

Startups struggle to set the right price for their products because pricing dynamics in the field don't obey the laws taught in the classroom. The standard supply and demand curves, drawn above, imply that as price increases demand decreases; that buyers act rationally and that this law is immutable. But this simply isn't the case. Buyers in the market place violate the traditional supply and demand model all the time. For example, Veblen goods defy the traditional pricing theory.

Read More...


The 9 Marketing Disciplines of Great SaaS Companies

Bill Macaitis, the former CMO of ZenDesk, articulates how a SaaS marketing team should operate better than anybody else I've met. At a recent conference, Bill outlined the 9 marketing disciplines of great SaaS companies and how they fit together to create a marketing powerhouse. I've copied my notes from Bill's talk below.

Read More...


Why Revenue Isn't the Most Important Financial Metric for Startups

Of the ten most important metrics on a startup's financial statements, revenue might seem to be the most important. But it isn't. Gross margin matters more because it is directly tied to a company's ability spend to grow and achieve profitability.

Read More...


The Fastest User Interface

In "Time to Hang Up on Voice," Sam Lessin argues voice isn't the interface of the future for three reasons. First, voice is hard to use in public places because background noise complicates interpretation, and because many people are in earshot, voice isn't private. Second, speaking to computers is less efficient than typing or using gestures. Third, keyboards are better tools for editing text than voice. But I think he's wrong if for only one reason: speed.

Read More...


Benchmarking SaaS Startup Efficiency with Revenue per Employee Metrics

In the past, we have benchmarked the revenue per employee of large publicly traded SaaS companies and determined that the average is about $200k of revenue per person. But, that analysis examined revenue per employee that only one point in time. As Jesse Hulsing pointed out to me, examining this figure over five years reveals quite a bit about the health of the business.

Read More...


The Four Key Trends of the Startup Acquisition Market

The startup acquisition market is poised to have its best year in nearly a decade. If acquirers maintain the same pace from the first nine months of the year through Q4, more than 450 venture-backed startups will have been acquired, generating more than $25B in proceeds. Given this state of affairs, it's a good time to take stock of the major trends in the startup market. I've observed four.

Read More...


Benchmarking WorkDay's S-1: How 7 Key SaaS Metrics Stack Up

This post is part of a continuing series evaluating the S-1s of publicly traded SaaS companies in order to better understand the core business and build a library of benchmarks that might be useful to founders. Today, we'll explore one of the enterprise behemoths, both in market cap and average revenue per customer: WorkDay.

Read More...


The Key Financing Attributes of Startups in the Billion Dollar Club

The WSJ published a recent chart of the 49 startups with billion dollar valuations. According to their research, there have never been as many privately held companies with such high valuations ever. The absolute number of these massively valuable companies alone is amazing. Ten years ago, most of them would have gone public by now. But what other insights can we tease from the data about these very special businesses?

Read More...


Why Personas Are Critical Product Development and Go To Market Tools for Startups

Yesterday, I attended an event held by the IT team of a major bank. When the data analytics team took the stage, I listened with great interest as the chief of the group described their internal struggles with data and the areas where startups might help them achieve their goals. He articulated his team's needs and goals in a very concise way by bucketing his users into three personas.

Read More...


The Unexpected and Uneven Evolution of the Startup Fundraising Market

I started working in venture capital three months before Lehman imploded. After the bankruptcy, the fundraising market contracted as investors internalized the new normal of the public markets. Over the past six years, the fundraising markets flipped from quite bearish to mildly bullish to extremely bullish. Or at least, that's the way it feels to me. I've struggled often to convey the magnitude of the change and its unevenness.

Read More...