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book, Winning with Data
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The fundraising market is in flux. The data indicates that it is certainly reverting to the mean after two record years in 2014 and 2015. Late stage market dynamics are changing as hedge funds and mutual funds seek other areas to invest. In 2017, there will be a lot of comparison between the prices public bound companies fetch at IPO compared to the last round private valuations as the public window opens. Given all that change, which early round will be the hardest to raise for founders in 2017?
Founded in 2008, AppDynamics is a leader in the application performance management space. AppDynamics technology helps engineers determine how software applications behave as users interact with them. Based in San Francisco, AppDynamics employs about 1200 people and has raised approximately $315M to date. The company filed their S-1 recently to take the company public. Let's look at some of the key metrics and then compare AppDynamics to NewRelic, a close competitor which went public in late 2014.
The end of the year is fast approaching. Time for some quantitative analysis of the content that readers liked the best this year.
Australia, Canada, Israel, China, India. SaaS startups are thriving in these countries and many more. Next generation software companies hail from many different parts of the world, and some of them are worth billions of dollars. Shopify and Hootsuite in Canada. Atlassian in Australia. Xero in New Zealand, just to name a few. As these successful startups have boomed, how has the early stage fundraising market for them evolved?
SaaS startups often find themselves in one of three different states when contemplating their burn rate. The first is the David Farragut strategy. Damn the burn rate, full speed ahead. The second is the conservative approach - attaining profitability using only the cash on the balance sheet. Those two are easy. Circumstances dictate the respective aggression or conservatism. Lots of cash or not so much. The more complicated state is the one in between, and that is the one that most SaaS startup operate within.
Sales leaders consistently underinvest in sales team training and development. As SaaS startups scale, sales execution becomes the most tangible metric of a business' success, and the one by which the business' health is benchmarked. Not to mention how the head of sales is evaluated. When is the right time to invest in sales training? And how much should a business invest?
When I say bubble, you likely conjure images of people speculating on real estate or stocks or tulips in your imagination. Like me, you might dismiss the folly of these bubbles as the collective action of a multitude of people who lose all rationality when bidding on these assets. But, as I learned from a recent interview with Brian Christian, bubbles can be created even when everyone acts rationally. This phenomenon is called an information cascade.
What is your SaaS startup worth in an acquisition? To answer that question, we can analyze the data set of all software companies acquired over the last six years and benchmark them by enterprise value-to-revenue multiples.
For hundreds of startups in the as-a-service world, the scores of product launches at last week's Amazon Web Services Reinvent Conference each were a warning shot across their bows. We are coming. We are coming right after you, with tens of billions of dollars on our balance sheet, hundreds of salespeople, and the broadest suite of software and infrastructure since Oracle. Anything that's open source with traction, we will host. Any business where we see margin is our opportunity. We are coming fast and hard. At least, that's the way I interpreted it.
In June, Frank Bien and I published our book, Winning with Data. It describes through case studies how some of the most successful startups use data to create sustainable competitive advantage. Since then, we've sold thousands of copies. Today, we're releasing an Audible version of the book.