SaaS companies are marvelous businesses. They are more predictable than most other kinds of companies and in addition they demonstrate leverage from technology. The best SaaS companies are able to build strong brands, develop scalable products and hire teams to bring those products to market effectively. To show the power of the convergence of these forces, I've analyzed the employee productivity patterns of the 50+ publicly traded SaaS companies.
Each quarter, Zendesk releases a Customer Satisfaction Benchmark to help companies build more effective customer support teams. The Q4 2014 differs from the previous in an important way. Instead of comparing companies in the same industry, for example, Education, Zendesk clustered companies with similar customer support characteristics, including ticket volumes, product support complexity and a few others, which revealed some important conclusions.
At Google, Product Reviews were held on Fridays at 130pm in a big room with a long table, two projection screens at one end and red couches along the walls called Marrakesh in Building 42. Each week, Eric, Larry and Sergey invited three product and engineering teams to present their progress each for about 30 minutes. On several occasions, I updated the executive team on the status of our team's project, social network monetization. Needless to say, especially the first time but really every time, I was nervous about the presentation.
How much should your startup budget for its employee stock option pool? One way of answering this question is a blanket addition per year, say a 2% renewal. Another way is to look at the cash based cost of the stock based compensation. We're going to examine the second one today by looking at the basket of 50+ SaaS companies.
Content marketing is one of the most powerful marketing tools startups can employ. Blogs are powerful drivers of awareness and creators of purchasing intent which ultimately lead to new customers, new employees or other new opportunities. This is doubly true as buyers are educating themselves before contacting sales teams to a far greater extent than ever. Below are the five things I wish I would have known when I first started writing this blog. I hope they are useful for anyone designing or redesigning a content marketing strategy.
Salesforce went public more than 10 years ago. This harbinger of subscription, internet delivered software created one of the most exciting waves in software and the single most valuable SaaS company today, worth $37B as of this writing.
In 2015, SaaS companies trade at a 30% lower multiple of revenue than last year. In early 2014, the typical SaaS company traded at about 9.2x their next-twelve-months of revenue. Since August 2014, that figure has dropped by about 30% to about 6.0x.
Figuring out how much capital your startup may need to raise will inform lots of different strategic decisions. A startup's growth rate is often highly correlated with the amount of capital it can invest in sales and marketing. More customers means more bookings, which means more capital and so on.
The best teams share two common attributes, according to an MIT research.
SaaS startups are growing faster than ever before. Publicly-traded SaaS companies founded from 2008 through 2014 needed 50% less time to reach $50M than their counterparts founded between 1998 and 2005. I stumbled across this trend when looking at a different chart used in my S-1 analyses that compares the time to $50M for each of the 51 or so publicly traded SaaS companies.