This week, an entrepreneur told me his startup is a B2C2B business. It was the first time I'd heard this acronym, and I thought it was a genius moniker. B2C2B succinctly captures the critical part of the new customer acquisition model powering many enterprise startups: winning hearts and minds of the intermediate consumer, the employees of a company. B2C2B models are behind much of the innovation in every part of the enterprise stack, from applications to platforms to infrastructure.
What percentage of SaaS IPOs in the last four years have the founding CEOs of the business been CEO at the time of IPO?
One of the most important forces in SaaS today is the Consumerization of IT. Instead of a centralized IT organization deciding which products to buy, product managers and marketers and engineers and data scientists determine which products they think would serve them best and buy them directly, often using a credit card. This movement is transformative.
Each year, I do a retrospective analysis of this blog. This year, I found something unexpected. Like many other content sites, just a handful of posts on this blog generate the majority of the traffic. I've plotted the distribution of traffic by post above; it's clearly governed by a power law. The top 2% of posts generated 19% of traffic, the top 10% account for 48% and the top 20% attracted 69%. None of that data is surprising. However, the source of traffic for the exceptionally successful posts is unexpected.
When discussing customer success for SaaS startups, the conversation focuses mostly on retaining customers and reducing churn. These are two fantastic benefits with meaningful return-on-investment. But great customer success organizations can meaningfully impact another critical part of the customer lifecycle, customer acquisition, by catalyzing evangelists to refer new customers.
Are startups growing much faster than they have in the past? The chart above plots the time required for startups to raise rounds at $1B or greater valuation, over the past ten years. The blue line is a logarithmic regression demonstrating the decrease from about 7.5 years to less than 2.5 years. The answer seems to be an unequivocal yes.
Are you a Barry, Jill, Buzz, Angel or a Devil? This is the question Best Buy store managers posed each time a potential customer walked into one of its stores when the company decided to segment its customer base in 2005. Barrys are high-income family men. Jills are soccer moms. Buzzes are gadget lovers. Angels are the best, most-profitable, customers and buy new products at full price. Devils, on the other hand, erode Best Buys' profits because they use coupons, find the best deals and return products frequently. After launching this segmentation, restructuring its stores to meet the needs of these segments, and focusing on the profitable segments, Best Buy's revenue increased 8%, an impressive figure for a retailer.
Crisis in startups is inevitable. Products break, deadlines are missed, legal issues arise, customers raise issue, employees quit, bad press circulates. To survive, founders and management teams have to respond well and quickly. In Managing the Unexpected, two University of Michigan Professors examine the characteristics and behaviors of great teams during crisis. Factory workers, miners, fire fighters, aircraft carrier flight deck hands, railroad operators and many others.
Box is a 1000+ person company providing collaboration and document sharing software. We had previously analyzed the business when the company filed their first S-1. Yesterday, the company filed an updated version of their S-1. In the past two quarters, some of the key financial characteristics trajectory have improved materially.
Growth is king in today's public markets. Most of the SaaS IPOs we've analyzed have traded growth for profitability and they have been rewarded handsomely for it. For the large tech companies, this trend is no different. The public market prizes growth. Some public tech companies sustain growth through internal efforts, but many use their cash reserves to acquire fast-growing startups. These public market cash reserves total $430B or so across the top 250 or so public tech companies, a massive war chest that will fuel startup M&A in 2015.