There's a SaaS company on the other side of the world founded nine years ago that is worth $2B, generates $100M in annual revenue and growing 80% year over year. Based in New Zealand, Xero has built a widely adopted small-to-medium business (SMB) accounting solution that counts 371,000 paying customers, a figure that grew 76% in the last 12 months. Amazingly, 30% of New Zealand GDP is processed by Xero.
Christoph Janz, one of the best seed stage SaaS investors, published a great tweetstorm on the state of the SaaS ecosystem yesterday. I've copied it below.
These are my two favorite devices from 2014. I use each one on a daily basis and both have changed my life in a meaningful way.
After writing about B2C2B companies last week, I received a lot of great comments about the differences between the B2C2B models, particularly the sales models after a company has acquired the initial Consumers. These are three sales models I've observed B2C2B companies use to convert the initial momentum with consumers into dollars.
Since LinkedIn's IPO in 2012, the company has grown its market cap by 6x and as of this writing is worth about $27.5B. Second to Salesforce, LinkedIn is the second largest SaaS company in the world. Unlike most SaaS companies which are B2B, LinkedIn is a B2C2B company. LinkedIn attracts hundreds of millions of consumers to post resumes online and sells this data and access to its audience to advertisers and recruiters and salespeople. The intrinsic data and people network effects of the business create reinforcing feedback cycles that have helped the business achieve tremendous revenue growth.
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.