Startups are intense experiences. Driven by a burning passion to change some aspect of the world, startup teams push, push, push to grow as fast as possible. Without the right balance, though, teams burn out - a terrible outcome. One of the most important responsibilities of every startup's management team is to manage their teams to maximize their performance and prevent burnout. But how?
After reading a few of the S-1 analyses on this blog, an entrepreneur asked me to look into the balance sheets of public SaaS companies. More specifically, how much cash should SaaS hold? How much equity do they raise? And do they employ debt to grow?
At the time of its IPO, Veeva employed about 600 people. Veeva built a CRM specific for the life-sciences/pharmaceutical industry, built on Salesforce's Force.com platform. In addition, the company provides tools to manage the documents for clinical trials. Today, we'll look at Veeva, masters of the massive enterprise sale, and one of the most remarkable SaaS businesses.
What will the world look like when cloud compute and storage are free? Cloud computing prices are hurtling to zero. The chart above shows the logarithmic decline of the cost of a transistor cycle by 11 orders of magnitude (11 decimal places) over the past 40 years. AWS has decreased prices for EC2, elastic compute cloud, and S3, simple storage service, 42 times in eight years.
I wish I had been in Stanford's CS183 class in 2012, the year Peter Thiel taught it. A student of the class, Blake Masters, copied all the class notes and I read every post, like thousands of other visitors to the site. In a few days, Thiel and Masters will release a book version of these notes called Zero to One: Notes on Startups or How to Build the Future. I was given a copy at TechCrunch Disrupt. Over the past day or so, I've read it in its entirety. Every person curious about or in the world of startups should read it, because it contains so much original thought.
Is there an optimal price for a product to maximize a SaaS startup's sales efficiency? As I've been analyzing the S-1s of publicly traded SaaS companies, most recently of HubSpot and Zendesk, I've been asking myself that question. Do million-dollar enterprise price points and field sales people create more efficient sales organizations than content-marketing-driven SMB startups? Or are the high-velocity inside sales teams of the pursuing the mid-market, the most efficient?
Zendesk is a 700 person company that builds customer support software. Zendesk went public earlier this year. It's a remarkable business primarily because the founders and the team have built a remarkably efficient customer acquisition funnel.
Following this week's post on Benchmarking HubSpot's S-1, Josh and Nikos raised an interesting question on Twitter. What are the right ways to benchmark SaaS companies in their early days and through to IPO? I have always used years-since-founding as the time axis to compare companies, because if I were a founder, that's how I might think about benchmarks. But after their comments I wondered if there were better ones.
One of the best ways I've found to understand SaaS companies is to pore through their public filings. A few months ago, I analyzed Box's S-1. In this post, we'll look at HubSpot's IPO filing and compare their journey to a public company to a basket of about 40 other publicly traded companies, in the hopes that this data will help other founders chart their path to IPO.
Does a startup's location impact its M&A prospects? We've already determined there is no material difference between the follow-on financing rates by geography. But do acquirers behave similarly to investors?