The acquisition frenzy continues in SaaS. This morning Microsoft announced it would acquire LinkedIn for $26.2 billion, which prices the business at 8 .1x trailing 12 month revenues and 6.7x next 12 month revenues. In addition, Symantec announced that it would acquire Blue Coat for $4.7 billion, a 7.7x trailing multiple. In the 2016 acquisition market, the median acquisition multiple is 7.8x trailing 12 month revenue and 6.4x next 12 month revenue.
Which are the ripest areas for startups to disrupt using machine learning? At the core, machine learning/artificial intelligence relies on two key ingredients - advanced algorithms and data sets to train those algorithms. Novel algorithms are increasingly making their way into the public domain in the form of open-source libraries. So, the key differentiator for startups and ultimately long-term competitive advantage is access to proprietary data sets.
How does a chat bot company transform a technology advantage into a distribution advantage? This I think is the key question facing startups in this part of the ecosystem.
When is the right time to increase sales headcount for a SaaS startup? It is one of the most strategic decisions for early-stage business to make given the amount of effort and expense involved in building, managing and scaling a sales team.
There are two main ways of building a SaaS sales team - top down or bottoms up. Top down SaaS sales organizations start with a VP of Sales who often hires senior account executives. Bottoms up sales teams hire the first account manager and promote from within. Which is better?
Two billion dollar SaaS acquisitions were announced this week with Salesforce paying $2.9B for DemandWare, an eCommerce platform provider, and Vista Equity Partners paying $1.8B for Marketo, the marketing automation company. In addition to the absolute size, these transactions distinguish themselves with high valuation multiples of 12x and 8x on trailing revenues.
We each know that focus is the most effective way to work, but hearing the mantra to focus doesn't help narrow our scope. What's the best way to focus? Start with the premise that everything is noise and then work to find the exceptionally valuable or important things for each day and for each project.
In 1967, Harvard Business Review rejected a paper submitted by Mel Conway. A year later, Conway's thesis would eventually be dubbed Conway's Law. Conway graduated from Caltech with a Masters in physics and from Case Western Reserve with PhD in math. He worked on the Pascal compiler among other notable software projects. Over the course of his career, Conway observed a phenomenon. The products software teams created reflected their organizational structure.
There are three different types of channel relationships for SaaS companies, a seasoned executive told me recently. Which is the right one for your SaaS startup?
One question founders often ask is which is the right customer size to target? What is the optimal ACV for a SaaS startup? One way of answering this question is to reflect upon the success of previous SaaS companies and analyze how they did it.