I'm a partner at Redpoint. I invest in Series A and Series B SaaS companies. I write daily, data-driven blog posts about key questions facing startups including how to fund raise, startup benchmarks, management best practices and team building. I co-authored the book, Winning with Data. Join more than fifteen thousand others receiving these blog posts daily by email.


The Beginning of Consolidation in SaaS

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.

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Start with the Premise that Everything is Noise

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.

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How Your Startup's Org Chart Changes Your Product

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.

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The 3 Types of Channel Strategies for SaaS Startups

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?

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What Average Contract Value is Best for a SaaS Company

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.

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The Decentralization of Venture Capital

To thrive, venture capital firms must perform three things well - ;raise capital from limited partners, source companies to invest in, and pick the best opportunities. Historically, each of these three activities has been highly centralized in a small partnership often perched on Sand Hill Road. But new networks are changing this. The latest called DAO attempts to decentralize all three at once.

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Is A/B Testing A Good Idea for SaaS Startups?

At Google, we tested everything. User interfaces, advertising targeting models, even hiring practices. One product team tested 41 different shades of blue to ensure maximum click through rate; but the company is now testing black links. That's one enormous advantage of A/B testing - all the sacred cows must prove their beatitude to maintain their divinity.

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The Leading Predictor of Series A Valuation for SaaS Companies

The highest correlated factor to post-money valuations for Series A SaaS companies isn't revenue or revenue growth, but negative churn. Revenue growth correlates to post-money with a 0.18 R^2. Revenue correlates at 0.3 R^2. Negative churn, or account expansion, correlates at 0.54 R^2.

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Are You Spending Enough Time on Your Startup's Go To Market?

If you build a disruptive product in the woods and no one is around, does anyone buy it?

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SaaS Companies Are Changing their Growth Strategies

Just how real is the sudden importance and profitability for SaaS companies? The median publicly traded SaaS company has improved net margin from -25% to -8.8% in less than two years, after a nearly four-year trend of negative growth in net margin. The initial spike in 2014 occurs two quarters after the first SaaS correction and the second occurs in late 2015.

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