Tien is the founder and CEO of Zuora, and was formerly CMO and CSO at Salesforce. He is a brilliant marketer and created the notion of the three doors to SaaS success.
In the last 35 years, the tech industry has exploded in size from $62B in total market cap to more than $9.7T today, as the chart above shows. In that time, the tech industry has birthed some behemoths. In 2013, Apple became the largest publicly traded company, the first time a technology company held that distinction. Despite the number of massive companies built over the past three decades, these tech giants represent an increasingly small amount of the total value in the technology sector.
Earlier this week, Zappos declared they will abandon traditional management structure for holacracy, a management ethos that eschews pyramids and hierarchy in favor of self-organizing groups, called holons. It's not a structure without management, but one of distributed authority and management. Below is a schematic describing holacracy at a high level.
Like many others, during my work day I fall into the firefighting trap, a time mis-allocation problem that leaves me focusing on urgent, but not necessarily important tasks. Firefighting is addictive because it's fast-paced, nonstop and fun. But firefighting is exhausting and leaves me feeling as if I haven't made progress toward my goals.
You’re walking down the hallway at work from one meeting to the next. A colleague or report stops you en route, asks for a minute and presents an important problem. It’s easy to respond with “let me think about it.” In that half-second, all the responsibility of the decision has been transferred. Unlike a minute ago, you have the monkey on your back."
One way of measuring the efficiency of a company's revenue model is to benchmark revenue per employee. Google and Facebook, the two most efficient companies, generate $1M per revenue per employee per year. Setting aside those exceptional cases and focusing instead on SaaS companies, the typical average revenue per employee is about $190k to $210k per year. The histogram above shows the ranges for publicly traded SaaS companies.
Financial statements are a Rosetta Stone for startups. They reveal the strategies and the tactics of how to bring a product to market. These are the ten metrics I look at when sifting through a startup's operational model, whether when considering an investment or in a board meeting.
On January 8, 1966, the New Yorker profiled Buckminster Fuller for the first time. During a trip to a Maine island with the journalist Calvin Tomkins, Fuller said something tremendously prescient:
The initial phases of a startup revolves around discovering product market fit (PMF). One way of declaring PMF is to have enough data to sketch a reasonably accurate price/demand curve for a product. Tactically, these means identifying customer segments, estimating the the demand of each segment, quantifying the investment required to build the right product, and uncovering the costs of acquiring and servicing customers within that segment."