I'll never forget the first time I was assigned a sales quota. I was six months into a sales role at Google in which I on-boarded and managed the accounts of social networks running AdSense ads. Our key metric was customer satisfaction and retention. After a few months, I was starting to get into a groove. And then, our team was assigned a new manager who put the team on a quota, sending me into a tailspin.
For Google, seasonality is an important factor in forecasting quarterly revenue growth. In the advertising business, Q4 is always the strongest, followed by Q1. Q2 is the weakest. In Google's latest financial year, the difference between the weakest and strongest quarters was 22%: $14.4B in Q4 and $11.8B in Q2. I wondered if the same were true for SaaS companies. While not subject to the consumer buying holiday cycle like advertising based companies, SaaS salespeople might be impacted by the vacation schedules of their customers or some other factors I couldn't anticipate.
Yesterday, I walked the sprawling floor of the Consumer Electronics Show. These are the six key themes/trends I noted: The Coming Era of Drones, The Internet of Things is Going Away, The Reinvention of the Car, Searching for the Next Massive Hardware Market, Commodification of Wearable Technology, and Hunting for TV's New Killer Feature
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.