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A little while ago, we were lucky to host Guillaume Cabane at Office Hours in a new format: 30 minute 1-on-1s with a few companies. It was a huge success and a format that we will continue because of all the learning. Guillaume was kind to share some takeaways from the event below.
If you’re in B2B SaaS, you most likely have a finite TAM. For the love of ARR, please get the exact list of all accounts in your TAM (at least US).
I’ve written before about the Jacob’s Ladder of Fundraising. The Jacob’s Ladder is a children’s toy that flips over, and it’s a great metaphor for the seed market. Seed rounds are rapidly approaching and now often equal to the sizes of Series As just five years ago. The chart above shows the mean round size in the US across.
As the Jacob’s Ladder flips, a series of important strategic questions arise in the market.
Wing.vc published the Enterprise Tech 30 last week. It’s a coaches poll of the top enterprise startups broken into early, mid and growth stage. Congratulations to all the companies and in particular, the 8 Redpoint companies on the list: Mattermost, Cockroach Labs, LaunchDarkly, Tray.io, AppZen, Snowflake, Hashicorp and Stripe.
Coaches polls are fun because they provide a different perspective on the market. I analyzed the data set and added a few columns to it to see if there are any trends.
In Rethinking Customer Churn Rate & LTV/CAC, Thibaud Clement illuminates a counter-intuitive concept about churn. The faster you increase your growth rate (acceleration rate), the higher the churn rate.
Consider the same startup under two scenarios: one in which the acceleration rate is 50% and one in which the acceleration rate is 0%. In the 50% scenario, churn will be 67% higher. A surprising result.
Why does this happen? Because the odds of churn decrease with time, particularly for products with monthly billing.
When I shared the Redpoint SaaS Metrics Template, I wrote about the difficulty I had identifying key engineering metrics. I was grateful for all the responses from leaders at many startups to share their expertise. I’ve updated the template with a few metrics.
Reliability - percent of application requests that load. 1 minus reliability is the percentage downtime. This measures the durability of the application.
Availability - percent of application requests that load within a certain latency.
When we published the results of the freemium survey earlier this year, we noticed respondents targeting the enterprise observed higher net dollar retention and lower churn than those startups targeting other segments. I wondered if we could observe any other patterns about enterprise businesses, so I produced this analysis of public companies with ACVs (annual contract values) of $100k or greater.
In the series of charts that follow, the red bars indicate the value of the metric during the year of IPO.
Every six months or so, I take a look at how the public markets are valuing next-generation software companies. There’s been quite a bit of volatility over the last five years, and this update is no exception. As of mid-June, the public markets value software companies at all-time highs.
The chart above shows the total enterprise value (TEV)/forward revenue multiple for the basket of public software companies. Just a quick reminder on these metrics.
Just a few months ago, we partnered with Mattermost and led the Series A. We believe that open source applications will be an important part of the future of software because of their security, lower costs of customer acquisition and the flexibility they offer customers.
Today, Mattermost is announcing a $50M Series B from Y Combinator Continuity and Battery. I’m thrilled to partner with Ali Rowghani from Y Combinator and Neeraj Agarwal from Battery for the next leg of the journey.
Over the last decade or so, I’ve compiled a metrics sheet to summarise a SaaS business. While no living document like this is ever perfect, this is currently the best board-level summary of the overall health of a business I have found. I’m sharing it so that others may benefit and improve it. If you have suggestions, please email me.
Google Sheet: Redpoint SaaS Metrics Template
Direct Download: Redpoint SaaS Metrics Template (xlsx)
Next week, on the 27th of June, Redpoint will host Office Hours with Guillaume Cabane. Guillaume is an exceptional marketer. He built the highly successful growth practices at Segment and Drift. He stands out because of his persistence at the cutting edge. I remember when he told me of how he used the Clearbit Reveal API to change the content of conversations in Drift pop-ups to meaningfully improve conversion. He’s always at the vanguard of using technology to drive awareness and demand for SaaS products.