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For hundreds of startups in the as-a-service world, the scores of product launches at last week’s Amazon Web Services Reinvent Conference each were a warning shot across their bows. We are coming. We are coming right after you, with tens of billions of dollars on our balance sheet, hundreds of salespeople, and the broadest suite of software and infrastructure since Oracle. Anything that’s open source with traction, we will host. Any business where we see margin is our opportunity. We are coming fast and hard. At least, that’s the way I interpreted it.

In June, Frank Bien and I published our book, Winning with Data. It describes through case studies how some of the most successful startups use data to create sustainable competitive advantage. Since then, we’ve sold thousands of copies. Today, we’re releasing an Audible version of the book.

I have 8 free copies to give away to readers. If you’d like to throw your hat in the ring for one of the codes, please answer a one question survey about SaaS startups. I’ll select 8 respondents at random and send out the codes next week. Just a reminder that you’ll need an Audible account to claim the code.

Bookings, MRR, Revenue. All these metrics form part of the financial statements of SaaS companies. For as long as SaaS companies have existed, we’ve used one way of counting revenue, called GAAP. Starting in 2017, revenue recognition for SaaS companies will change, and SaaS startups will have more flexibility in the way they record revenue than in the past.

BDO has published the clearest summary of these changes, which number more than 750 pages in the tax code. Your accountant or CFO is the best person to consult about these changes. Public companies must transition to these new regulations starting in 2017. Private companies have the option to migrate to these new standards in 2017. They are obligated to comply in 2018.

As a SaaS startup begins to reach critical mass, the business generates more of its revenue from upsells and expansions, reaching about 30% at between $40-75M in revenue, which is in line with some of the models we’ve created. Many times startup teams ask how to compensate a sales team for renewals and upsells. The 2016 PacCrest Survey contains a wealth of information about these types of go to market questions.

Earlier this week, I published benchmarks on [What Percentage Of Revenue Should SaaS Startups Spend On operating expense?](http://tomtunguz.com/how-much-should-spend-on-operating expense/) Several founders asked to see this data broken down further. What fraction of operating expense is spent on sales & marketing, and what fraction of op is spent on engineering? Most businesses spend 2x more on sales & marketing than engineering.

Imagine you’ve just been named the head of a bustling New York City restaurant challenged by one issue - customers complain about the customer service. A data-driven person, you search for a metric to evaluate the current customer service to validate the complaint and then track as you experiment with the restaurant’s operations. What metrics would you employ?

You might run a survey of customers at exit. You could follow with customers by telephone the day after the meal. You might ask finance to tabulate the tip amount as a percentage of the total bill and aggregate by waiter.

What percentage of revenue should be spent on payroll? In 2001, Salesforce spent $35.6M on payroll and generated $5.4M in revenue. NetSuite spent $38M on payroll generated $17M in 2004. as both of these companies scaled and approached IPO, the operating expense ratio (OER) or operating expense divided by revenue, asymptotes to 0.8. For every dollar of revenue, both of these companies spent $0.80 in payroll at scale.

A few weeks ago, I had my first customer support experience of the future. I was in a meeting when my Android’s caller ID told me American Express was calling. I stepped of the conference room and answered the call. A machine-generated woman’s voice identified itself as the American Express fraud department. “Do you have a bluetooth headset or headphones you can use with your phone?” she asked.

I replied that yes, I did. She said to tell her when I was ready. So I plugged in my headphones and said, “Ready.” Then she asked if she could send me a link to a website by SMS. “Yes.” The message came and I clicked on the link.

Public companies are often required to disclose the process of their acquisition. LinkedIn’s sale to Microsoft is described step by step in an SEC disclosure and it offers both a peek into how these massive acquisitions are consummated, and also illustrates the best practices for how to run a process, both acquisitions and fundraisings.

The timeline above shows how the deal progressed. Five potential bidders are included in the chart including Party C, whose identity is unknown. Note at the beginning of the chart, the bids for each suitor are illustrated as non-zero to separate the lines and make clear each suitor’s behavior. None of these suitors posted offers until May.

About $1B has been invested in early stage SaaS startups as of November 1. Over the last nine months, marketing startups have raised more dollars in aggregate than any other segment. The chart above shows the early-stage investment dollars by buyer within the organization. Operations teams following second, with human resources focused startups in third. Notably, sales startups raised the least amount of capital.