At Gainsight’s Pulse Conference on Customer Success, Mike McKee of Rapid7 spoke about the structure of his customer success team. He projected a slide, which I’ve copied in the image above, that depicts the way Rapid7 sells a contract, deploys its software, engenders adoption and expands accounts. It’s the best visualization I’ve seen to describe the sales and customer success process and the inter-team collaboration required to be successful.
Ariba went public in 1999 three years after having been founded. In its first year of selling, the company generated $800,000 in revenue. Then it ramped. $8 million, then $45 million, then $274M. In a three-year period, the company had grown 33x and achieved an astounding CAGR of 224% over the same period.
Ariba shares increased 300% on its first day of trading at IPO, valuing the company at $6 billion. At its peak, the company would be worth $40 billion, but after the dotcom crash, the share price returned from the stratosphere to normal levels. Ultimately, SAP acquired the company in 2012 for $4.6B.
The rate at which startups are raising follow-on rounds is decreasing, and has decreased steadily from 2003 through 2013. Between 2003 and 2006, post-Series A startups raised series Bs about 57% of the time. However from 2011-2014, that figure fell to 28%. The same trend is true in series C rounds, where success rates fell from 43% to 35%.
![image](https://res.cloudinary.com/dzawgnnlr/image/upload/q_auto/f_auto/w_auto/rounds_by_type051115.png " width=100%/>
This decline in startup follow-on fundraising success is the result of an increased number of series A, which have been growing at a rate of 18% per year since 2009. Meanwhile, series Bs and series Cs were steady over the same period.
Mobile visits account for more than 50% of all e-commerce. During the holiday season in 2014, that figure exceeded 70% for Walmart. In India, mobile usage dominates traffic to such an extent that Myntra, the largest retailer, is shutting down their web application to focus exclusively on their mobile apps. Instagram launched a website only after the mobile app reached more than 100M users.
If the consumer world is any indication of the future, we should expect to see a massively successful mobile-only SaaS company in the next few years. User preferences for simpler app UIs, the advantages of mobile app distribution through app stores and the consumerization of IT (the notion that end users now make IT purchasing decisions rather than the CIO) are three key forces creating this opportunity for startups.
In the late 90s, one company changed its name five times before they settled on one which today is a well-known brand. The business started as Silver Computing in 1995, then Stellar Computing in June 1997. Six months later, the company would rebrand as next ActiveTouch Systems, then six months later to ActiveTouch Inc., and finally, six months before IPO to WebEx.
WebEx went public in June 2000 with $8.3M in revenue over the previous twelve months. After three relatively slow years, growing from $1M to $3M, the company’s revenue rocketed 7x, then 3x and the close to 2x, as the chart above shows. And churn was pretty impressive, too. WebEx retained 95% of their customers the year they went public.
My first major negotiation was a potential advertising agreement between Google and Facebook. I was PM on the social advertising team at the time. There was a call scheduled at 2pm one afternoon, and I had been told that morning about it.
I’m wasn’t an experienced negotiator, so I panicked. I didn’t know how these conversations worked. I called some a few other product managers I knew inside Google, and asked their advice. I downloaded a few eBooks on negotiation and took notes. When 2pm came, I dialed into the call. I’m sure the Facebook team could hear my ragged nerves over the phone.
An entrepreneur last week asked me if bottoms up businesses are more efficient software companies than top down sales processes. Enabled by web and mobile app distribution, the bottoms up software business acquires individual users, small teams and eventually departments. The top down model sells to a C-level executive (CEO, CIO, CFO) and captures the relevant part of the organization through one sales process.
Because the bottoms up processes tend to rely on seemingly less expensive customer acquisition techniques like content marketing and in-product up-sell initially, this founder suggested, quite reasonably I thought, that bottoms up companies are more efficient.
When I first started writing, I wondered how I could make charts like those in the Economist or in the New York Times, the beautifully formatted ones. After some research, I figured out how. And this post explains how you can do it, too.
Many data scientists use a free open-source language called R. It’s a great tool for processing data and I use R to process all the data for this blog. You can download it here. Alternatively, many people use RStudio, an editor which makes R much easier to use. To make these charts, I use a library written by Hadley Wickham called ggplot2. ggplot2 has all kinds of charts: area, line, bar, etc. You can see all of them here
Rumors swirled yesterday that Salesforce, the $40B SaaS behemoth, had been approached by an acquirer. Dan Primack speculated this morning that Oracle and Microsoft are the likely candidates. If Salesforce were to be acquired, the SaaS ecosystem would change substantially.
Looking at the market caps and the balance sheets of the major enterprise acquirers, Microsoft could certainly acquire Salesforce outright in cash. Oracle would likely acquire the business in a cash & stock transaction.
The first SaaS startup started as a packaged software company. After selling floppy disks and CD-ROMs of expense software in computer software stores, the company changed models for the first time, and sold software licenses directly to enterprises. The company went public on this model in 1998. But soon after the crash of 2001, the startup’s market cap totaled only $8M.
So the business evolved again and became a pure SaaS business, selling software accessible to anyone with a browser. Thirteen years later, the company generated more than $600M in annual revenue in 2014 and sold to SAP for $8.3B in the largest ever SaaS acquisition, and it is one of the very few SaaS companies ever to achieve both positive revenue and cash flow break-even. That company is Concur, the travel and expense business.
