Posts

As I was researching the theory behind organizational goal-setting, I came across a letter from Hunter Thompson, at the time 20 years old, writing to a friend about goals. Yesterday’s post discussed some frameworks for organizations to craft goals to maximize employee happiness and effectiveness. But Thompson’s advice is for our goals as individuals.

To put our faith in tangible goals would seem to be, at best, unwise. So we do not strive to be firemen, we do not strive to be bankers, nor policemen, nor doctors. WE STRIVE TO BE OURSELVES.

Of late, I’ve been having lots of conversations with founders about setting goals. It’s a really important topic for many founders, because it’s the way that management teams align incentives and focus an organization on a few important areas. It’s their focus that enables startups to move quickly, one of their key competitive advantages in the market. But, what is the optimal way of setting goals? I first learned about goal setting at Google, which employs the OKR (Objective and Key Result) that Andy Grove developed at Intel. He wrote about it in a book called High Output Management. At its core, an OKR is a description of the goal with a quantitative metric of success. Angus Davis, founder of Swipely, added an important element to the way his company sets OKRs: each goal has to be aligned with the major goal of the business.

I learned to drive a car at age 19 on a warm Santiago de Chile night, in an unusual way. A friend named Jose Pedro resolved to teach me after dinner at his apartment, suprised to learn I didn’t know how. It was past two am, and without anyone on the streets, it would be safe, he assured me. As we sat in the car, he showed me how to manage the three pedals and the gear shift, and explained the how the clutch worked. Then the lesson started.

In Q2 2015, VC investment totaled $16.7B, about a 66% of the $28B deployed in Q2 2000 according to a new report. And the trends shows no sign of stopping. A big contributor to this growth are nontraditional investors including mutual funds and hedge funds, which now account for approximately 40% of dollars invested. And while the market is similar to the dotcom era in some regards, it is substantially different in others.

When asked why he took Zendesk public this week, CEO Mikkel Svane replied, “At some point you have to move out of your parent’s basement.” It’s a witty quip with some truth to it. Evolving into a public company is a step for about 25-30 venture backed IT companies per year, and it can be a worthwhile, if strenuous, journey. Zendesk went public in the midst of a 30% reduction in SaaS multiples in the public markets, and the company has continued to perform well.

Earlier this week, we examined the trends in the major categories of startup investment including eCommerce, Software, Social Networking and Education. But which lesser known startup sectors are starting to raise venture dollars? Where are founders finding unique opportunities to innovate?

Bitcoin is the fastest growing sector followed by photo sharing and physical storage (which includes moving and self storage companies). Each year, starting in mid-2012 through mid-2015, these sectors have grown their investment dollars by more than 145%, according to Mattermark data.

“People don’t buy what you do, they buy why you do it.” This line from Simon Sinek’s TED talk captures the power of a values based marketing campaign. Simon contrasts feature-based marketing - start with what the company is selling continue to how they do it and finishes with why - to value based campaigns which reverse the story-telling order. Values campaigns start with the why.

In the last six months, VCs have invested more than $57B according to Mattermark data, which puts 2015 on pace to exceed 2000 as the year the most venture capital will be deployed, ever. Which sectors are benefitting from all these venture dollars?

The chart above contrasts the top 12 sectors receiving venture funding in the US, and plots the relative share of dollars invested by month. The red line indicates the monthly data point, the thin blue line shows a linear regression trend line, and the shadow around the blue line is the area of standard error.

In every sales process for every SaaS startup, there is one ultimate internal champion advocating the purchasing decision. And it’s their budget that will be used to pay for it. So, which departments within customers spend most on SaaS?

One way of looking at this question is to compare the successes of software companies targeting different departments. I have categorized the 50 or so publicly traded SaaS companies by their principal buyer, and tallied the aggregate market caps of those companies above.

According to ChiefMarTec, in 2015 there are 1875 marketing technology companies, up from 947 last year. If the number of marketing software companies is any indication, there is a huge expansion in the number of SaaS companies in almost every segment including sales tools, engineering productivity, finance, and human resources.

This fragmentation trend has been happening for quite some time. In the old model of software procurement, companies would call one of the large software monoliths (Oracle, SAP, IBM, etc) and negotiate an enterprisewide license for a software suite to serve the majority of their departments. These suite offerings promised simplified negotiation and procurement, a single integrated platform with free data interchange across departments, and one point of support. But, this promise was never fulfilled. For example, according to a recent study by Panorama Consulting Solutions, the average ERP implementation requires 16 months to deploy and 20% of them are considered failures.