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We are 12 years into the longest bull market in US history and this bullishness has powered the venture market. Investors deployed $117 billion in 2019 up from $106 billion in 2018.. This market has grown 20% over the last five years. It’s been go, go, go for nearly a decade.

However, Q4 2019 saw meaningful dip from Q3, but it’s too early to say whether it’s an aberration, or the beginning of a longer-term trend.

If you’re starting a SaaS company, should you prefer to sell to B2B or B2C companies? And if you would like to sell to both, how should you allocate your sales teams? If you were to hazard a guess about the share of B2C vs B2B companies, what would it be?

I often find myself wondering this question in a board room or reading through S-1s of soon-to-be-public companies. What are the demographics of the customer base and how are they reflected in the sales team?

Here are my 5 predictions for 2020.

The direct listing becomes the standard way for startups to go public in 2020. The idea has been proven by Slack and Spotify, and many others will follow. Most startups at IPO have plenty of cash and don’t need to raise more in the public markets. The direct listing enables them to go public without raising capital.

The M&A market continues to surge. Software M&A in 2019 reached about $170B up from $136B in 2018, up 25%. With SaaS penetration roughly 20-30% by our estimates, there’s several hundred billion in market cap to be created in the next few years. And incumbents desire as much of that as possible for themselves. I’ll guess a 15% increase from here or about $200B.

It’s been an incredible year and one I’m grateful for. The most gratifying thing writing this blog is the feedback from readers who say the content is useful. That’s the goal. Thank you for making this so much fun and deeply rewarding.

These are the top posts of 2019 with some commentary and behind the scenes notes on each.

1. 1.01^365 = 37.7 - The idea behind this post is that small, daily improvement leads to huge compounding gains. A 1% daily improvement yields a 37x improvement in a year!
2. Setting the Salesforce/Tableau Acquisition in Context - A wave of consolidation swept the BI industry. Salesforce bought Tableau. Google bought Looker for $2.7B and I was so lucky to have a front row seat. This article talked about the sizes of these acquisition relative to history.
3. Mattermost’s $50M Series B - We are big believers in open source. We’ve invested in more than 15 open source companies over the last 15 years (eg, Hashicorp, Cockroach Labs, Dremio…). Less than 9 months after leading the A, Mattermost raised a large B to push forward open source chat and chatops.
4. The 37% Rule: How to Decide When to Stop Wondering and Start Deciding: I read Algorithms to Live By, which was terrific. And then I listened to a podcast from the author who reminded me about this simple math principle that gives me confidence about making quick decisions.
5. What a Valuation Implies About a Business: I’m curious about the way different investors value different businesses. And for a long time, I wondered how to translate the valuation multiples of a company into a more tangible concept. This is my mental model.
6. A Clever Hack to Reading More Books: There’s so much knowledge in books, and as a society we’re spending less and less time with books. It’s a format that is in slow decline. One way of reading more books is to reduce the cost of them. Here’s my hack to do exactly that!
7. The SaaS Valuation Environment in Mid-2019: 2019 saw the highest valuation environment for SaaS companies for the last 15 years. This chart documented the rise from about a 3.3x EV/forward rev to a 9.5x. A few months later, the market would hit 10.5x forward. Now we’ve regressed a bit, which is good thing.
8. Observations from the Enterprise Tech 30 List - Wing.vc ran a coaches poll of the most promising startups. I broke down the buyers, the layers of the stack they belong to, and the customer size segment to see if patterns exist. Redpoint invested in 8 of the 30, more than any other venture firm.
9. A Random Walk Down Sand Hill Road - Mental models are supremely powerful. There’s a book called The Model Thinker that delves deep into the topic, showing you the math of why you should play basketball faster if you shoot better; and the implications of different types of social networks.
10. The Fundraising Environment in 2019 - Three Major Shifts - At the beginning of the year, the ICO was a thing, and that’s gone for now. But the broader trend is financial products aren’t discrete any more. They are continuous. And the monikers no longer carry meaning. A $7m round might be a seed, a series A or a Series B. Time to jettison the labels and just use the numbers.
11. Before You Raise a Round of Funding, Ask Yourself This Question - Make sure you do plan your options grants for key hires and employees before raising a round of capital.
12. Why Product Innovation Slows After the Series A - The transition from finding product market fit to scaling has real costs, and they appear in the product innovation cadence.
13. That Will Never Work - The history of Netflix is a fascinating adventure. Marc Randolph, the founder who is also part of Looker’s board, narrates the wild ride.
14. Why Churn Rates Can Spike When Your SaaS Startup Experiences Hypergrowth - An important nuance when evaluating churn for your company.
15. The Benefits of and Questions Facing Remote and Distributed Startups - One major trend for 2019 and for 2020 is the rise of distributed companies. I explored the pros and cons of this corporate structure. Regardless of the cons, distributed teams are an inexorable force in startupland, analogous to globalization in the the broader economy.

Account executives and sales development teams are the front lines of a SaaS startup’s go-to-market team. They perfect the craft of matching the right product and the right customer, growing the company’s revenues. For most SaaS companies, these teams see the highest turnover. But how much turnover is typical?

Vik Singh and the team at Infer, which is a Redpoint company, set out to answer this question. They used publicly available data to track account executives (AEs) and sales development representatives (SDRs) across 41 high profile SaaS companies. These 41 companies include public companies and unicorns.

In November, two spectacles occurred. The first is Dreamforce, Salesforce’s annual event and the largest software conference in the world. The second is Elon Musk announcing the Tesla Cybertruck. Benioff and Musk use these events strategically. They engender an operational cadence to Salesforce and Tesla.

There’s no feeling like launch day. It’s the day you reveal to the world the sumtotal of your team’s efforts for weeks or months. That’s how I felt as a PM - a huge sense of urgency, anxiety and motivation. I imagine this is how every founder fats on the eve of demo day.

Our portfolio company Chorus.ai released the State of Conversational Intelligence 2020. The report uses data from 5m sales and customer calls to benchmark sales team performance.

There’s lots of great data in the report. Some of the data reaffirms rules of thumb. For example, the typical win rate of a sales qualified lead is 19%.

Other data points are surprising. For example, the average SDR dials 106 people to schedule one meeting. And the typical sales manager reviews only 8% of calls, but the best managers spend much more.

Last week’s post on The Most Frequent Mishire in Startups generated the most comments on a post this year. In particular, it was this section. Though the startup may have achieved product market fit, the company may not understand the fit. Who is using the product and why? How does the buyer journey evolve with time? How do buyers describe the product amongst each other? Few early stage companies can answer those questions accurately.

The most frequent mishire in startups is the first head of marketing. Many different disciplines fall under marketing’s purview. The question facing founders recruiting marketers is: which is the most important to prioritize?

Marketing expertise falls into three segments: product marketing, demand generation, and brand marketing. Each of these kinds of marketers have critical skills for a startup. But the reason many marketing hires fail is the business doesn’t hire the right expertise at the right time.

A few weeks ago, we were fortunate to welcome Nick Mehta, CEO of Gainsight to SaaS Office Hours. I learned a lot from the session about how customer success has evolved over the last 5 to 10 years. Here are my notes from the session.

The discipline of customer success varies widely depending on price point. At the lower price points, some organizations combine the role of an account manager and the customer success person into a CSAM (customer success account manager). These CSAMs perform high-volume account management and customer success typically through email and other forms of broad campaigns to drive retention and upsell.