Thursday, 2 June 2022

SaaStr

SaaStr

Uncharted and Electric: PayHawk’s CEO on Becoming Bulgaria’s First Unicorn

Posted: 02 Jun 2022 04:59 PM PDT

SaaStr's Poya Osgouei has a great Uncharted podcast that does a deeper dive with many SaaS execs.

Up this week is Hristo Borisov, the CEO of Payhawk and his advice on focusing on what you’re good at on both an individual as well as business level resonated a ton.

Also discussed:

  • The importance of Focus and going all-in in Entrepreneurship,
  • The 2 secre’s behind Payhawk’s growth to become Bulgaria’s first ever Unicorn,
  • The influence executing on product delivery has on the rest of the organization at Payhawk

Give the episode a listen here.

The post Uncharted and Electric: PayHawk's CEO on Becoming Bulgaria's First Unicorn appeared first on SaaStr.

What Really Happened to SaaS in the ’08-’09 Recession

Posted: 02 Jun 2022 07:33 AM PDT

A lot of folks are talking about how things were in ’08-’09 and even ’00-’01 these days.

I don’t think today is anything like those times. The amount of folks buying SaaS software is a force like we’ve never seen before, and even with some stock market drama, many top SaaS companies still trade at $4B, $10B, $20B or more just a decade after being founded.

But as a history lesson, let’s use my own startup Adobe Sign / EchoSign to see what happened in ’08-’09 … the worst global recession any of us have ever seen.  When the whole world shut down in many ways.

#1.  First, even in the darkest times of ’08-’09 — folks still bought more SaaS than ever.  That never even slowed down.  You can see here even in June ’09, the peak of that recession arguably, we doubled sales over ’08:

#2.  Two things though did get hit harder — SMB Churn and Upsells.  Enterprise customers renewed, but they didn’t buy as many additional seats for a while.   You can see that compression in this chart: the “Upgrade” column slowed for a while — quite a bit, i fact for a quarter or so — but everything else kept on growing:

#3. Customers kept buying more SaaS than ever, which masked all-time high churn in SMB accounts.  SMBs just plain went out of business in ’08-’09.  So our gross SMB churn spiked to a crazy high of 5.5% in May 2009 … but then returned to normal 2% by 2010:

#4. You can also see highly elevated gross churn in 2009 here — the Mar-June on the left side of the X-axis. But even by July 2009, it had returned to normal once we worked through a cycle of churn.  Things were back far sooner than anyone realized on the churn side.  And on the new bookings side, they never slowed down:

#5.  So churn was up in ’09, but so was sales.  And then … buyers just started to flood into SaaS into ’10 and then ’11 like we’d never seen. Even though we weren’t out of the recession yet, SaaS started to get really, really good even in ’10. You can see usage here:

So look, whatever comes, we’re in for a bumpy ride.  But if SaaS grew like clockwork through ’08-’09 … and then by ’10, came out stronger than ever before.

I’m pretty bullish about SaaS revenue growth in 2022, and about 2023 overall.

Go forth and conquer.

The post What Really Happened to SaaS in the ’08-’09 Recession appeared first on SaaStr.

Never Quit If

Posted: 02 Jun 2022 07:03 AM PDT

Almost all of us go through some tough times in SaaS. And other times that are not quite tough, but just … hard. It’s hard to be a founder, to be a CEO. It’s hard to grow, but not at a high rate.  It's hard to be a VP of Sales and every month, every quarter, you have to do better than the last ones.

Sometimes, you might even think it makes sense to just quietly quit. Or retreat and give up on growth, And maybe it does.

But in SaaS, Never Quit If …

1. Never Quit If … You Have 10-100 Unaffiliated, Happy Paying Customers. And Aren’t Completely Out of Money. It’s almost impossible to get anyone to buy any new business web services. The last thing anyone needs is another CRM, another invoicing app, another quoting tool, another recruiting app, etc. You got 10 paying customers out of the ether, that aren’t your friends, folks that work at your old company, your old boss, etc.?  And they are actually happy and love your product? That’s real. It’s not enough to pay the salaries and rent, not usually. But 8 times out of 10, it shows the earliest stages of real product-market fit, i.e., potentially having something. More here: If You Have 10 {Unaffiliated} Customers in SaaS — You Have Something.

2. Never Quit If … If You Were Doing 2x Better, You’d Actually Have Something. This is my big learning from my first year at Adobe Sign / EchoSign. It was a really tough year. We weren’t on a path to succeed. But we did have customers and customer growth (see point 1. above). I built a new model and realized if we could “only” grow twice as fast — we’d really have something. Because SaaS and recurring revenue compounds. And especially when you are in the sub-$5m range, you can almost will yourself to grow faster as long as you have some customers and some leads.

3. Never Quit If … You Can Get to $2m in ARR from Wherever You Are, Irrespective Of How Long It Will Take. $2m in ARR or so is Initial Traction, when the engine really will start working. Even if it’s not working now, if you can squint and see $2m ARR on the horizon, even if it’s all the way to the end of next year … don’t quit. What you are squinting at and seeing is the first time you’ll have a real company. Don’t quit now.  More on this stage here: How To Know You've Hit First Traction In SaaS.

4. Never Quit If … You Are > $2m in ARR and Are Growing > 80% YoY, or Just at Any Material Rate Really. Just never quit. It may be tiring, it may be painful, you may lose members of the team. But again, SaaS compounds. Don’t quit, or probably sell, once you are finally compounding. And if churn has grown due to tougher times?  It won’t last forever. Fight through it. You’ll get back to normal times. Maybe not this week, or this quarter. But you will. It’s the top-line engine and NPS that matter. More here: From Initial Traction to Initial Scale (~$10M in ARR): The Hardest Phase. But — The Cavalry is Coming.

5. Never Quit If … You Can See It. Even if growth has slowed, even if it’s worse than you'd planned for the year. If you can see how it all comes together, you have time. You have time to fill those product gaps. You have time for second order revenue to continue to kick in. You have time to work with those prospects. To upsell your customers. Things may have slowed down, and even gotten a lot worse. But if you have happy customers, you can get more of them.  No matter what the competition does, or how much you have left in the bank. More here: CLTV Isn't The Whole Story. Don't Shortchange Second-Order Revenue.

You can’t always make something out of nothing in SaaS.  But true product-market fit is rarer than it looks.  10, 100, 1000 happy customers are not easy to find, service and make a success.  Never quit if you really have something.  Even if today, it’s just not quite enough.  It will be later, if your team is strong enough, you will is there, and your customers believe in you.

(note: an updated SaaStr Classic post)

The post Never Quit If appeared first on SaaStr.

Dear SaaStr: I Just Received a $1M investment for My 3-year old Industrial SaaS Product to Scale. What Should I Do First?

Posted: 02 Jun 2022 06:08 AM PDT

Q; Dear SaaStr: I Just Received a $1M investment for My 3-year old Industrial SaaS Product to Scale. What Should I Do First?

You can't.  $1m isn't enough to scale anything, at least not in the U.S., and probably not anywhere.

To hire a true sales & marketing team, you're going to need about $3m-$4m. More on the math here: Why You'll Need Just About $3,000,000 to Build Your First Real…

But … $1m can help you do what you are already doing that is working a little bit — and do that better, with less stress.

  • You can hire a sales rep or ideally two to help you sell. To give you some leverage here. You just can't hire a real VP of Sales yet, but you can afford 2 AEs at $100k, $120k, $140k, or whatever per AE.   Because salary vests and bonuses are earned.  If you are very careful, 1m will let you invest in your first sales team.
  • You can keep investing in whatever small paid channels already work. You just can't dump money into expensive experiments. And you probably can't afford a VP of Marketing yet.
  • You can pay the team. This is important.

$1m helps you fill up a small tank. It doesn't let you truly invest. But if it helps fuel an engine that's already just starting to work … that's still magic.

Use the $1m as some extra fuel — to fuel what's already working, albeit at a very small scale. Not to "scale".

(note: an updated SaaStr Classic answer)

The post Dear SaaStr: I Just Received a $1M investment for My 3-year old Industrial SaaS Product to Scale. What Should I Do First? appeared first on SaaStr.

5 Interesting Learnings from Box at $1 Billion in ARR

Posted: 01 Jun 2022 06:56 AM PDT

So I’ve been waiting for this milestone for some time, ever since 2014, when we wrote in TechCrunch that Box would eventually get to $1B in ARR.  It was just a matter of time.  That Box would of course get to $1B in ARR given how much momentum it had at $200m in ARR — that’s the magic of recurring revenue.  At the time, most folks didn’t really get SaaS, NRR, and recurring revenue.  We all do now.

And now we’re here!

Box is now crossing $1B in ARR.  In fact, it’s growing the fastest at $1B ARR it has in quite some time, with its all-time highest NRR ever!

5 Interesting Learnings:

#1. Growing 18% at $1B in ARR — versus just 10% a year ago (!).  Going multi-product continues to be the secret to acceleration at scale. Suite (i.e. multi-product) momentum drove a Net Retention Rate of 111%, up 8% basis points from 103% a year ago.

#2. Box has now hit the magic number of 20%+ operating margins, becoming a cash flow engine.  From 1% in 2020 to 20% today. Key to this, as you can see, is driving down Sales & Marketing to a low 28% of revenue vs. a SaaS public company average of ~50%.  Box does have a viral / PLG component to rely on to drive down some costs here, but this is still probably the lowest sales & marketing can be in a sales-driven SaaS company that is still growing.

#3. Expansion of NRR is truly impressive — and a reminder it's never too late to drive up your NRR. Box is >increasing< NRR as it passes $1B in ARR!  The keys, here again, are going multi-product and more enterprise.

#4. 37% of revenue now from "Suites", or multi-product companies, and the number of $100k+ deals here have more than doubled.  You have to start single-product to stay focused and find your 10x wedge in a market. But at scale, continued growth requires a multi-product strategy.

#5. Box needed to get to scale to get there, like most SaaS companies — but now it's a true Free Cash Flow Machine. It generated $91m in free cash flow last quarter and $170m in FY22 That's approaching 20% of revenue as Free Cash Flow.

And a deep dive on how Box went multi-product and more enterprise at scale with CRO Mark Wayland here:

 

An incredible story we’ve all been a part of over the years, one way or another.  Box took its time to go multi-product, and with it, even more enterprise.  But once it did, it got its second wind.  At $1 Billion in ARR.

The post 5 Interesting Learnings from Box at $1 Billion in ARR appeared first on SaaStr.

Salesforce: “We’re Not Seeing Any Downturn or Deceleration”, Growing 24% at $30 Billion in ARR

Posted: 01 Jun 2022 03:19 AM PDT

Following Snowflake's blow out quarter, Salesforce has now announced a record quarter as well, growing a stunning 24% at a now $30 Billion in ARR.

In fact, that's acceleration.  At $24B in ARR, Salesforce was growing 20% year-over-year.

"We're just not seeing material impact on the broader economic world that all of you are in," Marc Benioff, Salesforce's co-founder and co-CEO, said on a conference call with analysts.

This isn't to say a slowdown isn't coming, or that some industries aren't impacted.  Snowflake also noted certain industries were buying / using less, even if overall growth at the end of the quarter was very strong.  And Salesforce noted it's slowing down hiring, and taking a break from bigger acquisitions, for now.  That's still a cautious note in Salesforce's optimism and blow-out numbers.

But it's a reminder to not use the overall global issues and challenges today as an excuse.  Some areas of spending are slowing in the economy, but SaaS overall is still growing faster than ever.  So if things are slowing down at your startup, be honest about the root cause.  Blame "the economy" too much, and you're doing yourself a disservice.  It's not slowing down Salesforce, Snowflake, or almost any other SaaS or Cloud leader.

We may be headed for a big downturn; we'll see.  But it's not here yet, at least not across the board on average in SaaS. Certainly, public SaaS revenue multiples are way down, and that's impacted many things, including making VC fundraising substantially harder than in the go-go days of 2021.  And some segments of the economy are under stress.

But so far, times are still very good in SaaS, and especially enterprise SaaS.

Don't just take it from me.  Take it from Salesforce, Snowflake, and more.  Take it from Gartner, who is now predicting SaaS to grow 20% overall next year to $200 Billion in total sales.

Go forth and conquer.  And especially, go close those big deals.

The post Salesforce: "We're Not Seeing Any Downturn or Deceleration", Growing 24% at $30 Billion in ARR appeared first on SaaStr.

Join SaaStr Europa After Parties with Payhawk, Appsumo, Capchase, Verdane, Hook, Chargebee and More!!

Posted: 31 May 2022 02:36 PM PDT

SaaStr Europa in Barcelona on 7-8 June is ALMOST here!  We're just about to cross 2,500 total attendees and we'll see where we end up!

Both nights we'll have amazing on-site outdoor happy hours, including open Q+As, cocktails, churros con chocolate, tapas, mules, and much more, courtesy of PayHawk!

Many of our partners are doing their own additional off-site happy hours on 7 June, in particular, in Barcelona, if of interest sign up here:

  1. Appsumo starts at 6pm: Request to be invited here
  2. Chargebee is hosting a party that starts at 7pm: Register here
  3. Verdane starts at 7pm at a chic rooftop bar: Event Link
  4. Hook is doing a beach Party–> https://saastr.hook.co/
  5. Capchase Nightcap and Tapas starts at 8:30: Event Link
See ya soon in BCN!!

The post Join SaaStr Europa After Parties with Payhawk, Appsumo, Capchase, Verdane, Hook, Chargebee and More!! appeared first on SaaStr.

Creandum Ventures: VCs Don’t Help Enough in Recruiting. And VC Brands Are Overrated.

Posted: 31 May 2022 07:02 AM PDT

So Creandum, one of Europe’s leading VC firms (and they’ll be speaking at 2022 SaaStrEuropa.com in Barcelona on June 7-8) updated its report on What Founders Really Want from VCs, and if VCs add value:The data is interesting:

  • Only 30% of founders think their VCs have been helpful.  That sounds about right.
  • VCs aren’t helping enough in recruiting, not for real.  69% of VCs say they are making a difference in recruiting, but 79% of founders say they aren’t.  This is what I work on and struggle with all the time as an investor.  Few things matter more than helping the team truly hire a few great VPs.
  • VCs mainly help with fundraising, with the next round.  This is right in my experience, and importantly, only some VCs can really help bring in the investors for the next round.  They have to have “juice”.
  • VCs think their brands really matter, but what founders care about is VCs they want to work with.  An important point, though perhaps one founders only come to after they sign the term sheet.

A reminder that even now, founders and VCs still aren’t 100% on the same page.  And that VCs should focus less on being the next Sequoia or Bill Gurley, and more on recruiting, and being a great team player.  And getting the next round in.  That’s the real job.

 

The post Creandum Ventures: VCs Don’t Help Enough in Recruiting. And VC Brands Are Overrated. appeared first on SaaStr.
at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)

BREAKING: North Carolina automotive group acquires 7 Upstate dealerships

Breaking news from GSA Business Report Click here to view this message in a browser window. ...