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THE 37% RULE: HOW TO DECIDE WHEN TO STOP WONDERING AND Earlier this year, I read Algorithms to Live By, a book that explains how to use insights from computer science in daily life. One of the rules is the 37% rule. It’s an important rule because it’s broadly applicable. But I had forgotten about it until I listened to the author on the Software Engineering Daily podcast. The 37% rule says that if you have a decision to make, you should spend THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these WHAT PERCENTAGE OF REVENUE SHOULD SAAS STARTUPS SPEND ON 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 HOW MUCH TO COMPENSATE SAAS SALES TEAMS FOR NEW SALES 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 TOMASZ TUNGUZ BY @TTUNGUZTOMASZ TUNGUZBENCHMARKSBEST PRACTICESBOOKSCHANNELCOMPENSATION Venture Capitalist at Redpoint Ventures HOW MUCH ARR CAN A CSM MANAGE? BY @TTUNGUZ How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment. WHAT IS THE STRUCTURE OF THE TYPICAL SAAS COMPANY AS IT The median startup with between 1-5M in ARR will have 12 engineers, 6 in sales and 3 in marketing. As the company grows and reaches 50-100M in ARR, the ratio of engineers to salespeople asymptotes to 1:1, down from 2:1. Meanwhile, the size of the marketing team increases only by 4X, compared to a 10X increase in sales and a 5X+ in engineering. THE 5 KEY PEOPLE IN A SAAS SALES PROCESS BY @TTUNGUZ Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people: The Proponent of the Sale champions the sales. THERE ARE ONLY 3 PRICING STRATEGIES FOR YOUR STARTUP BY Madhavan Ramanujam is a pricing expert. A partner at Simon-Kucher partners, the pre-eminent pricing consultancy, he argues in Monetizing Innovation that there are only three pricing strategies startups should pursue: Maximization, Penetration and Skimming. They prioritize revenue growth, market share and profit maximization differently. THE BIGGEST M&A MULTIPLE IN SOFTWARE HISTORY BY @TTUNGUZ The Biggest M&A Multiple in Software History. Cisco announced yesterday it would acquire AppDynamics for $3.7B. We’ve analyzed AppDynamic’s growth and key metrics, because the business had filed its S-1 to go public. However, the management team and board changed plans and made history. By my estimate, AppDynamics is the fifthlargest
THE 37% RULE: HOW TO DECIDE WHEN TO STOP WONDERING AND Earlier this year, I read Algorithms to Live By, a book that explains how to use insights from computer science in daily life. One of the rules is the 37% rule. It’s an important rule because it’s broadly applicable. But I had forgotten about it until I listened to the author on the Software Engineering Daily podcast. The 37% rule says that if you have a decision to make, you should spend THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these WHAT PERCENTAGE OF REVENUE SHOULD SAAS STARTUPS SPEND ON 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 HOW MUCH TO COMPENSATE SAAS SALES TEAMS FOR NEW SALES 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 THE PRODUCTIVITY IMPLICATIONS OF WORKING FROM HOME ACROSS Are we more productive at the office or at home? Researchers from the University of Chicago published data on the productivity trends across 150,000 employees of a large IT services company to answer that question. It’s the first time I’ve seen analysis on the same business through the period. The business had deployed software to monitor employee behavior before COVID and used it A SIX-STEP FRAMEWORK TO MAKE STRATEGIC DECISIONS BY @TTUNGUZ Any number of challenges can arise during a startup’s initial years. Some of these changes could be major and may require rethinking strategy. Competitors enter your target market. New products are released into your market which undercut yours. Customer acquisition costs rise dramatically. If faced with these questions, it’s hard to know where to begin or how to structure an analysis to THE 37% RULE: HOW TO DECIDE WHEN TO STOP WONDERING AND Earlier this year, I read Algorithms to Live By, a book that explains how to use insights from computer science in daily life. One of the rules is the 37% rule. It’s an important rule because it’s broadly applicable. But I had forgotten about it until I listened to the author on the Software Engineering Daily podcast. The 37% rule says that if you have a decision to make, you should spend THE THEORY AND DATA UNDERPINNING SALES COMMISSION PLANS BY Every startup’s sales commission plan is different. But it’s key to understand the theory and the benchmark data that governs the creation of sales commission plans to create a good one for your business. Before we begin, let’s define a few terms. Sales compensation is communicated in OTE, On Target Earnings. OTE has two parts: salary/draw and commission. Salary is the annual amount paid WHY REMOTE WORK CHANGES THE NATURE OF LEADERSHIP, AND THE Erica Brescia, the COO of Github, a company in which 70% of the workforce has worked remotely for a decade, wrote in the Economist about how remote working is different and better. There have been many perspectives shared on remote work, but Erica’s perspective adds an intriguing detail. Managers tasked with creating a culture of collaboration within a distributed team will find the profile HOW TO CREATE COMPETITIVE ADVANTAGE FOR YOUR STARTUP WITH 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 STARTUP BEST PRACTICES 27 Assume Anna is a key employee at a startup RedCircle which wants to keep her. Anna received a grant of 100,000 options on her start date. These options have a standard vesting schedule: a four-year vest with a one year cliff. This means the first 25,000 options vest after Anna has remained with the company for one year. SEVEN STRATEGIC RATIONALES FOR THE MICROSOFT/GITHUB Last week, Microsoft acquired Github for $7.5B. It’s a massive acquisition at a massive price relative to other software acquisitions. Why is Microsoft willing to pay so much? Developer identity. Identity has been critical to Microsoft success. Active Directory (AD) forms nexus of the Microsoft enterprise ecosystem. AD contains all the users, their roles, and their rights. THE MOST SUCCESSFUL SMB SAAS ACQUISITION CHANNEL EVER Channel distribution represents one of the biggest and most important changes in customers acquisition for SMB SaaS startups in quite a while. Historically, channel distribution has been reserved for the most expensive software and hardware. IBM, Intel, Cisco and their kin generate more than 80% of their revenues through a universe of resellers and distributors. STARTUP BEST PRACTICES 2 Startup Best Practices 2 - Startup Team Sizes. Posted on. 2013, Nov 20 3 mins read. At its core, a startup’s advantage in the market is the speed created by focus. When a team is well orchestrated, they can accomplish amazing things. Creating an environment that fosters communication best is therefore an essential part of startupmanagement.
TOMASZ TUNGUZ BY @TTUNGUZTOMASZ TUNGUZBENCHMARKSBEST PRACTICESBOOKSCHANNELCOMPENSATION Venture Capitalist at Redpoint Ventures WHAT IS THE STRUCTURE OF THE TYPICAL SAAS COMPANY AS IT The median startup with between 1-5M in ARR will have 12 engineers, 6 in sales and 3 in marketing. As the company grows and reaches 50-100M in ARR, the ratio of engineers to salespeople asymptotes to 1:1, down from 2:1. Meanwhile, the size of the marketing team increases only by 4X, compared to a 10X increase in sales and a 5X+ in engineering. FROM $800K TO $274M IN 4 YEARS 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 THE 5 KEY PEOPLE IN A SAAS SALES PROCESS BY @TTUNGUZ Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people: The Proponent of the Sale champions the sales. WHAT PERCENTAGE OF REVENUE SHOULD SAAS STARTUPS SPEND ON 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 HOW MUCH ARR CAN A CSM MANAGE? BY @TTUNGUZ How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment.FALSE COMPETITION
In the eleventh episode of Masters of Scale, Reid Hoffman interviews Peter Thiel. The episode revolves around the idea that to truly succeed, a startup must not beat the competition, but break free of competition entirely. The episode has many great points, but the one that stood out most to me is the idea of false competition. You could say that Coke and Pepsi compete very intensely, on the HOW TO CREATE COMPETITIVE ADVANTAGE FOR YOUR STARTUP WITH 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 THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these HOW MUCH TO COMPENSATE SAAS SALES TEAMS FOR NEW SALES 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 TOMASZ TUNGUZ BY @TTUNGUZTOMASZ TUNGUZBENCHMARKSBEST PRACTICESBOOKSCHANNELCOMPENSATION Venture Capitalist at Redpoint Ventures WHAT IS THE STRUCTURE OF THE TYPICAL SAAS COMPANY AS IT The median startup with between 1-5M in ARR will have 12 engineers, 6 in sales and 3 in marketing. As the company grows and reaches 50-100M in ARR, the ratio of engineers to salespeople asymptotes to 1:1, down from 2:1. Meanwhile, the size of the marketing team increases only by 4X, compared to a 10X increase in sales and a 5X+ in engineering. FROM $800K TO $274M IN 4 YEARS 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 THE 5 KEY PEOPLE IN A SAAS SALES PROCESS BY @TTUNGUZ Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people: The Proponent of the Sale champions the sales. WHAT PERCENTAGE OF REVENUE SHOULD SAAS STARTUPS SPEND ON 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 HOW MUCH ARR CAN A CSM MANAGE? BY @TTUNGUZ How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment.FALSE COMPETITION
In the eleventh episode of Masters of Scale, Reid Hoffman interviews Peter Thiel. The episode revolves around the idea that to truly succeed, a startup must not beat the competition, but break free of competition entirely. The episode has many great points, but the one that stood out most to me is the idea of false competition. You could say that Coke and Pepsi compete very intensely, on the HOW TO CREATE COMPETITIVE ADVANTAGE FOR YOUR STARTUP WITH 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 THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these HOW MUCH TO COMPENSATE SAAS SALES TEAMS FOR NEW SALES 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 THE PRODUCTIVITY IMPLICATIONS OF WORKING FROM HOME ACROSS Are we more productive at the office or at home? Researchers from the University of Chicago published data on the productivity trends across 150,000 employees of a large IT services company to answer that question. It’s the first time I’ve seen analysis on the same business through the period. The business had deployed software to monitor employee behavior before COVID and used it THE FIGURES THAT WILL MOVE THE VENTURE CAPITAL MARKET IN This weekend, Janet Yellen said the US economy would benefit from an increase in interest rates. The Fed has been struggling to combat historically low inflation. The combination of both the 25% increase in the money supply from last year’s stimulus plus the proposed infrastructure spending should trigger inflationary pressures. What does it mean for venture capital and Startupland? HOW TO ANALYZE YOUR STARTUP LIKE A VC IN 15 MINUTES OR When I first started in venture capital five years ago, I wanted to create a programmatic way to analyze companies well. My goal was to be able to step into a meeting with an entrepreneur with some kind of form that I would fill out throughout the meeting, so that by the end of the meeting I might have an understanding how the startup fits into its ecosystem. It took quite a while to devise THE 5 KEY PEOPLE IN A SAAS SALES PROCESS BY @TTUNGUZ Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people: The Proponent of the Sale champions the sales. THERE ARE ONLY 3 PRICING STRATEGIES FOR YOUR STARTUP BY Madhavan Ramanujam is a pricing expert. A partner at Simon-Kucher partners, the pre-eminent pricing consultancy, he argues in Monetizing Innovation that there are only three pricing strategies startups should pursue: Maximization, Penetration and Skimming. They prioritize revenue growth, market share and profit maximization differently. HOW TO CREATE COMPETITIVE ADVANTAGE FOR YOUR STARTUP WITH 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? BREAKING DOWN A TYPICAL VC/STARTUP DILIGENCE PROCESS BY After the first meeting. After a startup has left and I’m “doing diligence,” I want to test some of the assertions made by the company. Market Size Validation: The first thing is to verify market size and whether it foots with the data the company presented. Then, I try to dig deeper into the nuances of the market. How concentrated isthe
THE THREE FRAMEWORKS YOU NEED TO CREATE POWERFUL I remember many the great TED talks I’ve watched. Sir Ken Robinson’s ,“How Schools Kill Creativity” and the story of a little girl whose genius was unrecognized in school until she was allow do dance, and ultimately became a prima-ballerina, is simply unforgettable. In most of my meetings, I remember Amy Cuddy’s “Body Language” talk for a split-second. THE 7 QUESTIONS A STARTUP SHOULD ANSWER IN THEIR FUND The 7 Questions A Startup Should Answer in their Fund Raising Pitch. Some of our companies started financing processes in earlier this quarter. At a strategy session with one of our companies, the team and I crafted the outline of the pitch deck. They asked me what questions a venture investor might ask in the initial meeting. THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. TOMASZ TUNGUZ BY @TTUNGUZTOMASZ TUNGUZBENCHMARKSBEST PRACTICESBOOKSCHANNELCOMPENSATION Venture Capitalist at Redpoint Ventures HOW MUCH ARR CAN A CSM MANAGE? BY @TTUNGUZ How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment. WHAT IS THE STRUCTURE OF THE TYPICAL SAAS COMPANY AS IT The median startup with between 1-5M in ARR will have 12 engineers, 6 in sales and 3 in marketing. As the company grows and reaches 50-100M in ARR, the ratio of engineers to salespeople asymptotes to 1:1, down from 2:1. Meanwhile, the size of the marketing team increases only by 4X, compared to a 10X increase in sales and a 5X+ in engineering. THE 5 KEY PEOPLE IN A SAAS SALES PROCESS BY @TTUNGUZ Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people: The Proponent of the Sale champions the sales. THE 37% RULE: HOW TO DECIDE WHEN TO STOP WONDERING AND Earlier this year, I read Algorithms to Live By, a book that explains how to use insights from computer science in daily life. One of the rules is the 37% rule. It’s an important rule because it’s broadly applicable. But I had forgotten about it until I listened to the author on the Software Engineering Daily podcast. The 37% rule says that if you have a decision to make, you should spend ACTIVITY BASED PRICING Pricing is taxation. A pricing plan taxes some element of a product’s use. For a startup, choosing what to tax and how to tax it can be one of the most perplexing decisions because the tradeoffs between usage and revenue aren’t always clear. Activity based pricing or usage based pricing is one of the more common pricing plans in utility computing and software these days. THERE ARE ONLY 3 PRICING STRATEGIES FOR YOUR STARTUP BY Madhavan Ramanujam is a pricing expert. A partner at Simon-Kucher partners, the pre-eminent pricing consultancy, he argues in Monetizing Innovation that there are only three pricing strategies startups should pursue: Maximization, Penetration and Skimming. They prioritize revenue growth, market share and profit maximization differently. THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these WHAT PERCENTAGE OF REVENUE SHOULD SAAS STARTUPS SPEND ON 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 HOW MUCH TO COMPENSATE SAAS SALES TEAMS FOR NEW SALES 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 TOMASZ TUNGUZ BY @TTUNGUZTOMASZ TUNGUZBENCHMARKSBEST PRACTICESBOOKSCHANNELCOMPENSATION Venture Capitalist at Redpoint Ventures HOW MUCH ARR CAN A CSM MANAGE? BY @TTUNGUZ How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment. WHAT IS THE STRUCTURE OF THE TYPICAL SAAS COMPANY AS IT The median startup with between 1-5M in ARR will have 12 engineers, 6 in sales and 3 in marketing. As the company grows and reaches 50-100M in ARR, the ratio of engineers to salespeople asymptotes to 1:1, down from 2:1. Meanwhile, the size of the marketing team increases only by 4X, compared to a 10X increase in sales and a 5X+ in engineering. THE 5 KEY PEOPLE IN A SAAS SALES PROCESS BY @TTUNGUZ Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people: The Proponent of the Sale champions the sales. THE 37% RULE: HOW TO DECIDE WHEN TO STOP WONDERING AND Earlier this year, I read Algorithms to Live By, a book that explains how to use insights from computer science in daily life. One of the rules is the 37% rule. It’s an important rule because it’s broadly applicable. But I had forgotten about it until I listened to the author on the Software Engineering Daily podcast. The 37% rule says that if you have a decision to make, you should spend ACTIVITY BASED PRICING Pricing is taxation. A pricing plan taxes some element of a product’s use. For a startup, choosing what to tax and how to tax it can be one of the most perplexing decisions because the tradeoffs between usage and revenue aren’t always clear. Activity based pricing or usage based pricing is one of the more common pricing plans in utility computing and software these days. THERE ARE ONLY 3 PRICING STRATEGIES FOR YOUR STARTUP BY Madhavan Ramanujam is a pricing expert. A partner at Simon-Kucher partners, the pre-eminent pricing consultancy, he argues in Monetizing Innovation that there are only three pricing strategies startups should pursue: Maximization, Penetration and Skimming. They prioritize revenue growth, market share and profit maximization differently. THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these WHAT PERCENTAGE OF REVENUE SHOULD SAAS STARTUPS SPEND ON 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 HOW MUCH TO COMPENSATE SAAS SALES TEAMS FOR NEW SALES 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 FROM $800K TO $274M IN 4 YEARS 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 SEVEN STRATEGIC RATIONALES FOR THE MICROSOFT/GITHUB Last week, Microsoft acquired Github for $7.5B. It’s a massive acquisition at a massive price relative to other software acquisitions. Why is Microsoft willing to pay so much? Developer identity. Identity has been critical to Microsoft success. Active Directory (AD) forms nexus of the Microsoft enterprise ecosystem. AD contains all the users, their roles, and their rights. STARTUP BEST PRACTICES 8 -GETTING THE MOST FROM YOUR TEAM Startup Best Practices 8 -Getting the Most from Your Team By Preventing Burnout. Posted on. 2014, Sep 17 3 mins read. Startups are intense experiences. Driven by a burning passion to change some aspect of the world, startup teams push, push, push to grow as fast as possible. Without the right balance, though, teams burn out - aterrible outcome.
THE THEORY AND DATA UNDERPINNING SALES COMMISSION PLANS BY Every startup’s sales commission plan is different. But it’s key to understand the theory and the benchmark data that governs the creation of sales commission plans to create a good one for your business. Before we begin, let’s define a few terms. Sales compensation is communicated in OTE, On Target Earnings. OTE has two parts: salary/draw and commission. Salary is the annual amount paid HOW TO CREATE COMPETITIVE ADVANTAGE FOR YOUR STARTUP WITH 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?DATA LAKE ENGINES
In 2015, we partnered with two young founders to build Dremio. Tomer Shiran and Jacques Nadeau had just left MapR, and they came to work from our offices in Menlo Park. We shared a vision for a new way of working with data. Today, the company is announcing a $70M Series C to help them along that journey. More data is being stored in data lakes like Amazon S3 and Azure Data Lake Storage. BENCHMARKING HUBSPOT'S S-1 One of the best ways I’ve found to understand SaaS companies is to pore through their public filings. A few months ago, I analyzed Box’s S-1. In this post, we’ll look at HubSpot’s IPO filing and compare their journey to a public company with a basket of about 40 other publicly traded companies, in the hopes that this data will help other founders chart their path to IPO. STARTUP BEST PRACTICES 27 Assume Anna is a key employee at a startup RedCircle which wants to keep her. Anna received a grant of 100,000 options on her start date. These options have a standard vesting schedule: a four-year vest with a one year cliff. This means the first 25,000 options vest after Anna has remained with the company for one year. THE RATIO OF ENGINEERS TO SALES PEOPLE IN BILLION DOLLAR The average founding team tends to be 2 people, one of whom is an engineer. When a company is founded, the sales/marketing to engineer ratio is 1:1. After the first year, this ratio for the public SaaS companies increases to 2:1 (S&M:R&D) for the life of the company. This table above shows the data in a bit more detail including the samplesize
HOW MUCH SHOULD A SAAS STARTUP INVEST IN SALES & MARKETING How much should a SaaS startup invest in sales and marketing at different stages of the business? This is a very nuanced question, but benchmarks do provide some guidance for what is reasonable. Sales and marketing investment depends on many different factors including establishing product market fit, the business’s sales model (inside, field, freemium), and not least, cash balance and TOMASZ TUNGUZ BY @TTUNGUZTOMASZ TUNGUZBENCHMARKSBEST PRACTICESBOOKSCHANNELCOMPENSATION Venture Capitalist at Redpoint Ventures HOW MUCH ARR CAN A CSM MANAGE? BY @TTUNGUZ How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment. WHAT IS THE STRUCTURE OF THE TYPICAL SAAS COMPANY AS IT The median startup with between 1-5M in ARR will have 12 engineers, 6 in sales and 3 in marketing. As the company grows and reaches 50-100M in ARR, the ratio of engineers to salespeople asymptotes to 1:1, down from 2:1. Meanwhile, the size of the marketing team increases only by 4X, compared to a 10X increase in sales and a 5X+ in engineering. THE 5 KEY PEOPLE IN A SAAS SALES PROCESS BY @TTUNGUZ Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people: The Proponent of the Sale champions the sales. THE 37% RULE: HOW TO DECIDE WHEN TO STOP WONDERING AND Earlier this year, I read Algorithms to Live By, a book that explains how to use insights from computer science in daily life. One of the rules is the 37% rule. It’s an important rule because it’s broadly applicable. But I had forgotten about it until I listened to the author on the Software Engineering Daily podcast. The 37% rule says that if you have a decision to make, you should spend ACTIVITY BASED PRICING Pricing is taxation. A pricing plan taxes some element of a product’s use. For a startup, choosing what to tax and how to tax it can be one of the most perplexing decisions because the tradeoffs between usage and revenue aren’t always clear. Activity based pricing or usage based pricing is one of the more common pricing plans in utility computing and software these days. THERE ARE ONLY 3 PRICING STRATEGIES FOR YOUR STARTUP BY Madhavan Ramanujam is a pricing expert. A partner at Simon-Kucher partners, the pre-eminent pricing consultancy, he argues in Monetizing Innovation that there are only three pricing strategies startups should pursue: Maximization, Penetration and Skimming. They prioritize revenue growth, market share and profit maximization differently. THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these WHAT PERCENTAGE OF REVENUE SHOULD SAAS STARTUPS SPEND ON 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 HOW MUCH TO COMPENSATE SAAS SALES TEAMS FOR NEW SALES 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 TOMASZ TUNGUZ BY @TTUNGUZTOMASZ TUNGUZBENCHMARKSBEST PRACTICESBOOKSCHANNELCOMPENSATION Venture Capitalist at Redpoint Ventures HOW MUCH ARR CAN A CSM MANAGE? BY @TTUNGUZ How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment. WHAT IS THE STRUCTURE OF THE TYPICAL SAAS COMPANY AS IT The median startup with between 1-5M in ARR will have 12 engineers, 6 in sales and 3 in marketing. As the company grows and reaches 50-100M in ARR, the ratio of engineers to salespeople asymptotes to 1:1, down from 2:1. Meanwhile, the size of the marketing team increases only by 4X, compared to a 10X increase in sales and a 5X+ in engineering. THE 5 KEY PEOPLE IN A SAAS SALES PROCESS BY @TTUNGUZ Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people: The Proponent of the Sale champions the sales. THE 37% RULE: HOW TO DECIDE WHEN TO STOP WONDERING AND Earlier this year, I read Algorithms to Live By, a book that explains how to use insights from computer science in daily life. One of the rules is the 37% rule. It’s an important rule because it’s broadly applicable. But I had forgotten about it until I listened to the author on the Software Engineering Daily podcast. The 37% rule says that if you have a decision to make, you should spend ACTIVITY BASED PRICING Pricing is taxation. A pricing plan taxes some element of a product’s use. For a startup, choosing what to tax and how to tax it can be one of the most perplexing decisions because the tradeoffs between usage and revenue aren’t always clear. Activity based pricing or usage based pricing is one of the more common pricing plans in utility computing and software these days. THERE ARE ONLY 3 PRICING STRATEGIES FOR YOUR STARTUP BY Madhavan Ramanujam is a pricing expert. A partner at Simon-Kucher partners, the pre-eminent pricing consultancy, he argues in Monetizing Innovation that there are only three pricing strategies startups should pursue: Maximization, Penetration and Skimming. They prioritize revenue growth, market share and profit maximization differently. THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these WHAT PERCENTAGE OF REVENUE SHOULD SAAS STARTUPS SPEND ON 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 HOW MUCH TO COMPENSATE SAAS SALES TEAMS FOR NEW SALES 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 FROM $800K TO $274M IN 4 YEARS 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 SEVEN STRATEGIC RATIONALES FOR THE MICROSOFT/GITHUB Last week, Microsoft acquired Github for $7.5B. It’s a massive acquisition at a massive price relative to other software acquisitions. Why is Microsoft willing to pay so much? Developer identity. Identity has been critical to Microsoft success. Active Directory (AD) forms nexus of the Microsoft enterprise ecosystem. AD contains all the users, their roles, and their rights. STARTUP BEST PRACTICES 8 -GETTING THE MOST FROM YOUR TEAM Startup Best Practices 8 -Getting the Most from Your Team By Preventing Burnout. Posted on. 2014, Sep 17 3 mins read. Startups are intense experiences. Driven by a burning passion to change some aspect of the world, startup teams push, push, push to grow as fast as possible. Without the right balance, though, teams burn out - aterrible outcome.
THE THEORY AND DATA UNDERPINNING SALES COMMISSION PLANS BY Every startup’s sales commission plan is different. But it’s key to understand the theory and the benchmark data that governs the creation of sales commission plans to create a good one for your business. Before we begin, let’s define a few terms. Sales compensation is communicated in OTE, On Target Earnings. OTE has two parts: salary/draw and commission. Salary is the annual amount paid HOW TO CREATE COMPETITIVE ADVANTAGE FOR YOUR STARTUP WITH 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?DATA LAKE ENGINES
In 2015, we partnered with two young founders to build Dremio. Tomer Shiran and Jacques Nadeau had just left MapR, and they came to work from our offices in Menlo Park. We shared a vision for a new way of working with data. Today, the company is announcing a $70M Series C to help them along that journey. More data is being stored in data lakes like Amazon S3 and Azure Data Lake Storage. BENCHMARKING HUBSPOT'S S-1 One of the best ways I’ve found to understand SaaS companies is to pore through their public filings. A few months ago, I analyzed Box’s S-1. In this post, we’ll look at HubSpot’s IPO filing and compare their journey to a public company with a basket of about 40 other publicly traded companies, in the hopes that this data will help other founders chart their path to IPO. STARTUP BEST PRACTICES 27 Assume Anna is a key employee at a startup RedCircle which wants to keep her. Anna received a grant of 100,000 options on her start date. These options have a standard vesting schedule: a four-year vest with a one year cliff. This means the first 25,000 options vest after Anna has remained with the company for one year. THE RATIO OF ENGINEERS TO SALES PEOPLE IN BILLION DOLLAR The average founding team tends to be 2 people, one of whom is an engineer. When a company is founded, the sales/marketing to engineer ratio is 1:1. After the first year, this ratio for the public SaaS companies increases to 2:1 (S&M:R&D) for the life of the company. This table above shows the data in a bit more detail including the samplesize
HOW MUCH SHOULD A SAAS STARTUP INVEST IN SALES & MARKETING How much should a SaaS startup invest in sales and marketing at different stages of the business? This is a very nuanced question, but benchmarks do provide some guidance for what is reasonable. Sales and marketing investment depends on many different factors including establishing product market fit, the business’s sales model (inside, field, freemium), and not least, cash balance and TOMASZ TUNGUZ BY @TTUNGUZTOMASZ TUNGUZBENCHMARKSBEST PRACTICESBOOKSCHANNELCOMPENSATION Venture Capitalist at Redpoint Ventures HOW MUCH ARR CAN A CSM MANAGE? BY @TTUNGUZ How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment. WHAT IS THE STRUCTURE OF THE TYPICAL SAAS COMPANY AS IT The median startup with between 1-5M in ARR will have 12 engineers, 6 in sales and 3 in marketing. As the company grows and reaches 50-100M in ARR, the ratio of engineers to salespeople asymptotes to 1:1, down from 2:1. Meanwhile, the size of the marketing team increases only by 4X, compared to a 10X increase in sales and a 5X+ in engineering. THE 5 KEY PEOPLE IN A SAAS SALES PROCESS BY @TTUNGUZ Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people: The Proponent of the Sale champions the sales. THE 37% RULE: HOW TO DECIDE WHEN TO STOP WONDERING AND Earlier this year, I read Algorithms to Live By, a book that explains how to use insights from computer science in daily life. One of the rules is the 37% rule. It’s an important rule because it’s broadly applicable. But I had forgotten about it until I listened to the author on the Software Engineering Daily podcast. The 37% rule says that if you have a decision to make, you should spend ACTIVITY BASED PRICING Pricing is taxation. A pricing plan taxes some element of a product’s use. For a startup, choosing what to tax and how to tax it can be one of the most perplexing decisions because the tradeoffs between usage and revenue aren’t always clear. Activity based pricing or usage based pricing is one of the more common pricing plans in utility computing and software these days. THERE ARE ONLY 3 PRICING STRATEGIES FOR YOUR STARTUP BY Madhavan Ramanujam is a pricing expert. A partner at Simon-Kucher partners, the pre-eminent pricing consultancy, he argues in Monetizing Innovation that there are only three pricing strategies startups should pursue: Maximization, Penetration and Skimming. They prioritize revenue growth, market share and profit maximization differently. THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these WHAT PERCENTAGE OF REVENUE SHOULD SAAS STARTUPS SPEND ON 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 HOW MUCH TO COMPENSATE SAAS SALES TEAMS FOR NEW SALES 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 TOMASZ TUNGUZ BY @TTUNGUZTOMASZ TUNGUZBENCHMARKSBEST PRACTICESBOOKSCHANNELCOMPENSATION Venture Capitalist at Redpoint Ventures HOW MUCH ARR CAN A CSM MANAGE? BY @TTUNGUZ How much can a customer success manager manage? I’d heard the wisdom of $1-2M in ARR per year and around 80 accounts. But I hadn’t come across any data. Last summer, Gainsight posted the results of their survey on the topic. The truth is most CSMs manage between $2-5M in ARR and somewhere between 10-500 accounts. But it varies by segment. WHAT IS THE STRUCTURE OF THE TYPICAL SAAS COMPANY AS IT The median startup with between 1-5M in ARR will have 12 engineers, 6 in sales and 3 in marketing. As the company grows and reaches 50-100M in ARR, the ratio of engineers to salespeople asymptotes to 1:1, down from 2:1. Meanwhile, the size of the marketing team increases only by 4X, compared to a 10X increase in sales and a 5X+ in engineering. THE 5 KEY PEOPLE IN A SAAS SALES PROCESS BY @TTUNGUZ Whether implicitly or explicitly, it’s critical for a startup to map out accounts to understand the purchasing dynamics of a buyer. When sales teams start selling, their goal should be to create the sales playbook. The playbook all begins with understanding the key dynamics among the five players in the sales process. These are the five people: The Proponent of the Sale champions the sales. THE 37% RULE: HOW TO DECIDE WHEN TO STOP WONDERING AND Earlier this year, I read Algorithms to Live By, a book that explains how to use insights from computer science in daily life. One of the rules is the 37% rule. It’s an important rule because it’s broadly applicable. But I had forgotten about it until I listened to the author on the Software Engineering Daily podcast. The 37% rule says that if you have a decision to make, you should spend ACTIVITY BASED PRICING Pricing is taxation. A pricing plan taxes some element of a product’s use. For a startup, choosing what to tax and how to tax it can be one of the most perplexing decisions because the tradeoffs between usage and revenue aren’t always clear. Activity based pricing or usage based pricing is one of the more common pricing plans in utility computing and software these days. THERE ARE ONLY 3 PRICING STRATEGIES FOR YOUR STARTUP BY Madhavan Ramanujam is a pricing expert. A partner at Simon-Kucher partners, the pre-eminent pricing consultancy, he argues in Monetizing Innovation that there are only three pricing strategies startups should pursue: Maximization, Penetration and Skimming. They prioritize revenue growth, market share and profit maximization differently. THE 5 MARKETING CHANNELS OF GREAT SAAS COMPANIES BY @TTUNGUZ Leads are the lifeblood of every SaaS company. As a SaaS startup grows, the limiting factor of the business quickly becomes demand generation. Can the marketing team generate enough leads for the inside sales team to attain their monthly quota? The Marketing team’s mandate is to generate these leads in a cost-effective way and develop a portfolio of lead-generation mechanisms. Ideally, these WHAT PERCENTAGE OF REVENUE SHOULD SAAS STARTUPS SPEND ON 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 HOW MUCH TO COMPENSATE SAAS SALES TEAMS FOR NEW SALES 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 FROM $800K TO $274M IN 4 YEARS 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 SEVEN STRATEGIC RATIONALES FOR THE MICROSOFT/GITHUB Last week, Microsoft acquired Github for $7.5B. It’s a massive acquisition at a massive price relative to other software acquisitions. Why is Microsoft willing to pay so much? Developer identity. Identity has been critical to Microsoft success. Active Directory (AD) forms nexus of the Microsoft enterprise ecosystem. AD contains all the users, their roles, and their rights. STARTUP BEST PRACTICES 8 -GETTING THE MOST FROM YOUR TEAM Startup Best Practices 8 -Getting the Most from Your Team By Preventing Burnout. Posted on. 2014, Sep 17 3 mins read. Startups are intense experiences. Driven by a burning passion to change some aspect of the world, startup teams push, push, push to grow as fast as possible. Without the right balance, though, teams burn out - aterrible outcome.
THE THEORY AND DATA UNDERPINNING SALES COMMISSION PLANS BY Every startup’s sales commission plan is different. But it’s key to understand the theory and the benchmark data that governs the creation of sales commission plans to create a good one for your business. Before we begin, let’s define a few terms. Sales compensation is communicated in OTE, On Target Earnings. OTE has two parts: salary/draw and commission. Salary is the annual amount paid HOW TO CREATE COMPETITIVE ADVANTAGE FOR YOUR STARTUP WITH 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?DATA LAKE ENGINES
In 2015, we partnered with two young founders to build Dremio. Tomer Shiran and Jacques Nadeau had just left MapR, and they came to work from our offices in Menlo Park. We shared a vision for a new way of working with data. Today, the company is announcing a $70M Series C to help them along that journey. More data is being stored in data lakes like Amazon S3 and Azure Data Lake Storage. BENCHMARKING HUBSPOT'S S-1 One of the best ways I’ve found to understand SaaS companies is to pore through their public filings. A few months ago, I analyzed Box’s S-1. In this post, we’ll look at HubSpot’s IPO filing and compare their journey to a public company with a basket of about 40 other publicly traded companies, in the hopes that this data will help other founders chart their path to IPO. STARTUP BEST PRACTICES 27 Assume Anna is a key employee at a startup RedCircle which wants to keep her. Anna received a grant of 100,000 options on her start date. These options have a standard vesting schedule: a four-year vest with a one year cliff. This means the first 25,000 options vest after Anna has remained with the company for one year. THE RATIO OF ENGINEERS TO SALES PEOPLE IN BILLION DOLLAR The average founding team tends to be 2 people, one of whom is an engineer. When a company is founded, the sales/marketing to engineer ratio is 1:1. After the first year, this ratio for the public SaaS companies increases to 2:1 (S&M:R&D) for the life of the company. This table above shows the data in a bit more detail including the samplesize
HOW MUCH SHOULD A SAAS STARTUP INVEST IN SALES & MARKETING How much should a SaaS startup invest in sales and marketing at different stages of the business? This is a very nuanced question, but benchmarks do provide some guidance for what is reasonable. Sales and marketing investment depends on many different factors including establishing product market fit, the business’s sales model (inside, field, freemium), and not least, cash balance andSkip to content
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19 May / office-hours OFFICE HOURS WITH HOLLIE WEGMAN On June 3rd at 10 am, SaaS Office Hours will welcome Hollie Wegman, former CMO at Segment. Hollie has a wealth of experience as a marketer. She’s marketed many iconic companies including Salesforce, Mulesoft, and Envoy. During our conversation, we’ll talk about how to market technical products to developers, how to scale marketing teams, and how to develop the right portfolio of marketing approaches at every stage of the business. We’ll also answer questions from theaudience.
Read the postThis is a Standard Post18 May / books
THREE LITTLE PUZZLES ABOUT INFINITY Here are three little puzzles about infinity. Here’s a short blue line and a red line that is 3x longer than the blue line. Let me show you how there are just as many points in the blue line as there are in the red line. Let’s make a right triangle with the blue and red lines, and then draw a green line to connect them. I’ll draw a line connecting a point on the blue line to a point on the red line. Read the postThis is a Standard Post 13 May / trends / management HOW WOULD YOU MANAGE YOUR BUSINESS DIFFERENTLY IF SHELTER-IN-PLACE LASTED 18 MONTHS OR MORE? If the shelter-in-place order were to remain in place for another 12 months, how would you change the way you run your business? Over the past two months, CEOs and founders have managed the turbulence imposed by the coronavirus onto their companies. Most of the time, we’ve implemented short-term plans. This week, the first companies announced longer-term plans. Twitter empowered employees to work from home forever. Google and Facebook announced work-from-home plans throughthe end of 2020.
Read the postThis is a Standard Post 11 May / data analysis / financials WHY IS THE STOCK MARKET ONLY DOWN 15%? Why is the S&P index “only” down about 15%? Given all the economic turmoil, shouldn’t the index collapse? I was wondering this so I went to the source of all truth on the internet, Reddit. As I read the investing subreddit, I stumbled onto an explanation written by VPride1995 using a simple mental model that illuminated one potential answer. The discount dividend model states that the value of a stock is the discounted cash flow of all future dividends. Read the postThis is a Standard Post 06 May / trends / data analysis/ fundraising
THE FUNDRAISING MARKET HAS CHANGED, BUT NOT IN THE WAY I THOUGHT In March, I published analysis of the fundraising market in 2008. It showed that the later rounds, the series B and series C were the most impacted. The early data from March 2020 shows a different pattern. Seed and Series A rounds are first to bear the compression in the market. Later rounds are unblemished. Round volumes in seed have been declining since summer 2018. The same is true for Series A and SeriesB.
Read the postThis is a Standard Post05 May
REDPOINT 8 - OUR EIGHTH EARLY STAGE FUND Much has changed in the world since we announced our last early stage fund in 2018, especially in the last several months, as so much of our day-to-day lives have been reshaped by the coronavirus pandemic. We believe it’s more important than ever to back visionary founders, like the many we’ve had the privilege of working with as a firm so far. We’re both excited and grateful to have the opportunity to continue to partner with early stage entrepreneurs. Read the postThis is a Standard Post29 April / sales
BENCHMARKING SALES PROSPECTING VOLUMES, DEAL TERMS, AND MEETINGS INTHE CORONAVIRUS ERA
How do you benchmark a sales organization in a time like this? This is one of the questions that Jim Benton, CEO of Chorus.ai, answers every day in his Daily Briefings. Using data across 10m telephone calls, Jim highlights how the coronavirus is changing sales team performance. Here are some of the highlights from my reading. Cold calls are down 67%, while connect rates have fallen by about 10% sinceJanuary.
Read the postThis is a Standard Post26 April / trends
BULLWHIP AND BASE RATES - THE TWO MAJOR FORCES IMPACTING STARTUPS INQ2
A few weeks ago, I wrote What I Expect in the Next Few Months in Startupland, in which I mentioned two fundamental forces: Bullwhip Effect and Startup Growth Rates. We are seeing the impact on both in full force today. A quick refresher on the Bullwhip Effect: “The idea is that small changes in retail demand amplify into big swings up the supply chain.” A few readers asked for examples. Today, it’shard to dodge them.
Read the postThis is a Standard Post 22 April / startups / marketing/ strategy
NARRATIVE ECONOMICS AND THE POWER OF STORIES If I start a salacious tweetstorm that our local bank is running out of money, that rumor will circulate quickly. Eventually, the rumor will trigger a bank run. By tomorrow, the bank will face insolvency, even though it was business as usual at the bank this morning. This is the idea behind Narrative Economics. Robert Shiller wrote Narrative Economics, in which he explores how stories impact the economy. In particular, narratives stoked three depressions and recessions in the US in 1920, 1929, and 2008. Read the postThis is a Standard Post17 April / strategy
WHAT CUSTOMER DEMAND AND YOUR STARTUP BALANCE SHEETS IMPLY ABOUT YOURSTARTUP'S STRATEGY
Among the most useful frameworks I’ve found to manage a company in this era is the 2×2 matrix above. This matrix answers the question: what should the company’s stance be. It also raises the question: when should it change? One could argue times like these all good opportunities to adopt a defensive posture: focus on product, limit GTM hiring, and modulate burn. A million saved is a million raised. On the other hand, one could argue, now is a great time to press competitive advantage, win share, and emerge from this epoch strongerfor it.
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1 2 3 4 109 NextTOMASZ TUNGUZ
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Tomasz Tunguz
2019
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