reidhoffman.org

NOVEMBER 12, 2013

Friendster’s valuation set the tone for the entire social networking space. we had no revenue. As a result, we knew that our pitch would need to steer into investors’ biggest concern: the lack of revenue. We are the leader in the professional domain with viral growth. Investors see a lot of pitches. Why is it valuable?

Entrepreneur 111

Entrepreneur Revenue Viral Networking 111

www.forentrepreneurs.com

FEBRUARY 2, 2010

Business model viability, in the majority of startups, will come down to balancing two variables: Cost to Acquire Customers (CAC) The ability to monetize those customers, or LTV (which stands for Lifetime Value of a Customer) Successful web businesses have long understood these metrics as they have such an easy way to measure them.

Acquisition 103

Acquisition Cost Customer Entrepreneur 103

Agile VC

MAY 26, 2011

LinkedIn’s product had only been live for a couple months, we only had tens of thousands of registered users, and wouldn’t start generating revenue for more than a year after this point. round which closed in November 2003, and the pre-money valuation between $10 million and $15 million. It was a $4.7M link] leehower.

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

Both Sides of the Table

JULY 16, 2013

It goes like this, “If your next round investor can see how fast you’re scaling then you can raise money based on your user traction and your valuation can hit the sky. The minute you try to monetize now they have metrics with which to beat you up and say you’re business has limitations.” I see this weekly.

Burn Rate 412

Burn Rate Dilution Revenue Valuation 412

Cracking the Code

DECEMBER 1, 2009

Detailed SaaS Spreadsheet (Valuation and CAC benchmark). SaaS 13 Index Valuation. SaaS business metrics: why are they different? Popular Media: the key to viral marketing. S&M productivity (CAC ratio) for the SaaS 13 Index. Note: high CAC ratio means high productiviy (see blog post for definition). My Investments.

Software Review 48

Software Review Technical Review Cloud Europe 48

Reid Hoffman

MARCH 23, 2021

The metrics from the dashboard are the key inputs for collective decisions. You can always instrument your business and gather metrics, but that doesn’t mean the data you gather will be useful. Just track metrics that help you improve the product. The problem was that Groupon’s revenue growth was a false positive.

Venture Capital 46

Venture Capital Metrics Investment Bankers Framework 46

Cracking the Code

OCTOBER 9, 2009

This strong recovery has highlighted the resiliency of the recurring revenue model in a downturn as well as the stength of the shift to soaftware-as-a-service and cloud computing. In other words, how much of the decline in revenue growth is due to signing up fewer customer vs lower revenues from each new customer. anecdotes. (13).

Software Review 48

Software Review Technical Review Cloud Europe 48

Cracking the Code

MARCH 12, 2010

Given the predictability of SaaS GAAP revenues on a quarterly basis, the fact that the 08/09 projections were unchanged is not a surprise. Given that the revenues are not growing very fast, this means that most of the companies have reduced their sales force and focused on productivity improvement. SaaS 13 Index Valuation.

Software Review 63

Software Review Technical Review Cloud Forecast 63

Cracking the Code

NOVEMBER 13, 2008

The fact that SaaS valuations are being more affected by the downturn than the Nasdaq can be surprising given the supposed resiliency of the SaaS model (recurring revenues) but it translates the public investors belief that SMB software spend is going to be hit very hard by this recession. With this decline, the average EV/08 rev.

Software Review 48

Software Review Technical Review Valuation Portfolio 48

Cracking the Code

MARCH 10, 2008

I found this approach interesting, but it seems to me that gross margin is a more relevant benchmark than revenues, given that the GM of saas companies varies by type of application and size of the company (for example NetSuite went from about 50% GM three years ago to close to 70% today).

Sales 79

Sales Software Review Marketing Technical Review 79

betashop.com

OCTOBER 8, 2012

It has been awesome, flattering, and humbling to see that post went viral and has been seen by so many thousands of people — mainly aspiring entrepreneurs — and has been translated into many languages. Never, ever, choose your investors based on valuation. 10M post-money valuation = $100M target.

Technical Review 108

Technical Review Technology Software Review Valuation 108

Cracking the Code

NOVEMBER 10, 2009

It is intriguing to see the M&A dynamics in the space, highlighting the interest of tech companies for recurring revenue streams - even SAP announced in their analyst call earlier this month that they were moving from perpertual licenses to five year term licences. Detailed SaaS Spreadsheet (Valuation and CAC benchmark).

Software Review 48

Software Review Technical Review IPO Cloud 48

Cracking the Code

NOVEMBER 10, 2009

Cloud accounting is all about matching revenue and costs to consumption…well, except for professional services! SaaS companies use different metrics to calculate renewals. Detailed SaaS Spreadsheet (Valuation and CAC benchmark). SaaS 13 Index Valuation. SaaS business metrics: why are they different?

Software Review 48

Software Review Cloud Technical Review Sales Cycle 48

Cracking the Code

MAY 25, 2010

A few highlights from the different keynotes and speakers On top of Jason, we also had the chance of having many great speakers at the event and here are a few quotes and notes that I have taken during the different keynotes and panels: Joe Payne, CEO of Eloqua moderated the panel on Revenue Performance Management. SaaS 13 Index Valuation.

Software Review 74

Software Review Cloud IPO Jordan 74

Cracking the Code

OCTOBER 10, 2008

Be prepared to cross the desert - SaaS requires R&D and sales expense up front for a multi-year stream of revenue, so it demands enough investment capital to fund 4+ years of runway. Effectively measuring and understanding your CAC and CLTV metrics are key to future success. Great list! I particularly agree on points #2 and #4.

Software Review 48

Software Review North America Europe Metrics 48

Cracking the Code

JANUARY 22, 2009

For SaaS companies, we found that MRR is the best metric on which to base sales commissions. While it may make sense to offer very slight adjustments for favorable payment terms and one time revenue, net additions to MRR should dominate the sales rep’s thoughts. How do you clawback revenue from the sales guy? Cindy said.

Software Review 91

Software Review Clawback Sales Salary 91

Cracking the Code

FEBRUARY 25, 2008

As I was building the spreadsheet, I also included the revenue multiples for this set of companies, both for the trailing 12-month (TTM) and the forward 12-month (FTM). Detailed SaaS Spreadsheet (Valuation and CAC benchmark). SaaS 13 Index Valuation. SaaS business metrics: why are they different? My Investments.

Software Review 48

Software Review Technical Review Europe Venture Capital 48

View from Seed

JUNE 30, 2015

Over a third of our investments happen pre-product (so by definition, before PMF), and two-thirds are pre-revenue. For a marketplace or ecommerce business, you need to be doing well north of $5M in annual revenue or GMV to get an A round done. FWIW, at NextView, we invest from inception to strong PMF. We’re not at normal yet.

Seed Stage 120

Seed Stage Syndicate Syndication Dilution 120

Cracking the Code

SEPTEMBER 2, 2008

The Deutsche Bank report has a very interesting chart on the topic presenting the Free Cash Flow margins vs. the revenue growth four years post IPO for select software leaders: As you can see, with 20% Free Cash Flow margin and a 50% growth rate, Salesforce is well positioned in the pack! SaaS 13 Index Valuation. My Investments.

Software Review 48

Software Review Software Technical Review Cloud 48

Cracking the Code

FEBRUARY 4, 2008

T he response rate has been overwhelming and we ended up with 40+ companies and 80+ attendees, most of them CEOs and CxOs of leading public and private saas companies representing around 80% of the revenues of the SaaS industry in 2007. What metrics should I be using to drive a saas business? Whats the right strategy for Europe?

Software Review 48

Software Review South Korea IPO Portfolio 48

The Next Web

SEPTEMBER 29, 2013

You’re learning what the metrics that matter are, what your funnel looks like, and what actions you want your prospects to take. Clearly investors should promote the idea that startups need to have clear metrics for terminating the discovery mode. You need to nail your metrics to graduate discovery mode. What does that mean?

Metrics 136

Metrics Cofounder Cram Down Liquidity Event 136

Cracking the Code

DECEMBER 16, 2006

however, public SaaS companies like Concur, Saba, Taleo, LivePerson and Ultimate are growing 50-100% per year and trading at an average 5x trailing revenue multiples (I excluded salesforce leading the pack with 9x!) whereas traditional software companies of this size have a growth rate of less than 10% and revenue multiples of 2-2.5x.

Software Review 48

Software Review Silicon Valley Technical Review Software 48

Cracking the Code

JANUARY 28, 2008

Eloqua is bringing this revolution to the B2B marketers by providing on-demand applications and best-practice expertise for B2B marketers to execute, automate and measure effective marketing programs that drive revenue. Detailed SaaS Spreadsheet (Valuation and CAC benchmark). SaaS 13 Index Valuation. My Investments. anecdotes.

Software Review 48

Software Review Technical Review Los Angeles Europe 48

Duct Tape Marketing

DECEMBER 14, 2017

We’ve had over 20,000 people download that free tool that we built, and the key metric there is if somebody has used that free tool, their conversion rate on our paid product is three times higher than those who have not. It was a huge piece of the puzzle for us. That part of it was great. Fast forward a couple years.

Kansas City 40

Kansas City CTO Hire Las Vegas Software Developers 40

crowdSPRING Blog

MAY 8, 2015

What is the ideal size and make-up of a team for a pre-revenue SaaS startup? The Angel VC: Key Revenue Metrics for SaaS companies – buff.ly/1INSu29. Valuation As A Scorecard – buff.ly/1F0CUyC. Using PPC Marketing to Make Content Go Viral: Here’s How It Works crowdspring.co/1InOIwn. – buff.ly/1EY9ktL.

Small Business 48

Small Business Design Social Media Startup 48