benchmarking your saas start-up with emergence capital, storm ventures, talkdesk, guidespark
DESCRIPTION
How well do I really need to do to go big? To be outlier? To be the Top 10% of SaaS companies? Or really ... just to survive and make it?TRANSCRIPT
Benchmarking SaaS Start-Ups: How Am I Doing?Really?Brian Jacobs
General Partner, Emergence Capital
@brian_emcap
Jason M. Lemkin
SaaStr; Managing Director, Storm Ventures
@jasonlk
Brian JacobsFounding Partner, Emergence Capital
Investors in Salesforce, Successfactors, Veeva, Yammer, Box, InsideView, ServiceMax, Bill.com, EchoSign, Hightail, Lithium, etc.
Jason M. LemkinSaaStr Founder Community – 1m Views/Mo
Managing Director, Storm Ventures
Founder/CEO – EchoSign/Adobe
Investors in MobileIron, Marketo, EchoSign, GuideSpark, Metacloud, Sandforce, etc.
Benchmarking – What We’ll Discuss
•The Journey
•The Numbers: The Good, The Bad and the Ugly
•Funding: Who Gets Funded, & Why
•The Live Case Studies:– Early-ish Stage: TalkDesk: $150K to $2.5m ARR in 12 mos.; the next phase– Growth Stage: GuideSpark $1.5-$20m in 24 Mos. (but it took a while to get there)
The JourneyWhat Matters – And What Doesn’t
• The Best SaaS Companies Get to $100m in 7-10 Years
• Outliers are rare: Workday, Salesforce, DropBox, but few others
• Pace to $100m:– Box: 7 Years– Hubspot: 8 Years– Marketo: 6 Years– Zendesk: 8 Years– MobileIron: 6 Years– Veeva: 5 Years ($1m+ ACV)– LinkedIn: 7 Years
The JourneyWhat Matters – And What Doesn’t
• But … Really Doesn’t Matter How Long it Takes You to Get to Initial Traction (first $1-$1.5m)
• Some get there in 1 Year. Some take 3+ Years (GuideSpark). It doesn’t matter – if you are committed.
• Key is Not to Burn Out Around Year 4-5
The JourneyWhat Matters – And What Doesn’t
• After Initial Traction, Growth Rate is Critical
• Then …
– Best SaaS Companies go $2-$10m ARR in 5 Quarters or Less (>=15% MoM); 20% Outlier
– Key is Momentum as pass $10m ARR (100%+ Growth Once Cross It)
While Most Attention is Focused on Latter Stage Growth of Public/Acquired SaaS Companies…
…Early Stage Growth is Arguably More Important
• How get to $10m … Average $10m to $100m in 4.7 Ys.
This is Why: You Need One 3x Yr, And Then >=2x Each Yr
Top SaaS Players Grew Quickly Pre-$10M in Revenue
Annual Revenue Growth Before Achieving $10M in Revenue
Mean: 291%
Min: 36%
Max: 983%
Target Range
Without Sacrificing Sales Efficiency
Average Sales Efficiency Before Achieving $10M in Revenue
Note: Sales Efficiency = Change in Yearly Revenues / Previous Year’s Sales and Marketing Spend
Mean: 164%
Min: 45%
Max: 512%
Target Range
Use to introduce a
demo, video, Q&A, etc.
The Live Case Studies: TalkDesk and GuideSparkPotential Outliers
Talkdesk: Getting to 20% MoM Growth – From NothingFrom Hackathon, to Product-Market Fit
• Talkdesk – Top Desk.com Partner
• Call/Contact Center in the Cloud
• History:– Started off winning Twillio & SFDC hackathons– Then productized– Then monetized– Hit Initial Traction ($1.5m) 16 mos. After Launch –
with increased velocity (20%)– On pace grow $1m to $10m in < magic 5 quarters
Talkdesk: Getting to 20% MoM Growth – From NothingFrom Hackathon, to Product-Market Fit
• Q&A
• Keys to igniting growth:– Partners and integrations (takes time)– Driving ACV and deal sizes up (to six figures)– Upgrades key: < 20% of target ACV bought upfront
today– Understanding how do true enterprise-grade
implemenations --- even for SMBs :)– Pricing for value– Lead growth > Revenue Growth = VPS + Raise $$$
Talkdesk: Getting to 20% MoM Growth Post-InitialFrom Hackathon to Product-Market Fit to Outlier
• Brian Jacobs:
• Would you do the Series A?
• Is It In the Ballpark vs. Other SaaS Investments?
• Why or Why Not?
Case Study #2: Guidespark: 5 Years to OutlierThree+ Tough Years to Initial Scale. Then – Acceleration.
• GuideSpark: Employee Communications in the Cloud – Instead of In-Person
• History:– Started off as more generic e-learning platform– Struggled for product-market fit until found one core
use case, and one core enterprise customer– Doubled down on (x) enterprise + (y) employee
communications– Hired their Great VP of Sales at ~$1.5m ARR – once
real business model proven and first enterprise customers closed
GuideSpark: Outlier Growth Post-Initial ScaleA Long Journey to The Top
• Brian Jacobs:
• Would you do the Series C?
• Why or Why Not?
Come To Dreamforce to See the Rest!Wed Oct 15th! @ 1pmhttp://bit.ly/saastrdf