Bookings vs. Billings in a SaaS Company
Financial analysts speak a lot about “billings” in a public SaaS companies, but in private VC-backed SaaS companies, you rarely hear discussion of this metric. In this post, we’ll use a model of a private SaaS company (where we know all the internal metrics), to show how financial analysts use rules of thumb to estimate […]
The SaaS Rule of 40
After the SaaSacre of early 2016, investors generally backed off a growth-at-all-costs mindset and started to value SaaS companies using an “appropriate” balance of growth and profitability. The question then became, what’s appropriate? The answer was: the rule of 40 [1]. What’s the rule of 40? Growth rate + profit should be greater than or […]
A Look at the Tintri S-1
Every now and then I take a dive into an S-1 to see what clears the current, ever-changing bar for going public. After a somewhat rocky IPO process, Tintri went public June 30 after cutting the IPO offering price and has traded flat thus far since then. Let’s read an excerpt from this Business Insider […]
How To Get Your Startup a Halo
How would you like your startup to win deals not only when you win a customer evaluation, but when you tie — and even sometimes when you lose? That sounds great. But is it even possible? Amazing, yes — but you need have a halo effect working to your advantage. What is a halo effect? Per […]
Thoughts on Jeff Weiner’s “Pay No Attention to the Stock” Message
From everything I’ve heard for a long time, Jeff Weiner is a wonderful guy and great CEO. In addition, LinkedIn is certainly a great company, so please don’t view this post as dissing either Jeff or the company. I will say, however, that I found media coverage of Jeff’s now famous all-hands speech after the […]
One More Time: What Drives SaaS Company Valuation? Growth!!
About two years ago, I did a post with a chart from JMP that showed the correlation between the value of a SaaS business and its growth rate. Today, I’m back with a chart from RBC [1] that shows things haven’t changed. The correlation here is pretty amazing. What’s even more amazing is that valuation […]
Why, as CEO, I Love Driver-Based Planning
While driver-based planning is a bit of an old buzzword (the first two Google hits date to 2009 and 2011 respectively), I am nevertheless a huge fan of driver-based planning not because the concept was sexy back in the day, but because it’s incredibly useful. In this post, I’ll explain why. When I talk to finance people, I tend […]
Unfortunately, SaaS Start-Up Valuations Are About To Fall by 50%
Depending on where you are in terms of stage, timing, and all the rest, you may or may not particularly care what is happening with the public markets. I know at EchoSign, once we hit cash-flow positive, I cared a bit less — after all, what did it matter what valuations were, when I didn’t […]
A Look at the Zendesk S-1 (IPO)
I thought I’d take a quick read of the Zendesk S-1 today, so here are my real-time notes on so doing. Before diving in, let me provide a quick pointer to David Cummings’ summary of the same. My notes: 40,000 customers in 140 countries 2012 revenues of $38.2M 2013 revenues of $72.0M, 88% growth 41% […]
Back to the Future: Are We in Another Tech Bubble?
I’ve read several blogs and articles over the last few weeks debating the current tech environment and comparing (or arguing why not to compare) today to 1999. I guess it’s not surprise that there’s concern over this topic though, considering the soaring valuations that some of the current crop of social start ups has garnered […]
