📕 Jumping on VC Treadmill; Q2 2021 Private SaaS Company Multiples; How to Steal talent from Big Tech

July 30, 2021
The SaaS Playbook
Strategy

🏃 People often refer to raising venture capital as “jumping on the VC treadmill” because once you get on it, it’s very hard to get off. Astronomical growth targets require founders to spend all of the funds they raise quickly, putting them in an all out sprint to gain traction so they can raise their next round. David Sacks’ recent post on venture backed SaaS Org Charts gives a flavor of just how fast these companies need to scale their teams to have a shot at hitting those growth goals, explaining that Series A startups typically have at least 1m in ARR with roughly 40-50 employees, while Series B companies are looking to have at least 5m in ARR and 100-125 employees. That massive jump in headcount puts businesses in a scary position, because if they don’t raise that next round, there are significant cuts required to reach profitability, and ultimately, survive.

Strategy

📈 Public SaaS company multiples continued to roar in Q2 2021 (at the lower end you are seeing 4-5x revenue multiples for ~10% annual growers, which feels beyond generous!), but the question we are all wondering is what impact that has on the private sector. SaaS Capital’s data shows that while there has been an uptick in private company multiples, the premiums are being mostly seen in growth stage businesses who are up ~50%+ year over year. Our thought: buyers are likely looking for more growth from small startups than the bigger players because they just don’t have the scale (and stability) of public entities, which presents more risk.


Strategy

🏆 For pre-revenue startups, your initial outbound strategy is used to get product feedback rather than actually close deals – you have to make sure potential customers are actually picking up what you're putting down before executing on your initial thesis. Liam Mulcah (Director of Sales @ Unusual Ventures) has an unconventional way of segmenting potential customers, breaking them down into 3 buckets (startups, challengers, and champions) which can help you understand what they are prioritizing at their current stage, and hopefully enable you to better sell to them. He includes an example of a 14 day, 7 touchpoint outreach sequence which some of their companies have used for both LinkedIn and Email, as well as a sales outreach calculator so you can play with levers to see what sort of metrics you need to hit your goals.

Strategy

🧛 When trying to hire top talent, it’s very unlikely that you are going to be able to outpay the likes of Facebook, Amazon, Google etc.. But that doesn’t mean you can’t steal some all stars from the jaws of FAANG, it just means that you need to be more creative on how you present the opportunity to work at your startup. The area which big tech companies will never be able to compete with more agile startups is impact – rather being a cog in a massive machine, they can be on the ground floor of building a team where their footprint will be seen. Of course, that pitch will fall short on those who are looking for a more stable option and big company perks. But, if done right, it should at least make them think twice...

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Previous Weekly Playbooks

April 9, 2021
📕 The Guide to Building a Sellable Product; First-Time CMO Mistakes; Call or Email?...

There have never been more software companies than there are today, yet there’s an asymmetry between the rising interest in SaaS and the availability of private SaaS company data. This study from Andre Retterath took a look at the top startup databases to see which provided the most extensive and accurate data. Tl;dr: if you are an operator looking for general info like company location, leadership and light funding history, Crunchbase is the best bang for your buck. If more detailed funding history and competitive analysis is a must (and you can afford the starting rate of 18k/year), then Pitchbook is probably your best bet.

April 2, 2021
📕 What B2B SaaS can learn from NFTs; No-code no-joke; Why Google is seeing more “0 click searches”...

There’s still time for others to catch up, but our early leader for the 2021 SaaS buzzword of the year is no/low code. Jokes aside we are totally on board with the hype, tools that enable non-engineers to build play a huge role in the democratization of software development, opening up the door for almost anyone with a computer to become a creator. The linked post from Pietro Invernizzi (Stride VC) categorizes no/low code tools into the primary categories we see today, and rightfully shares the love with some of the smaller players out there not named Zapier.

March 26, 2021
📕 Gong’s most effective marketing channel; Why referral = better retention; A holistic B2B SaaS marketing guide

We’re still not over Stripe’s 95b valuation, partially because they haven’t shared much on the metrics which got them there. TechCrunch’s Alex Wilhelm looked at previous Stripe data to suss out why they could be worth the 95b label, coming to the conclusion that if Stripe processed $400b in 2020 (they were quoted as processing “hundreds of billions last year”), you can apply their ~3% fee to come to get to a $12b run rate, or 7.9x multiple on revenue. Even if we assume half that amount of payments, it would equate to a $6b run rate and 15.8x multiple, far lower than the public market multiples they will likely receive at IPO. This is all to say, 95b might not be too crazy after all.

March 19, 2021
📕 Dissecting investment memos; Moving on from the Metric Monolith; How to make ideas sticky...

Happy Friday mis amigos. We’d be remiss not to mention Stripe’s historic week, in which they raised 600m at a gasping $95b valuation. While the number is staggering, what’s most impressive is how they got there – the business has only 3,000 staff today, ⅓ as many as Facebook did when they IPO’d at a similar valuation, allowing them to be highly capital efficient relative to their unicorn peers. Funds will supposedly be spent on EU expansion, which could mean more acquisitions… It's a good day to be a European payment platform!

March 5, 2021
📕 Why it’s time to retire the MQL; Board meetings for beginners; Expert outbound sales sequences...

Welcome to the end of the week. We’ve got some big news, as we’ve just launched a brand new website featuring a SaaS Playbook library! Now if you’re looking for great B2B SaaS content in a specific area, you can filter through our historical playbook features by topic to quickly find the best of the best. Historical features are being added as we speak so you should have access to the full library soon... excited to see what you think!

February 26, 2021
📕 The weighted Rule of 40; Navigating SaaS loan interest rates; F#ck Content Marketing

Happy Friday everyone. The job market has been slower than usual for obvious reasons, but we do have some open roles here at Scaleworks which we’re looking to fill. Namely, we’re searching for a Corporate Development Associate to help us find great products to invest in and awesome B2B SaaS content to share with you all. Give us a shout if you think you or anyone in your network might be a fit… Referral fees included!

February 19, 2021
📕 Get smart with sales intelligence; Hubspot hits $1B; Simple email marketing optimizations...

Morning folks, hope all our readers facing these winter storms are staying warm and safe right now. We’ll get to the newsletter shortly, but first we’d like to highlight a few organizations which are working to support Texans in need right now. There are links with information on how you can donate or help if you’re interested. 

  1. Feeding Texas 
  2. Crowdsource Rescue
  3. The Salvation Army
January 15, 2021
📕 Pricing as a growth lever; 10x approach to content marketing; How to scale customer segments...

Two weeks into the year is a bit early to identify any real 2021 SaaS trends, but that doesn’t mean we can’t take out our crystal ball and at least try. Onetool CEO Gordian Braun thinks the increasing number of SaaS tools will create chaos for end-users – more options and new, super niche verticals could result in overlapping features for products in different categories, making buying decisions more difficult. No-code tools (like Notion and Airtable) and workflow automation tools should also be on the rise as both are “simplifiers” that address the issue of having too many tools to handle. Let’s see how his predictions shake out...

January 22, 2021
📕 Customer-Led growth FTW; Breaking a billion; Solving product problems…

It seems like every year, there’s a debate on if Silicon Valley is the best place to launch your startup. In 2020, this conversation picked up even more steam because, well, we don’t need to get back into those details. We recently stumbled across this LinkedIn thread that gives some great arguments for both sides of the table. We’ve always been partial to building new tech ecosystems outside the Valley, but would love to hear what you think.

Alright, now for this week’s Playbook!

January 29, 2021
📕 How to measure your Power User Curve; Solving product backlogs; The Chief Customer Officer 2.0...

Howdy folks, and welcome to the end of the week! Today’s playbook takes a focus on customer-centric strategies, from unique methods to measure user engagement, to the best ways to gather and prioritize customer feedback. We also managed to wrap in not one, but two corny car analogies. Please forgive us, it’s the end of the month and we’re behind quota.

Have a great weekend.

January 8, 2021
📕 Amplifying content via thought leaders; The Adjacent Customer; “Obviously awesome” product positioning…

Happy Friday folks. We can’t be the only ones a bit behind on our 2021 business planning, so we thought you all might get some use out of this template from our very own Ed Byrne, which will help you review last year’s progress and set thoughtful 2021 goals. It’s a roughly two-day process that requires some buy-in from your team and serious self-awareness... let us know what you think!

November 20, 2020
📕 The rise of the pod people; Self-caring your way to effective leadership; Simplifying revenue attribution...

Tech startup culture is known for two things: brooding dev teams and amazing office snacks. Kidding (sort of). What’s actually at the heart of startup culture is breaking down norms and creating new solutions to perennial problems.

Speaking of problem-solving – we’ve got some great content this week on solving the internal struggles most startups face, from team structure to leadership burnout and revenue attribution.

November 27, 2020
📕 SaaS Black Friday deals; How Typeform built an A+ brand, Why you shouldn’t “just ship it”…

Good morning to those just waking up from a turkey coma, it’s time for your weekly serving of SaaS news. And, because we love a good deal, we suggest you check out the B2B SaaS blog’s 2020 Black Friday deal list. We know everyone is in 2021 planning mode, so hopefully, the ~200 discounted SaaS deals save you some dollars.

Enjoy the rest of the holiday weekend.

December 4, 2020
📕 Avoiding the SaaS Valley of Death; Hiring “scrappers”; How to become a trusted advisor...

With the new year on the horizon it’s time to start thinking about that 2021 hiring plan. It’s hard not to focus on a candidate’s resume when making hiring decisions, but remember, an impressive resume doesn’t tell the whole story. More companies are foregoing those with “expert credentials” in favor of teachable hires who are willing to take risks. An openness to risk is especially important to surviving in B2B SaaS, so our advice is to always look for scrappers.

December 11, 2020
📕 Flywheels over funnels; How to measure SaaS operating leverage; Nailing your value prop...

In just 5 years, The Morning Brew has emerged as one of the GOAT newsletters. Their growth to stardom is in large part thanks to their referral marketing mastery – 30% of their 2.5m million subscribers came through the channel. We aren’t saying that a referral program will work quite as well for your B2B SaaS product (newsletters charge time, SaaS products charge money) but if it can work even just 1/10th as well, it could be worth testing...

December 18, 2020
📕 Avoiding measurability bias; The Shape-Up method; The power of Pre-Suasion...

Happy Friday folks. This is our last Playbook before Christmas, so we’ll wish you an early happy holidays now! It’s been an eventful year to say the least, here’s to hoping 2021 brings brighter days (we’re optimistic). Cheers!

January 1, 2021
📕 Your intro to cognitive marketing; A SaaS growth simulator; Boosting retention with intent data...

Happy New Year folks! Can’t believe we actually made it to 2021, we hope you have a great start to the year. We’ve been working on some of our new year’s resolutions and have a couple nailed down: to better understand our customers and thoroughly testing our acquisition channels. We’re touching on both (plus more) today, hope you enjoy!