Weighing Growth vs. Profitability; First-time founder growing pains; How to show validation when you lack data...

September 17, 2021
Strategy

☁️ VCs look for immediate and extreme growth in their investments, so the profitability of the companies they work with is the least of their concerns. But striving for sky high growth can be costly, and not just in dollars. Dumping loads of capital into marketing makes it nearly impossible to identify your real cost to acquire customers (CAC), and if your CAC remains high over time, you run the risk of never being able to build a sustainable model. There are, however, some notable software businesses who have taken the road less traveled, achieving profitability while also growing to an impressive scale. Both profitable and high burn companies can generate great returns for investors, we would just argue that the profitable ones also create good outcomes for founders!

Strategy

🎼 Businesses’ software stacks are getting crowded. On average, companies have 37 different software vendors at one time, and we bet it’s even higher for SaaS companies. The question is, do all of these tools really improve workflow and productivity, or are we overloaded? OMERS Ventures thinks poor communications between tools is the biggest issue with our ever increasing software stack, and a new breed of data orchestration software, which help these products seamlessly integrate with other apps, is the likely solution. API-first players like Zapier, Plaid, and Stripe have already made significant progress in addressing the needs of SMB and mid-market companies, but public APIs and API solution providers have a ways to go, as they struggle to match the speed of smaller, agile businesses.

Strategy

🧻 Storytelling is one of the hardest tasks for first founders because they often don’t have the data or work experience to build their story. Liran Belenzon shared a great story of how he got creative when faced with that exact problem. He needed to raise a bit of capital when pursuing his first venture, but their product was not at a point where it would have won customers over, which they needed to get investors excited. To show traction, he had a freelance designer build a paper prototype which demonstrated how the fully built tool would function to customers. The idea on its own was enough to sign up 200 prospect for their MVP, which was instrumental in showing traction to investors in the fundraising process.

Strategy

🌠 Perhaps an unpopular opinion (with founders at least), but they rarely start out as good leaders. It’s no fault of their own, it just usually takes time for them to acclimate to the task of leading others while also getting their day to day needs accomplished. The curve can be steep – the atmosphere surrounding software is of course quick in nature and constantly evolving, so the time it takes to evolve into leadership is often not given to the founder. That said, startups which take a more moderate approach to growth typically allow time for founders to find their way and grow in leadership, opposed to fast growth companies where the founder has to learn quickly.

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 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 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 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 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!

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!

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!

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 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.

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.

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.