Intro

Mostly Growth’s conversation with legendary SaaS operator and blogger Dave Kellogg digs into the shifting economics of software, why traditional ARR metrics are breaking down, and what actually drives buyer interest in today’s M&A landscape. Dave, CJ, and Kyle unpack the growing divide between “recurring,” “re-occurring,” and empirically recurring revenue, calling out how misreported ARR (from multiplying single months by 12, counting trials as customers, or ignoring opt-outs) is warping valuations. They explore why many $20–50M horizontal SaaS companies have become “zombies,” why vertical software and AI tuck-ins are still getting bought, and how investor preferences and preference stacks create brutal misalignments between founders, employees, and late-stage capital. The episode then shifts to real-world pricing psychology—from Instacart and DoorDash memberships to credit-card fee complexity and resort-fee opacity—before finishing with tools they’re using (PowerPoint’s charting, Wispr Flow) and Dave’s hard-won rules for scheduling etiquette after intros.

—

SPONSORS:

Metronome is real-time billing built for modern software companies. Metronome turns raw usage events into accurate invoices, gives customers bills they actually understand, and keeps finance, product, and engineering perfectly in sync. That’s why category-defining companies like OpenAI and Anthropic trust Metronome to power usage-based pricing and enterprise contracts at scale. Focus on your product — not your billing. Learn more and get started at https://www.metronome.com

Pulley is the cap table management platform built for CFOs and finance leaders who need reliable, audit-ready data and intuitive workflows, without the hidden fees or unreliable support. Switch in as little as 5 days and get 25% off your first year: https://pulley.com/mostlymetrics

—

LINKS: 

Mostly Metrics: https://www.mostlymetrics.com

CJ on LinkedIn: https://www.linkedin.com/in/cj-gustafson-13140948/

Growth Unhinged: https://www.growthunhinged.com/

Kyle on LinkedIn: https://www.linkedin.com/in/kyle-poyar/

Kellblog: https://kellblog.com/

Dave on LinkedIn: https://www.linkedin.com/in/kelloggdave/

Slacker Stuff: https://www.slackerstuff.com/

Ben on LinkedIn: https://www.linkedin.com/in/slackerstuff/

—

RELATED EPISODES:

The Staffing Ratios Salesforce Used, with Brett Queener of Bonfire VC

https://youtu.be/lJVgstAXjJs

OpenAI’s Impossible Math: $500B or Bust?

https://youtu.be/L6PLnvjcnpk

—

TIMESTAMPS:

00:00:00 Preview and Intro

00:01:21 Sponsors – Metronome & Pulley

00:03:48 Guest Intro – Dave Kellogg

00:04:18 Record Month Discussion

00:05:36 Who Will Buy All the SaaS Companies?

00:07:11 Investor Marks, Zombies & Misalignment

00:09:21 Horizontal SaaS Interest vs Transactions

00:10:32 M&A Narrative Violation & Carter Data

00:12:18 Big Tech’s AI Tuck-In Strategy

00:12:46 Vertical SaaS Positioning & Defensibility

00:14:16 Selling Durable Vertical SaaS Stories

00:17:09 “End of the ARR World” & Metric Breakdown

00:20:01 ARR Misreporting & Annualization Abuse

00:21:24 Snowflake’s “No ARR” Approach

00:22:11 Trials, Opt-Outs & Counting ARR Properly

00:23:11 CAR Abuse, Overstated Metrics & K-Ratio Failures

00:25:28 Empirical vs Contractual Recurring Revenue

00:27:18 Usage-Based Pricing, Stickiness & Investor Perception

00:28:42 Outcome-Based Models vs Revenue Classification

00:29:38 AI Valuations, Multiples & CFO Pain

00:30:00 Pricing in the Real World – Delivery Memberships

00:32:10 Membership Stickiness & 3-Sided Monetization

00:33:04 Costco as the Ultimate Subscription Business

00:34:18 Credit Card Fees, Lounge Promises & Coupon-Clipping

00:37:31 Resort Fees & Hidden Pricing Games

00:40:27 Something We Tried – PowerPoint & Wispr Flow

00:42:47 Scheduling Norms, Calendly Etiquette & Intro Protocol

00:46:24 Closing & Outro