4min chapter

This Week in Startups cover image

SaaS multiple compression, downturn outlook & advice for new VCs with Jason Lemkin of SaaStr | E1461

This Week in Startups

CHAPTER

How to Determine Quality of Revenue

If your gross margins are below 70, you're not really software. And if it costs you $5 to get a dollar worth of ARR, and it takes you four or five, six, seven years to make that money back, that's not a great business. We saw crazy things happen in Fintech where companies would come in with 50% margins because 20 to 30% of that would go to telephony. I mean, everyone carried into like 2018. Maybe we went insane on quality of revenue. It may be how long your rough weight's going to last but we're back to caring about quality Revenue.

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