Metrics that Measure Up

Michael DiFilippo, Chief Financial Officer at Invoca shares his journey to becoming a B2B SaaS CFO and how the role has evolved over the last ten years, During this episode of the Metrics that Measure Up podcast, Michael and I discussed the following items:How the B2B SaaS CFO role has evolved over the last few yearsHow Michael uses Performance Metrics to manage the businessHow the B2B SaaS CFO role will evolve over the next few yearsMichael started his journey to becoming a SaaS CFO in accounting, treasury, internal audit, and ultimately FP&A roles in the industry goods and then consumer food industry. In 2008, Michael secured his first CFO role in a B2B SaaS company with MuleSoft - ultimately acquired by Salesforce. This cross-functional foundation was so valuable to Michael that he continues to try and provide members in his organization the same opportunities.Michael credits DuPont with his broad orientation to finance through their rotational program, and ultimately he landed in a division producing LED screens. Then, when his former boss went to Symbol Technologies, he was recruited to join him and that was the start of his finance experience in a technology company.We pivoted to how the B2B SaaS role has evolved since Michael first became a SaaS CFO in 2008. First, he has seen the role evolve to a more strategic, growth partner in an advisory role to the executive team, and sees the same "strategic" focus of CFOs from executive recruiters. Michael says part of the evolution to a strategic CFO role is partially based upon his base of experience, and being invited into those discussions. In parallel, Michael has seen the scope of the CFO role expand into including other functions like Legal, Human Resources, IT, and even operations in some companies. Bottom line - the modern SaaS CFO is no longer primarily focused on the accounting side of the equation.Another key focus is how Finance ensures they have access to all of the operational data required to have better insights into how the business, especially the leading indicators is performing. At Invoca, The FP&A team is the primary liaison to the Sales operations team to ensure the data from the CRM system is flowing efficiently into the financial reporting process.Michael next focused on the primary measurements and metrics he uses to help manage the operational side of the business, its primary forward-looking metrics like pipeline performance trends, Sales Development meetings, and top opportunities trending. As Michael said, ARR growth is the #1 metric using a metaphor of book more and churn less!At the board level, the operational metrics include top-level metrics including Rule of 40, Gross Retention, Net Revenue Retention, Total Sales and Marketing Efficiency, CAC Payback Period, Actual versus Plan, New ARR booked, and New Customers which will then expand into the leading indicator trends that will impact those outcome metrics in the future quarter(s).Michael shared his vision for the future evolution of the B2B SaaS CFO which he agreed with our host will become one of the more common paths for Chief Executive Officers in the future!If you are in Finance and/or have a goal to become a B2B SaaS CFO - this conversation with Michael DiFilippo is a must listen!!!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Aidan Shaw, founded Myst Marketing to help B2C and B2B companies take advantage of the global pool of SEO resources around the world, while also experiencing the life of a digital nomad while building a great virtual company.During this episode, Aidan dives deep into the below SEO topics relevant today and in the future as Search Engines evolve in age of generative AI.The ROI of SEO: "Many businesses are divided over the tangible benefits of investing in SEO. Can you shed some light on the potential return on investment (ROI) for businesses that prioritize SEO, and provide some success stories or case studies that highlight its impact?"SEO vs. Paid Advertising: "There's always been a debate between the organic reach through SEO and the instant visibility offered by paid advertising. Can you discuss the pros and cons of each and why a business might choose to focus on one over the other, or perhaps a blend of both?"The Role of Content in SEO: "Content is often said to be king when it comes to SEO. How has the role of content in SEO strategies evolved over time, and what are the best practices businesses should consider when developing content with SEO in mind?"Future of SEO: "With advancements in technology, changing algorithms, and the rise of voice search and AI, where do you see the future of SEO heading? What should businesses be preparing for in the next 5-10 years to ensure they remain at the top of search resultContent Creation and AI: "There's a buzz about AI-generated content in the digital marketing space. How effective is AI-generated content for SEO, and what are the ethical considerations around using such content?"Challenges with AI in SEO: "While AI presents numerous opportunities in the SEO realm, what are some potential challenges or pitfalls businesses should be aware of?"See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

CJ Gustafson, CFO at PartsTech and the creator of the Mostly Metrics Newsletter and Run the Numbers podcast joins our host Ray Rike on this episode to discussVanity Metrics and why they are so dangerousSaaS Metrics that might not be that valuableCautions when using a Usage-Based Pricing modelThe motivation of being a social media creator for B2B SaaSThe challenges of being a social media creatorCJ and Ray share several interesting insights and sole disclosing perspectives on the opportunities and challenges of creating content on all things SaaS MetricsSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Eric Mersch is the author of "Hacking SaaS" and a partner at FLG Partners. Eric joined our host, Ray Rike to discuss the details behind the thought process of writing the book and why he segmented it into discrete sections and chapters based upon the following:SMB to Mid-Market B2BEnterprise B2BB2CVertical Industry SolutionsHorizontal SolutionsDuring this episode, Eric and Ray will dive into several of the B2B SaaS Metrics that Eric wrote about including:Customer Lifetime Value to CAC (CLTV:CAC Ratio)Net Revenue Retention (aka Dollar Based Net Retention in the book)Gross Churn (aka Gross Revenue Retention - GRR)Contribution Margin - why it's important to understand the value of adding more ARR...at a costHacking SaaS is one of the first books written to share the details behind the majority of metrics that make the recurring revenue business model of SaaS and Cloud companies so attractive that Enterprise Values are measured as a multiple of revenues VS profits.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Caleb Avery, Founder and CEO at Tilled shares how B2B SaaS companies can turn credit card payment processing fees from an operating expense into revenue as a Payment Facilitator (PayFac).See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Bill Kantor, the founder, and CEO of Funnelcast is applying the lessons he learned about statistical process controls in the hardware industry to the art and science of measuring and managing the opportunity funnel and then optimizing forecasting for B2B technology companies.The end-to-end Customer Acquisition process is still quite manual today, due to B2B Sales being such a human-centric endeavor. However, with a sufficient amount of opportunity data, the science behind statistical process controls in the manufacturing and consumer-facing industries is now available to B2B revenue leaders.But why are we will still using manual tasks to manage the B2B opportunity funnel? It starts with companies and their leaders not investing the time required to take a more data-centric, holistic view of even the most basic metrics - such as win rate. Yes, the win rate which is NOT a point-in-time measurement, rather it is a curve that includes different win rates along the time continuum being measured. As an example, the win rate on Day 75 is NOT the same as the win rate on Day 120. Moreover, if you simply use total deals won / total deals closed to calculate the win rate it excludes all of those opportunities that are still open and in process.What are the TOP metrics that are most predictive of a B2B company's sales success? Bill suggests there are only 3 sales metrics that matter, which include:Win RateOpportunity Creation RateAverage Contract ValueBut what about the more detailed, nuanced measurements such as "stage by stage" conversion rates which provides additional signals as to whether a deal is at risk of becoming "stale" and thus the probability to win reduces materially? They are critical to increasing the accuracy of forecasting - as those deals that are stalled are highly correlated to sales rep storytelling and the "exception status" of a single deal becoming the "outlier" reason for multiple deals - effectively eliminating the category of outlier to the norm.If you are responsible for managing the new customer acquisition forecast, and/or are responsible for financial performance metrics that are a direct result of win rates, opportunity creation and thus hitting the forecast and the plan - this is a highly instructive episode.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Alok Goel, Founder and CEO of Drivetrain.ai shares how his roles as a product manager at Google and then a Venture Capitalist informed his journey as a B2B SaaS entrepreneur.As a VC, Alok would meet 15 - 20 companies per week, which provides a unique opportunity to identify specific trends across a large number of companies using pattern recognition. One trend Alok identified, was what differentiated those companies that would consistently, quarter over quarter meet and exceed their stated financial goals from those that missed their financial goals? It was the pursuit to answer this question that lead to Alok's founding of Drivetrain.aiThe first question Alok answered was what were his experiences as a product manager at Google that informed his entrepreneurial journey. Google encouraged product managers to determine the best solution for a user without any constraints - which leads to the best solution for the audience. Then, think about how to deliver the solution with the constraints that do exist, both inside the company and in the market.Next, Alok shared the importance for a company to identify the data they have internally to gain insights into future growth efficiency, they should first identify what insights they wished they had about their business and then identify what instrumentation is required to achieve those insights.Alok shared the importance of never being too committed to one "way of thinking" that is not in alignment with the insights they are being provided from the market, from the internal metrics and data that is highlighting change is needed. In today's world, the external reality is changing so quickly, a company must change before the competitive market takes advantage of its resistance to change and evolution.Understanding that the insights you gain today are not going to change your business today - it will take some time. This is why having a continuous process that surfaces insights that can be quickly converted into actions that can be measured on their impact over time - this is why it is so important to understand the leading indicators (signals) and lagging indicators that are inter-dependant and predictive of future outcomes!If you are interested in how to develop a more predictive, holistic process that can capture the most important signals (leading indicators) that can be improved to ensure the ultimate lagging indicators such as Net Revenue Retention, CAC Payback Period and Revenue Growth rates are highly predictive and achieved consistently - this conversation with Alok Goel is a great listen!!!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Peter Walker, Head of Insights at Carta the industry-leading Equity Management Platform shares equity valuation insights and data from the 36,000+ customers and $2.5T in equity value running on their platform. Peter's goal is to make the data Carta has in their platform useful for CEOs and CFOs to inform decision-making.Start-up valuations trends increased dramatically in the 2020 - early 2022 timeframe - creating a valuation bubble. A few highlights from Peter included:Seed Stage:Q1-23: $13M pre-money (median)Q2-23: $12.7M pre-money (median)Series A: Q1-23: $40M pre-money (median)Q2-23: $39M pre-money (median)Series C: Q1-23:$300M pre-money (median)Q2-23 $250M pre-money (median)The ~ 20% decrease in pre-money valuations for Series C companies highlights the lack of a short-term IPO exit option and begins to normalize back to more historic valuations.Overall VC investment trends also highlight a material decrease in the amount of Venture Capital investments being made:Q4-21: $66B investment recorded on Carta (all-time high)Q1-23: $10B investment recorded on CartaQ2-23: $10B investment recorded on Carta - estimate onlyPeter highlighted the "SAFE" market held up better than most other price equity markets. Specifically, SAFE's over $500,000 were priced fairly equivalent to price equity seed rounds. Because of the ease of use of a SAFE, it has become the most common fundraising vehicle for pre-seed and seed rounds.Peter also highlighted that AI is a "hot space" for investors. The median cash raised for an AI company was $13M versus $8M for non AI companies in Q2-23.Next during the conversation, we discussed the trends on staffing and operating expense trends. Carta tracks terminations and the trends are quite insightful:January was the highest month for lay-offs ever for companies on Carta, numbering 17,000 lay-offs representing about 2% for the month (24% annualized) versus the norm of .5% - 1% per month. This number was reduced to 10,000 lay-offs in May. The other insight is that people are not leaving for voluntary termination reasons - highlighting the desire to not switch jobs in this market.One other topic we discussed was the compensation trends in early-stage companies. The rapid increases in salaries experienced in 2020 through the first half of 2022 have changed dramatically. Even software engineering roles saw a -.3% decrease over the past 6+ months, which is not material, but much different than the 10%+ increases experienced in 2020 - 2021. Sales were the most impacted function as measured by compensation decreases, followed closely by recruiter compensation.We also discussed the emerging trend of "down-rounds" which represented 20% of equity rounds in Q2-23. Moreover, the velocity of "angel investments" is down dramatically in 2023. After the explosion in angel investments in January 2020 - March 2023. Since then the # of angel investments is down by ~ one-third over the last six months - however, that is still above the historic levels of angel investments previous to 2021.One last data point is that Silicon Valley and the Bay area is still the #1 geographic region for VC investment when compared to New York (79% in Northern California and 21% in New York). However, when looking at NYC versus San Francisco the mix is much more equal with an ~ 50% to 50% mix in equity rounds raised.If you share my passion for all things metrics and data for B2B SaaS companies, this conversation with Peter Walker, Head of Insights at Carta is illuminating!!!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Product-Led Growth (PLG) is viewed as a new Go-to-Market motion by many - but to Carilu Dietrich it was her reality as the Chief Marketing Officer for a pioneer in PLG - Atlassian, developer of JIRA.Carilu was the driving force behind making developer products cool while helping to scale Atlassian from $50M ARR to over $400M leading to an IPO!Before Atlassian, Carilu started as an enterprise sales professional, and then started cross-training, including being responsible for the initial digital advertising for the launch of the iPad. Today's discussion centered on the journey of scaling a PLG company from $50M ARR to $500M ARR.What's the role of Marketing in a PLG company? It's much more of a B2C model, which included Atlassian's strategy to invest one-half less on Sales and Marketing and invest that saving in building the world's best product that sells itself! By hanging out in communities where the target buyer personas discuss the benefits of using the product, the primary source of new customers is inbound, versus requiring the expense of outbound sales investments.Atlassian was boot-strapped, which enabled the executive team to continue their "PLG" Go-to-Market motion even when others were strongly encouraging them to add in an enterprise Sales led motion. The real challenge is how to add in sales while maintaining the core focus of Product-Led Growth. The two models will inherently compete for constrained resources, especially financial and human capital.In a focused "PLG" environment, the primary goal is to ensure new users can experience the core value of the product, and translate their initial experience in a trial environment to a paying user.At Atlassian, Marketing was primarily responsible for awareness and top-of-funnel development while the "Growth" team was responsible for points of user engagement following hitting the "trial button" and nurturing new customers and converting them into paid users and ultimately paid enterprise customers. Initially, Atlassian focused on the "individual users", and progressing them from free users to paid users through up-sells and cross-sells which was primarily driven by Marketing. Sales was primarily responsible for paid user renewals, and over time sales then expanded their focus on converting a group of individual users to a company-wide, enterprise agreement.Next, we discussed hyper-growth at scale from the $50M to $500M level. As a small, early-stage company it is hard and even not advisable to hire people who have "seen" the movie at a higher level of scale. In the early stages, companies are looking for Product Market Fit and then in the next stage after they have repeatable sales they increase investment in Marketing to generate more top-of-funnel demand. Ultimately, the goal is to look for "step-ups" such as new product introduction, expanding into new global markets or even changing financial models to prepare for a larger financial return. At each step of the journey, executive leadership needs to continuously review and evolve the corporate strategy that provides the north star for the next phase of the journey.One of the techniques that Atlassian used was continuous experimentation. Beyond A/B testing for tactical enhancements, the need for additional market research to understand how the market is evolving, including competitive presence and user expectations.If you are preparing for the next stage of growth, and on the path to maintaining hyper-growth at scale, this conversation with Carilus is a great listen!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Anthony Kennada, is the founder and CEO of AudiencePlus and formerly the Chief Marketing Officer at Hopin and Gainsight...quite the pedigree!Anthony joined our host, Ray Rike to discuss the evolving nature of community and content led-growth, which is a strategy and topic trending across every B2B SaaS CMO. Anthony takes the topic a step further and highlights why "Owned Media" is a critical component in every B2B SaaS CMOs Go-to-Market strategy.Anthony's experience in using content and community at Gainsight serves as the foundation for Anthony's vision for AudiencePlus and its customers. Over the past few years, community development has traditionally been focused on the customer, but over the last few years expanding the reach of the content and the inclusion of all stakeholders interested in the topics the brand is creating and evangelizing has become a key part of the Marketing strategy to create a "halo" effect around the brand.Anthony was involved in building the Gainsight "Pulse" community from the ground up. During the early days, Gainsight took the role of building the stage for the leading thinkers in Customer Success, but not being at the center of the stage which developed an authenticity of helping to build a profession, not just a company.Second, Gainsight did not focus much on its product - but rather on the information on how to build, manage and scale a Customer Success team. Over time, as the market evolved and matured - then the opportunity to gradually introduce more about the Gainsight Customer Success Platform as the community grew.Lastly, when Gainsight first started hosting events - they did not measure the ROI by the revenue generated from the annual Pulse event - but by the pipeline and ultimate revenue generated as a by product of the event.Over the past few years - the event landscape has changed and building community is facing new headwinds. First, there is so much noise in the market that it is much harder to break through the noise. The second challenge is the distribution of content, as budgets have decreased and the cost of "paid media" continues to increase. The third challenge is that the rules of social media continue to evolve and change...as an example the recent decision by Twitter to not allow links to content on Substack.AudiencePlus is positioned as the first "owned-media platform for marketers". Anthony defines owned media as using a more rich editorial format of content beyond blog posts to break through the noise. One example is taking a podcast and breaking it into multiple clips, both audio and video to create more audience engagement. The "owned" media component is creating rich, educational, and engaging content that motivates the audience to view a company's content and community as a destination for people who are like-minded and they feel like they belong to something bigger - a community of their peers.If you are a CEO, CRO, or CMO exploring how to leverage content, media, and community to engage your target audience, and establish a thought leadership role for the community of buyers you seek to serve, this conversation with Anthony Kennada, Founder and CEO of AudiencePlus is a must listen!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.