Metrics that Measure Up

What a Unicorn Knows is a best selling book by Pablo Dominguez, Operating Partner at Insight Partners on how leading entrepreneurs use lean principles to drive sustainable growthSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Matthew Dixon is the author of The Challenger Sale, The Challenger Customer, and now he adds The JOLT Effect to his list of best-selling books for B2B Sales professionals.During this episode, Matt shares his insights on how B2B Sales professionals can help buyers to avoid the risk of the dreaded "no decision" which represents how 40% - 60% of qualified B2B opportunities end.Matt considers himself a "sales anthropologist" which highlights his deep research-based approach to understanding why buyers buy, and how the best B2B Sales professionals help their buyers become customers.The basis of The JOLT Effect was listening to 2.5 Million sales conversations using conversational intelligence to identify common themes in the buying process. Those predictive signals were segmented into which were most predictive of a "Win" versus a "Closed-Lost No Decision". This was made possible as COVID required the majority of B2B Sales conversations to be virtual, and that made it much easier to capture sales calls in a digital format to apply Machine Learning to those 2.5M sales conversations.The research identified three major reasons that buyers end up in "indecision" which represents 56% of deals that end in "No Decision". Those primary reasons include:Valuation ProblemsLack of InformationOutcome UncertaintyValuation Problems are highlighted by having too many choices and it being hard to determine which solution is best positioned to address the challenges of the current state and have the highest probability of achieving the outcomes that were used as the basis for the purchase decision and investmentLack of Information is the buyer continues to think they need more information before they can make a decision that is most likely to end in success versus failure, where failure is the #1 concern of most buyers. This invokes the fear of "omission bias" which is a powerful human need not to experience blame because of a decision they make. "FOMU" which stands for Fear of Messing Up is a much more powerful emotion that Fear of Missing Out which is often the tactic that B2B Sales professionals use to incent a positive purchase decision.Outcome Uncertainty is when the buyer is concerned that the actual return on investment will be hard to achieve, and they are better served to maintain the "status quo" versus not achieving the ROI they projected to justify the purchase. FOMUOne interesting aspect of "outcome uncertainty", is that sales professionals that effectively "set expectations" that are not overwhelming or hard to believe by the buyer. Using the simple concept of under promise and over deliver, and being able to balance expectations leads to an increased win rate from 20% to 51% when B2B Sales professionals can effectively set expectations that the buyer believes are achievable.Another learning was how to determine the reason for "buyer indecision". JOLT stands for: 1) Judge the reason for indecision; 2) Offer a recommendation on how to move forward; 3) Limit the exploration and Take Risks off the table.87% of sales calls have buyers who exhibit some level of moderate to severe indecision. How to judge the reason for indecision first requires "active listening". Then the technique of "ping and echos" by offering potential reasons for indecision (the fear) to the buyer to uncover potential reasons for a sales cycle resulting in no decision.When it comes to "Offering" a recommendation, the research shows an increase in win rates from 14% to 36% when a B2B Sales professional diagnoses the needs, problems, and/or concerns and then offers a recommendation versus not providing solutions to address the uncovered reasons for purchasing or not purchasing.If you are a B2B Sales professional or lead a company or function that is responsible for converting prospects into customers, this conversation with Matt Dixon, the author of The JOLT effect is a high-value listen!!!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Defining the Ideal Customer Profile (ICP) is a hot topic in almost every early-stage B2B SaaS company. It begins with some assumptions and then is refined over time based on the acquired customer profile that represents those early customers who purchase a company's solution. This evolves to which customer profile cohort has the best customer acquisition metrics such as average annual contract value, win rate, and sales cycle length.Dan Sperring, the founder and CEO Align has a different perspective...the best ideal customer profile cohort is determined by the segment(s) that have the best Net Revenue Retention (NRR) rate. Since NRR measures both customer retention rates in dollars (Gross Dollar Retention) + Expansion ARR in dollars, it is the ultimate compound metric to determine if a customer will buy, stick around, and expand their relationship over time.If you are considering how best to define and/or refine your ideal customer profile cohort(s) - this conversation with Dan is thought-provoking and insightful as to why NRR can best guide which prospects to pursueSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

ChatGPT and Artificial Intelligence (AI) are at the forefront of the majority of strategic discussions across the B2B SaaS and Cloud industry.Paul Roetzer started as a journalist and then leveraged that writing expertise into founding a marketing agency. Due to the launch of Watson by IBM, Paul's curiosity about how AI could impact Marketing started his journey to becoming an industry expert in how B2B companies are and could leverage AI to increase the efficiency and effectiveness of Marketing. In 2016 Paul founded and launched the Marketing AI Institute within his agency, and then spun it off as a separate company in 2019.How has the use of AI by B2B marketers changed over the past couple of years? Paul believes the inflection point started in the spring of 2021. First, Sam Altman - CEO of OpenAI/ChatGPT published the seminal article - Moore's Law for Everything. Then, Genius Makers, a book by Cade Metz, a writer for the New York Times was published.Paul was confused why AI did not take off earlier in 2011 when AI teams at Google, Facebook, and Microsoft were first formed. He concludes that he overestimated how quickly AI would go mainstream and underestimated the impact it was going to have on the industry, the economy, and the world. The public release of ChatGPT was the catalytic moment for AI awareness to become mainstream.Why has AI taken so long to be adopted by industry? Paul discusses hundreds of use cases that have been in place for 5+ years, around strategy and personalization. The challenge was the majority of marketing leaders did not know how to best leverage the power of AI, nor the accessibility which was still difficult to access, leverage, and exploit previous to the public release of ChatGPT.In the Bessemer Venture Partners "State of the Cloud 2023" one of their 5 predictions is that the initial value of AI will accrue to the individual users not to the entire company. In the spring, of 2023 Paul wrote an article entitled " The law of uneven AI distribution". The perspective shared in the article is that until C-Level executives begin to understand the full value of AI they will not lead the adoption across their department. A second point is that access will need to be granted to employees as in many industries and regions of the world access is still limited. Paul's third point is that executives will need to understand the risk, reward, and investment trade-offs required before they will fully support a broad-based roll-out of AI across their companies - especially in regulated industries.The "HOT TAKE" moment in the episode was at minute 12:40 when Paul shared that he believes many B2B SaaS companies will become obsolete quickly, It's hard to know what the "moats" are for many B2B SaaS providers beyond data and distribution. B2B SaaS organizations that have proprietary data to help tune generative, LLM-based models will have an unfair advantage, and a large customer base is best positioned to ride the AI wave and further differentiate and protect themselves from traditional B2B SaaS competitors.A highly defensible moat is that the companies that have the most data to train and tune AI models, such as the 4 Billion+ miles of training data that Tesla has amassed over the last 10 years. Salesforce is a great example of a company with large datasets that could form the foundation for the highly defensible application of AI.Paul believes that a B2B technology company that does not have a roadmap for AI, and resources to build or integrated into their core product will not be VC fundable in the future - if not already. The ability to quickly develop, deploy and refine AI-centric functionality will be table stakes for legacy Saas vendors or early-stage companies will be able to quickly eclipse incumbent vendors UNLESS they have applied AI to their data and distribution assets.How do Marketers being to embrace and utilize AI for their department? First, in a problem-based model, Marketers need to identify those problems/challenges that are most prominent in their department, the benefits of solving those issues, and then assess if there is smarter "AI" technology to address the top challenges in a prioritized, rank order.The second approach is to use a "task-based" approach and identify those activities their marketing team is executing daily, and how can AI increase their efficiency. Paul shared the 21-step process he uses to publish their podcast, how they use AI tools for half of the steps, and reduced time spent per episode from 15 - 20 hours to 3 -5 hours.Paul's closing advice to early career professionals - raise your hand in your organization and take the lead on building or being a leader in an "AI Council" in your company. Simultaneously become a student of AI and specifically how it can be used to increase personal efficiency, and company effectiveness and create your position as a future leader for the company.If you are a B2B Go-to-Market executive, work for a B2B GTM executive, or have B2B GTM executives work for you - listen to the conversation with Paul Roetzer, Founder and CEO at the Marketing AI Institute.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Imagine being a senior product leader at Microsoft for one of the leading "cloud products" in the industry, Azure Data Factory, and deciding to leave the stability, security, and prestige behind to launch your own B2B SaaS company. This is exactly the decision and journey that Anand Subbaraj began five years ago.Anand spent 13 years at Microsoft but was fortunate to be involved with five different product launches (V1) over 13 years, with a primary focus on understanding the market and customer requirements. By being part of the founding team at Azure Data Factory, Anand learned what it took to take on established industry leaders, with a product that had not previously been introduced to the market.Anand's experience with new product introductions at Microsoft, Anand had a personal experience in servicing his refrigerator at home, which served as the catalyst that customer service was ripe for transformation. After having three different service technicians have to make six visits to fix the issue, Anand was sure there had to be a better way to leverage automation to transform field service.As a result, Zuper was launched. What learnings has Anand had starting, growing, and leading his own company? First, Anand gained an understanding that Marketing is about investing to build a brand and market awareness, and is more science than art.Anand also learned a lot about cold calling, and what is required to make the first sales in a newly formed B2B SaaS company. By taking the lead on all initial outreach for Zuper, Anand was able to directly hear from the market on what they wanted and/or needed to consider transforming how they were managing the field service process. Anand also learned that without the "Microsoft" brand, that persistence in cold calling was critical to gaining early traction.Anand executive the "founder-led sales" model from $0 to $1M ARR. By taking this responsibility himself, not only did he have direct access to product requirement input from the market, but he could also hand over a "sales process" that worked to acquire the first $1M ARR. Anand leaned on "Marketing" first to create awareness and demand before hiring his first professional Sale resource.Identifying a gap in the marketplace is a key ingredient to the idea to launch a new company. At Zuper, Anand identified that many companies were viewing field service management automation as an extension of CRM. Second, consumers now expect a seamless experience like Uber, while companies require the ability to configure their processes within an automation platform, not to force their process to adapt to take advantage of the B2B SaaS platform.Understanding and being able to measure the business value delivered to the customer is critical for early-stage B2B SaaS companies. First, the ability to improve efficiency in the business process being automated, second is improving the productivity of the field service workforce, such as spending less time on driving to the next appointment and more time on fixing the customer's issue. In the Zuper example, measuring the "first-time fix rate" of new service tickets is a key benefit, and the Zuper customers see a 30% increase in the first-time fix rate by having the right technician, the right parts, and the right tools.When asked what "SaaS metrics" Anand uses, here is what he shared:Top Lagging Indicators Used:ARR and ARR GrowthCustomer ChurnBurn RateCash runwayTop Leading Indicators Used:Product UsageCustomer Acquisition CostCustomer Lifetime ValueCAC Payback Period (new)If you are a product leader or in a large stable company today, but considering launching your own B2B Saas company, this conversation with Anand Subbaraj 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.

Over the past two months, we have hosted the founders and CEOs of the leading SaaS Spend Management vendors.Sid Sridharan, the founder of Spendflo was formerly an executive in an "electric vehicle" charging infrastructure company and experienced the challenges of controlling SaaS spend in an early-stage, fast growing company. Sid's interaction (not all positive) with his own CFO regarding their SaaS spend inspired Sid to found a company that was purpose-built to address the very challenge his CFO presented Sid.How does Sid define SaaS Spend Management? Sid responded that Payroll is the number one spend in a company, and it has already been automated. Over the last few years, SaaS has become a top 3 spend, and is an area that is still not automated in the majority of companies - and most early-stage companies do not have the resources or time to manage it internally.Another topic we discussed was "How does SaaS Spend Management support and embrace the decentralized nature of SaaS purchases?" Sid first offered a CFOs perspective, which is when SaaS purchasing is decentralized and the associated expense is growing 25% per year, centralized control is required. Moreover, since the average SaaS tool has 9 competitors, the amount of time it takes to truly evaluate all the alternatives is greater than any one company can resource - thus they may be missing some great options for their requirements.Sid shared that they take a holistic approach to SaaS Spend Management starting with the discovery of existing SaaS Tools used, facilitating the purchasing of new SaaS tools, renewing existing SaaS tools, and managing overall SaaS Spend and utilization.One of the primary differences that Spendflo provides is the first-party data across their ecosystem, using a single platform to understand SaaS tool utilization and user sentiment. When we double-clicked on "user sentiment", Sid highlighted that once a customer invests time selecting a SaaS tool, it is hard to measure ROI, which is a key area that Spendflo focuses on, which is especially important in preparing for renewal decisions. By running usage and sentiment data continuously over the term of the agreement, it empowers the leaders to understand how users feel about the tool, including user satisfaction and user sentiment across two variables; 1) How important is the tool to business value and; 2) Would you be upset if this tool was taken awayWhen is the best stage of evolution to introduce a SaaS Spend Management Solution? Sid highlighted 50 - 60 people with the expectation to grow to 100 - 200 people, as the growth in SaaS spend will increase materially during this stage of growth. Sid also highlighted that $250K in SaaS spend is another inflection point to deploy a centralized SaaS Spend Management process.If you are responsible for any SaaS tool purchasing, management, and/or the budget, this conversation with Sid 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.

State of the Cloud 2023: Top Five Predictions:#1: Efficient GrowthAdopt new solutions to gain control of their Cloud and SaaS spend, including the infrastructure cost to deliver SaaS Solutions. Tools include Cloud FinOps tools, SaaS Spend Solutions, and engineering productivity tools to improve R&D processes.One of the areas of focus is on Cloud Spend as a way to manage the Cost of Goods Sold and thus increase Gross Margin which sets the ceiling for Saas profitability. Public SaaS companies with Gross Margins under 50% have a hard time driving Free Cash Flow of 20% or greater which is critical to enterprise value multiples.Some examples of tools to gain control of Cloud Spend are included in the Bessemer Ventures technical playbook of 40 tactics to drive profitable growth - this playbook can be found on Atlas on the BVP.com website - the report is called the "CEOs tactical guide to drive profitable growth".#2: Climate Software will drive the Green Energy TransitionWith the increase in consumer activism and government regulation, the green energy revolution is here. To support this green economy, cloud software that is tailored made to power the transition to green energy will explode. Examples are software dedicated to solar, infrastructure, sustainable design, and fossil fuel infrastructure transition.#3: Initial value of AI will be to the userThe AI and Large Language Model business ecosystems are evolving quickly. Bessemer believes the ultimate winner is the user to increase individual productivity at work and in their personal lives. AI research is now democratized so end users can have access to and build upon the latest AI capabilities.One example is ChatGPT being released to the general public and acquiring over 100 million users in the first three months - the faster-growing internet site ever!!!Bessemer calls the current AI revolution a B2C2B motion. This highlights the consumer excitement about the benefits of AI, which will in return bring these tools and techniques to the corporate workplace.#4: The application layer is where the most impact from AI will happen firstDue to the democratization of access to AI, the power of AI will be available to any company, that can embed AI without their own AI team. This will make horizontal B2B SaaS companies to provide AI driven workflows and processes without the need for a large internal AI development team.With the number of transactions in many SaaS platforms, the opportunity to accelerate the insights to enhance business process efficiency.#5: AI companies will grow twice as fast as traditional B2B Cloud companiesBessemer predicts the time the best AI companies will require to grow from $100M to $1B will be 50% faster than the historic fastest growers like Canva, Zoom, and Twilio. That is truly impressive as these companies scaled from $100M to $1B in four years or less!If you are a student of the Cloud industry or just SaaS-curious about where the industry is heading - the Bessemer Venture Partners "State of the Cloud 2023" is a great read and this podcast discussing the top five predictions 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.

In Episode #1 of this 2-episode conversation, Ray discusses the key findings from the Bessemer Venture Partners (BVP) annual "State of the Cloud" report for 2023 with Janelle Teng, Vice President and co-author of this year's report.Janelle is involved in many different research programs at BVP, including the "State of the Cloud" and the "Scaling to $100M ARR" reports.In this first episode of the "State of the Cloud 2023" report, we focus on the change in B2B Cloud company valuations in 2022 and the current state of the industry.Public cloud companies experienced the "SaaSacre" of 2022. Interest rates shocked the cloud industry in 2022 resulting in a greater than 40% reduction in public cloud company value. The forward trading multiple of public cloud companies is now below the long-term average and were halved in 2022.There are glimmers of hope from the Q123 timeframe. One example is Microsoft reported better than expected earnings in Q1, fueled by the interest in AI. These large tech companies are a great index for the smaller, private Cloud companies. The Cloud index is up about 5% in Q123, which provides hope for the re-emergence of Cloud valuations.Even with the aggressive pullback in public cloud company valuations, the average BVP Index cloud company has grown 50% faster than a traditional company - over a 10-year horizon.When will "Venture Capital" funding return to a more normalized state? Janelle asked the 60 investment professionals at BVP when will be the best time for a founder to raise VC money? The top timeframe forecasted was 2H24' with 1H24' being the second forecasted period for raising a round from Venture Capital. However, 1H23' was still in the running - highlighting the excitement around the current AI boom.The number of VC deals and the amount of VC funding in Q123 was down from the previous year and the previous quarter, so the turnaround in VC deal velocity is still in front of us.In the second half of my conversation, Episode 2 with Janelle, she shares the TOP 5 predictions for the Cloud in 2023!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Former VP of Marketing at Hopin and event industry thought leader Julius Solaris joined me on the latest episode of the Metrics that Measure Up Podcast. Julius has been involved in the event industry for over two decades, and has been involved in the creation and successful exits of two different event technology platforms - so provides a very unique perspective on where the event industry has been and where it is headed...First, we discussed the evolution of events in B2B Marketing. Events are often the first variable marketing program to be reduced during uncertain economic times. Covid introduced a new dynamic, with the growth of virtual events as the only way for people to gather. This created a tidal wave of virtual event platforms, events, and associated content. In 2023, the pendulum is aggressively swinging back to in-person events, including over $6.2B of acquisitions of event companies in the first quarter of 2023 alone.The definition of "events" has never been more fluid, with virtual, hybrid, physical, asynchronous, and recorded events. Then we introduced the concept of "Event-Led Growth", which Julius defines as a Go-to-Market strategy that sees the full spectrum of events at the core of your GTM and customer engagement strategy. This concept is gaining speed because the future of social media is in flux around the world, AI is a new and unknown factor, and events are the most personal, human mode of interacting with a brand and engagement at the individual level.Event-Led growth also provides an opportunity for "content creation" to take the forefront of target market engagement. Where does "community" play in the event-led growth model? Professional associations are a great example of an industry community, and they often come together once a year at an event. Today, virtual communities can form quickly, as exhibited by the grassroots "AI Community" of 1,000+ people that came together in San Francisco - all stimulated by one tweet from an AI thought leader. In fact, in strong communities, event marketing is not a large requirement, as those community members will attend based on the strength of the community bonds that form from previous in-person and virtual events.Julius mentioned the importance of ongoing virtual gatherings, like the SaaStr weekly webinar to build upon and nurture the relationships developed at the annual in-person event - a case study of the importance of continuous community engagement through a combinate of virtual and in-person events.Over time, Julius believes that the event industry will evolve to "company-owned events" versus the larger, mega-industry events that defined the previous generation of events. Due to the saturation of "content" available on digital media, people are craving an opportunity for connection that is only achieved at events with a shared asset - communities with a common interest.One topic we discussed was what happens when events become "too big" to foster intimate, personal interactions. Mass customization becomes harder over time, which is why satellite events and vendor-sponsored satellite events become the "smaller, intimate" venue for personal relationships to be formed and nurtured. One strategy for vendors is to secure a small booth at the event itself and create a satellite experience outside of the main venue.Julius provided advice on how to be a company's event-led growth strategy. Virtual events provide a low-cost way to being building a community through events. This is especially attractive due to the availability of technology platforms for virtual events. This creates the foundation for building a community and then provides a platform for creating multiple "individual digital assets" that can be re-purposed across multiple channels to maximize reach and engagement from a single virtual event.I had to ask Julius about how to engage virtual event attendees in tactics, like virtual booths and lounges. This has not worked very well in the early days of virtual events, primarily because event sponsors did not invest enough time on this topic. Activation of virtual event attendees needs to be "content-led", supported by a strategic communications strategy, pre, and post-event by the event host and the sponsors.If you are considering leveraging an "event-led" strategy to create awareness, build engagement, and develop a community of your own, this conversation with Julius Solaris is chalked full of great insights and ideas.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Excel is the #1 tool B2B SaaS companies use for many financial tasks, including calculating SaaS metrics to surface insights for operating decisions and investor updates.Ali started his career in tech as an auditor at Ernst and Young, with a priority focus on revenue recognition and reporting. While auditing a top tier B2B SaaS company, he was provided multiple spreadsheets with thousands of rows of data, and it even required almost 10 minutes to just open the Excel file, and almost 6 months to complete the audit. The primary challenge, finding all of the data required for the audit in an extremely large and poorly structured Excel model.What are the top signs that a founder/CEO will see to know it might be time to move beyond Excel? Ali suggests at $1M and above that Quickbooks is a fine General Ledger, but the initial issues are associated with revenue recognition and the associated reporting. Often, this is due to not having the right human resources who truly understand revenue recognition policy, and then the manual required to create a model and the appropriate formulas for revenue recognition.One sign that Excel might not be doing the job, is if revenue is being recognized on a cash basis. Another sign might be when an investor asks what your "MRR or ARR" is, and you realize it includes professional services or one-time fees. Why is getting revenue recognition important to an early-stage company? It becomes important when external stakeholders, like existing or potential investors, ask for things like GAAP revenue growth rates, and ARR growth rates and you cannot provide the answers because the financial foundation and reporting infrastructure have not been established.Inevitably if you are quickly heading to $1M ARR or already above that level, founders and CEOs are expected to know their numbers. One common tactic is to hire an external accountant, and ask them to set up revenue recognition and other financial reporting in Excel - the challenge with this is that it is not scalable, and if the "rent an accountant" goes away, it is hard for the next resource to understand the excel model.Next, we discussed the reality of ASC 606 (GAAP accounting policy), and how it impacts the need for more advanced financial reporting capabilities. ASC 606 includes very complex and nuanced accounting rules that Excel is just not well positioned to be the primary solution for modeling and reporting GAAP revenue and the associated financial metrics such as Gross Profit, EBITDA, and Net Income.The most important initial SaaS metric is Contracted ARR, and ARR including growth rates. Quickly following is the ability to understand Sales and Marketing expenses and the associated customer acquisition cost efficiency metrics including Customer Acquisition Cost, and CAC Payback Period. Cash burn and cash runway are other critical insights that a founder/CEO needs to ensure are available and accurate early on.When I asked Ali about other SaaS Metrics, he highlighted a recent example where a company wanted to start reporting their CARR and ARR, and they close a majority of deals mid-month. They were confused about how they report ARR for the month the contract was signed, and how those decisions impact the associated recognized revenue (GAAP revenue).If you are an early-stage SaaS company and are having challenges with Excel to capture, calculate and report basis SaaS financials including GAAP revenue, CARR, ARR and the associated SaaS performance metrics the conversation with Ali Rizvi is highly informative.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.