Dave Kellogg, a veteran in customer acquisition cost, and Ray Rike, a B2B SaaS growth strategist, dive into the key insights from the ICONIQ 2024 State of Go-to-Market Benchmark Report. They discuss troubling growth rate trends, especially for smaller companies. The duo analyzes the critical metrics like pipeline coverage ratios and conversion rates, emphasizing the need for a qualified pipeline over simply chasing higher ARR. They provide actionable insights for SaaS executives to optimize revenue growth amid evolving market challenges.

The SaaS Mendoza line highlights the slope of the long term growth rate that investors expect and operators should target on a path to IPO. Dave "CAC" Kellogg and Ray "Growth" Rike break down the updated expectations.Veteran software VC, Rory O’Driscoll of Scale Venture Partners proposed a theory to identify the growth rate below which a company may not be on the VC-to-IPO trajectory.In 2018, Rory started with an analysis of SaaS companies at the time of IPO. In 2018, SaaS companies going public had a minimum run rate ARR of $100M and at least a 25% forward growth rate. He then examined growth rates over time and observed that the growth persistence - which represents the rate of growth decay year over year, that public SaaS companies grew at 80-85% of their previous year’s growth. This metric is commonly known as "Growth Endurance".Dave and Ray discuss the new reality of the SaaS Mendoza line, with the most recent data in 2023-2024 suggesting that a SaaS company must have at least $400M - $500M" in revenue before they can IPO as evidenced by the recent Klaviyo, OneStream and Rubrik initial pubic offerings.CAC and Growth highlight other common "growth expectation" models including the T2D3 (Triple, Triple, Double, Double Double) and 56789 models. If you are evaluating what it takes for early stage company to attract new investors as your growth on a path to IPO - this conversation is full of great insights and perspective on investor expectations.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Go-to-Market trouble shooting is a very common activity in 2024 as B2B SaaS companies continue to face growth and especially efficient revenue growth challenges. In this episode Dave "CAC" Kellogg shares his top-down GTM trouble shooting method which boils down into two primary categories:Pipeline CoveragePipeline ConversionDave and Ray dive into the details on the key metrics to evaluate and what they tell a SaaS GTM operator about the current state of their GTM performance. Key insights are provided across multiple topics including:Week 3, Day 1 Pipeline Coverage RatioWin Rate vs Pipeline Coverage RatioPipeline Conversion MeasurementPipeline Source and CompositionCAC also provides his most basic insight into the top two questions a CEO should be asking which are:Are we giving sales a chance to hit the number (pipeline coverage)Is Sales converting enough opportunities into customers (pipeline conversion)If you are a CEO, CFO or GTM leader in B2B SaaS and are responsible for GTM performance and/or evaluating GTM performance this episode 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.

OneStream went public on July 24, 2024 and Dave "CAC" Kellogg and Ray "Growth" Rike dedicated this episode to discussing their S-1 and Initial Public Offering (IPO). OneStream, the company offering their Digital Finance Cloud to the Office of Finance has a long history including being self-funded, being acquired by Private Equity (KKR) in 2019 and beginning the transition from a perpetual license software company to a SaaS company in 2020 on the path to their IPO.During the episode, Dave and Ray discuss multiple aspects of the OneStream public offering including:The history of OneStreamKKR investment in 2019IPO pricingUmbrella Partnership Corporation (Up-C)Stock Class Voting RightsFinancial Performance Metrics TrendsIf you are a student of the SaaS industry and/or are interested in the details behind a company that serves the Office of Finance this episode is a great listen.This is the 50th episode of SaaS Talk™ with the Metrics Brothers and don't miss CAC and Growth sharing credits to the people who made SaaS Talk a reality!!!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Burn Multiple is a metric created by David Sacks to measure the capital efficiency of ARR growth in B2B SaaS companies. In this episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss alternatives to the Burn Multiple and then dive into the details of the two primary burn multiple components which are Net Burn and Net New ARR.There are multiple metrics that attempt to measure capital efficiency of B2B SaaS companies including:Hype Ratio = Capital Raised / ARRCash Conversion Score: Current ARR / (Total Capital Raised to date - cash)Efficiency Score = Net New ARR / Net Burn The Burn Multiple uses two primary components in it's calculation which is: Burn Multiple = Net Burn / Net New ARRNet Burn = Revenue in the Period - Operating Expenses in the PeriodNet New ARR = New Logo ARR + Expansion ARR - Down-sell ARR - Churned ARRWhat is a good Burn Multiple? It depends on the stage of the company, but let's use David Sacks benchmark framework from his original Burn Multiple article in 2020:Amazing = < 1xGreat = 1.0 - 1.5xGood = 1.5 - 2.0xSuspect = 2.0 - 3.0xBad = >3xIf you have an investor focused on the Burn Multiple or you have heard about the Burn Multiple but want to understand the details and nuances this episode 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.

Dave Kellogg and Ray Rike discuss Bessemer Venture Partners' 'State of the Cloud 2024' report, declaring 'The Legacy Cloud is Dead - Long Live AI Cloud!' They delve into Gen AI trends including AI foundation models, AI developers, AI agents transforming software relationships, vertical AI applications, and AI reviving consumer cloud. The episode provides insights for SaaS companies navigating the risks and opportunities of Gen AI.

McKinsey recently published a report entitled "Navigating the Generative AI Disruption in Software" that Dave "CAC" Kellogg and Ray "Growth" Rike discuss in his episode.Some of the primary topics discussed include:GEN AI penetration velocity today vs SaaS in the early daysGEN AI impact on switching from traditional SW/SaaS vendorsWhere will the rewards of Gen AI goImpact on SaaS Growth and Churn RatesOne of the most interesting parts of the report and this episode is that expansion growth rates of software will increase for those with embedded generative AI. In addition, the adoption of Generative AI solutions will be spread across three primary modalities of Gen AI software including:Native Generative AI Point SolutionsBroader platforms with embedded Generative AIInternally developed Generative AI softwareIf you are a traditional SaaS company and are looking to navigator the unchartered waters of the Generative AI software era, the McKinsey report and this episode are great sources of ideals and insights.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

What is the difference between the price and value of a SaaS company? How do metrics such as Enterprise Value to  EBITDA multiples play a role in this discussion? Dave "CAC" Kellogg and Ray "Growth Rike discuss the topic on this episode of SaaS Talk with the Metrics Brother and cover a wide array of topics including:What is a SaaS company worth?What is the definition of "price vs value" in the stock marketExamining Valuation Multiples What They Miss, Why They Differ, and the Link to FundamentalsHow Cash and Debt impacts Enterprise ValueEV/EBITDA vs EV/FCF vs EV/Revenue MultiplesAn inspiration for this episode was from a paper written by Michael Mauboussin with the title: "Examining Valuation Multiples What They Miss, Why They Differ, and the Link to Fundamentals". You can read the paper by clicking here.If you are a SaaS professional or even just interested in learning more about how SaaS companies are valued, this conversation is full of interesting insights and details on the concept of SaaS company valuations.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Trouble shooting Go-to-Market (GTM) issues is a critical competency to master for every SaaS company as they face the pressures of lower growth and reduced revenue growth efficiency. Dave "CAC" Kellogg and Ray "Growth" Rike introduce a GTM trouble shooting framework that addresses the five primary opportunities to improve GTM efficiency.The five key areas of Go-to-Market efficiency opportunities include:Pipeline GenerationPipeline ConversionWin Rates + ACVCustomer RetentionCustomer ExpansionCAC and Growth discuss some of the key metrics that measure the performance and health of each of the above areas. In addition, as two former B2B SaaS operators, they cannot help but dive into some of the key issues and solutions that go beyond "trouble shooting" and move into potential solutions to enhance revenue growth efficiency and improve performance.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Benchmarkit recently published their 2024 SaaS Performance Metrics Benchmark Report based upon 936 B2B SaaS companies participation. Dave "CAC" Kellogg and Ray "Growth" Rike discuss the recent trends and insights.SaaS Metrics and the corresponding benchmarks discussed include:2023 Growth Rates2024 Planned Growth RatesCAC Ratio (Blended, New and Expansion)CAC Payback PeriodNet Revenue RetentionSales and Marketing expenses as a % of RevenueARR per EmployeeThe full report and interactive benchmarking tool can be reached at: benchmarkit.ai/2024benchmarksIf you work in the B2B SaaS or Cloud industry this episode is a must listen!NOTE: Benchmarkit was founded by SaaSTalk co-host, Ray "Growth" Rike"See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.