Benchmarking SaaS Start-Ups: How Am I Doing?Really?Brian Jacobs

General Partner, Emergence Capital

@brian_emcap

Jason M. Lemkin

SaaStr; Managing Director, Storm Ventures

@jasonlk

Brian JacobsFounding Partner, Emergence Capital

Investors in Salesforce, Successfactors, Veeva, Yammer, Box, InsideView, ServiceMax, Bill.com, EchoSign, Hightail, Lithium, etc.

Jason M. LemkinSaaStr Founder Community – 1m Views/Mo

Managing Director, Storm Ventures

Founder/CEO – EchoSign/Adobe

Investors in MobileIron, Marketo, EchoSign, GuideSpark, Metacloud, Sandforce, etc.

Benchmarking – What We’ll Discuss

•The Journey

•The Numbers: The Good, The Bad and the Ugly

•Funding: Who Gets Funded, & Why

•The Live Case Studies:– Early-ish Stage: TalkDesk: $150K to $2.5m ARR in 12 mos.; the next phase– Growth Stage: GuideSpark $1.5-$20m in 24 Mos. (but it took a while to get there)

The JourneyWhat Matters – And What Doesn’t

• The Best SaaS Companies Get to $100m in 7-10 Years

• Outliers are rare: Workday, Salesforce, DropBox, but few others

• Pace to $100m:– Box: 7 Years– Hubspot: 8 Years– Marketo: 6 Years– Zendesk: 8 Years– MobileIron: 6 Years– Veeva: 5 Years ($1m+ ACV)– LinkedIn: 7 Years

The JourneyWhat Matters – And What Doesn’t

• But … Really Doesn’t Matter How Long it Takes You to Get to Initial Traction (first $1-$1.5m)

• Some get there in 1 Year. Some take 3+ Years (GuideSpark). It doesn’t matter – if you are committed.

• Key is Not to Burn Out Around Year 4-5

The JourneyWhat Matters – And What Doesn’t

• After Initial Traction, Growth Rate is Critical

• Then …

– Best SaaS Companies go $2-$10m ARR in 5 Quarters or Less (>=15% MoM); 20% Outlier

– Key is Momentum as pass $10m ARR (100%+ Growth Once Cross It)

While Most Attention is Focused on Latter Stage Growth of Public/Acquired SaaS Companies…

…Early Stage Growth is Arguably More Important

• How get to $10m … Average $10m to $100m in 4.7 Ys.

This is Why: You Need One 3x Yr, And Then >=2x Each Yr

Top SaaS Players Grew Quickly Pre-$10M in Revenue

Annual Revenue Growth Before Achieving $10M in Revenue

Mean: 291%

Min: 36%

Max: 983%

Target Range

Without Sacrificing Sales Efficiency

Average Sales Efficiency Before Achieving $10M in Revenue

Note: Sales Efficiency = Change in Yearly Revenues / Previous Year’s Sales and Marketing Spend

Mean: 164%

Min: 45%

Max: 512%

Target Range

Use to introduce a

demo, video, Q&A, etc.

The Live Case Studies: TalkDesk and GuideSparkPotential Outliers

Talkdesk: Getting to 20% MoM Growth – From NothingFrom Hackathon, to Product-Market Fit

• Talkdesk – Top Desk.com Partner

• Call/Contact Center in the Cloud

• History:– Started off winning Twillio & SFDC hackathons– Then productized– Then monetized– Hit Initial Traction ($1.5m) 16 mos. After Launch –

with increased velocity (20%)– On pace grow $1m to $10m in < magic 5 quarters

Talkdesk: Getting to 20% MoM Growth – From NothingFrom Hackathon, to Product-Market Fit

• Q&A

• Keys to igniting growth:– Partners and integrations (takes time)– Driving ACV and deal sizes up (to six figures)– Upgrades key: < 20% of target ACV bought upfront

today– Understanding how do true enterprise-grade

implemenations --- even for SMBs :)– Pricing for value– Lead growth > Revenue Growth = VPS + Raise $$$

Talkdesk: Getting to 20% MoM Growth Post-InitialFrom Hackathon to Product-Market Fit to Outlier

• Brian Jacobs:

• Would you do the Series A?

• Is It In the Ballpark vs. Other SaaS Investments?

• Why or Why Not?

Case Study #2: Guidespark: 5 Years to OutlierThree+ Tough Years to Initial Scale. Then – Acceleration.

• GuideSpark: Employee Communications in the Cloud – Instead of In-Person

• History:– Started off as more generic e-learning platform– Struggled for product-market fit until found one core

use case, and one core enterprise customer– Doubled down on (x) enterprise + (y) employee

communications– Hired their Great VP of Sales at ~$1.5m ARR – once

real business model proven and first enterprise customers closed

GuideSpark: Outlier Growth Post-Initial ScaleA Long Journey to The Top

• Brian Jacobs:

• Would you do the Series C?

• Why or Why Not?

Come To Dreamforce to See the Rest!Wed Oct 15th! @ 1pmhttp://bit.ly/saastrdf