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SaaStock 2019 - ed byne

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SaaStock 2019 - ed byne

  1. 1. Common Sense Business (in a world gone mad!)
  2. 2. 10 lessons we’ve learned in acquiring and accelerating 12 SaaS business originally doing between 1m and 10m annual revenue.
  3. 3. Capital Efficient - Principle Driven - Growth Focussed - Value Investors. ● Founded 4 years ago ● Raised $150m in 2 Funds (and a Venture Finance fund) ● 12 Acquisitions (9 Core, 3 Add-On) ● 3 Exits (700% return on capital) ● ~$55m ARR in current portfolio
  4. 4. Don’t Confuse Cash Cash = How much money I have in the bank (excluding what I’m owed and what I owe but including what I’ve been paid in advance for). Cashflow = How much money flows into my account each month (good indicator of how much I can spend stress-free). Profit & Loss = The revenue and expenses I’m booking (and accruing) each month, but not necessarily getting and paying. The bottom line is not the cash line! Lesson #1 Cash, Cashflow, Profit & Loss are different!
  5. 5. Lesson #2 Always Have a Margin of Safety ● 6 Months ‘Runway’ - or better - Default Alive ● ‘Notional EBITDA’ = can you be profitable in 30 days if you reduce spending? ● Net Positive Install Base (over time customers tend to use more and pay more) (If something doesn’t pan out - can you survive?)
  6. 6. Lesson #3 Be Selfish with Equity ● Most SaaS Companies, post ‘friends & family’ round, don’t need Venture Capital ● Consider alternative sources of funding: debt, pre-payments. Manage accounts receivable. ● Your Equity = Your Decisions → Your Exit Time Frame → Your Exit Price → Your Returns
  7. 7. Lesson #4 Reward Performance (not just time) ● Cash bonuses don’t work. ● Time is a poor indicator of success. ● Performance-based equity grants - blend with Time-based Grants ● Keep simple: performance = growth. ● Prevents the ‘waiting to get vested more’ approach.
  8. 8. Lesson #5 Hire Fast. Fire Fast. ● Reality is Hire Fast, Fire Slow! ● The ‘Grey-Zone’ people are the real tough ones. ● Grey-Zoners hold back the team and the company performance. And themselves. ● How many times have you let someone go and said ‘I did that at just the right time’?!
  9. 9. Lesson #6 Hire Potential over Experience ● Great CV is irrelevant if not a culture and values fit. ● Hire the people who are going to be great in their next job. And make your position their next job. ● Hire the person who is going to be a VP in their next role (or promoted to that in their current company). ● Recruiting isn’t difficult, it’s just Hard Work.
  10. 10. Lesson #7 Gates of Trust ● For new hires - the gates are cracked open - you hand-hold and approve decisions. ● As they get more comfortable with your culture and principles - the gates open more - you provide coaching and regular check-ins. ● Once they have a ‘gut feel’ and generally default to the right decision - the gates open fully and you empower, and trust. ● If you don’t do this - you risk a potential winner getting started on the wrong foot and ruining their chances of succeeding.
  11. 11. Lesson #8 No Amateur Mistakes ● Signups / MQLs get contacted, quicky and regularly. Leads get closed. ● Emails get responded to. Tweets are watched. Support tickets are triaged and always updated. ● AR - Accounts Receivable - and Expired Credit Cards - get collected! ● Make sure the things in your control, are done well. The little details really add up to move the needle - in either direction
  12. 12. Lesson #9 Focus out the Leading Indicator ● Lagging Indicators tell you how things are going: Revenue. Leads. Visitors. ● Figuring out the Leading Indicator - those activities that customers do that in turn drive usage and revenue - the results will follow. ● Examples: Number of Tasks Created (for a Project Management Tool). Number of Documents Handled (for a File System). ● Then focus your activities on increasing that metric.
  13. 13. Lesson #10 Charge the Right Price ● Price is the most powerful and least effort lever. ● It’s amazing how infrequently price is discussed, and changed. ● Your product, market, customers, features, are evolving. So is your value. Your price should too. ● Price is a signal of where you want to be perceived in the market. ● Best and cheapest is not reality.
  14. 14. Ed Byrne www.scaleworks.com ed@scaleworks.com @edbyrne Thank You!

Notes de l'éditeur

  • Don’t sprint over the cliff… look out for the sign posts when you approach it that show the safe path down.

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