#saastr

No começo de fevereiro deste ano, tive a oportunidade de participar do SaaStr 2018, o maior evento de SaaS do mundo, que reuniu em San Francisco (EUA) mais de 10 mil pessoas e os principais fundadores, CEOs, investidores e profissionais de Software as a Service do mundo. Assisti a muitas palestras, conheci muita gente e fiz networking com uma galera fera do Brasil e de fora.

Resultado? Voltei de…

[Note if you’ve arrived from LinkedIn, skip to just past the key points portion a few paragraphs down]

I’ve been checking out a number of startup events this year in an effort to find great entrepreneurs for our VC partners such as GMO VenturePartners, as well as share best practices throughout my journey. I’ve always been fond of SaaS, where I spent most of my entrepreneurial years building startups. Needless to say, the SaaStr Annual event is a great place to be for those that love SaaS. 

The SaaStr Annual 16 event this year certainly stepped it up its game. Jason Lemkin, the man behind SaaStr, made it clear he’s taking the SaaStr brand to new heights. Jason set the tone with an introduction of new SaaS community focused offerings, such as share space and an online academy, with the altruistic notion he's pointed out before, that this type of community just didn't exist 10 years ago in SaaS. Thank you Jason for such contributions and leadership.

With an assortment of key topics to cover in the agenda set months ago, the event was somewhat influenced by the undertones of recent shifts in the public markets, pull back in funding from Q4 15, and essentially what many have referred to as the valuation and private market liquidity squeeze in effect.

With days full of multi-track content and thought leadership by some of the greatest players and investors in the space, it would be hard to cover every point made. If you are interested in my recap notes by session please check them out here, or watch the recordings here.

Throughout the event, there were some key points:

SaaS now has a community, ecosystem and infrastructure that didn’t exist before, which includes best practices, requisite platforms to accelerate scale, and a raised bar when it comes to tech, goto market and/or sales traction

As such, knowing and nailing SaaS fundamentals are a requisite for having a chance to succeed

While the fundraising climate has changed, good businesses (strong fundamentals, innovative concepts and great entrepreneurs) will always be rewarded with opportunities for funding, growth, partnerships and customer acquisition

SaaS Evolution

Never before was there such a community focused on SaaS. There also didn’t exist the cloud infrastructure and software services to build to such scale so quickly as there is today. XYZ eloquently outlined this with the evolution of cloud computing in general.

With the ML route, companies need to first try to aggregate enough data to build a model, then change how that model/solution/industry works

Especially around chat. People do not want to talk to a database, but they don’t mind having a conversation, pointed out Tomasz Tonguz. A chatbot in the beginning is the evolution of DB. It will turn into an automated bot and will be a more interaction based.

Fundamentals

There were few talks on key SaaS fundamentals and metrics, to which, the ones that had overlapping content should serve as very strong guidance for budding SaaS entrepreneurs. Key points included:

The 5C’s of Cloud Financing

CARR &ARR

CAC Payback

Churn (monthly)

CLTV/CAC

Cashflow

And then of course, build a dashboard around them. Naturally, some of these KPIs need to be fluid, and please note many aren’t useful until product/market fit is established.

David Skok of Matrix Partners brought up many insightful points (deck here), providing depth on the importance of CAC:LTV across the SMB, mid-market and enterprise customer segments, as well as investments that go into product from a pricing.

And in a conversation with Aaron Levie, CEO of Box, differentiation today in SaaS means being mobile first, and using APIs to build incredibly scalable companies. We are in a collaborative place, and you have to do one thing really really well, so rely on these APIs and platforms to let you shine. Apps have become simpler and more consumerized… The people that will win are the people that that have the vision to do something different in a very exciting way. 

Funding

At the conference and in recent posts, Tomasz Tonguz and Mark Suster have extensively touched on the current fundraising climate, as well as recent shifts in the private and public markets. These moves have made some tectonic underlying shifts in the way that valuations, capitalization in venture funding and liquidity events for startups will look moving forward.

Valuations are starting to return to their cycle agnostic medians

In capitalization, there’s currently a rotation out of high growth stocks to high stability stocks. Hedge funds and mutual funds are looking to public markets once again. Capital from these sources represented 25% about $40 BN in 2015; so it’s expected $10BN will go away in the near term. That said, early stage funds shouldn’t hinge too much as these are dedicated 10 year funds focused on the early stage with relatively concretely established funds.

Right now we are seeing the end of a cycle of crazy valuation premiums and delayed liquidity (IPO) events, as startups have been able to leverage easy capital. In turn, later stage funds and large institutional investors are starting to make valuation adjustments on their balance sheets in an effort to hedge a potentially turbulent future for the unicorn era.

Lastly, Tomasz pointed out there are really four key areas today for successful raising:

Better technology

A better go to market strategy

Better relationships

Better/unique and novel approach to the market

These yield a startup a long term competitive advantage in the market. By demonstrating one of these early things it will help raise even at $0 ARR. For those that don’t, they will need to show exceptional sales and marketing... and those will be $100K investments to start off.

Conclusion

Being someone that has operated in the SaaS space for over five years, I’m tremendously excited to see such great support and advancement in the industry. By having better technology and a better goto market, coupled with a keen focus on key SaaS KPIs, you will be set to rocket your startup into the new era of SaaS.