The podcast in question is an interview performed by Harry Stebbings of The Twenty Minute VC where we sat down to talk about the importance of the lifetime value to customer acquisition cost ratio (LTV/CAC) and why, if you could only know one SaaS metric about a company, that LTV/CAC would be it.
Of course with Harry it’s easy to end up in a wide-ranging conversation, as we did, and we thus discussed many other fun topics including:
- How I got into enterprise software and SaaS.
- The biggest challenge as a leader in a high-growth company (hanging on).
- Why, for a public SaaS company, I’d probably take billings growth as the single metric, because LTV/CAC isn’t available.
- LTV/CAC and the idea that it’s a powerful (if compound) metric that weights what you pay for something vs. what’s it worth.
- Which churn metric to use as the basis for calculating LTV.
- Upsell and how to design your packaging to enable both incremental upsell and major cross-sell.
- Pricing and how to ensure your pricing is linked to at least one metric that always increases.
- Bookings and the perils of TCV in SaaS companies, including my favorite self-quote from the podcast: “beware of Greeks bearing gifts as you would beware SaaS companies talking TCV.”
- Multi-year deals and to what extent they should be prepaid.
- How once, at Business Objects, we once sold a customer more licenses than they had employees (on the broader topic of vendor/customer interest alignment).
- How sales and customer success should work together on renewals and upsells — and importance of putting farmers vs. farmers and hunters vs. hunters when it comes to competition.
- How you can’t analyze churn by analyzing churn — i.e., gathering a list of churned customers and looking for commonalities.
- The 90 day rule when it comes to new managers.
I hope you enjoy listening to it if you haven’t already. And for those who have, thanks for helping me make the top 10 list!