With the able help of Michael Lavner, we did a special, live presentation and discussion of my KiwiSaaS talk, Metrics That Matter in 2023, for Balderton portfolio executives.
These slides are largely the same as the KiwiSaaS ones, with the notable exception that European companies may find some of the data more relevant because Michael was able, in several cases, to replace my largely US-based benchmarks with data from Balderton’s universe of European SaaS companies.
We had a great discussions with those who attended and dove into the more advanced topics of:
- Growth-weighted rule of 40 scores.
- Growth endurance (also known as growth retention or growth persistence) as an increasingly popular metric. See this post by Christopher Janz which builds upon this post by Rory O’Driscoll. In short, tell me your current ARR and your ARR one year ago, and I’ll tell you when you’ll hit $100M in ARR. (I love that quote.)
- NPS and employee NPS (eNPS) as important, but nevertheless second-tier, SaaS metrics from the investor point of view.
- Several discussions contrasting the operator and the VC point of view on metrics in general. This is one of my favorite topics and I need to do more work here because it goes well beyond the CAC Payback Period (CPP) example I frequently use.
- A reminder that CPP is a risk metric, not a return metric — a statement I expect to have engraved on my headstone.
- The tendency of growth alone vs. Rule-of-40 score to better predict enterprise value multiples and how this varies over time. (I consider the market to be in an inversion when growth alone is the better predictor.)
- The importance of understanding the composition of the data set when benchmarking. In a perfect world, you could segment SaaS benchmarks by aspiration: IPO-track, PE-track, and bootstrap-track. Some data sets mix these three groups, others don’t. It’s key to know what you are looking at, because you want to benchmark against companies with aspirations similar to your own.
I’ve embedded a copy of the slides below. You can get them on Slideshare or Google Drive as well.
Thanks to those who attended the session, and please note that we’ll soon be hosting a public webinar version of this as well. All are welcome, and I hope to see you there.