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Bessemer 10 Laws Of Being SaaSy Fall 2008

Stashed in: Venture Capital!, Cloud, SaaS

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Ancient but still quite handy summary of success for SaaS startups…

  • 18. Bessemer’s Top 10 Laws for Being “SaaS-y” Your key monthly business metrics are: CMRR (Committed Monthly Recurring Revenue), Churn, and Cash flow - “Bookings” is for suckers Customer Acquisition Cost (CAC) and Customer LifeTime Value (CLTV) are the best indicators of long term value creation Tune before you scale : the Sales Learning Curve is even more critical for SaaS and it takes at least $300k MRR to climb it. Stop at three sales reps until at least two of them are making $100K MRR quotas Separate your “hunters” and “farmers” and pay them all on CMRR growth SaaS is a whole new ecosystem where traditional IT channels don’t work – Focus your business development efforts on business services channels , but you will need to sell directly for a long time as these new set of partners are not easy to ramp-up By definition, your sales prospects are online - Savvy online marketing is a core competence (sometimes the only one) of every successful SaaS business Stay local - Prove your business in North America first. Only after reaching $1M in CMRR should you consider hiring European sales and services execs behind customer demand. Save Asia for post-IPO Single instance, multi-tenant, single datacenter - Have only one version of the code in production. Really. “Just say no” to on-premise deployments The most important part of Software-as-a-Service isn’t “Software” it’s “Service”! Be prepared to cross the desert - SaaS requires R&D and sales expense up front for a multi-year stream of revenue, so it demands enough investment capital to fund 4+ years of runway. Load up for the long trip and pace your consumption of calories! BONUS LAW : You can ignore one of these, but not more than two. Great companies innovate, but pick your battles! 

I'm sorry, but did they say "FUND 4+ YEARS OF RUNWAY" ?!

No venture capitalist thinks like this.

Also telling is that this presentation was given in fall 2008 in the middle of the global financial crisis!

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