Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Numbers That Actually Matter
SaaStr 2017
Numbers That Actually Matter
Mamoon Hamid
Co-Founder + General Partner
02.08.17
The Dream
Not-So-Fictional SaaS Company
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Jan-11 Feb-11 Mar-11 Apr-11 May...
MRR Growth Accounting in Year 1
-$10,000
-$5,000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
Jan-11 Feb-11 Mar-11 Apr-11 May...
0.4
4.0
40.0
Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
Quick Ratio in Year 1
0.5
5.0
50.0
Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
New MRR + Expansion MRR
C...
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
Gross C...
Not-so-Fictional SaaS Co. – Year 1 Recap
• From almost zero to $1.1M in ARR
• Mostly organic MRR growth
• Quick Ratio hove...
Not-So-Fictional SaaS Company – Year 1 to 3
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,00...
Not-So-Fictional SaaS Company – Year 1 to 3
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,00...
Not-So-Fictional SaaS Company – Year 1 to 3
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,00...
Not-So-Fictional SaaS Company – Year 1 to 3
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,00...
MRR Growth Accounting – Year 1-3
-$60,000
-$40,000
-$20,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000
New Expansion Cont...
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 O...
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13
Gross C...
Not-so-Fictional SaaS Co. – Year 1 to 3 Recap
• From $1.1M to $9.4M
• But it took 20 sales people
• Expansion revenue offs...
How do we make sense of this?
• Product-market fit happens one customer at a time one
month at a time.
• Mostly ignored an...
Find your North Star
• MRR	is	the	price that	the	customer	pays,	the	North	Star	is	the	
value that	they	get.
• Your	North	S...
North Star Metric: For example - DAU/MAU
What Company is this?
25%
30%
35%
40%
45%
50%
55%
60%
65%
M1 M2 M3 M4 M5 M6 M7 M8...
North Star Metric:
Facebook DAU/MAU = 55% (until 2012)
25%
30%
35%
40%
45%
50%
55%
60%
65%
M1 M2 M3 M4 M5 M6 M7 M8 M9 M10M...
North Star Metric: DAU/MAU for Slack
25%
30%
35%
40%
45%
50%
55%
60%
65%
M1 M2 M3 M4 M5 M6 M7 M8 M9 M10M11M12M13M14M15M16M...
North Star Metric – Wait a Second…
What’s the Orange Line?
25%
30%
35%
40%
45%
50%
55%
60%
65%
M1 M2 M3 M4 M5 M6 M7 M8 M9 ...
North Star Metric – DAU/MAU
Front: The Shared Inbox App
25%
30%
35%
40%
45%
50%
55%
60%
65%
M1 M2 M3 M4 M5 M6 M7 M8 M9 M10...
What’s a good or bad North Star?
• Bad: Mostly measuring price paid as opposed to value
delivered
• MRR, paid seats
• Good...
# of file actions
DAU/MAU
# of Customer Interactions
WAU/MAU
Pitches Viewed
DAU/MAU
Hires made
WAU/MAU
User App - Pairs
Ap...
Value Delivered > Price Paid (MRR)
• Understand your MRR growth accounting
• Even though it’s likely a lagging indicator
•...
So What Happened to Not-So-
Fictional SaaS Co. Over Time?
ARR – Over 6 Years
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,0...
ARR – Over 6 Years
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,0...
ARR – Over 6 Years
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,0...
MRR Growth Accounting – Over 6 Years
-$200,000
-$100,000
$0
$100,000
$200,000
$300,000
$400,000
New Expansion Contraction ...
-7%
-5%
-3%
-1%
1%
3%
5%
7%
Date Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16
Gross Churn ...
0.4
4.0
40.0
Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16
Quick Ratio– Over 6 Years
What does this mean?
• New Revenue barely makes up for your churned revenue
• Lack of new funding require sacrifices - pro...
Numbers that Actually Matter. Finding Your North Star
Numbers that Actually Matter. Finding Your North Star
Numbers that Actually Matter. Finding Your North Star
Numbers that Actually Matter. Finding Your North Star
Numbers that Actually Matter. Finding Your North Star
Numbers that Actually Matter. Finding Your North Star
Upcoming SlideShare
Loading in …5
×

of

Numbers that Actually Matter. Finding Your North Star  Slide 1 Numbers that Actually Matter. Finding Your North Star  Slide 2 Numbers that Actually Matter. Finding Your North Star  Slide 3 Numbers that Actually Matter. Finding Your North Star  Slide 4 Numbers that Actually Matter. Finding Your North Star  Slide 5 Numbers that Actually Matter. Finding Your North Star  Slide 6 Numbers that Actually Matter. Finding Your North Star  Slide 7 Numbers that Actually Matter. Finding Your North Star  Slide 8 Numbers that Actually Matter. Finding Your North Star  Slide 9 Numbers that Actually Matter. Finding Your North Star  Slide 10 Numbers that Actually Matter. Finding Your North Star  Slide 11 Numbers that Actually Matter. Finding Your North Star  Slide 12 Numbers that Actually Matter. Finding Your North Star  Slide 13 Numbers that Actually Matter. Finding Your North Star  Slide 14 Numbers that Actually Matter. Finding Your North Star  Slide 15 Numbers that Actually Matter. Finding Your North Star  Slide 16 Numbers that Actually Matter. Finding Your North Star  Slide 17 Numbers that Actually Matter. Finding Your North Star  Slide 18 Numbers that Actually Matter. Finding Your North Star  Slide 19 Numbers that Actually Matter. Finding Your North Star  Slide 20 Numbers that Actually Matter. Finding Your North Star  Slide 21 Numbers that Actually Matter. Finding Your North Star  Slide 22 Numbers that Actually Matter. Finding Your North Star  Slide 23 Numbers that Actually Matter. Finding Your North Star  Slide 24 Numbers that Actually Matter. Finding Your North Star  Slide 25 Numbers that Actually Matter. Finding Your North Star  Slide 26 Numbers that Actually Matter. Finding Your North Star  Slide 27 Numbers that Actually Matter. Finding Your North Star  Slide 28 Numbers that Actually Matter. Finding Your North Star  Slide 29 Numbers that Actually Matter. Finding Your North Star  Slide 30 Numbers that Actually Matter. Finding Your North Star  Slide 31 Numbers that Actually Matter. Finding Your North Star  Slide 32 Numbers that Actually Matter. Finding Your North Star  Slide 33 Numbers that Actually Matter. Finding Your North Star  Slide 34 Numbers that Actually Matter. Finding Your North Star  Slide 35 Numbers that Actually Matter. Finding Your North Star  Slide 36 Numbers that Actually Matter. Finding Your North Star  Slide 37 Numbers that Actually Matter. Finding Your North Star  Slide 38 Numbers that Actually Matter. Finding Your North Star  Slide 39 Numbers that Actually Matter. Finding Your North Star  Slide 40 Numbers that Actually Matter. Finding Your North Star  Slide 41
Upcoming SlideShare
The State of the Cloud Report 2017
Next
Download to read offline and view in fullscreen.

141 Likes

Share

Download to read offline

Numbers that Actually Matter. Finding Your North Star

Download to read offline

This presentation uncovers a common misconception in fast growing SaaS businesses. Revenue reigns over everything. We talk about what really matters in building a sustainable SaaS company.

Related Books

Free with a 30 day trial from Scribd

See all

Related Audiobooks

Free with a 30 day trial from Scribd

See all

Numbers that Actually Matter. Finding Your North Star

  1. 1. Numbers That Actually Matter
  2. 2. SaaStr 2017 Numbers That Actually Matter Mamoon Hamid Co-Founder + General Partner 02.08.17
  3. 3. The Dream
  4. 4. Not-So-Fictional SaaS Company $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11
  5. 5. MRR Growth Accounting in Year 1 -$10,000 -$5,000 $0 $5,000 $10,000 $15,000 $20,000 $25,000 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 New Expansion Contraction Churned
  6. 6. 0.4 4.0 40.0 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Quick Ratio in Year 1
  7. 7. 0.5 5.0 50.0 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 New MRR + Expansion MRR Churned MRR + Contraction MRR Quick Ratio (QR) = QR > 4 👍
  8. 8. -8% -6% -4% -2% 0% 2% 4% 6% 8% Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Gross Churn Net Churn Churn – Year 1
  9. 9. Not-so-Fictional SaaS Co. – Year 1 Recap • From almost zero to $1.1M in ARR • Mostly organic MRR growth • Quick Ratio hovering around 4 • Negative Churn 👍 👍 👍 👍 Series A Likelihood > 90%
  10. 10. Not-So-Fictional SaaS Company – Year 1 to 3 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
  11. 11. Not-So-Fictional SaaS Company – Year 1 to 3 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
  12. 12. Not-So-Fictional SaaS Company – Year 1 to 3 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 🔥
  13. 13. Not-So-Fictional SaaS Company – Year 1 to 3 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 💰💰💰
  14. 14. MRR Growth Accounting – Year 1-3 -$60,000 -$40,000 -$20,000 $0 $20,000 $40,000 $60,000 $80,000 $100,000 New Expansion Contraction Churned
  15. 15. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Quick Ratio in Year 1 to 3 🆘
  16. 16. -8% -6% -4% -2% 0% 2% 4% 6% 8% Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Gross Churn Net Churn Churn – Year 1 to 3
  17. 17. Not-so-Fictional SaaS Co. – Year 1 to 3 Recap • From $1.1M to $9.4M • But it took 20 sales people • Expansion revenue offset by churned revenue • Quick Ratio hovering around 2 • High Gross Churn & Positive Net Churn • $1M/month of burn! 👍 Vanity Metrics Suggest Series B Likelihood > 90% Underlying Metrics Suggest 👎 👎 👎 👎 🆘 👎 👎
  18. 18. How do we make sense of this? • Product-market fit happens one customer at a time one month at a time. • Mostly ignored any product-market fit metrics • Churn/Expansion/Contraction MRR is a lagging indicator of product-market fit • How could you have seen it? By focusing on a leading indicator of the MRR decision...
  19. 19. Find your North Star • MRR is the price that the customer pays, the North Star is the value that they get. • Your North Star measures the value you deliver!
  20. 20. North Star Metric: For example - DAU/MAU What Company is this? 25% 30% 35% 40% 45% 50% 55% 60% 65% M1 M2 M3 M4 M5 M6 M7 M8 M9 M10M11M12M13M14M15M16M17M18M19M20M21M22M23M24M25M26M27M28M29M30M31M32M33M34M35
  21. 21. North Star Metric: Facebook DAU/MAU = 55% (until 2012) 25% 30% 35% 40% 45% 50% 55% 60% 65% M1 M2 M3 M4 M5 M6 M7 M8 M9 M10M11M12M13M14M15M16M17M18M19M20M21M22M23M24M25M26M27M28M29M30M31M32M33M34M35
  22. 22. North Star Metric: DAU/MAU for Slack 25% 30% 35% 40% 45% 50% 55% 60% 65% M1 M2 M3 M4 M5 M6 M7 M8 M9 M10M11M12M13M14M15M16M17M18M19M20M21M22M23M24M25M26M27M28M29M30M31M32M33M34M35 ! !
  23. 23. North Star Metric – Wait a Second… What’s the Orange Line? 25% 30% 35% 40% 45% 50% 55% 60% 65% M1 M2 M3 M4 M5 M6 M7 M8 M9 M10M11M12M13M14M15M16M17M18M19M20M21M22M23M24M25M26M27M28M29M30M31M32M33M34M35 ! !
  24. 24. North Star Metric – DAU/MAU Front: The Shared Inbox App 25% 30% 35% 40% 45% 50% 55% 60% 65% M1 M2 M3 M4 M5 M6 M7 M8 M9 M10M11M12M13M14M15M16M17M18M19M20M21M22M23M24M25M26M27M28M29M30M31M32M33M34M35 ! !
  25. 25. What’s a good or bad North Star? • Bad: Mostly measuring price paid as opposed to value delivered • MRR, paid seats • Good: Measures value delivered in bulk • MAU, DAU, messages sent • Better: Unquestionably indicates Product Market fit has been reached with the customer • Number of users with L28>=16 • Messages sent w/in 30 days of signup
  26. 26. # of file actions DAU/MAU # of Customer Interactions WAU/MAU Pitches Viewed DAU/MAU Hires made WAU/MAU User App - Pairs Apps signed onto per DAU Apps monitored per user MAUs Other North Star Metrics
  27. 27. Value Delivered > Price Paid (MRR) • Understand your MRR growth accounting • Even though it’s likely a lagging indicator • Focus on value delivered, not price paid or the efficiency of the sales machine that got them to pay • Find your North Star
  28. 28. So What Happened to Not-So- Fictional SaaS Co. Over Time?
  29. 29. ARR – Over 6 Years $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16
  30. 30. ARR – Over 6 Years $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16
  31. 31. ARR – Over 6 Years $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16
  32. 32. MRR Growth Accounting – Over 6 Years -$200,000 -$100,000 $0 $100,000 $200,000 $300,000 $400,000 New Expansion Contraction Churned
  33. 33. -7% -5% -3% -1% 1% 3% 5% 7% Date Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Gross Churn Net Churn Churn – Over 6 Years
  34. 34. 0.4 4.0 40.0 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Quick Ratio– Over 6 Years
  35. 35. What does this mean? • New Revenue barely makes up for your churned revenue • Lack of new funding require sacrifices - product development gets starved • Less competitive product means it becomes harder to add new customers and more churn • Hard to retain talent • And you enter a vicious cycle…
  • AprilCantu2

    Nov. 23, 2021
  • eomtank

    Apr. 10, 2021
  • JinRayan

    Jul. 2, 2020
  • RobbieJack

    Jun. 6, 2020
  • mpaavola

    Apr. 8, 2020
  • slidesharejoker

    Feb. 14, 2020
  • VICTORMANUEL345

    Dec. 28, 2019
  • JonathanLimTan

    Nov. 8, 2019
  • MohammedNassimAlhebishy

    Oct. 13, 2019
  • hsiaoannedoo

    Aug. 16, 2019
  • SteveLandry

    May. 22, 2019
  • kristofferlindstrom96

    May. 5, 2019
  • TECHIPADILLAPAREDES

    Apr. 28, 2019
  • RasulNasru

    Apr. 26, 2019
  • MicheleBoccardi

    Mar. 25, 2019
  • moctapka

    Feb. 20, 2019
  • LamprosRoussos

    Nov. 4, 2018
  • narayankrish

    Sep. 21, 2018
  • MarcoVossen

    Aug. 18, 2018
  • SyarifahRiefandania

    Aug. 14, 2018

This presentation uncovers a common misconception in fast growing SaaS businesses. Revenue reigns over everything. We talk about what really matters in building a sustainable SaaS company.

Views

Total views

218,439

On Slideshare

0

From embeds

0

Number of embeds

7,192

Actions

Downloads

209

Shares

0

Comments

0

Likes

141

×