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The Fifth SaaS Correction

By Tomasz Tunguz | December 21, 2021

Since 2016, public software has witnessed four corrections. We’re in the midst of the fifth. This guest article from Tomasz Tunguz explains how corrections affect company valuations, and it affects private SaaS companies and their valuations.

The Feedback Loops in Data that Will Change SaaS Architecture

By Tomasz Tunguz | November 30, 2021

According to Tomasz, there hasn’t been an architectural shift in SaaS since the advent of the multi-tenant database, which allowed SaaS companies to put all of their data across customers on a single database. This may be the next shift.

This guest post from Tomasz Tunguz explains the innovation and implications of having two feedback loops: 1) influencing customers and users, and 2) outputs data products and insights that are then fed into the data warehouse layer for downstream consumption.

The Need for Two Types of Payback Period Calculations

By Tomasz Tunguz | November 9, 2021

Two accounts have identical twelve-month contracts except for the payment terms, how should you calculate the payback period? Read this guest post to learn why there is a need for two metrics to exist – a cash-flow-based months-to-repay and an accrual accounting metric.

How to Predict the Forward Multiple of a Software Company

By Tomasz Tunguz | April 27, 2021

High growth software companies are valued based on forward revenue multiples. But, how does the market set the multiple? What predicts the forward multiple, or correlates with it?
Tomasz Tunguz explains how to calculate and predict revenue growth, sales efficiency, and the forward multiple of a SaaS or software company.

Can You Still Make Money Starting a SaaS Company?

By Tomasz Tunguz | March 3, 2021

Where is the SaaS world relative to how far it can go? With valuations of as-a-service companies and all-time highs or close to it, and more and more startups leveraging this model to serve an ever-larger number of consumers, I wondered how much more business is there to capture? Let’s try to estimate. We do […]

Simpson’s Paradox in Measuring Net Dollar Retention Rate

By Tomasz Tunguz | January 26, 2021

Net Dollar Retention is one of the most important metrics is a SaaS business. It measures the value of a cohort of customers over time including expansion, cross-sell, and churn (loss of revenue). But how do you measure NDR? Imagine this is your company’s data. The first column is the cohort month for each cohort […]

100k+ ACV SaaS Companies: Do Their Metrics Differ from Other SaaS Companies?

By Tomasz Tunguz | June 30, 2020

When we published the results of the freemium survey earlier this year, we noticed respondents targeting the enterprise observed higher net dollar retention and lower churn than those startups targeting other segments. I wondered if we could observe any other patterns about enterprise businesses, so I produced this analysis of public companies with ACVs (annual contract […]

Questions About Returning to Work

By Tomasz Tunguz | April 21, 2020

When will a start up’s management team feel comfortable telling employees they’re safe to return to work? Is it when the government declares it safe? Or schools re-open? Or customer prospects agree to meet in person? Or when we each record a positive antibody test? How will we conduct meetings? With masks and gloves? What […]

Product Launches Become the Operating Cadence of a Startup

By Tomasz Tunguz | April 7, 2020

In November 2019, two spectacles occurred. The first is Dreamforce, Salesforce’s annual event and the largest software conference in the world. The second is Elon Musk announcing the Tesla Cybertruck. Benioff and Musk use these events strategically. They engender an operational cadence to Salesforce and Tesla. There’s no feeling like launch day. It’s the day […]

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