In the many thousands of articles advising entrepreneurs on what they have to
focus on to build successful startups, much has been written about three key
factors: team, product and market, with particular focus on the importance of
product/market fit. Failure to get product/market fit right is very likely
the number 1 cause of startup failure. However in all these articles, I have
not seen any discussion about what I believe is the second biggest cause of
startup failure: the cost of acquiring customers turns out to be higher than
expected, and exceeds the ability to monetize those customers.
In case you are not familiar with the importance of Product/Market fit, Marc
Andreessen has a great blog post on this topic: The Pmarca Guide to
Startups, part 4: The only thing that matters.
In this blog, Marc argues that out of the three core elements of a startup,
team, pr... (more)
“If you cannot measure it, you cannot improve it” – Lord Kelvin
This article is a comprehensive and detailed look at the key metrics that are
needed to understand and optimize a SaaS business. It is a completely updated
rewrite of an older post. For this version, I have co-opted two real
experts in the field: Ron Gill, (CFO, NetSuite), and Brad Coffey (VP of
Strategy, HubSpot), to add expertise, color and commentary from the viewpoint
of a public and private SaaS company. My sincere thanks to both of them for
their time and input.
SaaS/subscription businesses are more complex th... (more)
This article looks at the high level goals of a SaaS business and drills down
layer by layer to expose the key metrics that will help drive success.
Metrics for metric’s sake are not very useful. Instead the goal is to
provide a detailed look at what management must focus on to drive a
successful SaaS business. For each metric, we will also look at what is
Before going any further, I would like to thank the management team at
HubSpot, and Gail Goodman of Constant Contact, who sits on the HubSpot board.
A huge part of the material that I write about below comes my exp... (more)
Portals, e-commerce sites, B2B commerce and so on...we're witnessing
unprecedented demand for e-business solutions of every stripe as companies
rush to put their businesses on the Web. With Y2K now out of the way, this
has become the top IT priority.
In the past many of these solutions have been built on top of IRM (Internet
Relationship Management) products such as Vignette and BroadVision whose
primary specialization has been content management and personalization. For
early Web sites, mostly serving up static content, this was sufficient. But
once the basic site is up and run... (more)
As a serial entrepreneur, I learned a lot of lessons from things that
didn’t work. These lessons later on shaped my ideas on what would be needed
to build a successful startup company. When I became a VC, I realized that
these same lessons could be applied to helping evaluate the many businesses
that I was getting to see. Whilst the following criteria are by no means a
guarantee of success, or the only criteria that you should think about, I do
believe they can be very helpful.
So in no particular order, here is a list of six questions that I learned to
ask to validate my own st... (more)