The Role of FP&A vis a vis Revenue Operations - with Paul Barnhurst, The FP&A Guy

Metrics that Measure Up

#MBA #Business #Ray Rike #B2bsaas #B2bcloud #Founders #Customer Acquisition #Revenue Operations #Trading #Entrepreneur #Metric #Benchmark #RevOps

37:03

“I could be walking in Central Park and come up on one of these horse and buggies. I don't think twice about it because I see it as part of the New York attraction. You know, you have the Statue of Liberty, you have Times Square, and you have these romantic horse and buggy things where people get married in the park and they ride these carriages. And tourists, they take these rides in Central Park. It's romantic, it's something beautiful to see. But I never thought for one second that these horses are abused.” – Tracy Winston, juror from Ryder’s trial New York City has a big, visible animal cruelty issue: horses forced to pull carriages, carrying heavy loads for long hours in all types of weather in the middle of chaotic traffic. Three years ago, a carriage horse named Ryder was a victim of this cruelty. He collapsed on a Manhattan street after being worked for hours in the summer heat. Two months later, he was euthanized. His story sparked global outrage. Ryder’s driver, Ian McKeever, was charged with animal cruelty The trial took place a few weeks ago, but McKeever was ultimately acquitted. This conversation is with Edita Birnkrant, the Executive Director of NYCLASS and Tracy Winston, one of the jurors from Ryder's trial. New York’s weak and outdated animal protection laws have not changed since Ryder died— and because of this, another avoidable death that occurred just a week after we recorded this interview. On August 5th, a horse named Lady died while pulling a carriage in Manhattan. This conversation is about accountability, about corruption and about what happens when justice fails the most vulnerable. It's too late for Ryder and Lady. But it is not too late to act. If you live in New York, please call your City Council members and tell them it’s time to bring Ryder’s Law, Intro 967, up for a vote and pass this vital bill to protect carriage horses from suffering and death on the city’s streets. To find your council member, go to: https://www.speciesunite.com/ny-horse-carriage-petition NYCLASS: https://nyclass.org/…

3 years ago 27:33

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You may have heard the acronym FP&A many times, but always wondered what it stood for? Financial Planning and Analysis is the function, typically present in more mature companies responsible that is responsible for financial planning, modeling and analysis.
Paul has a summarized view of what FP&A professionals are responsible for which is: "FP&A is responsible to maximize shareholder return by helping businesses to best deploy and allocate future dollars".
Where does FP&A start and end, versus the Revenue Operations function? Well, the answer was clear as mud. Paul shared that each company defines FP&A and RevOps differently, Some companies have "operations" report to the CFO and some to the Chief Revenue Officer. The primary answer was "planning and modeling" goes into FP&A, and the rest of operations depends on the culture and competency within a company.
Forecasting was another topic that is sometimes responsible for forecasting and others FP&A simply validates the Sales provided forecast, but not to create and share the forecast. Basically, can FP&A use historical financial data toreview and validate the forecast.
I drilled down into how FP&A departments become involved with "SaaS Metrics" in the SaaS industry. Paul likes to see CFOs as the primary owner of the data that drives SaaS Metrics to ensure that the input data and the enterprise value creating metrics are standardized. Basically, not having the Go-to-Market functions own the SaaS Metrics formula definition, but can collaborate with FP&A in the calculation of the metrics using the "Finance" approved definition and calculation formula.
If you are involved in the financial planning, modeling and reporting process in your SaaS company, and already have or are evaluating introducing a FP&A function that will work closely with the GTM operations teams (Sales Ops, Marketing Ops, CS Ops and/or RevOps) this conversation is a great listen!

128 episodes

Metrics that Measure Up

The Role of FP&A vis a vis Revenue Operations - with Paul Barnhurst, The FP&A Guy

Metrics that Measure Up

published 3 years ago

MP3•Episode home

128 episodes

#MBA #Business #Ray Rike #B2bsaas #B2bcloud #Founders #Customer Acquisition #Revenue Operations #Trading #Entrepreneur #Metric #Benchmark #RevOps

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Metrics that Measure Up

1
Microsoft Product Leader to SaaS Founder - with Anand Subbaraj, Founder and CEO Zuper 30:52

2 years ago30:52

30:52

Imagine being a senior product leader at Microsoft for one of the leading "cloud products" in the industry, Azure Data Factory, and deciding to leave the stability, security, and prestige behind to launch your own B2B SaaS company. This is exactly the decision and journey that Anand Subbaraj began five years ago. Anand spent 13 years at Microsoft but was fortunate to be involved with five different product launches (V1) over 13 years, with a primary focus on understanding the market and customer requirements. By being part of the founding team at Azure Data Factory, Anand learned what it took to take on established industry leaders, with a product that had not previously been introduced to the market. Anand's experience with new product introductions at Microsoft, Anand had a personal experience in servicing his refrigerator at home, which served as the catalyst that customer service was ripe for transformation. After having three different service technicians have to make six visits to fix the issue, Anand was sure there had to be a better way to leverage automation to transform field service. As a result, Zuper was launched. What learnings has Anand had starting, growing, and leading his own company? First, Anand gained an understanding that Marketing is about investing to build a brand and market awareness, and is more science than art. Anand also learned a lot about cold calling, and what is required to make the first sales in a newly formed B2B SaaS company. By taking the lead on all initial outreach for Zuper, Anand was able to directly hear from the market on what they wanted and/or needed to consider transforming how they were managing the field service process. Anand also learned that without the "Microsoft" brand, that persistence in cold calling was critical to gaining early traction. Anand executive the "founder-led sales" model from $0 to $1M ARR. By taking this responsibility himself, not only did he have direct access to product requirement input from the market, but he could also hand over a "sales process" that worked to acquire the first $1M ARR. Anand leaned on "Marketing" first to create awareness and demand before hiring his first professional Sale resource. Identifying a gap in the marketplace is a key ingredient to the idea to launch a new company. At Zuper, Anand identified that many companies were viewing field service management automation as an extension of CRM. Second, consumers now expect a seamless experience like Uber, while companies require the ability to configure their processes within an automation platform, not to force their process to adapt to take advantage of the B2B SaaS platform. Understanding and being able to measure the business value delivered to the customer is critical for early-stage B2B SaaS companies. First, the ability to improve efficiency in the business process being automated, second is improving the productivity of the field service workforce, such as spending less time on driving to the next appointment and more time on fixing the customer's issue. In the Zuper example, measuring the "first-time fix rate" of new service tickets is a key benefit, and the Zuper customers see a 30% increase in the first-time fix rate by having the right technician, the right parts, and the right tools. When asked what "SaaS metrics" Anand uses, here is what he shared: Top Lagging Indicators Used: ARR and ARR Growth Customer Churn Burn Rate Cash runway Top Leading Indicators Used: Product Usage Customer Acquisition Cost Customer Lifetime Value CAC Payback Period (new) If you are a product leader or in a large stable company today, but considering launching your own B2B Saas company, this conversation with Anand Subbaraj is a great listen!…

Metrics that Measure Up

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Evolving from Excel for SaaS Financial and Metrics Reporting - with Ali Rizvi Founder and CEO, TrueRev 28:12

2 years ago28:12

28:12

Excel is the #1 tool B2B SaaS companies use for many financial tasks, including calculating SaaS metrics to surface insights for operating decisions and investor updates. Ali started his career in tech as an auditor at Ernst and Young, with a priority focus on revenue recognition and reporting. While auditing a top tier B2B SaaS company, he was provided multiple spreadsheets with thousands of rows of data, and it even required almost 10 minutes to just open the Excel file, and almost 6 months to complete the audit. The primary challenge, finding all of the data required for the audit in an extremely large and poorly structured Excel model. What are the top signs that a founder/CEO will see to know it might be time to move beyond Excel? Ali suggests at $1M and above that Quickbooks is a fine General Ledger, but the initial issues are associated with revenue recognition and the associated reporting. Often, this is due to not having the right human resources who truly understand revenue recognition policy, and then the manual required to create a model and the appropriate formulas for revenue recognition. One sign that Excel might not be doing the job, is if revenue is being recognized on a cash basis. Another sign might be when an investor asks what your "MRR or ARR" is, and you realize it includes professional services or one-time fees. Why is getting revenue recognition important to an early-stage company? It becomes important when external stakeholders, like existing or potential investors, ask for things like GAAP revenue growth rates, and ARR growth rates and you cannot provide the answers because the financial foundation and reporting infrastructure have not been established. Inevitably if you are quickly heading to $1M ARR or already above that level, founders and CEOs are expected to know their numbers. One common tactic is to hire an external accountant, and ask them to set up revenue recognition and other financial reporting in Excel - the challenge with this is that it is not scalable, and if the "rent an accountant" goes away, it is hard for the next resource to understand the excel model. Next, we discussed the reality of ASC 606 (GAAP accounting policy), and how it impacts the need for more advanced financial reporting capabilities. ASC 606 includes very complex and nuanced accounting rules that Excel is just not well positioned to be the primary solution for modeling and reporting GAAP revenue and the associated financial metrics such as Gross Profit, EBITDA, and Net Income. The most important initial SaaS metric is Contracted ARR, and ARR including growth rates. Quickly following is the ability to understand Sales and Marketing expenses and the associated customer acquisition cost efficiency metrics including Customer Acquisition Cost, and CAC Payback Period. Cash burn and cash runway are other critical insights that a founder/CEO needs to ensure are available and accurate early on. When I asked Ali about other SaaS Metrics, he highlighted a recent example where a company wanted to start reporting their CARR and ARR, and they close a majority of deals mid-month. They were confused about how they report ARR for the month the contract was signed, and how those decisions impact the associated recognized revenue (GAAP revenue). If you are an early-stage SaaS company and are having challenges with Excel to capture, calculate and report basis SaaS financials including GAAP revenue, CARR, ARR and the associated SaaS performance metrics the conversation with Ali Rizvi is highly informative.…

Metrics that Measure Up

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State of the Cloud 2023 (Episode 1) - with Janelle Teng, Bessemer Venture Partners 21:29

2 years ago21:29

21:29

In Episode #1 of this 2-episode conversation, Ray discusses the key findings from the Bessemer Venture Partners (BVP) annual "State of the Cloud" report for 2023 with Janelle Teng, Vice President and co-author of this year's report. Janelle is involved in many different research programs at BVP, including the "State of the Cloud" and the "Scaling to $100M ARR" reports. In this first episode of the "State of the Cloud 2023" report, we focus on the change in B2B Cloud company valuations in 2022 and the current state of the industry. Public cloud companies experienced the "SaaSacre" of 2022. Interest rates shocked the cloud industry in 2022 resulting in a greater than 40% reduction in public cloud company value. The forward trading multiple of public cloud companies is now below the long-term average and were halved in 2022. There are glimmers of hope from the Q123 timeframe. One example is Microsoft reported better than expected earnings in Q1, fueled by the interest in AI. These large tech companies are a great index for the smaller, private Cloud companies. The Cloud index is up about 5% in Q123, which provides hope for the re-emergence of Cloud valuations. Even with the aggressive pullback in public cloud company valuations, the average BVP Index cloud company has grown 50% faster than a traditional company - over a 10-year horizon. When will "Venture Capital" funding return to a more normalized state? Janelle asked the 60 investment professionals at BVP when will be the best time for a founder to raise VC money? The top timeframe forecasted was 2H24' with 1H24' being the second forecasted period for raising a round from Venture Capital. However, 1H23' was still in the running - highlighting the excitement around the current AI boom. The number of VC deals and the amount of VC funding in Q123 was down from the previous year and the previous quarter, so the turnaround in VC deal velocity is still in front of us. In the second half of my conversation, Episode 2 with Janelle, she shares the TOP 5 predictions for the Cloud in 2023!…

Metrics that Measure Up

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State of the Cloud 2023 - Top Five Predictions with Janelle Teng, Bessemer Venture Partners (Episode #2) 25:51

2 years ago25:51

25:51

State of the Cloud 2023: Top Five Predictions: #1: Efficient Growth Adopt new solutions to gain control of their Cloud and SaaS spend, including the infrastructure cost to deliver SaaS Solutions. Tools include Cloud FinOps tools, SaaS Spend Solutions, and engineering productivity tools to improve R&D processes. One of the areas of focus is on Cloud Spend as a way to manage the Cost of Goods Sold and thus increase Gross Margin which sets the ceiling for Saas profitability. Public SaaS companies with Gross Margins under 50% have a hard time driving Free Cash Flow of 20% or greater which is critical to enterprise value multiples. Some examples of tools to gain control of Cloud Spend are included in the Bessemer Ventures technical playbook of 40 tactics to drive profitable growth - this playbook can be found on Atlas on the BVP.com website - the report is called the "CEOs tactical guide to drive profitable growth". #2: Climate Software will drive the Green Energy Transition With the increase in consumer activism and government regulation, the green energy revolution is here. To support this green economy, cloud software that is tailored made to power the transition to green energy will explode. Examples are software dedicated to solar, infrastructure, sustainable design, and fossil fuel infrastructure transition. #3: Initial value of AI will be to the user The AI and Large Language Model business ecosystems are evolving quickly. Bessemer believes the ultimate winner is the user to increase individual productivity at work and in their personal lives. AI research is now democratized so end users can have access to and build upon the latest AI capabilities. One example is ChatGPT being released to the general public and acquiring over 100 million users in the first three months - the faster-growing internet site ever!!! Bessemer calls the current AI revolution a B2C2B motion. This highlights the consumer excitement about the benefits of AI, which will in return bring these tools and techniques to the corporate workplace. #4: The application layer is where the most impact from AI will happen first Due to the democratization of access to AI, the power of AI will be available to any company, that can embed AI without their own AI team. This will make horizontal B2B SaaS companies to provide AI driven workflows and processes without the need for a large internal AI development team. With the number of transactions in many SaaS platforms, the opportunity to accelerate the insights to enhance business process efficiency. #5: AI companies will grow twice as fast as traditional B2B Cloud companies Bessemer predicts the time the best AI companies will require to grow from $100M to $1B will be 50% faster than the historic fastest growers like Canva, Zoom, and Twilio. That is truly impressive as these companies scaled from $100M to $1B in four years or less! If you are a student of the Cloud industry or just SaaS-curious about where the industry is heading - the Bessemer Venture Partners "State of the Cloud 2023" is a great read and this podcast discussing the top five predictions is a must-listen!…

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Event-Led Growth in B2B SaaS - with Julius Solaris, Founder and CEO Boldpush 36:40

2 years ago36:40

36:40

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B2B SaaS Metrics and Prioities with the Alexander Group - Ted Grossman and Davis Giedt 38:26

2 years ago38:26

38:26

The Alexander Group works with many of the leading companies in the B2B SaaS industry, and I was recently joined by Ted Grossman, their co-lead of the technology industry practice, and Davis Giedt, Director of Research and Analytics. Based upon Ted and Davis' unique insights and understanding of B2B SaaS due to the discussions and data from over one hundred customers, coupled with their historic Sales Compensation research and benchmarks with has become an industry standard. My first question was how has the use of SaaS metrics evolved. Ted's perspective is the core metrics have not changed that much over the past few years - rather it is the weight that is placed on specific metrics, especially growth vs profitability. As an example in 2021 and the first half of 2022, the weight was much higher on growth rate versus profitability metrics. One example is the Rule of 40 has increased in importance as measured by R-Squared by 3x over the last 6 months. As such "Margin + Growth" is much more balanced in 2023. Ted highlighted "expense to revenue" as a top priority at the macro level. This is also a very easy metric to benchmark against the industry. Then you can dive down into more granular revenue growth efficiency metrics such as "Profitability by Sales rep. Other things like the CAC Payback Period which measures the amount of time to pay back the acquisition of a new customer. Net and Gross Retention Rates are also high-priority metrics to understand the efficacy of retaining and expanding revenue with existing customers. What about the importance of changing the mix of revenue growth from new customers versus existing customers? The story varies in every company and depends on company-specific attributes such as do they have multiple products, or do they have a product that can expand usage to additional users, departments, or business units within an existing customer. When I asked Davis the "top" metrics he prefers, they included: Sales and Marketing expense to revenue which tests for every dollar invested in revenue growth, how much is returned on both a new and top-line revenue basis. Davis shared a 35% - 40% S&M expense to revenue as a good benchmark for growth companies Cost of Growth, sometimes known as the SaaS Magic number measures the top-line revenue growth versus Sales and Marketing investment, which has a range of .5 (poor), .75 - 1 (good), and > 1 (best) CLTV:CAC measures the amount of Gross Profit (or Revenue minus Cost of Goods Sold) generated against the revenue a new customer generates over the life of a customer. A CLTV:CAC ratio of 3x is good, though has been increasing over the past 2-3 years. CLTV:CAC ratio is a long-term ROI measurement Next, we discussed the topic of "consistency of metric calculation" when using industry benchmarks. Davis highlighted that for their clients they use one standard metric calculation formula to ensure when they are benchmarking it is an apples-to-apples comparison. One specific example was if you are trying to measure the efficiency of growing new customer ARR versus existing customer growth ARR, things like a "time study" may need to be conducted to properly allocate expenses to the pursuit of each growth ARR type. If you are a B2B SaaS company leader, the discussion with Ted and Davis provides some unique insights and perspectives that only come with the unique visibility they have across hundreds of leading B2B companies.…

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Scale your SaaS - with Matt Wolach, founder of Xsellus and "Scale your SaaS" podcast 31:13

2 years ago31:13

31:13

Matt Wolach is the founder of Xsellus and host of the Scale your SaaS podcast. Matt is one of those guests that have taken over a year to be on the Metrics that Measure Up podcast. Matt has hosted over 250 episodes of "Scale your SaaS" and was one of the inspirations for this podcast. The first question I asked Matt was about the common attributes that successful SaaS founders exhibited. By being a podcast host, Matt found he often learned more than he shares. However, one of the common themes of the most successful founders was the amount of time they invest in getting to know and understand their potential customers. Those discussions to dive into the mind of their potential customers was a key to success, and Matt recommends the goal should be to have about 50 of those discussions, versus the 3-5 that far too many founders conduct. What are the top three challenges that Matt sees early-stage companies face: 1) Lead generation/Pipeline which often early-stage companies over-index on one or two channels. Matt recommends finding 4 - 5 channels that work, and then continuously optimize each channel. Matt says there are 18 ways to generate leads in a B2B Saa company, including commonly missed lead sources such as a defined lead referral process with current customers. Other missed lead sources such as influencers and affiliate programs are undervalued. 2) Ability to close qualified leads is another inconsistent competency of many early-stage companies, which is especially dangerous if significant money is being invested in Marketing and lead generation activities. Matt suggests fixing the qualified lead to Closed-Won process before investing more in additional lead generation. 3) Lead form/demo form to demo completed is surprisingly a big leak for many early-stage companies. Matt shared the story that one of his new customers did not even measure the number of people requesting to be contacted or have a demo. The inbound demo request-to-demo completed ratio is a critical conversion rate that far too many companies do not measure. Matt said that an average of 42% of people who request a meeting or demo actually end up having a meeting with the vendor - meaning 58% of high-intent leads are not actually being followed up with timely. What metric does Matt like for B2B Saas companies in the $1M - $5M ARR range? Matt said the Customer Lifetime Value to Customer Acquisition Cost Ratio (CLTV:CAC Ratio) is one of his favorite metrics. Essentially with the industry standards that Matt shared a 3:1 CLTV:CAC ratio is a good goal, it means that for every dollar you invest in Sales and Marketing, $3 of gross profit is generated. The latest RevOps Squared benchmarks show that a 4:1 CLTV:CAC Ratio is the new benchmark. If you are an early-stage B2B SaaS company, this conversation with Matt Wolach, the founder of Xsellus is a great listen…

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SaaS Expansion across Europe - with Rick Pizzoli, Sales Force Europe 33:59

2 years ago33:59

33:59

In 2023 many SaaS companies are searching for what market(s) are going to drive their next phase of growth - and international markets, especially English-speaking countries are often considered by U.S. B2B SaaS companies. Rick Pizzoli, moved to Europe over 25 years ago to launch the European presence for U.S. based software companies. Based upon that experience, Rick and Sales Force Europe has helped over 500 companies enter and/or expand their presence beyond the United States or a single country in Europe. Rick shared that the majority of U.S. companies first start to consider entering the European market in the $5M - $10M ARR range. European companies begin to expand beyond their home country a little earlier, often in the $2M - $3M ARR range due to the more limited breadth of each country in Europe. Understanding your positioning, messaging, value proposition, and efficiency of your "home market" customer acquisition motion as measured by metrics are critical foundational elements to planning for an entry into a new country. If a company has not captured and documented the keys to success in its home country, it will be impossible to be successful in a new country. Another key factor to consider when entering into the European market is do you have a "lighthouse" account in a country you can build upon, and/or do you have a product that is localized for countries beyond English speaking? Rick's perspective is conducting market research to determine the "best" initial country is a better strategy than just saying let's just go to the United Kingdom, as it is the most like the US market and they speak English. At the same time, the UK market, especially in London is probably the most competitive market to enter, as so many U.S. based companies use the same "we similar" mentality. Bringing on local talent that understands the local market, has relationships in the local market, and can translate the "messaging and positioning" that works well in the U.S. to the local European country. There are nuances of the "talent profile" that works in one country versus another, which suggests having a local team with local leadership will yield a faster return on investment than parachuting in one or two resources from the home country. One key to success is seeding the market awareness and engagement with top-of-funnel activities beginning with a digital marketing strategy 3-6 months before having a local, on-the-ground presence. Having local Sales Development resources in place for at least 3 months before having a local Account Executive will also increase the productivity of those first 1-2 AEs. Having a local presence shows a true "commitment" to the local market and will make the majority of in-country buyers more comfortable with purchasing from a recent entrant to the local market. Should a company start with a single or at least two resources when first entering into a new country? Two resources are always better, and could also allow for additional language skills for the second target country that is being considered in a pan-European presence. It also eliminates the "resource" vs "market" specific challenges. If you are considering or just beginning the evaluation process to expand your U.S. or single European country B2B SaaS company into or across Europe, this conversation with Rick Pizzoli and Sales Force Europe is highly informative.…

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SaaS Spend Management Trends - with Eric Christopher, Founder and CEO Zylo 34:11

2 years ago34:11

34:11

Eric Christopher, the founder, and CEO of Zylo is sitting on top of one of the industry's largest SaaS spend data repositories and thus benchmarks, a key reason I knew I needed to have Eric as a guest on the podcast. What was the catalyst for founding Zylo? It started with Eric's experience as a revenue leader in two social media platform companies. Eric realized that by introducing new solutions directly to the Marketing department, it was becoming difficult for companies to manage and govern SaaS spend. "A business idea with complexity is worth pursuing" - the words an advisor shared with Eric which was part of the motivation to founding Zylo! Since anyone in a company can be a buyer of a SaaS solution, coupled with the existence of thousands of vendors with very different features and pricing, buying a SaaS product is complex. Moreover, measuring the value is very difficult and often, ill-defined. How does Eric define SaaS Spend Management? "Helping companies manage, measure and maximize value from every SaaS application purchased". The lifecycle of a SaaS solution starts with understanding how to receive the best price, and then how to optimize the value received. Questions to ask include, are employees using the product, are they receiving value, and how does the value compare to other solutions with similar functionality? Zylo uses a "value framework" that starts with understanding every application being used through a discovery process. Next, is being able to manage adoption and usage, which may be as much about maximizing value versus reducing costs. Next, identify opportunities for cost avoidance, while considering the renewal process to know the best terms based on the current utilization rates. Finally, gaining visibility into the existence and usage of every SaaS product in a company materially increases the ability to have the governance and controls in place to purchase, utilize, renew, and purchase the right products in the future. One surprising aspect of SaaS sprawl is that many organizations do not know what SaaS solutions are being used by their employees and the associated expenses! The best SaaS Spend management programs start with the ability to conduct "discovery" to identify all the SaaS tools being used in a company....but when is it the right time to consider implementing a SaaS Spend Management solution? Eric highlighted that when you are hitting $1M - $2M in annual SaaS spend is one milestone. Another milestone is that at 500 employees if you do not have a SaaS Spend Management program in place - alarms should be sounding. ...however, Eric shared that it is never too early to introduce a more structured SaaS purchasing, management, and governance process. Zylo is sitting on a treasure trove of "SaaS Spend Management" data from over $30B in annual SaaS spending across industries including a few of the below : SaaS spend by employee has increased by 50% over the last 2 years SaaS spend has been increasing by over 20% per year for several years Total SaaS spend is underreported by 50% due to decentralized purchasing The average company has over 300 "paid" SaaS subscriptions This increases to > 1,000 in Enterprise companies Interestingly, the cost of the SaaS spend may not be the primary opportunity for many companies, it may be minimizing the risk of not managing and governing the flow of data outside of the company! Several new trends in SaaS spend will be disclosed in the Zylo Benchmark report being published on April 4th, 2023! If you are interested in the evolution of purchasing and managing SaaS spend in your company, this product with Eric is a great listen!…

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The Future of SaaS Spend Management - with Ryan Neu, Founder and CEO Vendr 33:04

2 years ago33:04

33:04

SaaS Spend Management is an emerging and rapidly evolving category - yet Ryan Neu, Co-Founder, and CEO of Vendr has a unique vision for how the category needs to evolve. Ryan has a background in public accounting, and then transitioned to software sales, including a role in the early days at Hubspot. During his career selling, he realized that selling great products is hard, takes too much time and the distribution is quite inefficient - thus the catalyst to founding Vendr in 2018. Vendr was created as a new way to buy and sell software....and it is the "SELL" comment that is unique amongst SaaS Spend Management…

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The evolution of forecast management - with Guy Rubin, Founder and CEO ebsta 29:56

2 years ago29:56

29:56

If you have ever been frustrated with the forecasting process and accuracy at your company - this episode is for you! Guy Rubin is the founder and CEO of ebsta, a leading provider of Revenue Intelligence - the next generation of forecast management. Guy founded ebsta to automate the logging of sales rep activity directly into their Customer Relationship Management (CRM) like Salesforce and Hubspot. Over 50,000 companies have used ebsta in this environment which is when the breakthrough happened to begin scoring target buyer relationships - essentially a "relationship score". The strength of relationships is a key factor in an opportunity's probability to convert into a new customer....and thus making the revenue forecast more accurate. More on that later in the episode. Back to the core problem, ebsta has been solving for years - having timely and accurate account, contact, and opportunity data in their CRM. Since most of this data is captured in their email, and/or calendar. By using technology to capture every email, event, and meeting with an account or opportunity, it can be automatically imported into the CRM. Then, a company can use AI to determine the frequency of communications with an opportunity and begin to create an "opportunity score" based on the recency, frequency, and level of activities with specific opportunities. What about including insights from "conversational intelligence" platforms? This is another signal that ebsta uses to evolve the "engagement score", but Guy highlighted that CI is only one signal that informs their platform. Intent data is another signal that ebsta uses to inform and evolve their engagement and thus opportunity score. In a recent research report that ebsta published, one of the challenges is to determine what is the actual impact of intent data on the opportunity "win rate". In this report, ebsta was able to identify the level of influence that intent data has on win rates. Forecast accuracy is a challenge for every company. Initially, Guy felt the "ebsta" internal forecasts were superior to those of a "bottoms-up" process that begins with the AE or front-line sales manager. Those customers still require the ability to include the sales "bottoms-up" forecast, the ebsta automated forecast is typically within a +/- 5% error of margin - which is superior to the 69% of companies that miss the forecast by +/- 10% or greater. If you are involved in your company's "forecasting process" this conversation with Guy provides great insights and ideas to enhance your forecast accuracy!!!…

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Lessons learned from the Silicon Valley Bank collapse - with Todd Gardner, SaaS Advisors 32:34

2 years ago32:34

32:34

Friday, March 10th, 2023 - a moment in B2B Technology and Start-Up ecosystem history that many will never forget and hopefully provides a foundation for learning the risks and rewards of venture-backed, early-stage entrepreneurship. Todd Gardner founded SaaS Capital in 2007, the industry's first "recurring revenue credit facility". Before names like Salesforce, Workday, and Snowflake were well-known names, Todd experienced the financial crisis of 2008 and experienced firsthand the impact of a systemic banking issue including the meltdown of his financial partners. Our goal for this episode of the podcast is to provide practical insights and advice that SaaS founders, CEOs, and CFOs can apply to decrease the risks associated with their financial related decisions and banking decisions. We started with the basic, summary facts surrounding the collapse of Silicon Valley Bank (SVB): December 31, 2022 , SVB financial disclosure: - $209 B in total assets - $175.4B in total deposits March 8th: SVB disclosed a $1.8B loss on the fire sale of $21B in long-term assets March 8th - 10th: ~ $42B in deposit withdraws were made by SVB customers Friday, March 10th: SVB was declared insolvent and closed by U.S regulators Sunday, March 12th: U.S. government including the FDIC, US Treasury, and Federal Reserve announced that all deposits (100%) would be backstopped - made good because SVB had more than enough assets to cover the outstanding liabilities, primarily customer deposits. Essentially the US government is managing the risk which is primarily a "time-based" issue versus a balance sheet issue. Todd next provided an industry backdrop that lead to the run on SVB. Due to the accelerated ramp of venture capital investing in 2020 - 2021, the deposits on hand at SVB doubles. As standard bank operating practice, SVB invested a significant portion of those deposits in long-term bonds and treasuries, which had a low return due to the low-interest rates of the moment. During the second half of 2022, interest rates began to increase dramatically, and the result was that the value of the long-term bonds decreased in value. Simultaneously many customers were moving their deposits at SVB into higher interest-rate instruments outside of SVB - forcing SVB to sell some long-term assets to support the decrease in deposits. Due to the above macroeconomic interest rate dynamics, coupled with the short-term issues created by a handful of Venture Capital firms quietly recommending their portfolio companies move their deposits out of SVB. We next discussed the "financial ecosystem" that has been the foundation that fueled the amazing growth of the technology industry which includes: - Over half of the technology start-ups banked with SVB - Over half of Venture Capital firms in technology banked with SVB for Capital Call - Line of Credit Having the primary source of assets and liabilities from the same industry ultimately becomes a material issue for SVB. The above is a backdrop to the insights and advice that Todd shared for how this experience can inform future financial and banking decisions by SaaS founders, CEOs, and CFOs which include: #1: Diversify banking relationships including checking, savings, and credit facilities - have at least 2 banks and/or treasury based money-market account #2: Understand the banking relationships that your payables and payroll firms use #3. Maintain fiscal discipline throughout the start-up journey to change the narrative from "cash runway" to ongoing operating profit as early as possible If you are interested in learning more about the Silicon Valley Bank collapse and what it means to the financial strategy of SaaS CEOs and CFOs going forward, this conversation with Todd is a great listen.…

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When to introduce SaaS Spend Management - with Cledara co-founder and COO, Brad Van Leeuwen 28:32

2 years ago28:32

28:32

Over February and March 2023, we spoke with several founders, CEOs, and executives at SaaS Spend Management vendors. In this episode of the Metrics that Measure Up podcast, we discussed the evolution, best practices, and ideas on how to introduce a SaaS Spend Management program with Brad Van Leeuwen, Co-Founder and COO at Cledara. Brad stated that his own experience as an entrepreneur with the challenges associated with SaaS spend was the catalyst to founding Cledara. When a company is small, a manual process such as using the founders' credit card for all expenses is fine, but when you scale to 100+ employees that process does not provide the level of control and capital efficiency required to build a sustainable, durable growth company. Spend management solutions have been around for 20+ years - why is SaaS Spend Management so popular in 2023? First, the technology solutions have evolved significantly, and are much easier to use. Secondly, almost every company requires technology (software) to operate efficiently so the demand for SaaS solutions has exploded. Third, no longer is IT guarding the "data center or servers" so the procurement of software has become a decentralized process. SaaS Spend Management goes far beyond issuing a "corporate credit card" for all purchases, and includes a more proactive identification and then usage monitoring of the most relevant and used SaaS solutions in a company - thus providing centralized visibility and control. When should a company evaluate introducing a SaaS Spend Management solution - early on the focus needs to be 100% focused on developing and selling your product to establish Product Market Fit. Then, as a company evolves to 30 -50 companies, a general spend management tool centered on corporate credit cards is a good place to start. Once a company hits 50 - 100 employees, the SaaS Spend sprawl becomes harder to control and is a good time to consider introducing a corporate SaaS Spend Management solution. One of the key benefits of a SaaS Spend Management solution is that decentralized buyers can now have access to a pre-approved list of solutions. This empowers the employee to engage with the solution category of their choice, and the approved vendors without having to deal with a difficult procurement process. One of the trends in SaaS pricing and billing is the increased use of "Usage-Based Billing". One of the benefits of using a SaaS spend management solution is to have real-time insights into billing trends measured against budget and provide an early warning signal or even stop the use of a specific solution when the costs exceed the budgeted or contracted amount. One other benefit of SaaS Spend Management is to provide a pre-vetted list of vendors and the associated "realized pricing" that should guide a new solution purchase and/or renewal. If you are interested in learning more about how your company could gain increased visibility, control and reduced costs of your SaaS Spend while improving your employee experience in buying new SaaS software - this discussion with Brad Van Leeuwen is a great listen.…

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CFO lessons learned in planning and forecasting - with Dan Fletcher, CFO Planful 37:57

2 years ago37:57

37:57

Planning in 2020 continues to be chalked full of uncertainty based on the current macroeconomic reality. Assuch, being a finance leader in 2023 is even more challenging, and unpredictable - but developing an operating plan and budget is an important and critical component of the CFO's job. First, is being "hyper-realistic" is the theme of the year, especially on top-line revenue. Understanding revenue drivers like pipeline generation and conversion is critical to informing the 23' budget and operating plan. Factoring in longer sales cycles closed lost - no decision and buyer hesitancy is part of the art in building the 23' plan. Second is being "hyper-responsible" in managing costs. Third is "running multiple scenarios" highlighting the goal of profitable growth, which should always be in style, but even more imperative in 2023. Though Net Income is always interesting, in the B2B SaaS industry revenue growth is still a key driver, while EBITDA and Free Cash Flow are key indicators of profitable growth. Fourth is "obsessing on the leading indicators" impacting revenue trends. How have the relationships between CFOs and CROs changed heading into 2023? Dan highlighted he is lucky as both his head of revenue and head of customer success are metrics focused, and they collaborate closely on planning and forecasting - using over 80 metrics to continuously monitor their progress toward their operating plan. Next, we discussed the challenges of forecasting - especially in today's uncertain environment. Dan shared that hitting a +/- 5% accuracy is probably best in class, while Planful targets 3% - 5% forecast accuracy. Then we discussed the "triangulation methodology" which evolved into using Machine Learning and Artificial Intelligence. However, Dan started by ensuring front-line sales professionals need to see forecast accuracy as a priority. Dan shared a few tips to improve forecast accuracy. First, sales managers should provide a weekly forecast update as they are the closest to the pipeline, Second, Finance should be monitoring pipeline generation and conversion rates to continuously update the forecast. Third, using AI to capture the signals that impact opportunity conversion rates to provide an automated forecast to be combined with the first and second manual forecast management processes. What are the top 3-5 performance metrics that Dan is focusing on in 2023? Dan highlighted ARR growth is still a top metric. However, Dan focused on "leading indicators" including outbound pipeline development trends - including the pipeline from SDRs. Other leading indicators Dan tracks include outbound connect rates, conversation rates, opportunity conversion rates, and sales team acceptance rates. Start by looking for "trends" which can serve as very important pipeline trend insights. Next, looking at the opportunity funnel conversion rates in concert with analyzing conversational intelligence insights is very helpful to understanding "early signals" impacting revenue growth. A strong financial operations capability starts with instrumenting the infrastructure that can quickly surface leading and lagging indicators to inform decision-making. Dan highlighted the importance of technology to compress time from activity to insights to a decision. Being buttoned up on the CRM infrastructure and data are table stakes to fully leverage automated planning, forecasting and reporting. At what stage of company evolution should a SaaS company start the "instrumentation and automation" journey for planning, forecasting, and metrics reporting. "Complexity" of business operations is a critical factor to determine when to begin the automation journey. If you are considering how to increase your planning and forecasting accuracy, the conversation with Dan is very insightful and full of great ideas…

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SaaS Spend Management - with David Campbell, Founder and CEO Tropic.ai 37:39

2 years ago37:39