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How to turbo-charge your valuation.

Valuations for publicly traded SaaS businesses are bananas right now. At the time of this post, Zoom’s enterprise value relative to its last twelve months of revenue (EV / LTM) was an eye-popping 58.41x. Veeva’s EV / LTM ratio was 37.02x; and “lowly” Salesforce’s was 10.03x. And it’s not just the stock market; valuations for privately owned SaaS businesses are also flying high. Against this backdrop, a colleague recently shared with me commentary from a similarly frothy time for software businesses. …


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Tis the season…not for jolliness…but for annual forecasting. Countless companies spend the month of December frantically closing out the current year, while scrambling to codify goals for the fiscal year ahead. So, for many small-scale SaaS businesses, this is decidedly NOT the most wonderful time of the year. Rather, when it comes to financial planning and analysis, it can be a time of feast or famine. Famine in this case is represented by simply not doing any intentional planning. A surprising number of small software companies don’t share fiscal goals with their teams, or even set formalized financial plans whatsoever. Feasting, in this case, occurs when a leader’s eyes are bigger than their mouth, resulting in an unreasonably aggressive growth plan based on exuberant hope more than rational thought. Perhaps this is less like feasting, and more like binge-eating junk-food (in that it is based on impulse, offers a temporary jolt, induces sickness soon after, and is terrible health-wise in the long-term). But neither of these extremes is necessary; and a thoughtful plan does not require gobs of bureaucratic process (one of the primary excuses offered for this feast / famine dynamic). Rather, we’ve seen that the simple concept of triangulation can efficiently produce the building blocks of an informed financial plan that balances multiple perspectives on the business. …


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Note: This is a loosely defined “Part 2” to a prior post entitled: “Pulling Up from the Weeds of Cash Conservation.”

There is an old English adage: Just because you can, doesn’t mean you should. As explained in this HBR article and per the website PhraseMix, “This phrase is usually used to give advice to someone who’s using their money, power, or skill in a way that’s not very wise.” …


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It was 2001; and my boss was impressive — some would say intimidating. A whiz-kid founder and CEO of a fast-growing start-up that had raised capital at lofty valuations, he was precociously business-savvy and had a seemingly unshakable self-confidence. All of which made it that much more remarkable when he put his hands up and uttered those unforgettable words: “You convinced me.”

The truth is that we had very different leadership styles; and I often found myself filing the minority report when it came to debates among our company’s leadership team. But on this day, (and many times thereafter), I was grateful to be offered the opportunity to successfully make my case. I remember being surprised that day about the outcome itself, and about the impact it had on me — I’ll never forget that feeling of having a real voice in the business. Fast forward twenty years: I participate in many similar business debates, but now I often find myself in the senior role. I’ve learned that those same three words have enormous power, not only to make someone’s day…but to profoundly influence how businesses tackle challenges. I try to keep them top of mind and use them whenever possible. …


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From time to time, we use this forum to share observations and trends from webinars or virtual conferences (here); and sometimes we invite guest-bloggers to offer insights from their own experiences (here and here). This post does both of those things at once. Our friend and peer, Mike Dzik, is a Growth Partner at Radian Capital (full disclosure: one of Lock 8’s investors), where he works with Radian’s portfolio companies on their respective go to market strategies spanning marketing, sales and customer success initiatives. Last week, Mike attended the TOPO Virtual Summit a three-day virtual conference for sales, sales development, and marketing practitioners; and he was generous to share with us his impressions of the event. He’s also agreed to allow us to share those observations here on Made not Found. …


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The television series Undercover Boss has been a guilty pleasure of mine for years. Now entering its eleventh season, the show features “high-level corporate execs (who) leave the comfort of their offices and secretly take low-level jobs within their companies to find out how things really work and what their employees truly think of them.” For cringe-worthy viewing, this one totally hits home for me.

But I also like the show’s more serious theme of “walking a mile in someone else’s shoes” in order to deeply understand that person’s experience. At Lock 8, we’ve adapted this concept to help provide insight into a key focus area for small-scale SaaS businesses. Whereas Undercover Boss leverages this approach to offer candid employee-level views into the internal workings of companies, we hope to shine a light on the experience a customer has when evaluating, selecting, and adopting a B2B software solution. …


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As a card-carrying introvert, I’ve always found industry conferences to be exhausting. Likewise, over recent months, Zoom Fatigue consistently crushes me by mid-day Friday. So, I figured that a pandemic-induced remote conference would be some kind of “snakes on a plane” hybrid, uniquely designed for my personal torture. But, having just concluded my first honest-to-goodness attendance of a multi-day virtual trade conference, I am pleased to report that I was totally wrong. Rather, the SaaStr Annual at Home conference this week was engaging, informative, and — I can’t believe I’m writing this — energizing. Having been freed from the relentless distractions and demands of in-person conferences (networking, generating leads, striving to optimize investment in Travel & Entertainment), I paid much closer attention to the valuable content sessions than I normally would. I also appreciated moments of respite throughout the day which offered the opportunity to sense-make across sessions. …


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It is a good thing to be “coachable,” meaning capable of being easily taught and trained to do something better. It’s easy to understand why companies consistently seek to hire and reward coachable behavior in their teams. Based on this definition, I’d argue we all want to be coachable. Unfortunately, our egos often get in the way. This likely explains the countless books and articles that provide tips on how to become more coachable. These serve a valuable purpose; and I don’t have a beef with any of them. With one exception: their guidance seems to overwhelmingly focus on junior level professionals, and to largely ignore senior executives. At Lock 8, we strongly believe in the power of coaching to elevate the performance of executives and (correspondingly) the businesses they lead. …


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A prior post explored the concept of customer effort as a critical driver of customer loyalty. That piece referenced Gartner research / articles (here, here, and here) which argued that creating an effortless customer experience — far more than raising customer satisfaction — is the key to retaining customers’ devotion. The data doesn’t lie; and I certainly buy into the concept. To a point.

On further reflection, though, I have a few reservations. These doubts are based on nuances specific to enterprise software and customers’ experience with business-to-business SaaS solutions. Gartner’s research appears to have been broad in scope; it seemingly covered customer service interactions around consumer products / services without focusing on specific industries. …


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The key to customer loyalty is an effortless customer service experience.” These seemingly innocuous words caught me flat-footed and punched me right in the nose. I’d been focused for so long on trying to delight customers that the concept of effortlessness caught me completely off-guard.

Since being captivated by the book “Ravings Fans” decades ago, I’ve been an unhesitating proponent for striving always to exceed customer expectations. But a friend and successful entrepreneur recently initiated a conversation that has brought such longstanding beliefs into question. His perspective is informed by two Gartner articles (here and here) with supporting research that challenges the actual business impact of delighting customers…and points to (low) effort as being the strongest driver to customer loyalty. These articles and concepts caught my eye and are forcing a reexamination of some of my long-held beliefs. …

About

Todd Gibby

SaaS operator-turned-investor | Founder of Lock 8 Partners | Sharing observations, thoughts, and lessons learned from the ever-educational journey.

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