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

Metrics that Measure Up

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<div class="span index">1</div> <span><a class="" data-remote="true" data-type="html" href="/series/we-have-the-receipts">We Have The Receipts</a></span>

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We Have The Receipts

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לפני 11 ימיםלפני 11d ago

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Hosted by Chris Burns, We Have The Receipts is a bi-weekly all-access deep dive into Netflix Unscripted Reality! Each episode will bring you closer to the people behind the reality, with the free-flowing depth of podcast conversations and viral elements of TV’s best talk shows. We Have The Receipts is an upbeat, fan-first destination to uncover more insider secrets, more expert hot takes, and more off-the-rails drama from their favorite Netflix reality stars.

לפני שנתיים 32:34

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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 customersFriday, March 10th: SVB was declared insolvent and closed by U.S regulatorsSunday, 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.

128 פרקים

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

Metrics that Measure Up

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

Metrics that Measure Up

published לפני שנתיים

שתפו

MP3•בית הפרקים

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

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:

128 פרקים

#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

לפני 2 years30:52

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

לפני 2 years28:12

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

לפני 2 years21:29

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

לפני 2 years25:51

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!…

Metrics that Measure Up

לפני 3 years38:50

38:50

Craig Rosenberg has worked with hundreds, if not thousands of B2B SaaS companies as the co-founder of TOPO, Distinguished analyst at Gartner, and now as Chief Platform Officer at Scale Venture Partners. Across Craig's roles, he was able to take an expensive view across each stage of a SaaS company's growth including strategy, people, process, technology, tactics, and over time METRICS! Craig highlighted that the best companies in the world were/are "metrics" driven, and as Craig started to work with larger, enterprise-class companies beyond SaaS being "metrics and data" driven was even more critical to decision-making. "End to End" Customer Journey is an often discussed subject, but what is it really? Craig's perspective is most customer journey mapping is too generic and needs to be very focused on how the customer buys starting with using third-party internet activity to marketing interactions to Sales Development to Sales and then ending at "Closed-Won". Going beyond Closed-Won to include customer engagement, retention, and expansion, Going beyond mapping and understanding the entire customer journey including acquisition, retention, and expansion, companies need to "SEGMENT" the metrics by customer cohort, such as SMB vs Mid-Market vs Enterprise. Another view should be based upon "HOW" the prospect/customer came into the customer lifecycle process, such as lead source and/or lead channel. When I asked "who" in a company should map the customer lifecycle, Craig's response was quite pragmatic: "whoever is best at mapping the customer lifecycle in your company". Craig added that Revenue Operations is a perfect organization to take the lead on customer journey mapping, and building a "coalition" across Marketing, Sales, and Customer Success. An important caveat is that without the support and involvement of the CEO it becomes less significant and strategic. Another topic we discussed, was if a company should involve customers in the "journey mapping" process. Craig said of course, but you only need to include a few customers in the process as talking with more than 10 customers will provide diminishing returns. Next, I asked Craig about what metrics are priorities to measure the efficiency of the customer lifecycle across acquisition, retention, and expansion. Craig started with the Four Vital Signs Framework to track in a SaaS company: - Growth - Efficiency - Churn - Burn Next, we discussed if any of the Vital Signs are more important at each stage of a company's evolution. Craig's first recommendation was to instrument and begin capturing metrics for all four vital signs early in the journey. Certain metrics like churn/Customer Retention will become more important as a company grows beyond the first and second renewal cycles, but identifying and instrumenting for metrics should begin earlier than most companies believe are required. No matter what stage of growth your SaaS company is currently in, this discussion with Craig Rosenberg provides many interesting, insightful perspectives on the importance and priority of metrics across the customer lifecycle.…

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Metrics that Measure Up « » Lessons learned from the Silicon Valley Bank collapse - with Todd Gardner, SaaS Advisors

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

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