Top 10 in Tech - What to know for Week ending September 15, 2023

SaaS METRIC OF THE WEEK: Churn.

See #6 and Pod of the Week for more on Churn in 2023. According to CatchJS, though, we're all calculating churn rates wrong. If you love Statistics, the article is well worth reading and it even gives some Python code to perform the more complicated probability-based equation they recommend. You can then check out this tool(as a handy Google Sheet) from Newfund to analyze the strength of revenue streams for any B2B startup. A complimentary article outlining the methodology behind the tool is here (and you should read it first). Then, dive into Bessemer's new article on how to fix the Churn leaky bucket.

PLG: (for complex products)

While PLG may only fit a few enterprise players, there is hope. Companies are starting to apply PLG techniques in totally new settings - such as with complex products.

SMB

In general the Old SaaS-Skool guidance was to start chasing the biggest contract values as soon as possible (hello Enterprise!). However, according to Craft, newer school thinking is to focus on SMBs, as sales velocity is a better strategy than chasing contract size - and SMBs are plentiful. However - the downside of SaaS-for-SMB is discussed in this article from SaaStr - CHURN! BONUS: Linking 2 and 3 together here - Why SMB and Enterprise sales have nothing in common from Jason Lemkin.

ZERO-BASED DESIGN

Another concept for your dictionaries: Zero-based design has emerged as a potent approach for businesses to improve performance and redesign their products, services, and even organizations. McKinsey goes even deeper with a look at this from what they call Operations Practice.

AI

McKinsey's annual State of AI survey reveals the breakout adoption of generative AI: 30% of those surveyed indicated regular business use. Even though generative AI is on the rise, overall AI adoption remains steady with 40% planning an increase in AI spend. YC's new summer cohort is also 65%+ AI.

GENERATIVE AI

Adding a spin onto #5 above. Generative AI has seen success in B2C applications (like ChatGPT), but this article makes the case that Generative AI faces uphill challenges in B2B. Due to a lack of industry-specific data, it needs to be more accurate, outcome-focused, and in-depth. They pitch combining LLMs with proprietary data and human expertise to create practical B2B generative AI applications.

STATE OF SAAS

Profitwell is the King of data-driven content. Paddle acquired themhttps://techcrunch.com/2022/05/25/paddle-acquires-profitwell-for-200m-to-bring-analytics-and-retention-tools-to-its-saas-payments-platform/last year, but the content coming out this year is still excellent. Paddle just launched Forward, their own little conference/product launch, and as part of this, they presented SaaS Market Conditions for 2023 based on data from the 34k companies on the Profitwell platform. The summary is here - but watch the Video (linked below in Pod of the Week) if you have the time (first 10 of a 30-ish minute presso). Growth is slower, PLG Tactics are everywhere(backing up #2 above), especially try-before-you-buy, and CAC is way up in mature markets (US, UK, etc.).

SALES

OK - who doesn't want this from their sales team? From Openview, here's how to increase sales by 33% without hiring more Reps: it's all about simplifying sales and protecting selling time.

BUDGETS and FINANCE - DEEP DIVE

A lot more of you than I expected clicked the Budget and Forecast links last week - so let me add one more to help with your Financial Year plans: Bessemer has a significant six-part "fundamentals of startup finance" series - Part 1 (goldilocks Budgets), Part 2 (Forecasts), Part 3 (Hiring), Part 4 (Growth and Profits), Part 5 (Pricing) and Part 6 (Metrics and benchmarks).

CASE STUDY

Intercom's Des Traynor and Fergal Reid share insights on leveraging AI language models (like GPT-4) to transform Intercom's SaaS products, highlighting the importance of low-risk problem selection and a centralized ML team.