Deep Dive, Day Two
Brian Jacobs, General Partner, Emergence Capital Partners
24 years as a VC
- initially semicondactor investments
- 2003 focused SaaS & Cloud Computing (PaaS, SaaS, IaaS) - invested in sf.com and success factors
- 3 partners -> really fast decision making
- invest in companies with paid customers
- work where opportunity is emerging (technology & other changes over time)
- finding in the past 7 years: consumer SaaS - more media based, decided to focus on B2B SaaS
- synergy between portfolio companies - executive network (all CFO talk about recurring revenue model, etc)
Typical deal flow
- 100 entrepreneurs -> 80 pass, 20 meet
- 20 meet -> 10 pass, 10 meet for again for details
- 10 -> invest 1 or 2
to invest VCs want start to be aligned ;)
- strong management team
- large potential market
- BM validated by customers
- high margin and capital efficiency
goto market strategy is very important:
- sf.com blueprint is quite slow ;)
- sf.com -> $2bln in 10 years
- success factors -> $200mln
- freemium model found extremely usefull to penetrate biz environment
- yammer - growing very fast (1.5 mln registered -> 150.000 paid)
- yousendit - 15 mln registered -> 300.000 paid
- sf.com - chatter in freemium model
- sf.com might acquire dimdim.com - good freemium product, possible feature in CRM
toll booth - very good way to think about freemium
- where do you put your toll booth ? right at the entrance ? will users show up? deeper inside? what are users action ? what is the conversion ?
- you always ask yourself these questions and balance between users activity & revenues / conversions
- putting the toll booth in the right place is always about analyzing human behaviour
shall you talk to customers as you build SaaS product?
- SaaS has a lot of similarities to online consumer products
- you have to use data & statistics to understand customer behaviour
what sales model should be used?
- to sell $100k+ software you are to fly ;) - classical software sales approach
- SMB & divisional sales - common approach to use telexsales for less then $50k deals
- inside sales $500k quota, $100k OTE
- very expensive field sales still needed for enterprise deals
- comission paid for first 12 months of the contract
- devide sales to hunters (win new clients) and farmers (watch customers, analyze, retain existing)
presentation discussion comments:
- bottom-up approach can be used to better calculate market potential
- remember about estimating market vs estimating segment
- top-down approach - how many people buying today?
- existing market - differentiating factor is the key!
- new market - market potential / adoption is the key
- different options to charge: per # conferences, # people per conference, space used
- how many companies are using? what are the usage patterns?
- storage per user? 2TB for 200 customers?
- $$ to store one hour of video? 10MB per 1 hour conference?
- what is scale-up cost structure of the business?
- customer acquisition cost ?
- how much $$$ you invested in datacenter? $100k ?
- how many customers request storage? 20% ?
- overall impression - early to invest :)
From Mark Iwanowski, Partner, Trident Capital
* analytics http://www.the451group.com/, Gartner, IDC
* metrics: EPS, CPS
* stay focused & agile: challenge yourself with ROI questions, but always look for opportunities!
* make it happen vs let it happen
Download slides HERE:
Books to read:
- The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business (Collins Business Essentials) by Clayton M. Christensen
- Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter
Next: Marylene Delbourg, Serial Entrepreneur, one of the first women entrepreneurs coming form Europe (France!), experienced CEO and a coach (very much recommend!)
Main points on company presentations:
* first 30 sec - directly to the point, rehearse it 30 times! Play your role well, you are an actor!
* remove words with no energy - adjectives, "permit", "allows", "possible"
* let me show you what our product does
* we work with ... , our competitor is ...
* be direct! straight forward! be proud of what you do!
* script everything you say - every word, every slide, rehearse !!
* very simple, small words
relate to a usecase / life situation. visualize !!!
* "graphical relational database" vs
* "imagine you have a lot of files ... "
Download slides HERE: