Below are revenue multiples for publicly traded consumer tech companies we follow (B2C). Industries and therefore multiples vary widely. Commentary is below. If you’re looking for data on SaaS multiples, check out our post from last week.

Social media popped to 13x. The highs in 2017 were ~14x, but a more normalized multiple historically has been around ~10x. Snapchat is at 38x, near it’s IPO multiple of 40x in Q4 2016. They lost -$765mm in EBITDA on $2.5bln of revenue, but continue to grow at 46% YOY. Pinterest lost -$16mm in EBITDA on revenue of $1.7bln and trades at 31x…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Email him directly at sammy@blossomstreetventures.com, especially founders.

At the link below is one of the best startup post-mortems I’ve ever read. It’s by a founder of a company called Moz. The business had fantastic growth out of the gate, took on major VC money, tried to scale too quickly letting hiring and costs got ahead of growth, and ultimately they had to scale back significantly.

https://medium.com/@randfish/moz-returns-to-seo-5a330c0e6eb2#.n48oxyoek

The post is well worth the read, but below I distill the three big take-aways for me.

Avoid the dim glow of big…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Email him directly at sammy@blossomstreetventures.com, especially founders.

Recently, we got a hold of an investor letter from one of New York’s finest late stage venture funds. The letter shared insights into what the fund looks for in a management team, which resonated with us. Below we share these points, verbatim.

We like CEOs that are patient with us and believe that all questions are reasonable. CEOs that roll their eyes at questions, try to convince us that what we’re asking is not important, and then don’t have good answers…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Connect on LinkedIn or email him directly at sammy@blossomstreetventures.com, especially founders at all stages.

SaaS comps have never been stronger: of the 98 SaaS companies we follow, the average public SaaS business is trading at 18.3x revenue while the median is 13.92x. Interestingly, the gap between the average and median tightened from last quarter (4.4 down from 8.5x), meaning premium SaaS companies have come down to earth a bit. 59% of companies are trading at 10x revenue or greater (all time high). The data is below.

Negative EBITDA, positive…

“By Invitation Only” is the story of Gilt Groupe. While Gilt may not have been a good outcome for many investors (it ultimately exited for $250mm but was at one time a unicorn), the book has a number of great take-aways for ecommerce businesses.

It’s easier to move a brand down market than up. In other words, “Alexis had also observed over the years that it was easier to start high end and expand into mass market later than vice versa. She could think of a slew of designer brands that had started successful secondary lines, either on their own…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Email him directly at sammy@blossomstreetventures.com, especially founders.

Net dollar retention is the most important metric in SaaS. If you’re over 100%, revenue from upsells is outpacing revenue you’re losing from downgrades and churn. It means you’re keeping the customer base forever, and your current customers are a major source of growth. The latter is a wonderful bonus that isn’t well understood and may account for a significant portion of new revenue growth.

For clarity, net dollar retention is beginning of period revenue + upsells -churn — downgrades all divided…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Email him directly at sammy@blossomstreetventures.com, especially founders.

Gross dollar churn is important, but in our view net dollar dollar retention is the critical figure to watch. For those on annual contracts, it is generally defined as revenue from customers in the beginning of a period — revenue churned — revenue downgraded + upgrades all divided by revenue from customers in the beginning of a period (BEG — DOWN — CHURN + UPGRADE / BEG). …

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Connect on LinkedIn or email him directly at sammy@blossomstreetventures.com, especially founders at all stages.

There are many ways to measure SaaS sales & marketing efficiency. One of the simplest is to look at new revenue booked over a given time period divided by sales & marketing spend during the period (New Rev/S&M). While the sales & marketing expense in a period may not necessarily be attributable to a given period’s booked revenue due to long sales cycles, it’s still a good measure especially when looking at the trend.

In…

Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Email him directly at sammy@blossomstreetventures.com, especially founders.

Recently I read “Hire Right, Higher Profits” by Lee Salz which focuses primarily on enterprise sales rep hiring. Below are some of the key points of the book along with my commentary.

Failure in B2B sales hiring is high. “the attrition rate among B2B salespeople hovers around 25 percent, while nearly 50 percent of salespeople don’t deliver on their revenue targets. We also know that depending on the industry, somewhere between a fifth and a third of salespeople aren’t suited for the…

Reach out to Sammy directly at sammy@blossomstreetventures.com any time, especially founders raising capital.

Sprout Social is a successful social media management SaaS company targeting SMBs. We read their S1 recently looking for insights into their business that we could learn from. A summary of the S1 is below.

The numbers are good. 23,693 customers. 99% of revenue is software. revenue of $44.8 million, $78.8 million, and $102.7 million during the years ended December 31, 2017, 2018 and 2019. $131 million in ARR as of June 30, 2020. 4.9 rating and 99% CEO approval rating on Glassdoor. Annual contract values have…

Sammy Abdullah

co-founder at Blossom Street Ventures. Email me at sammy@blossomstreetventures.com

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