I celebrated a friend’s birthday with a large group a few days ago and realized how hard it is to tell who can’t carry a tune when the whole room is singing the same song.
The same goes for B2B SaaS startups: since so many are generally focused on LTV:CAC ratios, this can be a good way to cover up weak metrics.
Dividing Customer Lifetime Value by Customer Acquisition Cost provides useful insights, but how accurate is your historical retention data and how much have you collected?
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“Today, investors are zooming in on other efficiency metrics that paint a more reliable and comprehensive picture of the startup’s capital efficiency, and you should too,” said Igor Shaverskyi, a partner at VC firm Waveup.
In this TC+ column, he offers a formula and benchmarks to calculate “how long it will take for your customer acquisition costs to pay off”.
With VCs leaning harder on due diligence, reducing CAC Payback and paying “special attention” to how the Rule of 40 works is proof that your team knows how to provide direction. Investors love that.
“In my experience, some companies can get to a good spot in two quarters, but on average it takes about a year,” Shaverskyi writes. “It all depends on the severity of your situation.”
Thank you for reading,
Editorial Manager, MinRegion+
How we used data-driven personas to revolutionize the customer experience
I’m constantly surprised by how many startups do that not develop customer personas.
Instead of extracting information from user interactions to create avatars that represent real customers, many teams substitute their own judgment and guesses about what people like and don’t like.
Impartner VP of product Gary Sabin says his company “dove into the numbers” and “looked at 250 data points” to develop “persona-based services in deployment, customer support, and customer success.”
After a year, the company generated higher customer satisfaction scores and NPS scores. “These personas work for us,” says Sabin. “Your customer data can lead you to create the personas that matter most in your customer base.”
Sometimes you need to break your startup’s school ties
When you consider how many startups emerge from colleges and universities, it makes sense that so many academics end up in C-suites. But is that necessarily a good thing?
Last week during MinRegion Early Stage, hardware editor Brian Heater spoke with SOSV general partner Pae Wu about collaborating with teams of professors and students.
“There are some industries where having members of your founding team who stay in academia can work really well,” Wu said.
“We see this all the time in traditional biotech and pharma. But in other types of situations, frankly, it can become a drag for the company and be problematic for the founders who work full time.”
Ask Sophie: My VOTE OPT expires in 30 days, what are my options?
My VOTE OPT expires in a month and my company has not registered me in the H-1B lottery this year.
Not sure what options I have now. Staff!
— Sleepless in Silicon Valley
How startups can produce social content that really resonates
There’s something painful about watching a company post something stupid on social media in an attempt to go viral or jump on a trend. It always gives me an eerie feeling, “how are you, fellow kids?” mood.
Rebecca Szkutak spoke to Rashad Assir (Head of Content) and Josh Machiz (Partner) of Redpoint Ventures last week to get their thoughts on how young brands can exude authenticity.
“What we’ve really learned here is that it’s much better to put it out the door, ship it — similar to a startup — and really just see if it catches on, because if you get the urge for it to catch on, then you can invest more in it,’ Machiz said.