Page 1
Building a World-Class SaaS Company
Our Adventure in Open Source & Beyond
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The Journey
1999 20092006
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About Ephox
• 50 staff• 50% in Brisbane• 800+ customers• 5M downloads• 500M users
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The promise of publishing on the internet
You World
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The reality of publishing on the internet
You Developer World
$$costTimedelaysFrustration!
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A better way
You Software World
FasterBetterCheaper
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TinyMCE: the ‘Word’ in WordPress
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>30%oftheworld’swebsites
1billionposts/year
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Check
Core EditorImages, Video and more
Spelling & Grammar
Accessibility & Compliance
Commenting
Track Changes
Real-time collaboration
Import from Word
Cognitive
Live Data
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What is software as a service (SaaS)?
• Subscription business model
• Software & data as key part of value
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Some SaaSy examples
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SaaSy Subscription Business Model
BeginMonth
100%
End (install base)
101%
End Month
109%
Churn
1%
Upgrades & Add-ons
2%
8%
New customers
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Our Experience of SaaS with TinyMCE
May-15 Aug-15 Nov-15 Feb-16 May-16
9%m/m170%y/y
$AUD
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Predictable Compounding Growth
http://www.slideshare.net/shopifyInvestors/shopify-investor-deck-05042016
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ConvertKit MRR
Seehttps://baremetrics.com/open
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Quick survey
Who are you?
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Questions
• What revenue?• What growth rates?• What is your average annual contract value
(ACV)?
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What size are your customers?
http://www.pacific-crest.com/2015-saas-survey/
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Now for some content
Customer Acquisition
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You are not growing fast enough
http://www.pacific-crest.com/2015-saas-survey/
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Growth = Valuation
http://www.softwareequity.com/research_quarterly_reports.aspx
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EV/Revenue Multipliers vs TTM Revenue Growth – 1Q16
http://www.softwareequity.com/research_quarterly_reports.aspx
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Growth Rates by Company Size
http://www.pacific-crest.com/2015-saas-survey/
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Customer acquisition is EXPENSIVE
http://www.pacific-crest.com/2015-saas-survey/
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High ACV customers warrant even more CAC
http://www.pacific-crest.com/2015-saas-survey/
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Sales & Marketing is #1 expense
http://www.softwareequity.com/research_quarterly_reports.aspx
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Public SaaS companies
http://www.softwareequity.com/research_quarterly_reports.aspx
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Ramping your customer acquisition rate
• Seeds (Word of mouth)• Nets (Marketing)• Spears (Sales)
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Primary mode of distribution
http://www.pacific-crest.com/2015-saas-survey/
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Primary Mode by Contract Size
http://www.pacific-crest.com/2015-saas-survey/
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Growth Rate by Mode of Distribution
http://www.pacific-crest.com/2015-saas-survey/
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% of Pipeline Source by Marketing
http://www.forentrepreneurs.com/bridge-group-2015/
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Sales Development Reps (SDR)
• Inbound SDR today– 67% of SaaS
companies >$5M have SDR
• Push velocity faster
• Outbound– 70 calls/contacts per
day– 10 SQLs per week
• Make it work, scale it
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Inside Sales Reps (ISR)
• $10-$50K ARR per deal (average $25K)
• $50K per month in new business
• $150K OTE
http://www.forentrepreneurs.com/bridge-group-2015/
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Rep Productivity
http://www.forentrepreneurs.com/bridge-group-2015/
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Your Reps Should be Busy: 6.6 meaningful conversations per day
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>$5M you will need to be a hiring machine
http://www.forentrepreneurs.com/bridge-group-2015/
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Average Commission Rate is 10.1%
http://www.forentrepreneurs.com/bridge-group-2015/
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Or 9%
http://www.pacific-crest.com/2015-saas-survey/
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Field Sales Reps
• $66-84K in ARR/deal
• $240K OTE
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A Model Where Customers Win
• User adoption is key – no shelfware!
• Prove unit economics & addressable market
• 1% difference in churn = $100M in market cap
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Account / Customer Success Mgrs
• The $2M person
• $80K-$100K OTE
• 2% commission on renewals
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Gross dollar churn rates
http://www.pacific-crest.com/2015-saas-survey/
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ConvertKit Churn Rate
Seehttps://baremetrics.com/open
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ConvertKit’s # of customers
Seehttps://baremetrics.com/open
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ConvertKit Dollar Retention
Seehttps://baremetrics.com/open
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Net dollar churn rates
http://www.pacific-crest.com/2015-saas-survey/