Zero to 100 is a learning program from David Skok. It is a detailed instruction manual for how to take your startup from zero to $100m, with a particular focus on the area of building a go-to-market machine. So many of today’s founders come from a product or technical background, and have never been involved with sales and marketing. Right after starting their venture, they are hit with the huge problem of how to build their go-to-market organization and processes. It breaks the journey down into 9 steps, and explains why it is crucial not to skip steps in this journey in the rush to get ahead. The major emphasis of the course focuses on building a repeatable, scalable and profitable growth machine. Once you have that in place, you are ready to hit the gas and scale like crazy. To see videos of the presentations, click here: https://www.forentrepreneurs.com/matrix-growth-academy-zero-to-100-videos/

1. [ ]THE SAAS BUSINESS MODEL AND METRICS

2. THE SAAS BUSINESS MODELAND METRICS

3. Why is this topic so important?
SaaS businesses: highly sensitive
to small changes in a few key metrics

4. Understanding these unlocks the Levers for Growth

5. The Three Keys to success in SaaS
Acquiring
Customers
Retaining
Customers
Monetizing
Customers

6. Start simple - add sophistication as you progress
Scaling the Business
Search for Product/Market Fit
Search for Repeatable & Scalable
& Profitable Growth Model

7. The Early Days
Searching for Product/Market Fit
Search for Product/Market Fit
2 3
Prove the
Value
Prove it can
be sold

8. Focus on making sure the product is delivering Value
• Engagement with the product
• Usage of different features
• Are you delivering the promised business benefit?
• What customer KPI can you measure that you are impacting?

9. Searching for Repeatable Growth
Search for Repeatable & Scalable
& Profitable Growth Model
4 5
Find
Repeatable
Sales Motion
Prove non-
Founders can
sell

10. We’re looking for this chart
Bookings - (Net New ARR)
Q1 Q2 Q3 Q4 Q5 Q6 Q7

11. Net New
ARR
Expansion ARR
(Existing Customers)
Churned ARR
(Lost Customers)
New ARR
(New Customers)
The right way to measure SaaS Bookings

12. Key SaaS chart: 4 components of bookings
$(15.0)
$(10.0)
$(5.0)
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
Jan Feb Mar Apr May Jun
ARR Bookings
New ARR
Net New ARR
Expansion ARR
Churned ARR
Always look at a
chart that shows the
trendlines to see if
there is growth

13. Make it Scalable
Search for Repeatable & Scalable
& Profitable Growth Model
6
Make it
Scalable

14. Bookings Top of Funnel Lead Flow
Conversion
Rate
Average
Deal Size

15. Example: Touchless Self Serve
Visitors to
Web Site
Sign up for
Free Trial
Closed
Deals

16. Funnel Metrics are Essential
"IF YOU CAN NOT MEASURE IT,
YOU CAN NOT IMPROVE IT."
- LORD KELVIN

17. The Key Metrics
VISITORS
CAMPAIGNS
TO DRIVE
TRAFFIC
TRIALS
CLOSED DEALS
CONVERSION
%
CONVERSION
%
OVERALL
CONVERSION %

18. Computing Funnel Conversions
requires Cohort Analysis
January February March Conversion Rates
Visitors 100
Free Trials 40 40%
Closed Deals 1 4 5 12.5%
Tracking the January Cohort
Not all deals will close in the same month they started in the funnel

19. Not all Lead Sources are Equal
Visitors
Trial
5%
10%
$5,000
Customer
Google Ad Words FaceBook Ads
Visitors
Trial
2%
20%
$8,000
Customer

20. OVERALL
CONVERSION %
(BY LEAD SOURCE)
Cost per lead
LTV
ROI by Lead Source

21. A quick reminder of what we
discussed earlier…

22. Bookings without Sales people
Leads
Simple linear relationship
Conversion
Rate
Average
Deal Size
x x

23. But when you add in Sales People…
Ramp
Time
Sales
Capacity
Limit

24. Growth comes in discontinuous units

25. Bookings
No of
Sales People Productivity per Rep
(Average)
x
PPR

26. Remember this?
One of the most common reasons for missing plan
Didn’t hire sales people fast enough

27. Two Graphs
0
2
4
6
8
10
12
14
16
18
Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Number of Reps versus Plan
Reps Plan
$0
$500
$1,000
$1,500
$2,000
$2,500
Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Assigned Quota vs Plan
Assigned Quota Plan
$k

28. $0
$500
$1,000
$1,500
$2,000
$2,500
Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Assigned Quota vs Plan
Assigned Quota Plan
$k $500k Lost Bookings
potential due to
slow hiring

29. Compare Actual Bookings to Assigned Quota
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Assigned Quota Bookings
$k
85%
Over Assignment
of Quota
needed to
hit plan
=1/85%

30. Monitoring PPR
Charts3

31. PPR over time
$100
$110
$120
$130
$140
$150
$160
$170
Q1 Q2 Q3 Q4
Average Productivity Per Rep
NewARRbooked-$k/quarter

32. Productivity Per Rep (PPR)
Rep Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
John 120 165 180 145 80 110 195
Mary 80 110 135 155 150 145
Fred 60 35 75 40 55
Alice 85 145 160 180 145
Joe 60 110 85 130 145
Mike 155 170 145 190
Sarah 35 45 70 45
Sue 80 145 175 165

33. % of Reps at Quota
30%
40%
50%
60%
70%
80%
90%
100%
Q1-16 Q2-16 Q3-16 Q4-16
% of Reps above
75% of Quota
30%
40%
50%
60%
70%
80%
90%
100%
Q1-16 Q2-16 Q3-16 Q4-16
% of Reps above
100% of Quota

34. The other thing that drives PPR
Adequate Lead Flow

35. THE
MAGIC OF
FUNNEL
MATH

36. Raw Lead
Marketing
Qualified Lead
Sales Accepted
Lead
Opportunity
Closed Deal
20%
80%
25%
20%
Funnel Math

37. Raw Lead
Marketing
Qualified Lead
Sales Accepted
Lead
Opportunity
Closed Deal
20%
80%
25%
20%
Closed Deal1
Opportunity5
Sales Accepted
Lead
20
Marketing
Qualified Lead
25
Raw Lead125
Reverse Funnel Math

38. Compute Leads Required per Rep
x
No of
Closed Deals
=
Reverse Funnel
Conversion Rate
Marketing Qualified
Leads Required

39. This becomes the Contract between Sales & Marketing
Marketing Qualified
Leads Required Sales
Marketing
SDR’s

40. Ensure Customer Success
Search for Repeatable & Scalable
& Profitable Growth Model
7
Ensure
Customer
Success

41. The Backend of the Funnel
Closed Deals
Loyal
Customers
who are
Advocates
Renew ExpandOnboard
It’s all about LTV

42. 1 2 3 4 5 6 7
Jan 85% 75% 65% 62% 61% 58% 57%
Feb 87% 78% 70% 67% 63% 59%
Mar 88% 84% 79% 75% 71%
Apr 92% 89% 86% 82%
May 93% 89% 85%
Jun 94% 90%
Jul 96%
Months after starting usage
Cohort
Shows improving first month churn
Shows churn stabilizing
in fourth month
Cohort Analysis

43. Top 2 Factors affecting Renewals
On-boarded
successfully?
Champion still at
the company?

44. Dollar Renewal Rate is King
Customer
Renewal Rate
>Dollar
Renewal Rate

45. Customer Churn vs $Dollar Churn
Customer 2
$5k MRR
Customer 1
$1k MRR

46. Customer Churn vs $Dollar Churn
Customer 2
$5k MRR
Customer 1
$1k MRR
Customer 2
$6k MRR
Customer 1 Churned
50% Customer Churn
17% $Dollar Churn

47. Customer Churn vs $Dollar Churn
Customer 2
$5k MRR
Customer 1
$1k MRR
Customer 1
$1k MRR
Customer 2 Churned
50% Customer Churn
83% $Dollar Churn

48. Negative $Dollar Churn
Customer 2
$5k MRR
Customer 1
$1k MRR
Customer 2
$7k MRR
Customer 1 Churned
50% Customer Churn
-16% $Dollar Churn

49. Negative Churn
Expansion
Revenue
from Existing
Customers
Revenue Lost
from Churning
Customers
>

50. Basic
Edition
Features
Requires Variable
Pricing Axes

51. Users
Basic
Edition
Features
Requires Variable
Pricing Axes

52. Users
Depth of
Usage
Examples:
- Mailing list size
- Database size
- Amount of storage used
Basic
Edition
Features
Requires Variable
Pricing Axes

53. Negative Churn – Crucial for Long Term Success
Revenue Lost with
2.5% monthly Churn
Renewals
Lost due
to Churn
YEAR 3
$3m $7m
Becomes harder
& harder to
replace this with
new bookings
Renewals
Lost due
to Churn
YEAR 6
$30m $70m

54. Impact of Negative Churn
$400k vs $150k
ending ARR

55. Make it Profitable
Search for Repeatable & Scalable
& Profitable Growth Model
8
Make it
Profitable

56. UNIT ECONOMICS
Why do we need this?

57. What makes this topic so important?
• GAAP Accounting
• The primary tool that the world uses to understand the health of a business
BUT THERE’S A BIG PROBLEM
• GAAP accounting doesn’t work for SaaS
• Point in time snapshot
• Doesn’t take into account the value of future recurring revenue

58. 2ND Reason - why is this topic so important?
• There is a huge problem with SaaS businesses:
When they grow fast, they usually lose a lot of money
• The SaaS Cash Flow Trough
• Some will never be profitable
• How do you know you are running a good business that will eventually be
profitable?

59. What’s so different about SaaS?
$(7,000)
$(6,000)
$(5,000)
$(4,000)
$(3,000)
$(2,000)
$(1,000)
$-
$1,000
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month
10
Month
11
Month
12
Cash Flow for a Single Deal
CAC (Cost to acquire the customer) Subscription payments * GM%

60. Cash Impact of a typical deal
$(7,000)
$(6,000)
$(5,000)
$(4,000)
$(3,000)
$(2,000)
$(1,000)
$-
$1,000
$2,000
$3,000
Month
1
Month
2
Month
3
Month
4
Month
5
Month
6
Month
7
Month
8
Month
9
Month
10
Month
11
Month
12
Month
13
Month
14
Month
15
Month
16
Month
17
Month
18
Negative Cash Flow

61. If cash flow is bad for one
customer, what happens
when we grow, and add
many more customers?

62. Modeling a slow increase in the number of customers
added every month
$(1,000,000)
$(500,000)
$-
$500,000
$1,000,000
$1,500,000
Month1
Month3
Month5
Month7
Month9
Month11
Month13
Month15
Month17
Month19
Month21
Month23
Month25
Month27
Month29
Month31
Month33
Month35
Month37
Month39
Month41
Month43
Month45
Month47
Month49
Month51
Month53
Month55
Month57
Month59
Cash Flows
CAC
Subscription
Payments
* GM%

63. Cumulative Cash Flow
$(3,000,000)
$(2,000,000)
$(1,000,000)
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Month1
Month3
Month5
Month7
Month9
Month11
Month13
Month15
Month17
Month19
Month21
Month23
Month25
Month27
Month29
Month31
Month33
Month35
Month37
Month39
Month41
Month43
Month45
Month47
Month49
Month51
Month53
Month55
Month57
Month59

64. The SaaS Cash Flow Trough
$(3,000,000)
$(2,000,000)
$(1,000,000)
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Month1
Month3
Month5
Month7
Month9
Month11
Month13
Month15
Month17
Month19
Month21
Month23
Month25
Month27
Month29
Month31
Month33
Month35
Month37
Month39
Month41
Month43
Month45
Month47
Month49
Month51
Month53
Month55
Month57
Month59

65. “The thing that surprises many investors &
boards of directors about the SaaS model is
that, even with perfect execution, an
acceleration of growth will often be
accompanied by a squeeze on profitability and
cash flow.”
Ron Gill, CFO at Netsuite

66. What’s the impact of faster growth?
$(10,000,000)
$(5,000,000)
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
2 more
Customers/Month
5 more
Customers/Month
10 more
Customers/Month

67. What’s the impact of faster growth?
$(10,000,000)
$(5,000,000)
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
2 more
Customers/Month
5 more
Customers/Month
10 more
Customers/Month
Cash Flow Trough
gets deeper

68. When your SaaS business
is losing money at an
increasing rate, how can
you tell if the business is
going to work eventually?

69. UNIT ECONOMICS
A Powerful Tool

70. Unit Economics
Can I make more profit from my
customers than it costs me to
acquire them?

71. Unit Economics
Cost to Acquire a Customer Lifetime Value of a Customer
CACCAC LTVLTV

72. A Viable Business Model
CA
C
CAC LTVLTV<
But surprising how many
Entrepreneurs underestimate CAC

73. Guidelines for SaaS success
LTV CAC> 3x
Months to
recover CAC < 12-18 months
Required for Capital Efficiency

74. Months to recover CAC can dictate acquisition spending
If we make $10k from the customer in the first 12 months…
We can afford to spend up to $10k to acquire them

75. Months to recover CAC can
dictate acquisition spending
If we make $10k from the customer in the first 12 months
We can afford to spend up to $10k to acquire them

76. LTV - Importance of Gross Margins
LTV =
ARPA Gross Margin %
$ Churn

77. Improving Gross Margins
• Greatest cost is usually people costs in implementation and on-boarding
• Solve by:
• Simplifying the product
• On-line training courses
• Provide in-product training videos and walk-throughs
• Charge a one time fee for implementation

78. The Power of Unit Economics applied to Segments
Brad Coffey, HubSpot
“When we started this analysis, we had 12 reps selling directly into the VSB market and 4 reps selling through Value Added Resellers (VARs). When we
looked at the math we realized we had a LTV:CAC ratio of 1.5 selling direct, and a LTV:CAC ratio of 5 selling through the channel.
0
1
2
3
4
5
VSB VARs
LTV:CAC
0
3
6
9
12
VSB VARs
No of Reps
0
3
6
9
12
VSB VARs
No of Reps

79. 12 Months Later
Brad Coffey, HubSpot
The solution was obvious. Twelve months later we had flipped our approach – keeping just 2 reps selling direct and 25 reps selling through the channel.
This dramatically improved our overall economics in the segment and allowed us to continue growing.”
0
3
6
9
12
VSB VARs
No of Reps
0
5
10
15
20
25
VSB VARs
No of Reps
0
5
10
15
20
25
VSB VARs
No of Reps

80. Salesperson Unit Economics

81. Salesperson Unit Economics
CA
C
OTE LTVQuota<
4-6x
On Target Earnings
A typical good ratio to aim for is around 6x in SaaS

82. Annual up-front payment
Instead of Monthly

83. What happens if we collect a year’s payment in
advance?
$(5,000,000)
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
Month1
Month3
Month5
Month7
Month9
Month11
Month13
Month15
Month17
Month19
Month21
Month23
Month25
Month27
Month29
Month31
Month33
Month35
Cumulative Cashflow comparision -
monthly payments vs year in advance
Eliminates the
cash flow trough,
and means $35m
more cash in this
scenario

84. CONCLUSION

85. Key Metrics and Levers
• Bookings
• Top of funnel lead flow
• Funnel conversion rates by stage
• Average deal size
• Sales Rep tracking
• No of Reps
• PPR (Productivity per Rep)
• MQL’s vs plan
• Customer Happiness / Retention / Churn
• Unit Economics
• Months of Cash collected up front

86. The importance of a Revenue Operations
• Tracking these metrics and interpreting them takes time
• But there are potential gold mines in the data
• Hire Revenue Ops person earlier than you’d think
• When you start scaling, say around 8-10 sales people