eric wimer

Our Micro SaaS portfolio company just hit ARR / FTE productivity rivaling $50M SaaS firms. Here are 4 lessons we learned along the way: Focus on operating leverage, not just revenue growth. EBITDA/FTE is an excellent scoreboard. Lean teams move faster and punch harder. Return on effort matters more than chasing scale or deal size. Where have you most recently created operating leverage in your business? #ARR #MicroSaaS #BusinessEfficiency

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Everyone's talking about PE and VC. But do you really know the difference? Here's the truth: They're both about investing in companies. But that's where the similarities end. Let's break it down: 1. What they actually do: PE: Buys established companies VC: Funds early-stage startups 2. Risk appetite: PE: "Let's make this good company great." VC: "This could be the next unicorn... or total bust." 3. Ownership mindset: PE: "We're taking the wheel." VC: "We're along for the ride." 4. Investment size: PE: Dropping $100M+ like it's nothing VC: Starting small, maybe $1M-$10M 5. Return timeline: PE: "See you in 3-7 years." VC: "Talk to you in a decade... maybe." 6. Exit strategy: PE: IPO, sell, or reshuffle the deck VC: IPO or get bought out 7. Day-to-day involvement: PE: "We're basically running this place." VC: "Call us if you need advice." 8. Industry focus: PE: "We'll buy anything that makes money." VC: "Tech, innovation, disruption. That's our jam." Here's the kicker: PE is like buying a fixer-upper house. VC is like betting on a racehorse. Both can make you rich. Both can lose it all. But remember: PE plays it (slightly) safer. VC swings for the fences. Which would you choose? P.S. Next time someone confuses PE and VC, send them this. You're welcome. 😉 P.P.S Check out my Newsletter for Founders to Raise Capital and Grow Revenues Here: https://lnkd.in/ejecDs9Z #BrainDumps | BrainDump #97

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Nearly all companies that scale to $B+ markets recognize a simple truth: giant markets are chains of niches. The first niche you choose, at seed, sets the stage for your whole company journey. If you pick a "killer wedge" right off the bat, you learn fast, build systems needed to scale, and gain traction. It's easy to springboard. If you pick wrong, it's like banging your head against the wall for months. We've been examining these wedges in-depth for years. Today, we're releasing our findings: Here: https://lnkd.in/dFFHQ7VU And below 

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Uber and Lyft both launched UberX in Raleigh on the same day. Fast forward 6 months, Uber had 90% market share in the area. Here's how we won: 1. Uber's main KPI at the time was ETAs. When a rider was ready to take a trip, we wanted them to get a driver in under 5 minutes. So we launched in a very small geographic area, and our team worked our butts off to match rider and driver demand so ETAs were under 5 minutes. Thus, we launched Uber in Raleigh in a 7 mile circle in downtown Raleigh in April 2014. Lyft, on the other hand, launched in Raleigh, Durham, and Chapel Hill on that same day. They thought covering the entire area (each of those areas are 30-45 min from each other) would help them win since they were first. However, their result was 10-20 minute ETAs for the entire area. So while Uber wasn't available in Durham & Chapel Hill, Lyft's experience was already sub-par. 2. For our team to hit 5 minute ETAs in our small geo, we needed more drivers on the road AND we needed existing drivers to drive when the demand was. So we did tons of top of funnel marketing: ads, driver referrals, and flyers were the best performing methods. And for existing drivers, we looked closely at the real-time data and we'd design targeted incentives. When we saw rider demand not being met, we'd target X number of drivers with extra financial incentives to drive during those times so all ETAs were under 5 minutes. Yes, we burned money to meet rider demand. And it worked. 3. As we grew our small geo in Raleigh and more and more rides were under a 5 minute ETA, we started to build a driver base in Durham and Chapel Hill. We did driver onboarding events, we advertised that we were "coming soon" and we built up supply so come launch day, we'd cover the area well. And 3 months after we launched Raleigh (and 3 months behind Lyft), we launched Durham and Chapel Hill nearly hitting sub-5 minute ETAs on day 1. 4. Uber had local city teams at this time. Meaning my team's sole focus was on the Raleigh-Durham area. We lived, ate, and breathed Uber Raleigh. I worked day and night to grow my market and ensure happy riders and drivers. I answered every single driver support ticket myself. Lyft, on the other hand, had their company in SF overseeing the United States. They didn't have dedicated city teams. This meant when there were events going on in Raleigh, we knew about it and we'd make sure Uber drivers would be there. I don't know what Lyft did, but their presence lacked, and we'd win the big events. Fast forward 6 months from launch, Uber had a >90% market share in the Raleigh-Durham-Chapel Hill area. It taught me a valuable lesson: you don't have to be first. You just have to be focused on what matters most.

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This is a must listen to for anyone B2B founder. How to figure out Product Market Fit. One of best frameworks I've seen in a while. https://lnkd.in/ghSmhVNB

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As a B2B SaaS VC 👩‍💻 and a huge data nerd 🤓, fewer things bring me more joy than a truly statistically significant analysis (600+ companies surveyed) of B2B SaaS metrics across early stage companies. Great work by our team at Emergence Capital! See comments for full report, and please let us know how we can make this better in the future!

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Every truly great founder that I know is a THOUSAND STEPS AHEAD. You know this by asking them questions on anything related to their startup business, team, markets, data points, financials, legal, etc. The issue? Most people do not ask great founders, great questions. The other issue, most people know nothing about business building. (so they have no idea what is good, bad or ugly, they simply follow the laggards) I like what Lenny Rachitsky discusses with Mike Maples, Jr here. 1. Get out of the present: Instead of just thinking about solving current problems, you need to immerse yourself in the future. Look for emerging trends, technologies, or shifts in behavior that suggest where the world is heading. Great innovations often stem from individuals who immerse themselves deeply in a niche or cutting-edge area. 2. Great startup ideas share three elements: a. Inflections: External shifts that create potential for radical change in how people think, feel, and behave. b. Insights: A unique understanding of how to harness these inflections and enable a future that the company believes in. c. Founder-future fit: An alignment between the founders and the future they envision, including their skills, motivations, and network. 3. Three things that successful founders do differently a. Movements: A movement aligns early believers around a higher purpose, leveraging their emotional commitment rather than just pragmatic benefits. b. Storytelling: Frame your startup’s story as a hero’s journey. Position yourself not as the hero but as the guide (like Obi-Wan Kenobi) who invites customers (the heroes) to embark on a transformative journey toward a better future. Tailor your narrative to resonate with different stakeholders—investors, customers, employees—by emphasizing how they can achieve their aspirations through your vision. c. Disagreeableness: Founders who challenge the status quo often appear disagreeable because they defy conventional norms. They drive change by questioning existing patterns and persuading others to embrace new ways of thinking and acting.

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There are Billions of dollars in non-dilutive grants and other funding for startups, especially those in Medical Devices, Digital Health, and Healthcare overall! Are you tapping into these sources of free capital where you don’t have to give up any of your equity? There are also people who can help you better prepare to win your grant applications (see below)!

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Episode 50 -- The Internet is f*****g exhausting. A convo with T.R. Wilhoit, VP of ECommerce at Case-Mate. T.R. has both agency + brand side experience, which always makes for an interesting convo. I tend to agree with the title of the episode. The internet is f'ing exhausting. Especially when it comes to eComm. So many channels. So many things to think about. Part art. Part science. Some highlights within... 1) AI is a bit overblown (today) according to T.R. *I agree*. 2) We talk about a few agency nightmare tales from T.R.'s career so far. 3) Consumer behavior pre + post election. Full episode is linked in the comments. Getting to episode 50 was not easy. Consistency in podcasting, is often, a pain in the ass, if I'm being honest. Looking forward to the climb to 100 in 2025 :)

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Retention.com ended May up 1.1% at $21.7m ARR, but still below our Dec ‘23 high of $22.1m ARR. RB2B closed the month at $622k ARR (+300% m-o-m). Here’s the good, the bad, and the ugly of May 2024: If you’ve been following along from home... We had four down months in a row (Jan - Apr). April was the biggest down month: - 2.3%. The hardest LinkedIn post I ever wrote was that April monthly update: - We were down for the 4th month. - We were down more than prior months. - The market dynamics had changed completely. - We had competition coming from everywhere, big pricing pressure. - Our churn problem seemed to be getting worse, no matter what we did. The hardest part of that entire post was admitting that I had no idea when it would end. It was even harder listening to our execs tell me that the post read horribly from our employees perspective. But here’s what I knew when I posted that post... We were (arguably, still are) just stuck again. My entire journey has been getting stuck, then getting un-stuck again. I knew we would figure out how to move forward again. If we just kept going, we would figure out: - Exactly how to navigate the new competitive environment - How and what we could do that others couldn’t do  - How to improve efficiency and get in front of churn I don’t think we’re out of the woods yet, but we are on the right track. Retention(.)com team - I’m proud of you. Keep it up! We’re going to emerge on the other side much stronger. Retention(.)com Highlights: - We continued the roll-out of EOS - We are ahead of our Q2 sales target - We’re seeing an increase in our expansion revenue - Average deal size is up around 7% this Q - Canceled revenue is down 18% this Q - 375 people are signed up for our 2nd Retox event - We launched a new Reclaim flow - “active onsite”  - We made significant progress on our SFMC Reclaim integration We generated around $600k of free cash, which offsets some of the free cash miss last month (which was around $300k). RB2B Highlights: - $622k ARR 12 weeks post launch, team of 5 (welcome Jeff Hall) - Still only have a 1.3% conversion rate - We’re going to push out a credit system (lower prices) next week - We are experimenting with a two-touch sales motion next week - We have our first full-time salesperson starting July 1 - Human support down from 8.4% to 3.2% of total interactions - We’ve started to see an uptick in UGC - 3 last week, 7 this week All things considered, May was a pretty good month. There aren’t too many negative things to dwell on. Pretty soon we’re going to start including RB2B ARR in the top line ARR number. That, to me, is the life we have chosen. Get stuck. Figure something else out. Grow again. Doing what we do is not easy. But when you find a new growth lever, it’s sooooooooo satisfying. The good news is I’ll keep reporting everything so you can be a part of the journey. Keep building.

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Unpopular opinion: I believe scaling a CPG brand from $1M to $10M is harder than going from $0 to $1M, largely because of what you see in the image below. You can get to $1M with a good product, hustle, and consistently showing up in a niche. You can also reach $1M by avoiding excessive marketing fees and working with smaller distributors accustomed to small brands. But once you transition from the "launch" to the "scale" phase, you have to start playing the game the way everyone else does. This means dealing with distributors and wholesale customers who are used to working with companies 100x-1,000x bigger than you. Don't get me wrong: in some ways, being a small, emerging brand can work FOR you and not you against you. At Sun & Swell, we've received tremendous support from customers, distributors, and even some of the big food companies who want to see smaller, mission-driven businesses succeed. But at the end of the day, you have to start running your small business like a big business and compete directly with industry giants (but with the budget of a small business). What do you think? Is scaling from $1M to $10M harder, or from $0 to $1M? Source of photo: @cooltechtipz on X (image might be a bit dated...but you get the point!) #cpgfounder #femalefounder #womenowned

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*Shopify BEATS on Q1 earnings* - I listened to Harley Finkelstein at 2x speed so you don't have to.. Highlights below 👇 In Q1, Shopify beat on both revenue and earnings with increased payment adoption and rapid growth as well as continued wins in the enterprise segment. Notable wins included BARKBOX, INC. PrettyLitter, Overstock, WYN BEAUTY by Serena Williams. A quick rundown of the #'s Gross Merchandise Value: $60.9B ( ⬆ 23%) - same growth rate as Q4. impressive to see that growth rate sustained at increasing scale. Revenue: $1.9B (⬆ 23%) - up 29% when adjusting for the sale of Shopify Fulfillment Network to Flexport. Gross Payments Volume: $36.2B (⬆ 32%) - most importantly GPV grew to 60% of GMV up from 56% in 2023 which means they're capturing more share of payments via Shopify Payments which means more revenue. Looking closely, their take rate also is increasing as Shop Pay increases penetration Subscription Solutions Revenue: $511M (⬆ 34%) - mainly driven by price increases and increased merchant adoption. MRR: $151M (⬆ 32%) - interesting 🚩 this is only up $2M from Q4 2023, so QoQ MRR growth is actually a tepid < 2% Shopify Plus accounts for 32% of MRR, a decline in share from Q3 last year. This is one of those hard-to-reconcile counter-narratives to everything the team says on these earnings calls about enterprise and moving up market. Gross Profit: $957M with GM at 51.4%. It's interesting to watch this GM oscillate on revenue mix for the quarter. Q4 is payments heavy which is traditionally lower margin whereas more of the revenue in Q1 comes from SaaS and subscriptions and pushes margin up. GP is what pays the bills so great to see it growing so quickly Free Cashflow: $232M (12% FCF margin and doubling YoY) - Shopify continues to become a cash-generating machine that will allow it to reinvest in its platform and growth to up the pressure on incumbents like Salesforce and Adobe. THE MAGIC METRIC - Shopify talks about increasing the Attach Rate, but I don't think they spend enough time on it. Ultimately, it's the number that drives this business and the long-term shareholder value of the company. Attach rate is defined as (merchant revenue/merchant GMV). Effectively, it's how much of their customers' revenue they capture as revenue to the platform. However, it's the ultimate balancing act - if too high competitors can steal share, too low, the business doesn't grow. The way to continue to justify increasing this take rate is to build valuable net new features where merchants have no problem paying incremental dollars to Shopify because they're either adding more value to the business or replacing other costs in the PnL. This is why Shopify Editions is such a big thing! Currently, Attach Rate is at 2.99% and growing QoQ The Look Ahead to Q1 2024 Looking forward, Q2 is forecasted to be in line with expectations set at the end of last year, so no surprises there. Good quarter Shopify!! #shopify

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Yesterday PitchBook dropped some new data showing Q2 activity up, and Modern Retail and Anna Hensel published a great article on Zombie brands. Sean Frank summarized it well. So what is the actual state of affairs? Do things suck? Or do things not suck? My take: We live in too much of a black and white world. Nuance and grey area are important. Take the Non-Alcoholic category for example. Twitter takes are hot that either Alcohol is DEAD, or Non-alcoholic is FOR SURE a fad. For me, the answer is in between. I don't need NA to take over the whole store, or even half the store. I need it to grow its shelf space from 1 to 1.5, or 2. Incremental changes, across a wide number of stores. That grows the market. It's not all or nothing. The current investment cycle is messy. There are large amounts of zombies. There are also large amounts of good companies successfully raising capital, quickly, that may trade at revenue multiples in the future. Both can be true, at the same time. Discerning investors and operators will continue to focus on fundamentals.

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Founders out here..Want to raise VC funding? Nail these 6 criteria, or don’t bother.👇 Quick context: Before John Hu raised $5M for his own startup, he spent years at Northwest VC evaluating countless startups. The ones that got funded? They all aced this checklist. ▪️Team: -The strength of the team is critical. -Do they have the right mix of talent, industry expertise, and drive? -And how well does the team align with the market? -The Founder-Market Fit must be rock-solid. ▪️Market Size: -Investors want to know if the market has serious potential. -Does the startup operate in a space with billion-dollar growth opportunities? -What’s the TAM? ▪️Competition: -Every startup faces competition. -How fierce is it in this particular market? -Is there enough room for the startup to capture meaningful market share? ▪️Differentiation: -What makes the product or service unique? -Investors need to see a clear competitive edge – something that will help the startup rise above the noise in a crowded market. ▪️Metrics: -Early traction matters. Are there any key performance indicators (KPIs) showing strong growth? -Metrics like revenue, customer acquisition etc be compelling to catch investor attention. ▪️Exit Potential: -VCs always have an eye on the exit. -How many potential buyers are in this space? -Is there a clear path to a lucrative exit for the investors? It’s a tried-and-tested approach to evaluate a company’s true potential. Would your startup pass the test? #startups #checklist #fundraising

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Series A investors - if a cofounder has just left a company when you invest, what % of equity is acceptable for them to leave with? (At seed, I like to see any "dead equity" at <6% pre raise and am curious if it's higher at A since more work has been done)

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There are so many vendors, and so much noise in the market right now. It's hard to tell what anyone does, harder to figure out who’s delivering value, and impossible to differentiate one from the next. I’ve been talking to a lot of VCs lately, and they all feel it in their portfolio companies - even good companies w/happy customers, great products, and strong net retention - just can’t get the market to believe (or pay attention to) to the success they are delivering for customers. It’s a huge problem - everyone is struggling to generate pipeline and opportunities, and struggling to win new business when they do get conversations. So what are we (as a market) doing about this noise problem? YELLING LOUDER (and more often) More emails. More calls.  Emails informed by intent data.  Emails informed by AI w/intent data context.  aiSDRs. Auto-dialers, AI-driven video at scale. Inbox creation/rotation/warming.  Signal-based emails. Microcampaigns. “Quick question”.  “Are you the right person?” “Q4 Priorities at %%Company_Name%%” You can have the most advanced technical outbound setup in the world w/Clay linked up to Unify linked up to HeyReach w AI Layers and Human Layers and waterfall enrichment, and all this (pretty damn) impressive/clever tooling, and could have downloaded the entire brains of Brendan Short and Mark Kosoglow and then trained an AI on them on how to set this ^ all up... But… the gains are only incremental at best, b/c the bigger problem is the channels (ie email, LinkedIn inbox, soon to be phone) are just bombed out. My inbox certainly is a mess - but interestingly enough - I’ve gotten so good at scanning/deleting an email about lead generation services that’s clearly AI-generated in about .35 seconds - that ironically I don’t actually get that many well thought out human emails. So what’s my prediction for what works for cold outbound in 2025? Well nothing really - again the channels are bombed out and anything that does work won’t be a silver bullet and will only be a small incremental improvement.  But if there is one thing that might sort of work in 2025… I think it’s a return to manually written, well-thought out outreach. And a whole bunch of dials :) Long-term I think we need to rethink the underlying problem of trust and attention in B2B though - there’s a whole lot of energy being wasted.

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Bold prediction for 2025: Investors will pay founders to access their venture data. Founders own their data and grant access to investors for a fee. This shift promotes transparency, trust, and efficiency in fundraising, while giving startups a new revenue stream.

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Can Envestnet | Yodlee become Plaid? Now that Envestnet was taken private, will Bain Capital spinoff Yodlee? Yodlee was a public company on its own before it was acquired by Envestnet. Yodlee was originally acquired for $660 million in 2015. Visa previously made an offer to buy Plaid for $5B. I have always been a Yodlee fan. I was a Yodlee user and I have used numerous products that are built on top of Yodlee. Most hedge funds are users of consumer transaction data and many have used a product that is built on the backs of Yodlee. What’s the problem with Yodlee? - They have always been hard to work with. The sales team has never been a favorite of the hedge fund industry and the customer service/support hasn’t been top notch which is expected if you are asking for high 6-figure or 7-figure contracts. - When people talk about Plaid, they always say developer first, top-notch APIs. When people think of Yodlee, they always think old school, and I have yet to hear someone say they have best-in-class technology. Though I think this is mainly just a branding and a marketing issue, in the end, it’s an issue. - Data quality. I think and have heard it’s actually strong. But they need to better position this vs. competitors. - Product offerings. Innovate, Innovate, Innovate. The product opportunities are endless not just in capital markets/hedge funds, but across financial institutions and beyond. What do you think? Will we see a publicly listed Envestnet | Yodlee in the next 5 years? I do a more in depth discussion on the topic in my blog today 👇

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