Ben Scandlen’s Post

Transcript

Alright, it's April 18th. It's time to go over the latest articles I found related to growth and marketing. I think you'll find these very interesting. We have one from David Spitz where he talks about the efficiency of your AR, your net new AR with related to your sales and marketing spend. One from Kyle Poyer who talks about R2 in terms of the number of employees you have. Then one from Thomas Tongue is where he talks about making markets, companies making markets and finally one from Mosaic. Grow solutions where we just talk about the fundamentals of growth. So let's dive in. Let's get started with this article of David Spitz. David does an amazing job at looking at data from publicly traded SaaS companies. And so these are metrics that year end 2023 medians as he says growth anemic but stable 18% which is very similar to what we saw in the article yesterday from Maxio. And he has a chart in here which which charts very closely to what I shared yesterday. What was most interesting to me is this his point here GTM still a mess. And he looks at some of some of the metrics and why he's forming the opinion sales and marketing expense as a percentage of revenues at 40%. Sales and marketing expense as a percentage of net new AR 237%. And he This is his point. These numbers are well above historical healthy norms, and this is a metric that matters most for go to market. So let's take a look at the chart and see what he's talking about. Here's where we are. Sales and marketing expense as a percentage of net new AR. 200% if you exclude stock based compensation and you just see this growth curve, it's just continuing to climb like these numbers aren't going to work and so take a look at what you're doing and seeing if your numbers align with these. We have to as sales of marketer, as people in sales and marketing and growth, find a way to get more efficient. In our experiences across our clients is that there is definitely efficiency out there. I mean we've moved away from growth at all costs that really get efficient growth but find those efficiencies. I mean it's it's and usually making those cuts is not super painful. There's things that are just not converting to revenue. We need to eliminate them. So I'm glad David highlighted this in this chart. I think it's really meaningful and is really beneficial for many different companies. Kyle Poyer shares this post. And he's uh, he's really into metrics and I think this is a great one and increasingly important metric is shockingly simple annual recurring revenue per full time employee. So again looking at AR per full time employee and he the reason why he thinks is so beneficial, it's a metric you can't hide from. It's not complicated and you can compare yourselves to others. And so he lays out some better benchmarks here at one of five million AR, a good number is 90. Rate is 150K. If you move down to more than 50 million, AR good is 250. K Great IS300K. And then he shows what some of these leading companies what they're looking like a Dropbox 8, almost 800. OK. Um, in terms of AR per FTE? I mean, that's just amazing. So. But there's all this article also highlights. An important important point that like to emphasize is you need to make sure when you're reading different suggestions, articles on LinkedIn and other channels is that the data that you're seeing applies to your organization. Like if you're at more than 50 million ARR and you're making decisions based on something that was written out for companies that are 1 to 5 million AR, you're going to be a make miss. You're going to make mistakes. You're like, hey, you know, I read that a great. AR per FT E is 150 K No, you're not. You're performing very poorly and vice versa. You just need to make sure that the data you're looking at is meaningful to your organization. So next let's take a look at this article from Thomas Tongues. And he starts off by saying over the weekend, Toby, the founder of and CEO Shopify discussed the major reason investors pass on Shopify in his early days market size. I remember that financing round, I remember having the same concern and making the same mistake. So which is kind of crazy when you think about Shopify now that the concern was market size, I mean Shopify serves almost everyone at this point it seems like and so. Thomas is thinking has evolved over the years and he's saying we need to move away from just saying, is market size large enough? And the other question is can the company make the market? Market size, the output of all the players marketing, selling and building their efforts altered to store and juice the supply and demand curves. It's not a it's not a given, not an output or steady state. And so. His point is that a company that's doing a great job can actually expand the market and this is a critical point. Are there opportunities for your company to expand the market by doing the right things? He says when. Often it's startups that engender that a man changed the market dynamics and make markets massive by taking a risk with products. When done right, these founders can create category defining businesses like Shopify, which is now worth 90 billion. So yes, obviously market size is is important, but if you're thinking big, if you have a great vision, if you think about ways to open that market. The potential could be much greater than than even where it is today. And finally, I just want to close by taking a look at this article from us, which is just the idea that you need if you want transformational growth. There's some basic things you have to focus on. There's so much content on there around, which still looks like growth hacks and little tips to drive growth. But those don't drive transformational growth, not if you don't have a firm foundation. And so there's three questions that you got to make sure your company can answer. Well, does my organization have a clear growth vision and this isn't just a revenue target, you have to make sure that you clearly define your growth vision. Is there a clear baseline for performance in a way to track and measure for the success of the identified strategic initiative. So you obviously need to bill measure what you're trying to accomplish. And then finally and this is so important and and I think this is the thing that can be most often being ignored, have I gotten buy in to the growth vision at all levels of the organization? Companies are driven, companies are inspired, they do better. And so it's really important you get this buy in on your growth vision. All right, that wraps it up for today. I hope you enjoyed these articles. If you have any comments or feedback, leave them in the comments here. Would love to hear from you. If you know any good content that I should share that I should take a look at, please add that to the comments as well. Otherwise I will see you tomorrow.