📕 Dissecting Investment Memos; Moving On From The Metric Monolith; How To Make Ideas Sticky...

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Happy Friday mis amigos. We’d be remiss not to mention Stripe’s historic week, in which they raised 600m at a gasping $95b valuation. While the number is staggering, what’s most impressive is how they got there – the business has only 3,000 staff today, ⅓ as many as Facebook did when they IPO’d at a similar valuation, allowing them to be highly capital efficient relative to their unicorn peers. Funds will supposedly be spent on EU expansion, which could mean more acquisitions… It’s a good day to be a European payment platform!

🔋 Annual software reports are often repetitive (did you hear that software is eating the world?!), but the latest from Battery Ventures didn’t disappoint. The tl;dr is the general market consensus of what a good SaaS business looks like (for ex. 120%+ net retention or 80%+ gross margin) is falling apart, as there has been an expansion of playbooks which prove that you can be a stellar SaaS co without attaining “bluechip” metrics. So how do you evaluate businesses if those mentioned benchmarks aren’t always the best indicator of success? By digging deep into cohorts economics – the linked sheet from Batter is a helpful template to get you started.

⚾ If you’re a founder or CEO, you’ve probably provided VCs/PEs with details on your business to help them evaluate the opportunity of investment. But you never get to see what happens to that data, or how it is pitched amongst their investment committee. So it’s pretty cool that Bessemer publishes their investment memos, sharing some inside baseball on their most successful deals like Shopify, LinkedIn, and Twitch. The risks outlined in each are particularly interesting, as you can see how they were able to overcome those challenges after the fact. It’s best for you as a company to highlight those risks ahead of time, and provide ammo to combat concerns.

📊 When creating or even just rebuilding your company’s financial model, there’s little reason for you to start from scratch. There are dozens of resources around SaaS modeling which can serve as a great starting point. Stéphan Nasser’s review of his top 12 choices, which compares each based on 5 key criteria, should be the first stop of your modeling journey. We personally are big fans of Taylor Davidson’s SaaS Financial Model and SaaS: Enterprise, SME & Users by Alexander Jarvis (both covered in the article).

📦 When we talk about stickiness it’s usually around customer retention, but we’re going to take a step back here and take a look at how to make your ideas stick. In Chip and Dan Heath’s स्टिक के लिए बनाया गया, the two brothers cover the 6 qualities which your ideas must have to stay top of mind, which they cleverly built to spell out success (which, in itself, makes their idea sticky!):

Simple: your core idea should be able to be conveyed in one sentence
Unexpected: generate curiosity by violating expectations with counter intuitive ideas
Concrete: frame the idea in terms of human actions, including concrete visualizations
Credible: add authority and vivid details, unrealistic stats don’t help your case
Emotional: people need to feel what you’re telling them, use comparisons they care about
Stories: The easiest way to make an idea memorable is through stories, giving us experience and understanding without being there