📕 The Weighted Rule Of 40; Navigating SaaS Loan Interest Rates; F#ck Content Marketing

Republished By Plato

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Happy Friday everyone. The job market has been slower than usual for obvious reasons, but we do have some open roles here at Scaleworks which we’re looking to fill. Namely, we’re searching for a Corporate Development Associate to help us find great products to invest in and awesome B2B SaaS content to share with you all. Give us a shout if you think you or anyone in your network might be a fit… Referral fees included!

💓 When it comes to valuation, SaaS private equity investors lean heavily on the rule of 40, in which a company’s combined growth rate and profitability margin should be ≥ 40. But investors would take higher growth over higher profitability in a heartbeat (especially with smaller SaaS companies where profitability doesn’t equate to much), which is why it makes more sense to weigh each metric accordingly. SEG (Software Equity Group) suggests giving a 1.33 multiple to growth and 0.67 to profitability, which feels about right to us.

🤥 SaaS companies have an increasing pool of loan providers to choose from, so if you’re considering, you’ll have to take a hard look at who’s offering the best rates. But beware, seemingly identical rates can end up costing you very different totals. For example, some lenders offer rates at what they will say is 12%-20%, but without amortization, meaning you pay 112-120% of the total borrowed in equal payments over a given period. That flat rate actually ends up equating to a 35% interest rate because your principle isn’t reducing every month. The Element Finance team put a nifty loan calculator together which can help you calculate these real costs and make sure you aren’t being swindled, check it out.

🔪 Hearing “you’re not thinking strategically” has to be one of the deepest cuts you can recieve in a product related position. But even the best fall down sometimes – Rose Yao spent years building at both Google and Facebook, and couldn’t avoid that exact criticism early in her career. She has since put together a basic product strategy framework to help demystify the topic and show product managers how they can think a bit more outside the box. She includes a couple popular frameworks like the 70/20/10. (70% of time should be spent on existing products, 20% on medium size products/features, and 10% on pure innovation) which have withstood the test of time and are great guides to stick to.

🤬 If you work in a SaaS business where everyone is encouraged to blog, you may want to put on the earmuffs for this stat: 70% of the content written in organizations is never used, and the other 30% is rarely utilized properly. So instead of focusing on pumping out sheer volume, Randy Frisch argues that we should take a step back and think about how to better leverage our content into experiences. His book, F#ck Content Marketing, he explains why personalized content streams (think Netflix and Spotify) are what each SaaS business should be creating, and why it doesn’t take 100’s of articles to get there.