DeepSummary
In this podcast episode, Jason Lemkin, the founder and CEO of SaaStr, discusses the three most underdiscussed metrics in the SaaS industry for 2024. The first metric he highlights is net new customer count, emphasizing the importance of continuously growing the customer base even after achieving scale. He stresses that a lack of new customer growth puts a company's future at risk.
The second metric Lemkin focuses on is the balance between growth and efficiency. He explains that while profitability is important, growth still matters twice as much, and companies need to achieve both to succeed. Lemkin provides examples of public SaaS companies and how they balance these two factors.
The third metric discussed is the bar for going public (IPO) in the current market. Lemkin examines recent SaaS IPOs and the high revenue and growth rates required, indicating that many startups may be living in a 'bubble' and need to adjust their expectations.
Key Episodes Takeaways
- Continuously growing the customer base (net new customer count) is crucial for long-term success, even after achieving scale.
- Companies need to balance growth and profitability, with growth being twice as important as profitability in the current market.
- The bar for going public (IPO) is high, requiring substantial revenue and growth rates, which may be unrealistic for many startups.
- Bootstrapped companies should aim for a cash reserve equal to at least half of their ARR to enable investments in growth initiatives.
- Sales and marketing efficiency metrics are less important than overall growth and profitability for startups.
- Profitability alone is not the goal; companies should focus on maintaining high growth while becoming more efficient with cash burn.
- Once a certain revenue threshold is reached (between $10-20 million ARR), the distinction between being bootstrapped or venture-funded becomes less relevant.
- Companies need to manage their financial resources carefully and prioritize initiatives that drive customer acquisition and growth.
Top Episodes Quotes
- “If your new customer growth is not growing, half of your top line revenue growth, your future is not secure.“ by Jason Lemkin
- “There is a point somewhere between ten and 20 million of ARR, which maybe you're not at today, but there's a point where it doesn't matter. There's a point where it doesn't matter whether you are bootstrapped or not.“ by Jason Lemkin
- “If youre at 7 million and youve only got half a million in the bank. You cant hire that vp, even though that vp of sales would help, or that vp of marketing or product or Cs, you cant.“ by Jason Lemkin
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Episode Information
The Official SaaStr Podcast: SaaS | Founders | Investors
SaaStr
5/17/24
SaaStr 739: The Three SaaS Metrics That Matter in 2024 and Will IPOs Be Back? with SaaStr Founder and CEO Jason Lemkin
What are the three most under-discussed metrics on social media, with VCs, and especially with founders? SaaStr founder and CEO Jason Lemkin shares his top three SaaS metrics that matter in 2024:
- Net new customer count
- Growth vs. efficiency
- The bar to IPO
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