📕 Why investors continue to bid up valuations; Low-touch demand gen models; Content splintering...

Welcome back to The SaaS Playbook, a bi-weekly rundown of the top articles, tactics, and thought leadership in B2B SaaS. Not a subscriber yet?


🌎 TAM (total addressable market), SAM (serviceable available market), and SOM (serviceable obtainable market) are the typical tiers used to demonstrate what a company’s market could be. But none of them focus on the near future of your company – TAM’s are generally represented as $1b+, which isn’t going happen in the short term. That’s why Fairbanks Venture Advisors suggests early stage founders think about their Launch Available Market, or LAM, to map out and show investors who your initial targets are going to be. LAM is calculated by estimating conversion rates of your acquisition activities (or using the real rates if you have the data) then applying your ARPU, and other bottom-up approach assumptions that show you are accounting for all variables.

⚖️ Early stage SaaS investor Kenn So penned a great essay on why investors continue to bid up startups prices, even though they would admit they are overvalued. It starts with a simple supply and demand equation. With only ¼ of the number startups being created today as there was in 2010 (see below), and a 380% increase in the amount of VC raised since that same year, there is high investor demand for a small supply of investable startups (you have to deploy to stay in business, after all). And while the amount of startups exiting has decreased 5% over that period, the amount of money exits are generating has grown significantly, justifying VCs to bid further. One notable difference from the early 2000s to today – 80% of startups are burning cash at the point of IPO, while not growing much faster than the more capital efficient cohorts of earlier years, a pretty eye opening stat.


🌾 Most B2B SaaS companies start with a low touch sales model before building an SDR team and moving upmarket because low touch also generally means lower cost. Marc Thomas from PoweredbySearch went against the grain and started with a direct sales model before moving down market to build a B2B SaaS demand gen flywheel. He shared a template for building that model which stemmed from his learnings, from positioning to website structuring, and also has a separate piece with some additional notes on the principles discussed in the model which is a good supplementary read if you enjoy the first!

👓 The Wall Street Journal’s legendary “Tale of Two Young Men'' letter tells the story of two men with similar backgrounds who work at the same manufacturing business. 25 years down the line one man is in the same role and the other is president of the business, the only difference being that the president educated himself by reading the WSJ. That story, which resulted in over $2B in subscriptions during a ~30 year period, follows a clear “two path” storytelling framework which can be applied to pretty much any SaaS business. While it has lost some of its novelty through gained popularity, it’s a good framework to use in messaging where you are looking to demonstrate how you beat the competition without boasting.

🪓 Getting content right is time consuming, but if you want to maximize the channel, there’s no way around dedicating real resources to it. When looking at content ROI, you measure the cost to produce your content and the resulting engagement and conversions over time. It can take a while to generate returns from one piece, so an efficient way to improve your ROI is in the short term is by content splintering – creating similar content focused on the original topic with tweaks that make it unique, and publishing it across separate channels. Aside from being a money and time saver, splintering enables companies to test new channels because few resources are needed to adapt your existing content to whatever new channel or platform you are testing.