📕 How Low Will SaaS Valuations Go; 2022’s Outbound Sales Stack; The Top Product Strategy Frameworks…
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?
❓ Last week, Tomasz Tunguz (MD at Redpoint Ventures) asked a question many are wondering, “how low will SaaS valuations go”? After all, public software multiples are now officially lower than what we saw in 2016, with the median percentile trading at 4.9x (vs. 5.6x in 2016). Tunguz points out that the 10-year bond’s rates correlate with SaaS multiples at -0.49 R^2, inferring that increasing rates address roughly half of SaaS valuations’ drop. He then creates a linear model with the 10-year bond’s data to show just how sensitive multiples are to these hikes. What the output tells us – the 3.3x average multiple we saw in early 2016 isn’t outside the realm of possibility.
🤝 Outbound sales historically revolved around three basic activities: finding a list of targets and their contact info, reaching out to them, and of course, selling. While that hasn’t changed, the emergence of new software in meeting intelligence, buyer intelligence/intent, and other sales enablement functions has significantly improved our ability to do those three things! This quick read highlights different areas and players in the current outbound sales stack, which seems to be shrinking, given the consolidation we see in the space. 6Sense (revenue AI), ZoomInfo (sales data), and Outreach (outbounding) are just a few of the players who have made acquisitions in the last 12 months.
🧲 More leads translate to more sales – simple, right? Not necessarily, because as Singlegrain suggests, that idea completely ignores the quality of your leads. Adding poor-fit leads will make your sales team’s lives miserable because they’re unlikely to close. And your success team will bear the burden as well because while some low-quality leads will actually convert, they’ll have a higher chance of churn. So try to work backward and pay attention to where customers with high churn are coming from, then scale back your initiatives on those channels. You should also keep a close eye on your visitors' behavior to see where they are in the buyer's journey, poor fit leads will generally exhibit different behavior.
🩸 Hearing “you’re not thinking strategically” has to be one of the deepest cuts you can receive 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 of 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.
As always, if you or someone you know is considering selling, taking investment, or even looking for a bit of debt, we might be able to help out. Just reply to this thread and we can get acquainted. We may or may not be a perfect fit, but we’re always up for meeting SaaS founders and extending our network where helpful.