What’s wrong with this thinking?
“We’re raising capital to acquire new users and accelerate growth. Our aim is to use this capital to acquire (X) number of users so that we can raise our series (Y) in 18–24 months time.
Our aim is to optimise our content and digital advertising strategies such that our CAC:LTV ratio is greater than 5. We are confident we can do this but need the capital to build out this capability and deliver at scale. We are confident that our marketing team will be up to the task.”
It’s one of the SaaS industry’s most common growth strategy for early-stage startups. Invest in digital advertising in order to test and optimise for a favourable CAC:LTV ratio. The theory being that building an advertising system that reliably generates a favourable CAC:LTV ratio guarantees profitability. …
We all see them. Those companies with products that seem to sell themselves… They have a secret sauce; something that’s going on that just makes their products so much more engaging than our own.
These companies make us jealously look at our own products and wonder “How?”
How do some products seem to take hold in the market and spread effortlessly, while others don’t? It’s a good question and one worth answering. …
Often, we are never exposed to more of the ocean than what’s visible from the local beach. It’s so easy to forget that the earth is mostly blue.
With 71% of the earth covered in water, it begs the question, can we leverage the size and scale of our oceans to help improve some of humanities woes?
In our latest podcast, Masters of Future Technology student Louis Gordon dives deep into the future of blue carbon. During the discussion, he made an interesting point. …
It was such big news when the British High Commissioner to New Zealand Laura Clarke called New Zealand out on its environmental record.
“There is a gap … between ambition and reality,” Mrs Clarke said. “You have Scandinavian ambitions in terms of quality of life and public services, but a US attitude to tax. The brand 100% Pure New Zealand lulled many into a false sense of security when the environmental reality is far more challenging.”
Personally, my first reaction upon reading Mrs Clarke's statement was that she must have her facts wrong. I mean, who can trust politicians at all these days, right? They sensationalise and lie for their own agendas. …
The answer to any commercial problem is always cash. It doesn’t matter what the question is. Cash is king, and the more cash a company can generate, quickly, the more successful they will ultimately be.
Sales velocity is a measurement of how fast a company is making money. It measures and describes both how quickly leads are moving through a company’s pipeline and how much value new customers provide over a given period.
A company’s sales velocity plays a huge role in its ability to thrive and grow. The less time it takes for a company to convert leads, the faster it can generate cash. This is particularly important for companies with limited capital reserves i.e. …
The board of a local startup contacted me for help.
A year prior, the company had raised a few million dollars to progress their sales and marketing efforts. The board were now concerned that they were a month or two from ‘bingo’ cash, and felt they needed to shake things up a little.
The boards' assessment was that they had a great product but had yet achieved the level of sales traction they had expected. Furthermore, the management team were struggling to make real progress with how to move the company forward, which was of growing concern.
We all got together and sat down to a group meeting. Within minutes of meeting the management team, it started to become clear as to what was going on. The management team were so ‘nice’ to each other… And not in a pleasant way. It was more of a timid, ‘you first, no you first, no I insist’, type thing. It was really awkward to watch. …
Natural Rate of Growth or “NRG” answers the question:
“If no one from sales and marketing did their job, how much would we grow?”.
That is, it measures the proportion of revenue growth that comes from ‘organic’ i.e. non paid, acquisition sources.
NRG is a metric that is growing in favour with young businesses, especially within the SaaS community because it prioritises of all the right behaviours that lead to healthy growth. …
So, what is a conversion rate? A conversion rate is a metric that is used to measure and quantify a proportion of outcomes from a given sample. More importantly, they are the tools companies use to measure and optimise sales and marketing channels.
To calculate a conversion rate, you take the number of intended outcomes and divide by the total number of relevant interactions.
For example: if you make 50 sales from 1000 leads then the conversion rate is 5%, which is calculated by dividing 50/1000.
Why conversion rates are useful for scaling a business is because they are inversely proportional to acquisition costs. That is, the higher the conversion rate a company can achieve, the lower the unit cost of each conversion becomes. …
Today is all about the often untapped gold mine for many businesses; their existing customer base! In particular, the specific revenue that comes from selling to them. We will discuss what it is, how it works, and why it’s important. With that all said, let's get into it!
So, what is Expansion Revenue?
Expansion revenue is the revenue a company earns from selling to its existing customer base. That is, it’s the net new revenue that has come from existing customers. It is calculated by taking the total new revenue of an existing customer and subtracting the old revenue value.
e.g. If a customer is already paying $100 p/m but they upgrade their plan to $200 p/m the expansion revenue is $100. …
Today we’re talking depreciation, the incredibly important technique needed to expense assets. We will discuss what it is, how it works, and why it’s important. With that all said, let's get into it
Deprecation is an accounting tool that allows companies to account for the ‘consumption’ of their assets that don’t diminish on their own and to correctly allocate the cost of these assets against the revenue they help to generate.
Depreciation is a necessary accounting tool as it allows companies to account for the ‘use’ of their assets that don’t physically run out that also last longer than a year. …