How To Calculate Churn And Churn Rate For SaaS Companies: A Complete Guide

If there's one business metric that rules them all - it's churn. No wonder, many executives and VCs call it "The Silent Killer". And despite that most of the time everyone in the tech ecosystem (founders, investors, media, etc) are focused on nailing growth target - without understanding the core

a month ago

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Startup founder mistakes from 0 to 1

Zero to One (or 0 to 1) - is going from nothing to something, for SaaS companies this usually means going from pre-revenue to $1m in annual recurring revenue.  Given the zero base - it's the biggest leap that a company will have to achieve on its path to initial

4 months ago

SaaS Magic Number: measuring scaling efficiency

Tons of metrics can be calculated for any SaaS business. In order to determine how your start-up is performing in a business environment, it's essential to calculate the SaaS Magic Number and various other sales efficiency metrics. Although the metric is overlooked in the SaaS startup community, it’s no

3 years ago

If VC would've been a sport - it would've been Baseball

It's a pretty popular fact that greatest baseball players hit the ball every 1/3. The green line below show this as fairly consistent across the top-50 hitters historically (the 50th having 2839 hits, so it's quite reprentfull). While the greatest hitters do an average 15-20% a better job than

3 years ago

What does the Rule of 40 tell about a SaaS company?

The Rule of 40 emerged a few years back at a time when many SaaS companies started to go public. Unlike traditional public on-premise incumbents, SaaS companies do not repay instantly the customer acquisition costs (CAC) and require at least 6-12 months of payback period to recoup it. Capital markets

3 years ago

MRR (monthly recurring revenue): the ultimate guide for SaaS

After writing this post, I found out that it has gotten a bit out of proportion, so below is a short table of contents: Sections: * Intro * Metric vs Reporting (GAAP, IFRS) * Definition: what is MRR (monthly recurring revenue)? * Tracking MRR and why its important? * How to calculate MRR and its

3 years ago