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Bessemer S Top 10 Rules For Being Saa Sy

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  • 1. Bessemer’s Top 10 Rules for Being SaaSy www.bvp.com/saas
  • 2.
    • Your key business metrics are: CMRR (Contracted Monthly Recurring Revenue) and Cash . “Bookings” is for suckers.
    Bessemer Law of SaaS #1
  • 3.
    • Separate your Hunters and Farmers. As soon as you’ve climbed the Sales Learning Curve, begin ramping your sales force by hiring renewal-oriented account managers. Keep the hunters moving, and let farmers tend to the crops.
    Bessemer Law of SaaS #2
  • 4.
    • It takes at least $300k of CMRR to climb the Sales Learning Curve. Stop at 3 sales reps until at least two of them are making ~$100k MRR quotas
    Bessemer Law of SaaS #3
  • 5.
    • It’s a whole new ecosystem . Channels are very hard for SaaS companies to build, so don’t base your plan on SI’s and traditional ISV’s. You will need to sell directly for a long time.
    Bessemer Law of SaaS #4
  • 6.
    • Stay local. Prove your business in the North America first. Only after reaching $1M CMRR consider hiring European sales and services execs behind customer demand. Save Asia for post-IPO.
    Bessemer Law of SaaS #5
  • 7. Bessemer Law of SaaS #6
    • One Datacenter. Invest early in backup and disaster recovery, but stick to one data center, at least until well after IPO.
  • 8.
    • Single Instance, Multi-tenant. Only one version of the code in production. Really. “Just say No” to on-premise deployments
    Bessemer Law of SaaS #7
  • 9.
    • By definition, your sales prospects are online! Savvy online marketing is a core competence (sometimes the only one) of every successful SaaS business.
    Bessemer Law of SaaS #8
  • 10.
    • Constantly trade off cash vs. growth. If you must replenish supplies while still crossing the desert, optimize your growth rate (sales rep recruitment and marketing spending) so that you maximize your recurring revenue run rate when you need to fundraise next.
    Bessemer Law of SaaS #9
  • 11.
    • Be prepared to cross the desert. SaaS requires R&D and sales expense up front for a multi-year stream of revenue, so it demands enough investment capital to fund 4+ years of runway. Load up for the long trip and pace your consumption of calories!
    Bessemer Law of SaaS #10
  • 12.
    • You can ignore at least one of these rules , but not more than two. Great companies innovate, but pick your battles!
    Bessemer Law of SaaS