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Matt Wensing (Founder/CEO, SimSaaS) - Can You Predict Your Company's Success?

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How Predicting the Weather Led to a Better Way of Forecasting the Success and Failures of Software Companies.

Matt Wensing was the founding CEO of Riskpulse, a startup that predicts weather-based exceptions for the transportation and logistics teams of F1000 manufacturers. To get this vertical SaaS business off the ground, Matt tested everything—from selling ads to freemium to inside sales and enterprise sales, first bootstrapping then raising funds from angels and VCs. Over time, he realized that weather forecasting and the challenge of predicting the growth of early-stage companies have a surprising amount in common; both are complex systems where small changes in input can have big effects on outcomes.

Three years ago he began playing with this idea, then became a bit obsessed… How can startups test the underlying physics of their business model, and how could these findings lead to innovations in early-stage startup financing?

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Matt Wensing (Founder/CEO, SimSaaS) - Can You Predict Your Company's Success?

  1. 1. Can You Predict Your Company’s Success? Ma# Wensing Founder, SimSaaS @ma#wensing
  2. 2. I got (very) lucky the first ?me.
  3. 3. I got (very) lucky the first ?me. I don’t want to (have to) get lucky again.
  4. 4. I got (very) lucky the first ?me. I don’t want to (have to) get lucky again. I want to equip entrepreneurs.
  5. 5. Macro & Micro
  6. 6. Fundamental Forces
  7. 7. Fundamental Force (?!)
  8. 8. Long-Range Thinking
  9. 9. Mars: Between 33.9M - 250M miles from Earth spacex.com/mars
  10. 10. Inevitability. khanacademy.org
  11. 11. What’s inevitable in business?
  12. 12. What’s inevitable in business? Simon Wardley (@swardley)
  13. 13. What’s inevitable in business? Things go from novel to commonplace.
  14. 14. What’s inevitable in business? Things go from novel to commonplace. Perspec?ve affects value percep?on.
  15. 15. Perspec?ve
  16. 16. Perspec?ve Evolu?on
  17. 17. Perspec?ve Evolu?on Accelera?on Market Size
  18. 18. Perspec?ve Evolu?on Accelera?on Market Size
  19. 19. Photography in 2009
  20. 20. Photography in 2009
  21. 21. Photography in 2009
  22. 22. Photography in 2009 What does a user need?
  23. 23. Visible Invisible Photography in 2009
  24. 24. Visible Invisible Photography in 2009 User
  25. 25. Visible Invisible Photography in 2009 Print User
  26. 26. Visible Invisible Photography in 2009 Online Photo Storage Print User
  27. 27. Visible Invisible Photography in 2009 Online Photo Storage Online Image Manipulation Print User
  28. 28. Visible Invisible Photography in 2009 Web Site Online Photo Storage Online Image Manipulation Print User
  29. 29. Visible Invisible Photography in 2009 Web Site Online Photo Storage Online Image Manipulation CRM Print User
  30. 30. Visible Invisible Photography in 2009 Web Site Online Photo Storage Online Image Manipulation CRM Platform Print User
  31. 31. Visible Invisible Photography in 2009 Web Site Online Photo Storage Online Image Manipulation CRM Platform Print Computing User
  32. 32. Visible Invisible Photography in 2009 Web Site Online Photo Storage Online Image Manipulation CRM Platform Print Computing Power User
  33. 33. Visible Invisible Photography in 2009 Web Site Online Photo Storage Online Image Manipulation CRM Platform Print Computing Power Commodity User Invention
  34. 34. Visible Invisible Photography in 2009 Web Site Online Photo Storage Online Image Manipulation CRM Platform Print Computing Power Commodity User Invention
  35. 35. Visible Invisible Invention Photography in 2009 Web Site Online Photo Storage Online Image Manipulation CRM Platform Print Computing Power Commodity User
  36. 36. Visible Invisible Invention Photography in 2009 Web Site Online Photo Storage Online Image Manipulation CRM Platform Print Computing Power Commodity User
  37. 37. Visible Invisible Invention Photography in 2012 CRM Platform Print Computing Power Commodity User
  38. 38. Visible Invisible Invention Photography in 2012 CRM Platform Print Computing Power Commodity User
  39. 39. Visible Invisible Invention Photography in 2012 CRM Platform Print Computing Power Commodity User “The market needs to be fulfilled and the market will be fulfilled, by the first viable product that comes along.” - Marc A.
  40. 40. Macro: Perceiving Inevitable Change
  41. 41. Micro, Part I: Calcula?on
  42. 42. “Forecas?ng”: A Brief History The Royal Charter, 1859. Admiral Robert FitzRoy
  43. 43. Breakthrough: Speed (& Extrapola?on)
  44. 44. Enough Speed to Get Ahead of Reality The Weather Forecasting Factory, Stephen Conlin
  45. 45. The Startup Forecas?ng Factory
  46. 46. Visible Invisible Early-Stage Financing Customer Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s
  47. 47. Visible Invisible Early-Stage Financing in 2007 Founder Investor Liquidity Investor Brand BankTerms Cash Fund LP’s Financial Data Diligence Invention CommodityCustom-Built Product
  48. 48. Visible Invisible 10 Years of Change Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial DataDiligence Invention Custom-Built Product Commodity
  49. 49. Visible Invisible The Investor Response Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial DataDiligence Invention Custom-Built Product Commodity Value-Add Founder
  50. 50. Visible Invisible Con?nued Evolu?on (2018-2019) Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Invention Custom-Built Product Commodity Diligence Value-Add
  51. 51. Visible Invisible Market Response Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Value-Add Invention Custom-Built Product Commodity Alt. VC Alt. Quant Diligence Alt. Banking
  52. 52. Visible Invisible Where's the boaleneck? Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Value-Add Invention Custom-Built Product Commodity Alt. VC Alt. Quant Diligence Alt. Banking
  53. 53. Visible Invisible Invention Photography in 2009 Web Site Online Photo Storage Online Image Manipulation CRM Platform Print Computing Power Custom-Built Product Commodity User
  54. 54. Visible Invisible Invention Photography in 2009 Web Site Online Photo Storage Online Image Manipulation CRM Platform Print Computing Power Custom-Built Product Commodity User
  55. 55. Visible Invisible Where's the boaleneck? Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Value-Add Invention Custom-Built Product Commodity Alt. VC Alt. Quant Diligence Alt. Banking
  56. 56. Visible Invisible Where's the boaleneck? Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Value-Add Invention Custom-Built Product Commodity Alt. VC Alt. Quant Diligence Alt. Banking
  57. 57. Visible Invisible Where's the boaleneck? Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Value-Add Invention Custom-Built Product Commodity Alt. VC Alt. Quant Diligence Alt. Banking
  58. 58. Visible Invisible Early-Stage Financing Tomorrow Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Diligence Value-Add Invention Custom-Built Product Commodity Alt. VC Alt. Quant ???
  59. 59. Visible Invisible Early-Stage Financing Tomorrow Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Diligence Value-Add Invention Custom-Built Product Commodity Alt. VC Alt. Quant ???
  60. 60. Visible Invisible Early-Stage Financing Tomorrow Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Diligence Value-Add Invention Custom-Built Product Commodity Alt. VC Alt. Quant ??? “The market needs to be fulfilled and the market will be fulfilled, by the first viable product that comes along.” - Marc A.
  61. 61. Micro, Phase II: Simula?on
  62. 62. Replacing Human Computers
  63. 63. Math! Not Specula?on
  64. 64. Simula?on, Not Extrapola?on MRR CAC LTV Churn Cohorts Pricing Leads Pipeline Simulator METRICS TRENDS PLANNING
  65. 65. Simula?on, Not Extrapola?on MRR CAC LTV Churn Cohorts Pricing Leads Pipeline Simulator METRICS TRENDS PLANNING
  66. 66. Simula?on: How?
  67. 67. Simula?on: How?
  68. 68. Simula?on: How?
  69. 69. Simula?on: How?
  70. 70. I. Human sales reps have a finite capacity. II. All channels eventually saturate. III. New hires have a ramp-up period. IV. Time is the enemy of all deals. V. All systems, including humans, make mistakes. VI. Engineers build value. VII. Marketing communications value. VIII. Customer success delivers value. IX. Sales captures value. X. Drag on organization increases as it scales. Enforce Constraints The Job of the Dungeon Master (Simulator) Select the Dice
  71. 71. Visible Invisible So What? New Orbits = Speed = New Answers Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Diligence Value-Add Invention Custom-Built Product Commodity Alt. VC Alt. Quant Alt. Banking
  72. 72. High Retention, High NPS / WoM High Retention, Average NPS / WoM Average Retention, Average NPS / WoM High Retention, Average NPS / WoM SaaS Growth Curves
  73. 73. SaaS Growth Curves High Retention High NPS / WoMAverage NPS / WoM Average Retention
  74. 74. SaaS Growth Curves High Retention High NPS / WoMAverage NPS / WoM Average Retention
  75. 75. SaaS Growth Curves High Retention High NPS / WoMAverage NPS / WoM Average Retention “Viral Cake” “Viral Quicksand”“Quicksand” “Cake”
  76. 76. SaaS Growth Curves High Retention High NPS / WoMAverage NPS / WoM Average Retention “Viral Cake” “Viral Quicksand”“Quicksand” “Cake”
  77. 77. Your Next Growth Ini?a?ve? Viral Cake Viral QuicksandQuicksand Cake
  78. 78. Net Income Forecast (No Uncertainty)
  79. 79. Net Income Forecast (With Uncertainty)
  80. 80. Net Income Forecast (With Uncertainty)
  81. 81. Visible Invisible Produc?zed Capital = Market Shii Founder Investor Liquidity Investor Brand Bank Terms Cash Fund LP’s Financial Data Diligence Value-Add Invention Custom-Built Product Commodity Alt. VC Alt. Quant Alt. Banking
  82. 82. “The Amazon of VC”
  83. 83. “The Amazon of VC” Clear Cost of Capital Speed Is Cri?cal Quan??es Are Right-Sized Push Not Pull
  84. 84. This is what funding is for, right?
  85. 85. 🍔
  86. 86. 🍔 🍔
  87. 87. 🍔 🍔 🍔
  88. 88. 🍔 🍔 🍔 🍔 🍔 🍔 🍔 🦄
  89. 89. I have a clear need. Push me op?ons.
  90. 90. Op?on #1: Marke?ng Raise
  91. 91. Op?on #2: Revenue-Based Financing
  92. 92. Op?on #3: Fundstrapping (with Dividends)
  93. 93. Next Gen Capital = Choice & Trade-offs
  94. 94. Choice & Trade-offs
  95. 95. Choice & Trade-offs Founder-Investment Fit = Less Risk Less Risk -> More Successes
  96. 96. Predic?ng Your Company’s Success Clearly state your assumptions about “the inevitable.” • Can you plot the needs of your customers? • How are the existing solutions evolving? • What stresses exist in the market landscape?
  97. 97. Predic?ng Your Company’s Success Clearly state your assumptions about “the inevitable.” • Can you plot the needs of your customers? • How are the existing solutions evolving? • What stresses exist in the market landscape? Consider the physics of your particular business. • What is the shape of your growth ramp? How should you prioritize change? • If you’re considering funding, does it really fit your needs?
  98. 98. Thank you. Ques?ons? Ma# Wensing Founder, SimSaaS @ma#wensing

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