Josh Stein is a partner with Draper Fisher Jurvetson where his current board responsibilities include Box (NYSE: BOX), Chartbeat, LaunchDarkly, LendKey, Loftium, Lumity, Periscope, and Talkdesk. He is also actively involved with the firm's investments in AngelList, Doximity, Front, and Rippling. Join him as he shows how and why you should lie (to yourself) with SaaS Statistics.

1. HOW TO LIE (TO YOURSELF)
WITH SAAS STATISTICS
JOSH STEIN
Partner
DFJ
@dfjjosh

2. How to Lie (to Yourself) With SaaS Statistics
Josh Stein
Partner
DFJ
@dfjjosh

5. *
*
*
*
*
Series A Lead
*
*

6. LTV > CAC =
CAC > LTV =

9. The well-chosen “average”
Mr. Stingy, I have
heard that you
pay your
employees very
poorly.
That is an
evil lie. The
average
salary in my
company is
$91,000
per year.
The median
salary is
$80,000 per
year. Your
accusations are
unreasonable.
Sounds good,
Mr. Stingy,
but…
The Salary Scale in
Mr. Stingy’s Company
Mr Stingy: $300,000
Mrs. Stingy: $120,000
Accountant: $80,000
Secretary 1: $80,000
Clerk 1: $20,000
Clerk 2: $20,000
Clerk 3: $20,000

10. Semi-attached figures

11. Cigarettes are not harmful
to your health
The smoke is filtered; and, your
dentist recommends Viceroys
The claim and the proof are unrelated (semi-attached)
Claim Proof

12. Interest Rates Interest Rates
3.154%
3.152%
3.150%
3.148%
3.146%
3.144%
3.142%
3.140%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
Same Data, Different Y-Axis

14. Gun deaths in Florida
Number of murders committed using firearms
2005
Florida
enacted
its ‘Stand Your
Ground’ law
873
721

15. 2005
Florida
its ‘Stand Your
Ground’ law
721
873
Gun deaths in Florida
Number of murders committed using firearms

16. Fool Yourself
SaaS

17. Overreliance on LTV
Pitfall #1

18. LTV =
ARPA x Gross Margin %
Customer Churn Rate

19. 1% Higher Churn Means LTV Cut in Half!
$M
$1M
$2M
$3M
1.0% 1.5% 2.0%
LTV
Churn Rate
*ARPA = $25,000
GM = 90%

21. LTV =
ARPA x Gross Margin %
Customer Churn Rate
What about ?

23. Working Capital as a Function
of Payback Period
Payback Period Impact
of Growth
Months to Repay CAC Months to Payback
26%
20%
17%
15%
13%
3 6 9 12
15
3 6 9 12
15
0.9
2.6
5
7.8
10.9
9
6
3
0
$M
20%
10%
0%
CMGR

24. TURNOVER is VANITY
PROFIT is SANITY
but
CASH
is KING

25. Sub $100M ARR? Growing quickly?
Use CAC Payback

26. Bulls*ht Pipeline
Pitfall #2

27. Unqualified
Unqualified
Pipeline
Pipeline
Pipeline
Forecast
Forecast
Signed
Pipeline Stage
Status
Percentage
Complete
1. Discovery
Prospect Identified
2. Pre-Qualification
Initial Contact Made
3. Qualification
Opportunity Assessed
4. Solution Design
Complete Solution Defined
5. Evaluation
Active Solution Evaluation
6. Decision
Presented to Decision Maker
7. Negotiation
Pricing Proposal Presented
8. Closed
Revenue Recognition
100%
0%
10%
25%
40%
60%
75%
90%

29. AppendixQ1! Q2. Q3? Q4??

30. Appendix

31. Not Adapting as you Scale
Pitfall #3

32. $10M  $100M
!=
10 x $1M  $10M

34. OUTBOUNDINBOUND
VS

35. Difference in Buying Process
Enterprise Sales Process SMB Sales Process
Meeting
Demo
Technicals
Commercials
PUC/Closure
Demo sign-up
Email nurturing
Site revisits, key pages
Adding key members
Closure
v
s

38. Metric complexity
Qualitative Quantitative
CompanyStage
Public
Companies
Growth Stage
Companies
Early Stage
Companies
Super
Early Stage
Companies
Qualitative
Feedback
Customer
Engagement
Website Visits,
Leads, &
Conversions
Bookings
Monthly & Annual
Recurring Revenue
Gross Churn
Customer Count
Up-front
Invoicing
Cash
Avg. Revenue
per Account
Customer
Acquisition
Cost
COGS
LTV:CAC Ratio
Customer
Lifetime Value
Net Churn
Gross Margin
Cohort Analysis
Expenses
Segment &
Exploratory Analysis
Market Penetration
Deferred
Revenue
EBITDA
Forecasted
Sales & Quota
YoY, MoM Customers
& Revenue Growth
Up-sell, Cross-sell
and Down-sell

39. Leading
Lagging
Influence
future
performance
Analyze
past
performance

40. KEEP
CALM
and
TRY NEW
THINGS

41. Watch the data but
keep your eyes on
the road

43. josh@threshold.vc

44. THANK YOU