Home Startups The End of Free Money, Predicting NRR, Reducing SaaS Spending • businessroundups.org

The End of Free Money, Predicting NRR, Reducing SaaS Spending • businessroundups.org

by Ana Lopez
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If you ask three different people if we are in a recession, you will quickly get three different answers.

As often as the word “R” is used in technology, a survey of 450 startup founders found that only 12% plan to hire fewer employees and 6% have laid off people.

“The data proves early stage founders are seeing a more gradual approach to the recession,” said Jen Neundorfer, founder of January Ventures.

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“It’s in contrast to some of the memos you see from the Sequoias of the world that say, ‘Cut immediately and cut deeply.'”

Eighty percent of the seed-stage and pre-seed founders who responded to the January survey have less than a year of landing job left. Only half of respondents said they plan to cut costs, “compared to 2020, when 81% of companies reported doing so,” writes Rebecca Szkutak.

Thank you very much for reading,

Walter Thompson
Editorial Manager, businessroundups.org+
@your protagonist

December 8 Twitter Space: Immigration law for startups

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Image Credits: Bryce Durbin/businessroundups.org

On Thursday, December 8 at 9am PT/12pm ET, I’m hosting a Twitter Space with Sophie Alcorn, a Silicon Valley immigration lawyer and the author of Dear Sophie, a column that appears every Wednesday on businessroundups.org+.

If you are a visa officer who has been laid off, or if you just have questions about working and living legally in the United States, join the conversation.

This space is accessible to everyone: click through to set a reminder and submit your immigration-related questions for us to ask during the Q&A.

Use customer health data to grow and predict future NRR

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Image Credits: Osaka Wayne Studios (Opens in a new window) /Getty Images

When investors are more interested in organic growth than writing follow-up checks, desperate founders can launch a quest for One Metric to Rule Them All, like one of Middle-earth’s power rings.

Net revenue retention is a powerful metric for startups looking to reduce churn rates. That’s why Kellie Capote, chief customer officer at Gainsight, recommends using the DEAR framework:

  • Effort
  • Engagement
  • Adoption
  • ROI

“The DEAR Customer Outcomes Score allows you to tie workflows to leading indicators and lagging results,” writes Capote.

“If you’re looking for a data-driven way to build confidence in your modeling with your executive team and board, this is it.”

Which side is up? Keeping the end of free money and the importance of cash at hand

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Image Credits: PM images (Opens in a new window) /Getty Images

In simpler times, founders could often please investors by showing how quickly their company met growth expectations.

“Well, investors today care about the less distant future,” said Max Schireson, an operating partner at Battery Ventures.

“They care about how much money they have to put into your business to achieve that future and when it will arrive.”

In a guest post for TC+, he shares candid advice and multiple scenarios that can help founders handle investor exceptions during tough times.

“They say time is the one thing you can’t buy, but in fact time is the easiest thing to buy in a startup.”

If you’re a startup startup, turn to user-centered design to thrive during adversity

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Image Credits: Tony C French (Opens in a new window) /Getty Images

I started to pay more attention to a CEO who uses surveys to ask platform users which features are most important to them.

So far it’s not going so well.

With true user-centered design, product managers collect as much information as possible to ensure they are building for an audience – not themselves.

“With investors becoming more discerning and writing smaller checks, UCD can be the difference between launching your company or never getting it off the drawing board,” said Adam Sandman, founder and CEO of Inflectra.

How companies can reduce rising SaaS costs

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Image Credits: Ong-ad Nuseewor (Opens in a new window) /Getty Images

A study by procurement management platform Vertice found that one in eight dollars companies spend goes on SaaS products.

“That’s not surprising when you consider that the average organization now uses about 110 SaaS solutions,” says Kyle Wiggers. As a result, customers spend 53% more on software licenses today than they did in 2017.

“Most organizations have dramatically expanded their software vendor portfolios over the past 10 years,” said Stephen White, senior director analyst at Gartner. “It is not uncommon for the supplier portfolio to more than double.”

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