Podcasts on Startups and Entrepreneurship

Two years ago, after all the buzz around podcasts, I jumped on the bandwagon and have really enjoyed the content and experience. Like any medium with no marginal cost and a potentially infinite audience (hello blogs!), there’s been an explosion of podcasts of varying quality. After snacking on a number of different ones, here are my favorites:

  • Naval – Thoughtful. Intellectual. I really enjoy Naval’s thinking. It’s more general philosophy around life and business, and less startup specific, although readily applicable.
  • Twenty Minute VC – Crisp. Fast paced. Harry has interviewed thousands of people in the VC and tech entrepreneurship world. Highly recommended.
    Bonus: Harry also runs the excellent SaaStr podcast.
  • Y Combinator – Extensive. Deep. YC’s content is excellent, covering a number of different topics.
  • EntreLeadership – Broad. High quality. EntreLeadership has a number of well-known guests sharing their entrepreneurial journeys.

For me, podcasts have slotted in nicely when I want something interesting in the background to ponder while driving, walking, etc. If you haven’t tried a podcast or two, I’d highly recommend it.

What else? What are some other favorites around startups and entrepreneurship?

Where art thou startup exits?

The startup world loves to talk about the potential upside, the potential exits. While there are plenty of newsworthy exits — think Qualtrics being acquired by SAP for $8 billion —  the reality is that exits are few and far between, especially outside the startup centers.

After startup investing for a decade now, and doing over 30 deals, I’ve had exactly one exit and two partial exits (selling some secondary). Now, on paper, the overall returns look great but it’s really, really hard to get any liquidity. Building great companies takes time, decades of time.

For entrepreneurs, the key is to build an enduring business. A business that provides value to all stakeholders, grows in perpetuity, and has the ability to generate sustainable profits is the true measure of success. Should a strategic buyer come along, great. If not, no worries.

In fact, in today’s market, if a startup is venture backed, they need to be on a path to $100M+ in revenue to have the opportunity to go public. Going public is an “exit” in that shareholders get liquidity and the company raises money from the public markets (assuming it isn’t a direct listing). Going public is the exit venture-backed startups should focus on.

If a potential investor asks about an exit strategy, the answer should be to build a large, enduring business. Then, and only if the investor is looking for more specifics, offer up the logical acquirers for the business. Too many investors ask about an exit strategy, when, in reality, the world doesn’t work that way. Companies are bought, not sold.

Build a great business and acquirers will come knocking; everything else is conjecture.

State of the Cloud 2018

Byron Deeter of Bessemer Venture Partners has an excellent slide deck titled State of the Cloud Report 2018. Byron and his team do an excellent job reviewing trends in the industry and predicting the next big areas for cloud-enabled B2B software.

Some notes:

  • Five largest companies in the world by market cap are tech companies
  • IPOs are sill below historical norm
  • Public cloud companies outperform the overall market
  • Many private companies are getting premiums compared to public companies due to faster growth rates
  • VC-backed startups exits have gone down the last three years
  • ARR growth rate from $1M to $10M is a major indicator (best is doing it in two years)
  • ARR Multiple divided by Year-over-Year (YoY) annual growth has stayed constant
  • Example: 10x ARR multiple divided by 150% YoY growth would be an ARRG value of 6.7x
  • Best valuations for SaaS startups as follows:
    • CARR revenue growth of 200% (e.g. tripled ARR in last 12 months)
    • CAC payback < 12 months
    • Churn is net negative
    • Cash flow efficiency > 1
  • Predictions:
    • Rise of serverless computing
    • API’s drive innovation
    • Blockchains finds a home in the enterprise
    • Payments-as-a-service
    • The move from system of record to system of results
    • The screenless software movement
    • Values create value
    • The cloud is flat; innovation outside the Valley

Interested in SaaS? Head over and read State of the Cloud Report 2018.

Video of the Week: How the blockchain is changing money and business | Don Tapscott

For our video of the week, watch How the blockchain is changing money and business | Don Tapscott. Enjoy!

From YouTube:
What is the blockchain? If you don’t know, you should; if you do, chances are you still need some clarification on how it actually works. Don Tapscott is here to help, demystifying this world-changing, trust-building technology which, he says, represents nothing less than the second generation of the internet and holds the potential to transform money, business, government and society.

The Power of the Webhook

Back in the Pardot days, we wanted a way to accept data from a third-party form or application directly into the app, so we came up with the form handler. Basically, it’s the receiving end of a form submission without the front end form fields to go with it. Over time, this practice of sending and receiving data via a specific URLs became popular and is widely know as a webhook.

Wikipedia has a more technical definition:

Webhooks are “user-defined HTTP callbacks”. They are usually triggered by some event, such as pushing code to a repository or a comment being posted to a blog. When that event occurs, the source site makes an HTTP request to the URI configured for the webhook. Users can configure them to cause events on one site to invoke behaviour on another.

Now, webhooks make it easy to share data and trigger features across thousands of SaaS apps, and they don’t have to have formal integrations. The more apps that implement webhooks — both to send and receive data — the more the incumbent apps that aren’t SaaS 2.0 lose their ecosystem integration moat.

Look for webhooks to continue to grow in importance over time.

What else? What are some more thoughts on the power of webhooks?

JavaScript as the Web’s Integration Fabric

Ten years ago, I never would have predicted how JavaScript (code to make things more dynamic in a web browser) hosted on third-party sites would become the core integration method for the front-end of the web (see The Three Types of SaaS Integration). In hindsight, it makes sense that interactive elements and analytics would be decoupled from much of the content so that companies can deliver best-of-breed solutions for a variety of functions. Now, tag managers like Segment and Google Tag Manager have taken it one step further and decoupled the loading of JavaScript on a per-page basis to a system that uses JavaScript to load other JavaScript (very meta).

Many popular webpage features are loaded via JavaScript that comes from a third-party, including:

  • Web analytics
  • Forms
  • Live chat
  • Comments
  • Pop-up prompts that ask for an email address
  • Site search
  • Dynamic content

Going forward, look for this trend to continue and more functions on the web to be delivered via third-party JavaScript. More sites will deliver real-time personalization and richer, higher quality experiences in a seamless manner via third-party products. JavaScript is the web’s integration fabric, and growing in importance.

What else? What are some more thoughts on JavaScript as the web’s integration fabric?

API-First SaaS 2.0 Single Page Apps

Two of the core components of SaaS 2.0 products are actually related: API-first platform and rich, responsive user interfaces. Ever since Gmail made the first mainstream Javascript-heavy web experience that feels more like a desktop app, developers have been building open source platforms to make that type of “Single Page App” easier and faster to build. Single Page Apps reload only the portions of the screen that have changed, instead of the traditional way which refreshed the whole screen. And, these Single Page Apps work best against REST APIs, the same APIs that make a product API-first.

Now, there are powerful Javascript libraries like Angular (MVC framework backed by Google) and React (view framework backed by Facebook) that are popular with strong developer communities and a long list of additional open source projects that plug in nicely. By having quality, proven open source platforms, more apps are going to adopt them thereby applying more pressure to the legacy incumbents. The incumbents are going to have an incredibly hard time modernizing. Just like many software companies couldn’t make the transition from on-premise to the cloud, many SaaS companies aren’t going to be able to make the transition from SaaS 1.0 to SaaS 2.0, and it’ll be most apparent in the user experience.

Look for Single Page Apps to be a defining characteristic of API-first SaaS 2.0 companies.

What else? What are some more thoughts on API-first SaaS 2.0 Single Page Apps?