Building a World-Class SaaS Company

Our Adventure in Open Source & Beyond

The Journey

1999 20092006

About Ephox

• 50 staff• 50% in Brisbane• 800+ customers• 5M downloads• 500M users

Some of our users

The promise of publishing on the internet

You World

The reality of publishing on the internet

You Developer World

$$costTimedelaysFrustration!

A better way

You Software World

FasterBetterCheaper

TinyMCE: the ‘Word’ in WordPress

>30%oftheworld’swebsites

1billionposts/year

Check

Core EditorImages, Video and more

Spelling & Grammar

Accessibility & Compliance

Commenting

Track Changes

Real-time collaboration

Import from Word

Cognitive

Live Data

What is software as a service (SaaS)?

• Subscription business model

• Software & data as key part of value

Some SaaSy examples

SaaSy Subscription Business Model

BeginMonth

100%

End (install base)

101%

End Month

109%

Churn

1%

Upgrades & Add-ons

2%

8%

New customers

Our Experience of SaaS with TinyMCE

May-15 Aug-15 Nov-15 Feb-16 May-16

9%m/m170%y/y

$AUD

Predictable Compounding Growth

http://www.slideshare.net/shopifyInvestors/shopify-investor-deck-05042016

ConvertKit MRR

Seehttps://baremetrics.com/open

Quick survey

Who are you?

Questions

• What revenue?• What growth rates?• What is your average annual contract value

(ACV)?

What size are your customers?

http://www.pacific-crest.com/2015-saas-survey/

Now for some content

Customer Acquisition

You are not growing fast enough

http://www.pacific-crest.com/2015-saas-survey/

Growth = Valuation

http://www.softwareequity.com/research_quarterly_reports.aspx

EV/Revenue Multipliers vs TTM Revenue Growth – 1Q16

http://www.softwareequity.com/research_quarterly_reports.aspx

Growth Rates by Company Size

http://www.pacific-crest.com/2015-saas-survey/

Customer acquisition is EXPENSIVE

http://www.pacific-crest.com/2015-saas-survey/

High ACV customers warrant even more CAC

http://www.pacific-crest.com/2015-saas-survey/

Sales & Marketing is #1 expense

http://www.softwareequity.com/research_quarterly_reports.aspx

Public SaaS companies

http://www.softwareequity.com/research_quarterly_reports.aspx

Ramping your customer acquisition rate

• Seeds (Word of mouth)• Nets (Marketing)• Spears (Sales)

Primary mode of distribution

http://www.pacific-crest.com/2015-saas-survey/

Primary Mode by Contract Size

http://www.pacific-crest.com/2015-saas-survey/

Growth Rate by Mode of Distribution

http://www.pacific-crest.com/2015-saas-survey/

% of Pipeline Source by Marketing

http://www.forentrepreneurs.com/bridge-group-2015/

Sales Development Reps (SDR)

• Inbound SDR today– 67% of SaaS

companies >$5M have SDR

• Push velocity faster

• Outbound– 70 calls/contacts per

day– 10 SQLs per week

• Make it work, scale it

Inside Sales Reps (ISR)

• $10-$50K ARR per deal (average $25K)

• $50K per month in new business

• $150K OTE

http://www.forentrepreneurs.com/bridge-group-2015/

Rep Productivity

http://www.forentrepreneurs.com/bridge-group-2015/

Your Reps Should be Busy: 6.6 meaningful conversations per day

>$5M you will need to be a hiring machine

http://www.forentrepreneurs.com/bridge-group-2015/

Average Commission Rate is 10.1%

http://www.forentrepreneurs.com/bridge-group-2015/

Or 9%

http://www.pacific-crest.com/2015-saas-survey/

Field Sales Reps

• $66-84K in ARR/deal

• $240K OTE

Customer Success

A Model Where Customers Win

• User adoption is key – no shelfware!

• Prove unit economics & addressable market

• 1% difference in churn = $100M in market cap

Account / Customer Success Mgrs

• The $2M person

• $80K-$100K OTE

• 2% commission on renewals

Gross dollar churn rates

http://www.pacific-crest.com/2015-saas-survey/

ConvertKit Churn Rate

Seehttps://baremetrics.com/open

ConvertKit’s # of customers

Seehttps://baremetrics.com/open

ConvertKit Dollar Retention

Seehttps://baremetrics.com/open

Net dollar churn rates

http://www.pacific-crest.com/2015-saas-survey/