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Posts from the 'Uncategorized' Category
19.06.18 Why startups can’t afford to ignore customer retention Venture-backed companies must walk the line between fast growth and efficient growth. Even as VCs value high-quality revenue, companies are still held to a minimum growth rate. We think of this threshold as the “Mendoza Line,” a baseball term we’ve adapted to track the minimum growth needed to get access to venture funding. Above this line, startups are generally attractive to investors and even have a good chance for a strong exit. To achieve sustainable growth, maximizing customer lifetime value is an important component and one that is often underestimated, particularly for SaaS and other subscription-based businesses that generate recurring revenue. It is estimated to cost somewhere between five to 25 times more to acquire a new customer than to keep one you already have. Additionally, Bain research has shown that a five percent increase in retention rates can increase profits by 25 to 95 percent. Even by conservative estimates, retention is a powerful mechanism for growth. As companies face greater pressure to grow both quickly and responsibly, we are placing more value on customer retention as a barometer for long-term success. And we are seeing smart startups invest in measuring customer happiness in more sophisticated and consistent ways. In looking at SaaS deals over the past 10 years, we’ve found that a few key metrics and best practices are predictive of healthy business fundamentals. Here’s the advice I give startups looking to achieve smart growth through customer retention. Create a system for measuring customer happiness First, measurement must be an executive priority. Ensure you have a system in place to measure retention on a quarterly basis (at least) and meet as an executive team to diagnose potential problems. While benchmarking against similar businesses can be helpful, trending your own metrics is the best way to see how your performance is improving or deteriorating. You’ll need to identify the specific metrics that work best for your business. I recommend looking at how efficiently you’re putting resources toward customer retention, which gives you insight into customer happiness and predicts the profitability of your growth. The percent of ARR spent on retention tells you how much you’re spending to keep your customers happy; let’s call it your Retention Efficiency. You can measure this with a simple calculation: (Quarterly cost of customer retention) x 4 Ending annual recurring revenue (ARR) base The ability to keep this number low means you’re retaining your customers without burning money. This means you can invest sales resources toward acquiring net new customers rather than replacing revenue from those that have left. I’d also recommend looking at the Customer Retention Cost (CRC), which measures how much on average you’re spending to retain each customer: (Quarterly cost of customer retention) x 4 Total # of customers in your base Note, this number may increase over time if you’re moving upmarket — enterprise customers generally require more resources to retain than small to mid-sized companies. If your retention costs are going up, this per-customer number can help you explain why in the context of your go-to-market strategy. Don’t just measure churn rate Most startups measure retention in terms of churn rate: dollars that left in a given quarter divided by total ARR. In my experience, churn is a vanity metric and not particularly accurate because it combines customers that are eligible to leave and those that are not (e.g. contracts that were signed in the past month). Renewal rate is harder to benchmark, but tells you more about your customer happiness and health of the business overall. Gross Renewal Rate shows you the dollars that renewed as a percentage of all dollars that were eligible to be renewed. Calculate this metric (Gross Renewal Rate) by summing all renewed contracts and dividing that total by the dollars that were up for renewal: Dollars renewed Dollars eligible to renew Net Renewal Rate is a measurement of the growth of your existing customer base, net of any churn, as a percentage of all dollars that were eligible to renew. Include any expansion dollars with your renewed dollars in your calculation to get Net Renewal Rate: (Dollars renewed + dollars expanded) Dollars eligible to renew Calculating renewal rate by segment is even more helpful in diagnosing issues of customer dissatisfaction. For instance, if your renewal rates are trending down in the SMB segment but not at the enterprise level, you might identify a problem with product-segment fit. Perhaps the product is too complex for SMB customers, while enterprise customers need those features. Don’t look to customer success as the fix-all solution If you’re looking to improve retention, the answer isn’t necessarily to pour resources into your customer success organization. Retention is one area that can be impacted by several functions. Look into the factors that play into customer lifetime value, including: Product: Increases in churn or retention costs could signal that you’re drifting from product-market fit or that your product faces increased competitive pressure. Marketing and sales: Ask yourself the following: Does your marketing accurately message your value proposition? How much is your sales team promising above and beyond what the product can do? Customer success: Make sure you’re engaging with customers beyond the first three months of their deployment; the next six to nine months are critical for success. Measure customer success throughout the life cycle to ensure users are getting the most out of the product and understand how to use it. Define a product engagement metric Understanding how much your customers actually use and depend on your product is the best indicator of happiness. Engaged customers are more likely to renew their contract — which helps to keep your retention numbers steady. They’re also more likely to tell others about their experience with your product, which improves top-line growth. Experiment with an engagement metric that works for your business: for DocuSign, it’s the number of envelopes sent; for JFrog, it’s the volume of binaries distributed; for Textio, it’s the number of job requisitions written in the platform. Your ability to keep customers happy without spending a ton of resources speaks to the value you’re delivering. And if you retain customers efficiently, you can spend more on acquiring new customers. In evaluating a portfolio company, I’d much rather see a business with good growth and high-quality customer retention than one with explosive growth but low retention. VCs will hold you to these metrics — make sure you’re accountable for them. https://ift.tt/2JTL9ap
19.06.18 Pitchbook now offers users suggested companies when they search This one’s for all the due diligence fiends and competitive landscape mapping mavens out there. Pitchbook, the data and analytics service for private equity and public markets, is rolling out an automated suggestions feature for premium users when they’re doing searches on companies for market intelligence. The new service is based on machine learning technology that scours Pitchbook’s financially focused information and data set. Each word in a description is represented in 300 dimensional space using the global vectors for word representation software lifted from researchers at Google and Stanford, and those vectors are then applied to companies to determine their various relationships. “The differentiator for why the output of this is going to be high quality. When we look up a company is because we have this proprietary set of financial related news and information,” says Tyler Martinez, the director of software engineering and data science at Pitchbook. During an advanced search, the Suggestions algorithm stores the entire search as a vector ad comapres it against larger word embedding model to find similarities among companies. Behind the new features is a years long effort to get more financial data at more scale, according to the company. Pitchbook invested in web mining tools and an automated news collection technology that can process 30 billion words. And the amount of material that Pitchbook and its competitors have to track has expanded exponentially since the company was initially launched years ago. There was $28 billion invested into 1,700 deals across the globe in the first quarter of 2018, and the geographic expansion of the private equity business and the explosion of interest in private markets has created a new demand among investors who don’t know what they don’t know, according to Pitchbook. “We built suggestions because it’s really hard to keep tabs on what is a big challenge in the market,” says Jenna Bono, a product manager for the company. https://ift.tt/2M7j1wL
19.06.18 Using tech and $100M, Dr Consulta transforms healthcare for the poorest Healthcare delivery is an incredibly complex topic, but one that has a simple truth: health security is key to living a good life, and, ultimately, for developing a strong economy. Unfortunately, billions worldwide suffer from lack of access to even the most basic of medical diagnostics and treatments, since doctors often aren’t available and the costs when they are can be exorbitant. That’s the world that Thomaz Srougi grew up with in his native Brazil. Brazil has made health security a major priority, offering comprehensive and free medical coverage to every citizen, a right enshrined in its constitution. That simple right though is riven with challenges, from a lack of public funding, to long queues for services, to geographic disparities between urban cores and rural areas. Those with the means use private medical services, but those costs are far outside the reach of the majority of Brazil’s inhabitants. The country may have made a commitment in words, but it has in many ways failed to fulfill that commitment with actions. Srougi wanted to bridge that gap. He had medicine in his DNA: his father was a urologist, and so saw first hand the challenges of the public health system. He spent years as an investment banker and financier, and also netted two masters degrees from the University of Chicago in business and public policy. But he yearned to return to Brazil and work on ameliorating the massive health disparities that he saw in his youth. His solution would eventually become Dr Consulta. The concept was simple: offer the sort of universal access of the public health system, but with the quality and timeliness of the private health market. Srougi and his team opened their first clinic in 2011 in a São Paulo favela, the irregular slums that spread like an archipelago through Brazil’s cities. Since that humble beginning, Dr Consulta has spread rapidly throughout the country, becoming the largest private medical service provider in Brazil, according to the company. It now boasts more than 2,000 doctors, and has served more than a million patients in a country of 208 million. In São Paulo alone, the company has 44 medical centers. That growth has certainly caught the attention of venture capitalists, who have plowed $100 million into the company since its inception. The company started off with just the brick-and-mortar of clinics. They were bare bones, but functional. A doctor is always on call, and they are located in the hearts of neighborhoods to guarantee accessibility. Patient records are stored digitally, and perhaps most importantly, prices are — relatively — reasonable, with basic procedures costing only around $20. Those savings come from vertical integration — the clinics are one-stop shops for medical treatments, allowing doctors to save time and money on tests and other procedures. Dr Consulta’s app allows patients to get results and feedback faster Over time, the company has increasingly focused on its digital practice. With its large number of patients, the company is building out its data science practice. With its patient records, Dr Consulta hopes to move beyond just basic app workflow tools to predictively analyzing patient trends and finding new and robust treatments. The hope is that the careful application of machine learning algorithms will allow the company to simultaneously improve its patient outcomes while continuing to drive down costs. That data could also be valuable for medical researchers. The company is exploring partnerships with universities and others who might be able to use patient data in a confidential way in order to investigate new therapeutics. That data could be particularly valuable since Dr Consulta’s data could add significant diversity to existing datasets from Western countries. With the clinics in place, the company is now branching out into new product lines to continue expanding its footprint. One initiative is to offer a sort of rewards card that can be used with retail partners. The idea is to build upon the brand that Dr Consulta has built and create a community of retailers that might offer complementary goods and services. The company is also building out a subscription program that would allow customers to pay a flat monthly fee for unlimited medical care. In short, Dr Consulta wants to be the hub for health and wellness for each of its patients. The company offers a unique example of how concentrating on underserved markets with services priced effectively can be a massive startup opportunity, while also helping people find the health security they need to build better lives. https://ift.tt/2JPjqYm
19.06.18 Millions of Google, Roku, and Sonos Devices Are Vulnerable to a Web Attack Using a technique called DNS rebinding, one amateur hacker found vulnerabilities in devices from Google, Roku, Sonos, and more. https://ift.tt/2M57VbP
19.06.18 Patriot Boot Camp wants to turn soldiers into entrepreneurs From the earliest moments of boot camp, budding soldiers learn about entrepreneurship. They learn how to operate in unknown terrain, how to listen to signals, and perhaps most importantly, how to make things happen with extremely limited time and resources. Yet, when soldiers return home following a deployment, the transition to civilian life can be jarring. Even with those valuable soft skills, there aren’t many obvious jobs in the private sector for a combat engineer or a fire support specialist. Perhaps even more challenging, according to Josh Carter, is their lack of connections. “The biggest thing that veterans are facing is network — they don’t have a big network,” he said. Carter is working to change that situation through Patriot Boot Camp, a series of programs under the TechStars banner that gives veterans the tools and connections they need in order to launch a startup. The non-profit, which was founded by Taylor McLemore, congressman Jared Polis, and TechStars founder David Cohen, hosts multi-day “boot camps” in cities across the country that are designed to quickly immerse participants into the life and thinking of startups. Since its founding in 2012, the program has held nine boot camps in cities like San Antonio, DC, and Austin, with its next program in Denver later this year. Carter’s own experience making the transition from the navy to the private sector is telling. He joined the service when he was seventeen in the mid-90s, and over the following three years, traveled to thirty different countries. The experience matured him he explained, and on his return, he joined the telecom industry, starting his career climbing poles and eventually joining Twilio as an escalation manager and early employee. Twilio changed Carter’s life, encouraging him to pursue startups as his own career. “During that time I really got the bug to create something,” he said. He tried to build his own startup called Brightwork, which was a developer microservices API founded in 2015. The company went through TechStars Chicago, and Carter was hoping to build the kind of company he had seen at Twilio. But growth challenges early on proved insurmountable. “We were really struggling to figure out our target market and struggling to find investors, so it just sort of died,” he told me. During this period, Carter had been participating in Patriot Boot Camp’s programs, and liked what he saw. Following the dissolution of Brightwork, he eventually joined the program as an executive, first as chief operating officer last November, and then as interim CEO earlier this year when his predecessor, Charlotte Creech, stepped down to join USAA. Carter has big ambitions for the program. While today the boot camp has been focused on 1-2 multi-day events per year, he wants to build the program into a full-fledged growth accelerator that would target startups in addition to budding entrepreneurs. He also hopes to increase the number of boot camps per year to three. He’s also investigating raising a fund, now that there is a cohort of more than 750 entrepreneurs who have gone through the program. Ultimately, his goal is to “build better founders” and give them the resources they need for victory. One aspect of the program that I found interesting is that it isn’t just limited to veterans, but includes military spouses as well. Networks are incredible important for founders, and Carter points out that spouses have “this special tenacity about them” and need to know “how to build a network quickly in a town where she knows nobody.” They often face just as much challenge in returning to life outside the base as the veteran themselves, and startups could prove to be an important avenue to make that transition. As its numbers and successes swell, Patriot Boot Camp hopes that it can serve as a beacon for soldiers returning home, telling them that startups aren’t the sort of crazy risk that they first appear. Indeed, after what many of these men and women have just been through, it may not be all that daunting of a next mission after all. https://ift.tt/2MGxmBE
19.06.18 Dreamlike Landscapes Grow from Sculptural Portraits by Yuanxing Liang Wondrously detailed worlds emerge from busts of youthful women in clay sculptures by Chinese artist Yuanxing Liang. Ambling trees, bridges, and temples emerge from the figures’ hairline, fusing realism and fantasy in smooth resin. Despite their complex design, Liang occasionally creates small editions of his sculptures. The artist is a gradute of the Sichuan Academy of Fine Arts. You can see more of his intricately wrought fantasy worlds on Weibo. (via My Modern Met) https://ift.tt/2lm0aTy
19.06.18 Review: Chrome’s Vega transit brief makes your work commute a little less uncool You’re either a Chrome bag person or you’re not. And if you’re not a Chrome bag person, it might be time to give the newly Portland-based bag maker another look. I’ve been a fan of Chrome Industries bags for a long time, but over the years I’ve only owned two: the discontinued Mini Buran, a 15L, extra-small messenger by Chrome standards, and the Niko camera pack. I still use the latter periodically but I traded the messenger away early on because in spite of being Chrome’s smallest pack and the only one that didn’t look cartoonishly big on my 5’4″ frame, I can never get the weight quite right. There are two reasons for that: 1. Chrome bags are huge and designed for huge hulking men and 2. I’m just not a messenger bag person. Taylor Hatmaker/TechCrunch Chrome’s lineup of industrial-strength messenger bags has typically appealed to hardcore bike types and dudes big enough to hoist its famously burly packs, but the company is branching out with a few new offerings that should excite anyone like me who covets their designs and build quality but just can’t make most of their stuff work. The Chrome Vega Transit Brief, part of Chrome’s new work-centric Treadwell collection, is one of those new bags. The Vega is made to appeal to professional types who maybe need to keep their look away from the “I’m a bike messenger who lives in a punk house” kind of vibe but it’s still made of the pretty much indestructible ballistic nylon that gives Chrome bags their iconic look and feel. At first glance, the Vega looks like any generic laptop messenger, but unlike those (boring) you can carry the Vega three different ways. The first mode lets you carry the Vega briefcase-style, with a leather hand strap. The second mode converts the bag into a messenger with a detachable strap. The third mode (my favorite) happens when you pop out two hideaway straps from the back of the bag, turn it 90 degrees and carry the Vega like a backpack. For my purposes, I switched between hand-carrying the bag and putting it on my back to carry a 13″ MacBook and other odds and ends. At just 15L, Vega is meant to carry small, rectangular stuff — you won’t be throwing groceries on the way home from work in this thing. It’s got two main zippered compartments, one soft padded laptop sleeve that can fit a 15″ MacBook and one all-purpose stuff pocket lined with its own sleeve and two internal zip pockets that are actually big enough to be super useful for a phone or a wallet and keys. There’s a teeny external pocket that can also hold a phone or something small, but that one is tougher to get into so I mostly didn’t use it. I mentioned it already, but it’s worth repeating that the Vega is very, very rectangular. Its primary compartment would be best suited to hold stuff like an iPad, a book or paper documents, but if you have anything with much depth it’s not going to be well suited to this pack. Another thing worth noting is that the Vega looks like a big ol’ rectangle when it’s carried like a backpack. You’ll either like that look and think it’s kinda distinct and cool like I did or you’ll hate it. One criticism: the leather strap that lets you carry the Vega by its handle doesn’t stow, so it just sort of hangs there when you wear it like a backpack. It’s not super noticeable but it bugged me a little because the snaps were tricky to open and close, a little flaw I imagine they might modify if they ever update this design. The Vega isn’t Chrome’s most inspired design ever, but it isn’t supposed to be. If you want to show up to a meeting looking pro but still cool, like yeah you looked over the slides from the call but you drink shitty beer after work because you’re legit not because you can’t afford some triple-hopped bullshit, the Vega is probably for you. For anyone looking for a well made bag that’s not too loud to carry to and from work meetings that happens to turn into a damn backpack, Chrome’s Vega transit brief is a great fit. What it is: A bag that looks discreet and professional while keeping work basics close (laptop, papers and the like). Great as a no-frills carry-on bag for travel or a to-the-office and back kind of bag. What it isn’t: A workhorse. With its 15L volume, you’re not going to be hauling big loads around or taking produce home from the co-op with this thing. Read more reviews from TechCrunch Bag Week 2018 here. https://ift.tt/2t9SA2L
19.06.18 Beyoncé and Jay-Z’s ‘Everything Is Love’ Marks a New Step in the Album’s Evolution The format is constantly changing in the era of streaming. https://ift.tt/2M5eQ4H
19.06.18 Google Podcasts Hands On: It’s About Time After years of mostly ignoring the podcast world, Google now makes a dedicated Android app for listening. And it’s pretty good! https://ift.tt/2tiIYSt
19.06.18 Personal finance startup SmartAsset raises $28M I first wrote about SmartAsset nearly six years ago, when it launched its first product, a tool allowing prospective homebuyers to analyze the rent vs. buy decision and to see what kind of home they could actually afford. According to co-founder and CEO Michael Carvin, “On the consumer side, our strategy has never really changed. Our mission is to help people make the best personal finance decisions and to build the web’s best resource for personal finance decision-making.” Of course, some aspects of the company have evolved. For one thing, SmartAsset now offers tools, calculators and content in a number of categories, including taxes, retirement and banking. For another, it’s announcing today that it has raised $28 million in Series C funding, bringing its total raised to more than $51 million. The new round comes from Focus Financial Partners (a firm backed by Stone Point Capital and KKR), Javelin Venture Partners, TTV Capital, IA Capital, Contour Venture Partners, Citi Ventures, Fabrice Grinda and others. Carvin said SmartAsset reached more than 45 million uniques last month, nearly doubling its traffic year-over-year. And 25 percent of that traffic comes from repeat visitors. As for how SmartAsset makes money from those visitors, it does so partly by promoting financial products like mortgages. But Carvin said the biggest piece is the SmartAdvisor platform, which connects financial advisors with potential investors. Carvin described it as “the web’s first digital lead generation platform for financial advisors,” and compared the SmartAsset business model to Zillow’s, saying both companies have built big audiences that they can then match up with real estate or finance professionals. In SmartAsset’s case, users fill out a questionaire and then work with a SmartAsset concierge to help them find an advisor who’s a good fit. Carvin added that the advisors on the platform have been screened by the company, for example to ensure that they haven’t had any criminal violations and that FCC hasn’t upheld any complaints against them for the past decade. Asked whether this focus on financial advisors has led SmartAsset to change the way it designs its consumer products Carvin said, “We believe the better the user experience, the better our business will work. And so when we’re building a retirement tool, a home affordability tool, a tax tool, we’re building that only with the consumer interest in mind.” Looking ahead, Carvin said he plans to continue following this strategy. “We’re going to build out the web’s premiere personal finance resources and then leverage that on advisor side,” he said. https://ift.tt/2M2i2hA