I celebrated a friend’s birthday with a large group a few days ago and realized how hard it is to tell who can’t carry a tune when the entire room is singing the same song.
The same holds true for B2B SaaS startups: because so many are generally focused on LTV:CAC ratios, it can be a good way to obscure weak metrics.
Dividing Customer Lifetime Value by Customer Acquisition Cost offers useful insights, but how accurate is your historical retention data, and how much have you collected?
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“Today, investors zoom in on other efficiency metrics that paint a more reliable and comprehensive picture of the startup’s capital efficiency, and so should you,” says Igor Shaverskyi, a partner at VC firm Waveup.
In this TC+ column, he offers a formula and benchmarks for calculating “how long it will take for your customer acquisition costs to pay off.”
Now that VCs are leaning harder into due diligence, reducing CAC Payback and paying “special attention” to how the Rule of 40 works is proof that your team knows how to move directionally. Investors love that.
“In my experience, some companies can get to a good place in two quarters, but on average, it takes about a year,” writes Shaverskyi. “It all depends on the gravity of your situation.”
Thanks for reading,
Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist
How we used data-driven personas to radically improve the customer experience
Image Credits: Hanna Plonsak (opens in a new window) / Getty Images
I’m constantly surprised by how many startups do not develop customer personas.
Instead of drawing information from user interactions to create avatars representing actual customers, many teams will substitute their own judgment and guesses about what people like and dislike.
Impartner VP of product Gary Sabin says his company “dove into the numbers” and “looked at 250 data points” to develop “persona-based services in implementation, customer support and customer success.”
After a year, the company generated higher customer satisfaction ratings and NPS scores. “These personas work for us,” says Sabin. “Your customer data can lead you to create the personas that matter most in your customer base.”
Sometimes you need to cut your startup’s school ties
Image Credits: Haje Kamps / TechCrunch
Considering how many startups emerge from colleges and universities, it make sense that so many academics end up in C-suites. But is that necessarily a good thing?
Last week, at TechCrunch Early Stage, hardware editor Brian Heater spoke to SOSV general partner Pae Wu about partnering with teams that include professors and students.
“There are some sectors where it can work very well to have members of your founding team who remain in academia,” said Wu.
“We see this all the time in traditional biotech and pharma. But in other types of situations, it can become, frankly, a drag on the company and problematic for the founders who are full time.”
Ask Sophie: My STEM OPT expires in 30 days, what are my options?
Image Credits: Bryce Durbin / TechCrunch
Dear Sophie,
My STEM OPT expires in a month, and my company did not register me in this year’s H-1B lottery.
I’m not sure what options I have now. Help!
— Sleepless in Silicon Valley
How startups can produce social content that actually resonates
Josh Machiz, partner at Redpoint, and Rashad Assir, head of Content at Redpoint, talk about “How To Turn Your Startup into a Social Star” at TechCrunch Early Stage in Boston on April 20, 2023. Image Credits: Haje Jan Kamps / TechCrunch
There’s something painful about watching a company post something vapid on social media in an attempt to go viral or jump on a trend. It always gives me a creepy, “how do you do, fellow kids?” vibe.
Rebecca Szkutak spoke to Redpoint Ventures’ Rashad Assir (head of content) and Josh Machiz (partner) last week to get their thoughts on how young brands can project authenticity.
“What we’ve really learned here is, it’s much better to get it out the door, ship it — similar to a startup — and actually just see if it’s hitting, because if you get the inclination that it’s hitting, then you can invest more into it,” Machiz said.