– July 2018. The Cantabrian posted a photo on Twitter showing the signed shirts of Messi and Modric hanging on a wall.– October 2018. Months after the first rumors that linked Setién and Barcelona arose, it was again ensured that the Barça leadership dome continued with the name of the Cantabrian in first position in the list of futures. “This is the same thing that was spoken with the National Team. I am flattered that it comes out, but if we pay attention to everything that comes out … Barcelona has a great coach, we must respect it, especially colleagues. It is doing a great job and I see Barcelona well, regardless of whether it may fail, “he said.– November 2018. Sergio Busquets handed his shirt to Setién after he asked for it and after signing it with the following dedication “for Quique, with appreciation and admiration. For your way of watching football. A hug.” Before the match, played at the Camp Nou and ended with Betis victory 3-4, the coach could be seen talking with the Barca player, a moment he took the opportunity to tell “Hey, listen, I want your shirt later. You have to dedicate it to me and I have to put it in a frame.” Setien He has always praised Busquets for his football. “I am amazed Busquets. He is a very intelligent player who is permanently reading the game,” he said.– March 2019. After falling in Benito Villamarín against Barcelona 1-4, Setién surrendered to Messi. “Nobody is close to Lionel’s level. Barça’s second goal has been cartoon. To win this team you have to be right on your occasions because you know that this team being Messi is going to score you. The success of this team with Messi leaves the rival with little capacity, “said the Cantabrian.On the Barca captain he added “I have not seen anyone approach him. I have seen players do wonderful things but not with the balance and continuity of Messi, for 12-14 years active. I do not know if Pele, but nobody has achieved that. He does all the games. It is a luxury to have seen him every Sunday, to coincide with him. I really liked that our audience has cheered him, that he has valued a player that we have suffered today, but that we usually enjoy. It is fair and honorable to recognize it, I am proud of the behavior of the fans “.– May 2019. In his first interview after leaving Betis, granted to Carousel Deportivo de la Cadena SER, Setién said “of course I would like to train Barça.” I felt that soccer could be better played, but I didn’t see it until Johan showed it to us.– Quique Setien (@QSetien) March 24, 2016– June 2016. In the same social network the coach wrote “but how Iniesta plays football. How lucky are we to be ours and can enjoy with him.” After the decision of Barcelona to fire Ernesto Valverde and after Xavi Hernández, Quique Setién He has been chosen to replace the Extremaduran coach. The Cantabrian has shown on numerous occasions his admiration for the style of Barça and for everything that surrounds the Blaugrana entity. His desire to sit in the Camp Nou bench It has become clear every time he has spoken publicly about what is already his new club.– March 2016. Setién posted on Twitter “I felt you could play football better, but I didn’t see it until Johan Cruyff taught it to us.” But how does Iniesta play football! How lucky we are that he is ours and we can enjoy with him.– Quique Setien (@QSetien) June 17, 2016– May 2017. Setién came up with the rumors that placed him on the Camp Nou bench. “I know the rumors that link me to Barcelona, but it is a possibility that I do not contemplate. I do not know if I have the level to train Barcelona. I have been training for two years in Primera and I have a clear idea of how Barça plays, many things I do come from the Cruyff philosophy, “he said.– May 2018. The Cruyff Foundation, created to remember the player and coach of Barcelona, recognized Quique Setién “as the coach who best represents his values”.
What’s the first metric VCs hunt for in your pitch deck? Easy… committed monthly recurring revenue (CMRR). Everyone knows that, right? In their famous report on the laws of cloud computing, Bessemer Venture Partners rightly says, “[CMRR] is the single most important metric for a Cloud business to monitor, as the change in CMRR provides the clearest visibility into the health of any Cloud business.”Ask any cloud / SaaS investor, and they’ll say the same thing. This is the foundational metric that everyone scours the pitch deck to find.But is CMRR growth everything? Let’s compare two companies with nearly identical CMRR growth curves. We’ll call them Company ABC and Company XYZ. The chart below shows that indeed, both companies are on the same CMRR trajectory.So which company is more interesting? How does a VC decide which of these to invest in? Contrary to popular opinion, it is (a little) more scientific than a blindfolded dart-throwing contest.The next logical metric to examine is Gross New CMRR per Month, or New Customer CMRR. Since each month can be viewed as a new customer cohort (upsells are excluded), this exercise tells you the size of each new cohort you’re adding (in $). Great, so let’s compare ABC and XYZ on this:Now which company is more interesting? Uh, well, clearly ABC right? I mean, that growth though! ABC has grown the new cohort size by 2.4x in 2 years, from $10k to $24k. ABC really knows how to scale its go-to-market! Meanwhile, look at boring old XYZ. They’ve been adding $10k of new CMRR every month for two years. Womp womp. No thanks XYZ.But wait a second…these two charts are comparing the same two companies at the same point in time. How can they be identical on one chart, and so different on the other? Since we are indeed looking at CMRR, there’s no implementation lag.Solving for end-of-month CMRR is a pretty simple arithmetic:End-of-Month CMRR = Beginning-of-month CMRR + New Customer CMRR + Upsell CMRR – Downgrade CMRR – Churned CMRRWe can see that ABC is adding plenty of new CMRR each month. We can conclude that the company has a churn issue of some sort. Whether full-on cancellations or downgrades, it doesn’t matter. We can intuit that Company ABC is bleeding CMRR dollars somewhere. More on their specific retention trend in a second.Net Dollar Retention and the Leaky Bucket IssueWhat’s the best way to measure churn and benchmark against other SaaS companies? The industry standard benchmark is quickly becoming “net dollar retention.” If I acquire $1 of CMRR today, what is that $1 worth over time? The true best of breed companies today are seeing that $1 grow over time, becoming $1.10 or $1.20 or much more. This phenomenon is called “net negative churn.”To some folks (read: VCs and serial SaaS execs), I’m sure this seems elementary. If that’s the case feel free to stop reading. These are not brand new revelations, and I’m not the Christopher Columbus of net negative churn. I’m writing this because I saw a number of real businesses in 2014 that were exploding in CMRR, but on deeper inspection had major net dollar retention issues. These companies were quickly getting to $600-800k CMRR, growing well over 100% year-over-year (and profitably too!). But on the retention side, $1 was shrinking to $0.40-$0.50 as early as Month 12. The founders of said companies were overly focused on total CMRR growth, while paying much less attention (if any) to cohort-based dollar retention.Some people call this a “leaky bucket issue.” You see this on display in the ABC vs. XYZ comparison. If you examine ABC in isolation, you may be able to rationalize the leaky bucket. After all, they’ve grown CMRR to $264k from a standing start two years ago. And these guys are so good at scaling go-to-market! The “scaling go-to-market” argument is even easier to justify when there is a good CAC ratio, which is often driven by the kind of word-of-mouth virality that signals strong product-market fit.But when you do a side-by-side comparison and switch out your rose-colored glasses, you realize ABC has had to grow their customer acquisition by 2.4x just to keep up with XYZ, who has apparently been on autopilot.Alright enough with the lead-in editorial, let’s look at the retention curves for ABC & XYZ side-by-side. The equation here measures CMRR in Month X as a % of CMRR in Month 1. It’s measured on a cohort basis. The denominator stays fixed, which allows you to isolate the operational trend. Wow, this is dramatic. It becomes clear why ABC has had to ramp its go-to-market so aggressively to keep in step with XYZ. ABC definitely has a leaky bucket issue — CMRR is seeing a rapid decline to 60% of its initial value by Month 12, and then slows toward an asymptote at 45% by Month 24. Our friends at XYZ on the other hand see net negative churn, growing CMRR to 120% of initial value by Month 24.Now what happens if we assume XYZ is able to scale its go-to-market as ABC has? This would give us a true apples-to-apples comparison.As you would expect, we see XYZ pulling away from ABC (whose linear CMRR growth doesn’t look so hot anymore). To be precise, XYZ is now ~58% bigger than ABC ($416k CMRR vs. $264k CMRR), with the front-end growth (and ostensibly the same go-to-market investment).What’s perhaps more pertinent is that XYZ would most certainly get funded at a premium price, while ABC would likely have to resort to an inside round from existing investors. That’s not an oversimplification — I see companies like XYZ get $10-15M rounds at market-topping valuations. I honestly don’t think I’ve ever seen anything like that for a company like ABC.Key TakeawaysHere are the key takeaways from this study:Improving retention gives you much more leverage on the go-to-market front (you’re fighting against a leaky bucket)The 1-2 punch of a growing front-end and a healthy back-end is the magic formula for exponential growth and lots of VC love.Excel Spreadsheet TemplateClick here for a spreadsheet you can use to calculate your own CMRR growth and Net Dollar Retention: Download NowSlideShare Version Why the Most Important Metric in SaaS is Misleading from OpenView Venture Partners Photo by: Brett Farmiloe AddThis Sharing ButtonsShare to FacebookFacebookShare to TwitterTwitterShare to PrintPrintShare to EmailEmailShare to MoreAddThis73