AWS adds user monitoring and A/B testing to CloudWatch

Amazon CloudWatch was introduced way back in 2009 to help AWS customers view data about their cloud usage and spending. Today at the dawn of AWS re:Invent, the company’s cloud customer conference taking place in Las Vegas this week, the cloud division announced a couple of enhancements to the product.

Amazon has been building on the types of data provided by CloudWatch, and today it added user monitoring. With Real User Monitoring, AWS customers can understand when there is a problem with a deployment and take corrective action before customers really begin to feel it.

“Amazon CloudWatch RUM will help you to collect the metrics that give you the insights that will help you to identify, understand, and improve this experience. You simply register your application, add a snippet of JavaScript to the header of each page and deploy,” Amazon’s Jeff Barr wrote in a blog post announcing the feature.

This doesn’t exactly fall under the category of stunning innovation. It’s something companies like AppDynamics and New Relic have been doing for years, but as with most things Amazon they are providing a soup-to-nuts experience for customers inside AWS, and this type of monitoring lets you know when things could be going wrong with your AWS application.

The other new feature is a new experiments tool called CloudWatch Evidently, which helps developers set feature flags and run A/B tests inside an application they are building on top of AWS. Rather than just updating an app for every user, developers may want to test it on a limited subset of users and see if the new feature breaks anything, or if users prefer a particular approach or design more.

They can limit the people who see a new feature by setting a feature flag in the code and setting up the parameters for that feature. In addition, you can do A/B testing, another form of experimentation, that lets you test features with a certain subset of users to see which feature or design people prefer.

Neither of these is new either. Companies like have been doing more broad feature flag management for some time, and companies like Optimizely have been building companies around A/B testing.

CloudWatch Evidently is already available in 9 Amazon cloud regions with pay-as-you-go pricing, while CloudWatch RUM is also available now in 10 regions at a cost of $1 per 100,000 events collected.

Product-led growth and signal substitution syndrome: Bringing it all together

A few years back, my former colleagues and I at SiriusDecisions introduced what we called the Intent Data Framework (IDF). About a year ago, we updated the model to include non-behavioral signals and called it the Buyer Signals Framework (BSF).

Already, it’s clear we left something out of the IDF and even BSF: product-led growth.

Signal substitution syndrome

Both versions of the framework were attempts to address a misunderstanding that was, and still is, so rampant in B2B that I have a name for it — signal substitution syndrome. The nature of this syndrome is simple: In B2B, both marketing and sales practitioners tend to see each new source of information about their potential buyers — each signal type — as a substitute for the last one that didn’t work.

If people are using the product, the need is not prospective or theoretical, it is actual.

The history of B2B could be written in the successive failure of these signals to be what we all hoped for. Whether it was people showing up at trade show booths, people filling out bingo cards from the back of magazines, the people and bots filling out website forms, webinar registrations, syndicated content leads, third-party intent signals, review site users, etc.

The misunderstanding that underwrites signal substitution syndrome is that any of these signals should be considered as sufficient — or even halfway decent — signals of buyer intent unto themselves. To be sure, by happenstance, some leads have occasionally turned into business in a way that can be seen and understood.

Help TechCrunch find the best growth marketers for startups.

Provide a recommendation in this quick survey and we’ll share the results with everybody.

But if there’s one thing that my time as an analyst taught me, it’s that leads are a depressingly high failure rate (95%-99%) signal. Intent data by itself is worse. However, they are both better than whatever we had before. In fact, none of these signals are, by themselves, actually expressions of intent. Expressions of interest? Sure. Intent, not so fast.

How product-led growth fits in

Along comes product-led growth (PLG) with the idea that we’ll offer a free or very low-cost version of our solutions and use adoption of them as the new signals that will lead to enterprise deal generation. Of course, not every product is amenable to a PLG motion. It’s pretty hard to imagine Oracle PLG-ing their manufacturing cloud, for example.

Upbound nabs $60M to grow its open source Crossplane multi-cloud management project

Companies today want to avoid the lock-in they faced in the past with a single vendor. As a result, they are hedging their bets with a multi-cloud strategy, but this creates a new problem around finding a single tool for managing it all. That’s where Upbound comes in with its open source Crossplane multi-cloud management tool.

It’s a big problem, and up until now, companies have relied on the cloud vendors themselves to manage each one separately. While some solutions like Google Anthos and Red Hat OpenShift have come along, there was a lack of open source tooling until Upbound released Crossplane in May 2020.

Investors recognized the need identified by Upbound and rewarded the company with a $60 million Series B to help build the open source project while looking to grow the commercial version of the product. Altimeter Capital led the round with participation from GV, Intel Capital and Telstra Ventures.

Upbound founder and CEO Bassam Tabbara said that while the market has attempted to find a solution to this management challenge, he believes that his company is the first to build an open source community with the hope of developing this single management console and single API to manage across cloud tools.

“There’s been a lot of efforts around trying to build a single point of control. None of them have attacked this problem from a community perspective, creating a universal control plane that enables that in [a] community, while [building] the convergence around it,” he said.

“I think of Crossplane as the first to get to a point where we actually now have a convergence effect around a single universal cloud API. This has never happened before. It’s truly the first time that we’ve gotten to one. You can go to Crossplane right now and you get one declarative API that can be used to address all cloud resources and infrastructure sources across all vendors.”

Tabbara points out that the project is fully cloud-native and is managed under the umbrella of the Cloud Native Computing Foundation (CNCF), which manages Kubernetes and other key open source cloud-native technologies.

He said that Crossplane allows users to pick and choose the cloud vendors they want to use — whether cloud infrastructure vendors like AWS, Microsoft and Google or cloud-native tooling like Elastic, Confluent, Databricks and Snowflake — and manage all of that from a single API.

The company has grown and helped nurture the open source project and developed a commercial product in parallel called Upbound (like the company), which customers can install themselves in their cloud of choice or use a SaaS version that Upbound will manage for them.

It’s not only catching on with users. Tabbara said he has also been seeing major vendors like AWS, Azure, Equinix and IBM building integrations for Crossplane. He believes this is key, and it’s similar to the dynamic we saw in 2017 when the major cloud players began to rally around Kubernetes and the CNCF.

“It’s truly to the point where there is now a real convergence effect around Crossplane, not unlike the convergence effect that we saw around Kubernetes as a project, and not unlike the convergence we saw around Linux as a project,” he said.

It seems to be a project and a commercial vision with tremendous potential, one that investors see as a pivotal piece of the cloud puzzle and are willing to pour in significant capital to help build. If Upbound can execute on this vision, it may be onto something truly transformative, but only time will tell if they can make that happen.

Particular Audience takes in $7.5M to give retailers way to take on Amazon

Being in control of customer data is one of the ways retailers, like Amazon, Spotify and Netflix, are able to tap into consumer behavior and create customized experiences whenever a user logs in.

Those are some of the reasons Amazon, in particular, is poised to grab 50% of the U.S. e-commerce market this year, and why Sydney-based Particular Audience wants to break down the data silos going on within e-commerce to give any retailer a chance to gather similar data on their customers to personalize experiences.

Particular Audience provides product discovery tools for retailers that are powered by artificial intelligence and machine learning. In fact, the company wants to go further and offer personalization based on anonymity and without compromising personal data, CEO James Taylor told TechCrunch.

Taylor launched Particular Audience in 2019 after taking a few years to work out the technology. The global pandemic threw a wrench in some plans, with Taylor and a handful of executives taking a pay cut so as to not have to let any employees go. However, with the e-commerce industry growing over the past 18 months, the company was able to get back to where it was, he said.

The company has now amassed a real-time data set on product search, sales, pricing and availability from across the internet, from its browser plugin, which gathers the data from its online shopper community without tracking or cookies. Retailers can analyze that data to tell them, for example, how better to promote high-margin or overstocked items.

“Data IP is the current frontier,” he said. “It is data that is going to improve predictions to personalize inventory and reduce waste while also helping with supply chain management. The goal is to create website data visibility that would benefit all of the other merchants other than Amazon.”

To continue developing its technology, the company secured $7.5 million in Series A funding in a round led by Equity Venture Partners and that included existing investors Carthona Capital and a group of angel investors. This latest investment gives the company $9.5 million in total funding raised to date, which includes $1.3 million in seed funding raised in 2019.

Particular Audience

How Particular Audience works on a website. Image Credits: Particular Audience

Particular Audience is working with approximately 100 websites currently. In addition to Sydney, the company also has an office in London. Europe makes up more than 50% of Particular Audience’s global revenue, and the new funding enables the company to open a new office in Amsterdam next year.

North America is also a growth territory for the company, where it has already opened an office in Vancouver, with plans to open a New York office in 2022 as well. The company has 60 employees, up from 20 last year, and Taylor expects to add 40 more in the next year, including rounding out its leadership team with a head of product.

The funding will also be invested into building out an API-first product suite and retail media platform so retailers can gain a revenue stream from cost per clicks. Meanwhile, the company saw 460% year over year in revenue growth and expects to hit $100 million in gross merchandise value through its products this year, up 19 times in the last two years, Taylor said.

As part of the investment, Daniel Szekely, partner at Equity Venture Partners, will join the board.

“Personalization of the internet is a critical frontier for e-commerce retailers, and in a world of growing online shopping options and diminishing consumer attention spans, delivering an experience that meets individual consumers’ needs is absolutely critical,” he said in a written statement. “James and his outstanding team have tackled this issue in a novel way, and the important need for their solution has been made obvious as the business gets pulled into multiple geographies. We’re thrilled to back them in their Series A and know this is just the beginning of the journey.”


Bolt makes first acquisition with Tipser, launches ‘Remote Checkout’

The ability to purchase something at the point of discovery from digital content exists, but checkout technology company Bolt has the opportunity to give that its “one-click” treatment. It announced Monday that it made its first acquisition in Tipser, a Swedish-based technology company enabling direct checkout on any digital surface.

San Francisco-based Bolt is fresh off of raising $393 million in Series D funding in October, bringing total capital raised to date to $600 million. And though the Tipser acquisition is in line with the company’s plans of what it wanted to do with the new capital, Ryan Breslow, founder and CEO of Bolt, told TechCrunch the deal “had been in the works for a while.”

Tipser’s technology enables consumers to purchase products natively from sites like online publications, mobile marketplaces, price comparison sites, social media platforms or search engines. The company is led by Marcus Jacobsson, co-founder and CEO, who started the company in 2012 with Axel Wolrath and Jonas Sjöstedt.

In fact, when Bolt initially began talking to Tipser, the company was not in a place to sell, and was actually working on their next investment round (they raised just over $14 million), but the two companies ended up going into deeper conversations and found their cultural resonances worked better together, Breslow said.

“We saw how significant Tipser could be for Bolt,” he added. “They had been perfecting their embedded commerce technology for a decade and were the only formidable player. They were stronger than us in areas where we were weaker. It is very strategic to have them on our team.”

Exact transaction figures were not disclosed, but Breslow did reveal to TechCrunch that the acquisition, which was an all-stock deal, came in “just shy of $200 million.” The entire Tipser team is staying put, so Bolt will be adding 100 more people to its team. Tipser’s presence in Sweden will now also serve as Bolt’s European headquarters to go with the company’s recent announcement of expanding into Europe.

In addition to the acquisition, Bolt is launching Remote Checkout, a tool for shoppers to make a purchase from the exact point of discovery. Instead of seeing something on social media — where 84% of shoppers look for reviews, according to Pew Research Center — then going to another website to make the purchase,

The new tool is one that Bolt was working on internally for over a year and was inspired by Instagram Checkout, also a tool where you can discover a product and check out directly from the app, Breslow said.

“With the death of tracking and cookies, we could see the need for native checkout so retailers can track conversion,” he added. “It’s better for consumers to not have to click a million things.”

Bolt’s Remote Checkout features include the direct one-click checkout, engagement with Bolt’s network of shoppers and the ability for merchants to boost conversion rates while receiving orders through multiple channels and building direct relationships with visitors. It also turns anonymous visitors into logged-in account holders and monetizes traffic on-site.

The added feature of publishers and creators being able to monetize traffic coming to their sites was one that Jason Wagenheim, president and CRO at media publisher BDG (formerly known as Bustle Digital Group), found particularly interesting. BDG’s brands include Bustle, EliteDaily and Fatherly.

He was a bystander of sorts for the merger, having signed up with Tipser in January as the company’s first U.S. publisher, going live with the product in April on two of BDG’s 13 sites, Wagenheim said in an interview.

“What I love most about this acquisition is that we can accelerate the onboarding of hundreds of more merchants onto our platform,” he said. “This is a marriage of content and commerce.”

Before social media and companies like Bolt and Tipser, shopping directly from a magazine page meant utilizing QR codes, but that didn’t take off like people thought it would, Wagenheim said.

Other publishers tried to crack the code, and he noted Goop being one of the few able to do it. Now with these new technologies, any publisher or creator can close the gap between the upper and lower funnels and drive awareness because its commerce is shoppable and one click away.

He considers BDG’s project with Tipser still in the beta phase, but there are plans to roll out the technology on all of its sites next year. The company already had its audience engage in over 25 million sessions with people, on average, seeing 10 products per session, a metric Wagenheim says means the process is working: people are spending time with the products, are engaged and adding products to carts.

“With hundreds more merchants for editors to write about, and the one-click transaction happening, that is a game-changer,” he added.

How Pilot convinced Index Ventures to think long-term about margins

On a recently recorded (and soon-to-be published) episode of the Found podcast, an entrepreneur told my co-host and me that he sees a broad swath of the venture capitalists out there as money managers, more focused on short-term gains and returns than long-term revolutionary technology.

Whether you agree or not, it’s hard to ignore the fact that the multipliers in Silicon Valley and the growth of software businesses have changed the way we think about a startup’s timeline.

“The pressure from [Index] caused us to work a little harder and be a little bit more precise in our instrumentation to be able to prove that the long-term trajectory would achieve certain milestones that would work for everybody.” Jessica McKellar

Pilot, a bookkeeping software service that has raised more than $160 million since inception, is not necessarily a stranger to the shorter-term desires of investors. Index Ventures partner Mark Goldberg, who led the Series A and Series B rounds for the startup, would be the first to tell you that the board and the founders had some early disagreements about how the company should operate.

Obviously, it wasn’t enough to stop him or Index from doubling down on the business.

We talked about all this and more on TechCrunch Live.

Doubling down

“It was pretty terrifying,” said Goldberg. “In my gut, I thought, ‘Wow, we better get this right.'”

A few things clicked into place for Goldberg to want to keep investing in Pilot. The first was that it was a real category-creation opportunity, in that bookkeeping was a $100 billion industry that was largely fragmented.

The second was the customer love for the product.

“We started to hear customers proactively calling us from within the Index portfolio saying that they hated doing bookkeeping and back office functions, and now they don’t have to think about it. They said things like ‘Whoever this Pilot team is, they’re doing some wizardry so I can just shut my brain off to the part of the business I didn’t enjoy doing.'”

The third was the conviction and dedication of the team to empathizing with and understanding their customers.

He recalled a time early on when the team was no more than 10 people, most of them engineers, when he visited the office on a weekend. They were all wearing green visors, doing bookkeeping for their customers.

“They weren’t doing it because they needed to for customer support, but because they really wanted to empathize with the customers for the product that they were building,” said Goldberg. “That’s the sort of sweat equity and market recognition that told me, if this continues to grow, there really is no ceiling on what this business could become.”

While that sort of dedication to understanding the user was attractive, it was not without its costs.

Counterintuitive convictions

“Pilot is a technology company wrapped in this lovely human layer of high-touch support for its customers, which is a bit counter-intuitive in Silicon Valley, where most companies don’t want humans in the loop,” said Goldberg. “That’s what I know and understand, and we had a view that this sort of tech-enabled service model could be very valuable, but we wanted to make sure that they could create a financial profile that had gross margins that reflected that of a software company.”

In its simplest form, Jessica McKellar and her co-founders felt very strongly that they wanted to focus on the customer fully and deliver great customer service from the very beginning. In a business where you are onboarding customers by ingesting the entirety of their financials, that can be costly.

Afterpay unveils BNPL subscription offering for US customers

“Buy now, pay later” company Afterpay announced Wednesday that it was going after the $1.5 trillion global subscription payments market by offering to its U.S. customers payment installments for subscriptions, like gym memberships, entertainment subscriptions and online services.

The service will launch in both the U.S. and Australia beginning early in 2022 and will be free for customers who pay on time. IPSY, BoxyCharm, Savage X Fenty and Fabletics are among the initial list of merchants that will offer the feature. The company plans to expand the feature in-store and into other regions later, including Canada, New Zealand, the U.K. and Europe.

In addition to paying for subscriptions in installments, Afterpay is also enabling its offering to be used on preordered items, where users can pay in four installments over time once the item ships. Another feature coming soon will allow merchants to accept deposits on custom items.

“By offering customers the option to pay for subscriptions with Afterpay, we’re not only giving consumers flexibility to pay for more expensive monthly costs, but we’re also helping our merchant partners capture a wider consumer base through this convenient experience,” said Zahir Khoja, general manager of North America for Afterpay, in a written statement.

Klarna, Afterpay’s competitor in the BNPL space, also announced news this week for its U.S. customers that it was offering its “Pay Now” option.

Meanwhile, in August, Square announced that it was buying Afterpay in an all-stock deal valued at $29 billion. Afterpay has also been on a roll with feature debuts recently, launching both Afterpay Ads, a suite of advertising products for brands to engage with shoppers within the ecosystem, and merchant analytics tool Afterpay IQ, in August.

Afterpay works with 100,000 retailers and has approximately 10.5 million active customers in North America as of June 30, up from 5.6 million the year prior. North America is the company’s “largest region in terms of underlying sales,” which grew 145% year over year, or from $4 billion in fiscal year 2020 to $9.8 billion in fiscal year 2021, according to the company.

Tiamat Sciences cooking up plant-based proteins for cheaper production of cellular meat

Cellular growth medium is a component of cellular agriculture that enables lab-grown meat to be made at a lower cost. However, the traditional ways of making these growth factors, or reagents, are costly themselves, which makes large-scale manufacturing difficult.

On average, reports show that lab-grown meat costs about $50, but that new technologies could bring that down to a more reasonable $3 per pound by 2030.

Tiamat Sciences is one biotech startup developing a more cost-effective biomolecule aimed at replacing more costly bioreactors. Today, it announced $3 million in seed financing, led by True Ventures, with participation from Social Impact Capital and Cantos.

France-Emmanuelle Adil, Tiamet Sciences

France-Emmanuelle Adil, founder and CEO, Tiamet Sciences. Image Credits: Tiamet Sciences

The company’s CEO, France-Emmanuelle Adil, founded the company in 2019 to manufacture animal-free proteins using a proprietary plant molecular farming approach that combines biotechnology, vertical farming and computation design to reinvent recombinant proteins.

“The growth factors used in media are expensive right now,” she told TechCrunch. “We can reduce costs drastically and reach price parity with meat.”

Adil estimates that today’s growth factor costs $2 million per gram to make, but she believes that with efforts from Tiamat Sciences and others, that cost could come down 10 times with a focus on making it 1,000 times cheaper by 2025 so that large-scale production can proceed.

Prior to the $3 million seed round, the company brought in a small round last July to give it $3.4 million in total funding to date. Adil wanted to expand the company, which was in Belgium, where it has an operating site, and moved to North Carolina in May.

The new funding will aid in building a pilot production facility in Durham, North Carolina and in technology development. The company is already on its way to reaching carbon-neutral production.

She was not able to disclose customers yet, but said the company is in development of its first product aimed for release by the end of the year. Tiamet would then be sending samples to customers for testing, which she believes will lead to some partnerships in 2022.

In addition to food, Adil says Tiamat’s approach could be applicable in other industries like regenerative medicine and vaccine production.

“Growth factors are transferable to other industries because the processes are similar,” she added. “We will be working on expansion for the end of 2022. We will scale very fast with a number of plants and then 100,000 plants. We are in discussion with companies to help us scale big but progressively.”

Phil Black, co-founder of True Ventures, said the investment into Tiamat Sciences fit into its plant-based portfolio. The initial money raised by the company allows them to prove to people that their technology works and to produce it at the trial level. Then will come a much larger round to scale up from liters to gallons.

“The cell meat industry is here to stay and now people are interested in making it more profitable for themselves and making more of it,” he added. “Limited factors exist, and Taimat’s solution will be a game-changer.”

TechCrunch+ roundup: Why your title matters, part-time CFOs, Sequoia’s new model

Startup culture is informal, which is why some workers end up with job titles like “customer delight manager” or “product whisperer.”

That might work inside mature companies, but early-stage founders who are presenting themselves to investors must be more specific.

In an interview with Natasha Mascarenhas, B2B stealth startup founder Akshaya Dinesh recounted the time her team was rejected by an accelerator because they hadn’t yet picked a CEO.

Full TechCrunch+ articles are only available to members.
Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.

“We said something like, ‘We’re very early and we’re both technical so we’re kind of doing everything together,’ but if we had to choose it would be X,” said Dinesh.

Making sure each contributor has a clearly defined title gives potential investors a better understanding of the team and its abilities — and it will also help avoid future legal disputes.

But like it or not, it also means some founders will receive a larger slice of the pie than others.

“As we’ve learned through loud legal disputes and quieter signs, titles matter,” writes Natasha, who also interviewed several investors and legal experts. “Perhaps even more than the name of your startup does.”

In observance of the Thanksgiving holiday in the U.S., we won’t be publishing on Thursday, November 25 and Friday, November 26.

Thanks very much for reading!

Walter Thompson
Senior Editor, TechCrunch+

5 must-have board slides for SaaS sales and revenue leaders

Hand putting wooden five stars on table

Image Credits: Aramyan (opens in a new window) / Getty Images

Before he became a partner at Battery Ventures, Bill Binch was chief revenue officer at Pendo, a product analytics app.

In his former role, he was responsible for providing his company’s board with quarterly updates on growth and revenue.

“As a wise mentor once told me, no one ever gets a promotion from a board meeting, but people sure do get fired afterward,” he writes in an article about the five slides sales and revenue teams must get right:

  • Headline reel.
  • Detailed, five-quarter view.
  • Segments, geographies and verticals.
  • Pipeline.
  • Sales team health.

Data collection isn’t the problem: It’s what companies are doing with it

Rear view of young man walking towards detour on red background

Image Credits: Klaus Vedfelt (opens in a new window) / Getty Images

Instead of raking in user data as a general practice, companies should aggregate information to optimize product development and create a superior customer experience, writes Maxim Kharchenko, director of fintech products at Rakuten Viber.

In a detailed TechCrunch+ post, Kharchenko uses examples to explain how companies can set up data fabrics, AI and decision intelligence frameworks to build a data-driven business without sacrificing user trust.

3 ways fractional CFOs can fast-track a startup’s success

red balloon with man helping people cross chasm

Image Credits: wildpixel (opens in a new window) / Getty Images

Bringing a CFO aboard is not a high priority at most early-stage startups.

It isn’t a critical role until the company reaches product-market fit, and the best ones are expensive to recruit and retain.

Hiring a part-time CFO may be a better option, particularly for companies that are shaping up their finances before seeking new funding, advises Ranga Bodla, head of industry marketing for Oracle NetSuite.

“With no sign that the flow of capital will ease in the near future, bringing in a fractional CFO could be a well-timed strategic move for startups with ambitious growth plans,” he writes.

What happened to Paytm’s IPO valuation?

In India, nearly every store has a placard with a Paytm QR code customers can use to pay for nearly anything.

Given its ubiquity, there was boundless optimism ahead of the fintech’s IPO last week. However, the stock tanked the next day and fell further this week.

It appears the public didn’t like the IPO price too much, Alex Wilhelm writes. Despite a growing merchant base and strong rise in GMV, it appears Paytm “is struggling to pull enough revenue from its work to cover the cost of doing business.”

In Amazon scuffle, Visa’s loss could be Affirm’s gain

Online shopping concept. Credit card and laptop computer on blue background 3D Rendering, 3D Illustration

Image Credits: Ilija Erceg (opens in a new window) / Getty Images (Image has been modified)

Interchange fees can be costly for e-commerce retailers in more than one way — costly payment methods like credit cards lead to customers making fewer transactions and abandoning shopping carts.

And Amazon’s recent decision to stop accepting Visa cards on its U.K. site is evidence of just how much those costs can matter, writes Ryan Lawler.

A host of e-commerce platforms are increasingly moving to alternatives like buy now, pay later as customers tend to buy more often when given no-interest or interest-free payment alternatives, and providers like Affirm and Afterpay are poised to reap the benefits of this shift, Ryan writes.

“We’re likely to see more BNPL partnerships and adoption as retailers seek to grow their top-line sales, reach new customers and move beyond credit cards as a primary payment method.”

What open source-based startups can learn from Confluent’s success story

3D illustration of many arrows changing way to converge toward objective on kraft paper. Confluence background.

Image Credits: Olivier Le Moal / Getty Images

Founders are often told to perfect one product and only shift focus after they’ve either succeeded or failed at it.

But Confluent simultaneously built a cloud product while still figuring out its on-premise service business, writes enterprise reporter Ron Miller.

“The challenge for us was that we had a software offering with very large customers with lots of demands, and we had to [build] a cloud offering across all the different clouds while still servicing that [existing] customer base,” Confluent CEO and co-founder Jay Kreps told Ron.

“Growing the existing business and building something new are both pretty hard problems, so that was the big challenge for us.”

Kreps and Ron also spoke about how the dual focus paid off to help Confluent become a $22-billion publicly listed company, its early days, and why founders should trust their instincts.

As Sequoia changes its model, other permanent-capital VCs weigh in

Sequoia Capital announced in October that it would create a new structure that rolled up all of its investments into a single fund.

“Our industry is still beholden to a rigid 10-year fund cycle pioneered in the 1970s,” wrote partner Roelof Botha in a blog post.

The move to a more permanent, Registered Investment Adviser model is meant to counter that, several U.K.-based VC investors told Anna Heim and Alex Wilhelm.

“It takes a fund like Sequoia with the strength of their LP relationships to even consider this kind of option,” Molten Ventures partner Vinoth Jayakumar said.

SaaS in 2021: How prodigious growth changed the startup landscape permanently

With capital in abundance, SaaS startups don’t seem to be too worried about how much runway they have remaining.

According to OpenView’s annual Financial & Operating Benchmarks report, only 13% of nearly 600 companies surveyed named “burning too much cash” as one of their top three concerns, compared to 30% last year.

While 2020 was atypical and a rebound this year is not surprising, the report goes one step further, arguing that there is an increasing gap between the haves and have nots of B2B software.

Nowhere is this more apparent, the authors claim, than when you look at public B2B SaaS companies. In an analysis accompanying the new report, they point out data showing that some companies see their enterprise value increase much faster than the competition.

The combination of an enormous market, a compelling growth engine and outstanding unit economics is helping top startups attract talent and capital, which might increasingly be escaping lower-performing companies, according to the report’s authors.

“Investors have forgotten all about the Rule of 40.” OpenView Partners

But what does that mean for founders that aren’t anywhere near an IPO yet? And which benchmarks can they use to evaluate their performance? To find out, we talked to the report’s two lead co-authors, OpenView’s Vice President Sean Fanning and Operating Partner Kyle Poyar. We also reached out to Dale Chang, operating partner at Scale Venture Partners, which aggregates data of its own via its Scale Studio; and to Matt Cohen from Canadian VC firm Ripple Ventures.

Our conversations covered some of the strategies SaaS companies can adopt to emulate their top peers — including product-led growth and usage-based pricing, of which OpenView is a known advocate — as well as a lingering concern: Are the multiples we are seeing sustainable?

Measuring up

If we had to only retain one chart from OpenView’s report, it would be the benchmarks table below, which features a few metrics and separates them based on the respondents’ annual recurring revenue (ARR):

Financial and operating metrics by ARR - 2021 - OpenView

Image Credits: OpenView Partners

A note to readers explains that “each cell represents the median performance of a company, as well as the range (bottom quartile and top quartile) of each metric at each respective ARR scale” with the median in bold and the range in parentheses.

The authors note that “benchmarks are the map, not the territory” and that “performance and valuation are a multivariate equation.” Still, the founder of a startup with ARR between $1 million and $2.5 million might be pleased to see that growing 100% year on year means outperforming the average SaaS company in that category. But they will also note that top-of-class companies grow by about a whopping 300%.

All eyes on growth

The median growth rate of SaaS businesses would already leave the average SMB in dismay, but the top quartile’s performance is on a different level, especially for early-stage companies. Just look at this chart: