Category: Startups

If you can’t make a decision, you need better options

Nicole Glaros1 Comment

Yet another insightful Luism by my favorite strategist and dear friend, Lu Cordova.

She was releating a story about how she needed to hire a VP for her last company. She had narrowed it down to two options, but really couldn’t decide between them. She brought in a consultant, she had them interview with the board, she interviewed them again, she spent a day with each, she completed her extended due dilligence and she still couldn’t decide.

And that’s when it hit her – she couldn’t decide because both of them were wrong. So she scrapped her search and started over.

I find this is critical insight. Every single time I have found myself at a place where I can’t make a key decision – if I force a decision, it has WITHOUT FAIL ended up wrong. If I scrap the options and start from scratch – WITHOUT FAIL I have ended up behind schedule, but with more than I could have ever hoped for.

So remember that. Don’t relegate yourself to the options that are thrown at you. If you can’t decide, it’s because all your options are wrong and you’re looking in the wrong place.

Thank you Lu!

SaaS Landscape – a sharing of initial research

Nicole Glaros2 Comments

I’ve been doing a bit of research on the Software-as-a-Service (SaaS) business model recently for one of the companies that I work with. While I’m not going to pretend to be an expert, I will share my findings and sources. And please, if I’m wrong, correct me!

SaaS is getting quite a bit of traction recently with investors because of Salesforce.com’s success and the IPO’s of Netsuite, Omniture (in 2006), and DemandTec. And while it’s a hot market right now, allow me to play devil’s advocate for a moment.

1. Of the publicly traded companies that I looked at, only Salesforce.com has been consistently profitable. The rest are still operating at a net loss.

2. It has taken most of these companies somewhere between at least $30million and $65million in venture funding to reach IPO. This is significant because as an entrepreneur, you better be thinking big numbers. Your $300K Series A isn’t going to cut it.

3. They spend an ABSURD amount of money on sales & marketing. Omniture spends between 41%-57% of total revenues on M&S. Netsuite spent 65% of revenues on M&S. Salesforce spends between 48%-61%, if you don’t count the 467% they spent the first year they were in business (thank you Salesforce for educating the public for the rest of the SaaS companies).

While investors are excited because IPO Valuations are coming in as high as 10X revenue, I think the next 36 months will be the true test if the SaaS model can hold its own. These guys had better turn the corner or the model is in trouble.

The SaaS model definitely makes sense though. From a personal perspective, the less software I have to manage, install, update, host, etc, the less time I have. I love all that is online because my life goes with me where ever I go, without requiring to lug around my laptop. And to the extent that, on the consumer side, companies can partner, I’d be even more likely to rid myself of bulky clients and opt for the online version. (By the way, I’d pay someone to take away my 2007 version of Quicken and provide me with a usable, easy, online, interconnected version of personal financial software)

Anyway, here’s a link to a Google Spreadsheet (love goog, biggest fan) with all of the historical financials I found on a select number of SaaS companies, including Omniture, Netsuite, Salesforce.com, RightNow, DemandTec, and Concur. I’ll continue to update it as I find more information.
Here are links to some interesting articles that I’ve found as well:

SaaS Blogs – The Saas Investing Landscape

The Ponderings of Woodrow – Netsuite IPO

Resistance Fades as SaaS goes Mainstream

Get Ready for Saas 2.0 

Saugatech has a research article out on SaaS trends – anyone care to share with me?

Good luck to all the SaaS companies out there – and share your research with me if you have any.

Long fingernails vs. venture capital

Nicole Glaros1 Comment

I had an interesting conversation two nights ago with Catherine Merigold of Vista Ventures. She and I share a similar interest in seeing women in entrepreneurship succeed, because there are oh-so-few of us. Given that investors job is to minimize risk, she has a theory that anything that separates an entrepreneur from an investor qualifies risk. For instance, a woman with long, red fingernails might be seen as more risky to a group of male investors since they don’t share that trait and might not understand it. I think there is merit here, but I also think that anything distracting to an investor, whether it be a woman with long, red fingernails, or a man with a full set of chops is detrimental.

This isn’t to say that you can’t be unique and individual, but it is to say that it might take you longer to reach your goals. I think of music artists here. If you want to make it BIG, most musicians have to play to the whims of the public, whether you like it or not. But once you reach a certain stage in your career, people will begin to like anything you play. You can effectually change the likes and dislikes of an audience, be a trend setter. But you have to be on top to do that.

The take away from our conversation was simple. If you’re trying to raise money for your company, what do you want your investors to notice? Your long red fingernails? Your shaggy long hair? Or your stunningly brilliant business model? I do think women will have a more difficult time raising money, they have more obstacles to overcome to get there. But ensure the investors are focused on the right thing – how you are going to return their investment quickly, safely, and in large quantities.