The SaaS Formula for Success
I read a lot from David Cummings, the founder of Pardot. After selling the company to SalesForce he’s become a strong thought leader on SaaS businesses and supporter of the Atlanta tech community. While nice to hear about people building tech hubs outside of the Valley, the former is what keeps me coming back for his wisdom.
Beyond the gems, his writing style is perfect. Short, yet still tells a story. He offers bullets that are easily digestible. About once a week, he has a gem that is worth forwarding or sharing. This week, this simple formula for SasS success really stood out:
The ideal SaaS business will have high gross margins (> 80%), low cost of customer acquisition (< first year’s revenue), high lifetime value of the customer (many times the acquisition cost), high renewal rates (> 90% per year), and copious amounts of leads.
Thoughts? Anything he’s missing?