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patio11's profile
Patrick McKenzie
Patrick McKenzie
Patrick McKenzie
@patio11

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Patrick McKenzie

@patio11

I work for the Internet, at @stripe, mostly on accelerating startups. Opinions here are my own.

東京都 Tokyo
kalzumeus.com
Joined February 2009

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    1. Patrick McKenzie‏ @patio11 20 Feb 2018
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      This drives pricing decisions, marketing channels, the relative importance of departments (design, marketing, engineering, sales), top priorities for the management team, etc. To a degree that most people don't appreciate until they've worked in SaaS a while.

      2 replies 0 retweets 22 likes
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    2. Patrick McKenzie‏ @patio11 20 Feb 2018
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      Here's a fun game: "What's your ACV [annual contract value]?" *you name a number* "I will freehand your org chart." This game is easier to play than tic tac toe.

      3 replies 2 retweets 37 likes
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    3. Patrick McKenzie‏ @patio11 20 Feb 2018
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      Regardless of the sales model, SaaS companies are driven under the hood by the best economic model anyone has come up with for software. You only need four numbers to judge the health of a SaaS company: acquisition, conversion, price, and churn. It works like this:pic.twitter.com/xKWkjXcqpc

      4 replies 4 retweets 69 likes
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    4. Patrick McKenzie‏ @patio11 20 Feb 2018
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      That equation is sort of stylized and has some simplifying assumptions, because all models are wrong but some models are useful. One which is certainly wrong: it assumes that churn is a continuous product. In low-touch SaaS as it is actually practiced, churn happens early.

      1 reply 0 retweets 11 likes
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    5. Patrick McKenzie‏ @patio11 20 Feb 2018
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      A lot of customers will essentially extend their trial, sometimes with the permission of the company and sometimes not. (A surprising-to-younger-me portion are happy to pay for the privilege! "Oh didn't get around to using it yet but don't want to cancel; I still might...")

      1 reply 0 retweets 11 likes
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    6. Patrick McKenzie‏ @patio11 20 Feb 2018
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      So you don't settle into your long-term churn rate until ~3 months into use of the software, frequently. Savvier firms track the seasoned rate and ones which have extreme amounts of savvy (and time on their hands, and data) do ongoing cohort analyses. But the simple model works!

      1 reply 0 retweets 12 likes
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    7. Patrick McKenzie‏ @patio11 20 Feb 2018
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      Speaking of the simple model working: one of the reasons I'm so jazzed to write about SaaS at Stripe (and we will be writing a lot more in the future) is that there is a wide body of practices which are in the uncomfortable position of being known by everyone and done by few.

      1 reply 0 retweets 17 likes
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    8. Patrick McKenzie‏ @patio11 20 Feb 2018
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      I sometimes got asked during my consulting career what the secret black magic was. The secret black magic is 98% boring execution on the same set of things that everyone else knows to do and few successfully organize their firms into doing consistently.

      2 replies 29 retweets 106 likes
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    9. Patrick McKenzie‏ @patio11 20 Feb 2018
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      "What's the other 2%?" I'll tell you if I ever figured it out. My one original thought, in ~10 years in the business, was altering the first-run experience and flow of the free trial in response to exact marketing channel a user came in through. (Please steal that. It worked.)

      1 reply 4 retweets 64 likes
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    10. Patrick McKenzie‏ @patio11 20 Feb 2018
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      (Conceptually this is "If they Google [$PRODUCT api docs] and end up on your API docs and then sign up for the free trial, and your free trial comes in Developer, Finance Professional, and Operations Professional flavors, you don't have to ask them which trial they want.")

      2 replies 3 retweets 41 likes
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      Patrick McKenzie‏ @patio11 20 Feb 2018
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      Since the various sub-disciplines in a SaaS company get arbitrarily deep, you get interesting returns to specialization. Effectively none of them are taught to any useful degree in school. This causes networks to be very, very powerful in SaaS.

      8:45 AM - 20 Feb 2018
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      • Ben Ferns Alexander Hultnér 📯 Jared Hansen Arnav Kalra Diego Henrique Tim Humphries Anshul Modi Nathan sociaL.ly distanced Walls Aaron Wall
      2 replies 1 retweet 13 likes
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        2. Patrick McKenzie‏ @patio11 20 Feb 2018
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          Rather little of the technology of running SaaS businesses is written down. (Working on it!) A huge portion is bringing together a team of people who've done similar things before. This is one reason why Silicon Valley tends to race ahead with regards to funded SaaS.

          1 reply 1 retweet 20 likes
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        3. Patrick McKenzie‏ @patio11 20 Feb 2018
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          I live in Tokyo and love it here, but you could scour Tokyo high-and-low and probably not find someone who would give the 47th best SaaS lifecycle email writer in SF a run for their money. (That is a reasonable professional speciality to have given how useful it is.)

          1 reply 0 retweets 17 likes
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        4. Patrick McKenzie‏ @patio11 20 Feb 2018
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          And since the rate of skill growth is generally proportionate to the rate that the company hits new challenges at, the best thing you can do for yourself in SaaS is to work at a team where the functions supporting you work reasonably well. (That might be true of most work?)

          4 replies 0 retweets 22 likes
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        5. End of conversation
        1. Alexander Hultnér  📯‏ @ahultner 20 Feb 2018
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          Replying to @patio11

          Do you have any suggestions on good networks? I.e. over the internet or conferences in the European area? IndieHackers is always interesting but it would be great to have more.

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