Kellogg: Services Revenue Exceeding 20% to 30% Labels Software Startups as Services
Dave Kellogg · 5 Scale-Up Mistakes for Startups with Dave Kellogg | SaaStr Software Community · Jul 20, 2022 · at 45:09
In a Q&A at SaaStr, veteran enterprise software executive Dave Kellogg advises a founder on keeping professional services under 20-30% of total revenue to avoid multiple compression.
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“If you go that route, then you got to be careful because if it gets too big, people are going to say, you're not a software anymore. You're not a software company, Nick. You're a services company pretending to be a software company, right? So you have to be very careful. It doesn't get bigger than around 20 or 30% of total revenue. Once you get above 20 or 30%, people are going to, oh no, it's a disguised services company.”
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