SaaS multiples still value growth at three times more than profit
Sam Jacobs · Pavilion Breaks $10m Revenue using New Growth Playbook, CEO Sam Jacobs · Dec 17, 2024 · at 4:45
This episode carries Sam Jacobs's own address, with nobody on the show putting questions to them. It still counts as said, and it is kept out of every score on their page.
Pavilion CEO Sam Jacobs explains how software valuation multiples have compressed while growth continues to command a premium over profit.
0:00 / 0:18exact quote · 18.8s
720p mp4 · rendered on demand · StarZero watermark
“In today's environment, the actual multiple is five to six times, and that's provided that you have growth. So even though we're moving away from a growth at any cost world to a world where efficiency is prized, the reality is that growth is still worth three X more than profit, but even, even in that environment, it's not worth anything close to what it used to be worth”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Sam Jacobs
Sales teams should reduce headcount if reps average under 15 weekly meetings
“So if your reps don't have 15 meetings a week, then what that means is one of the ways that you can drive improved efficiency is by reducing the number of reps. I'm sorry to be callous like that, but the point is great companies are routing more resources, mea…”
High interest rates require SaaS payback periods of 12 to 18 months
“In a world of, ah, higher interest rates, that really we need to be solving backwards from 12 to 18 months.”
Call Recording Shifted From $7B Valuation to a Commodity Feature
“A lot of services that were premium services, the most prominent example of which would be call transcription and recording, that used to be a whole company worth seven billion dollars, Now that's a feature of most revenue platforms and a commodity feature at …”
Jacobs: Building proprietary software is unnecessary to create a big business
“And all of the people that said you need your own software in order to build a big business, those people I don't agree with actually.”
Sam Jacobs: If you ask your board what your company is worth, it is worth little
“One of the other lessons, by the way, is if you're asking your board what the company is worth, it's probably not worth very much, and if you want to sell the company, it's probably not worth very much. Companies get, ah, bought, not sold.”
Sam Jacobs: Valuation Premium of Growth over Free Cash Flow Fell to 3-to-1
“It used to be growth at any cost, which means that growth really was worth almost, not infinitely more, but probably maybe 15 to 20 times what Free cash flow was worth today. We're in a world where growth is still more valuable than free cash flow, but only th…”