Rob Bernshteyn, CEO of Coupa, breaks down the historical expansion of Coupa's blended and subscription gross margins over 34 quarters.
Insight
SaaS founders should prioritize product stickiness over CAC payback periods
“I would much more have them, I would suggest for them to focus much more on how sticky their product is, because I get the point of getting their money back and recovering and the importance of that, but if they turn after three years or four years, eventually…”
Assertion Not publicly verifiable
Coupa's ACV grew for 34 straight quarters, reaching millions in enterprise
“Well, that's gone up virtually every quarter now for 34 quarters in the mid-market, it's anywhere from, you know, 50,000 to maybe 200,000 or so dollars a year, so annual subscription. And in the enterprise, it's hundreds of thousands, in many cases, a couple o…”
Insight
SaaS IPOs primarily serve to grant market legitimacy and reassure enterprise buyers
“That's more for marketplace legitimacy. It helps customers feel much more confident that you're around for the long term. You're not just going to get tucked in somewhere.”
Disclosure
Coupa operates at an internal LTV-to-CAC above 8, despite guiding lower
“Well, we've always been optimizing on LTV to CAC. So a lifetime value of a customer. And then CAC being cost of customer acquisition. So, you know, we're running really well there. It's about a, Over eight, but you know, I think of publicly we gotta be safe. W…”
Insight
SaaS magic numbers above 1.0 show underinvestment; below 0.5 show risk
“If you're sort of over one on SAS magic number, you're under pressing into the market, you're below .5, you're kind of risky and you could argue maybe even buying the business. So you could stay at kind of .75, you know, if you're a little overall efficient, i…”
Assertion Supported
Coupa priced its IPO at a unicorn valuation, avoiding a down round
“No, no, no. That's not our good either. We were somewhere in that same neighborhood. It was just like roughly unicorn kind of thing. And we entered in at the same place and then it went up to I don't know, 1.7 billion or something. And it's, so it's been aroun…”