The Ledger
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Mehta: Net retention is the primary valuation driver in SaaS
“The number one valuation driver in SAS is net retention.”
Consumption SaaS NDR reaches 180% while classic subscriptions top at 130%
“So in consumption, you see companies with a 150, a 160, a 170, a 180% in, in sort of more your classic subscription, you know, one 10 is very good. One 20 is like, is really good. One 30 is like awesome, right? And so that's kind of the range. If you're more o…”
Founders should target utility and consumption-based pricing models
“So if you're starting a company from scratch, I do think the companies that are utility-based product-led growth, consumption-based pricing are the best businesses largely.”
Enterprise multi-year contract software cannot adopt utility pricing
“If you're selling enterprise software that is like sold to the CHRO and it's like a three-year contract, you're not going utility-based pricing anytime soon. Don't even waste time on that. That's just a total waste of time.”
Developer platform technology companies must use utility-based pricing
“But if you're in the developer ecosystem, selling platform technology, right? You have to be some kind of utility-based pricing, right? Whether you're Twilio, Snowflake, et cetera, right?”
Vista Equity operates between traditional PE and classic VC
“Vista is kind of showed up in this new category where they're not really private equity anymore and they're not your classic VC. They're investing in companies that are trying to be these like long-term growers, not, you know, Gainsight's never since the early…”
Mehta: Vista's $1.1B Gainsight buyout will be a steal
“I think it will be a steal for Vista. Actually, I think our business has done really well in the last six months. So I'm actually excited to be a steal because I think all of us will make out well.”
PE buyout valuations cannot be compared directly to VC preferred rounds
“When you do a deal with a Vista type firm, it's a hundred percent common. So it's actually kind of hard to compare apples to apples to a classic venture deal where there's a preferred So I wouldn't, I think optically it's hard to compare that valuation to othe…”
Gainsight plans to surpass 1,100 employees by end of 2021
“We'll end the year way past probably like 1100 or something. So we're hiring more people this year than we have in our history.”
Mehta: Enterprise SaaS requires heavy upfront capital due to long sales cycles
“In enterprise SaaS businesses in general, because you sell, you have a longer sales cycle and you have to build a sophisticated product. Typically they do take a lot of money because you have to spend a lot of money up front and you get those customers to pay …”
Mehta: Customer success acts as the primary growth driver in consumption models
“If you have a business model where people pay you as they consume, like a consumption based model, like Twilio, which is we're proud to have as a gainside customer in those businesses, that customer success motion is the growth motion”
Mehta: Customer success is about driving outcomes, not pleasing customers
“That's when I think I tell every CS person, it's not just about doing what your customers tell you to do. It's not about being nice. It's about actually helping them get to where they need to be.”
Gainsight acquired unlaunched startup Aptrinsic for product experience
“And so we found a great company that hadn't really launched yet called Apptrinsic. We bought them integrated into our suite.”
Gainsight has grown to slightly over 1,000 customers
“Yeah, we're close to, I think about a thousand customers now, a little bit more than that, but the ASP has gone up a lot too.”
About 17% of Gainsight customers use its PX product
“And then most of our customers, about 17% of our customers have our PX product today. That means there's 83% still to go buy it.”
Bain study found customer success management teams grow 30% annually
“Like for example, Bain Consulting Group did a study for us and found that CSM kind of teams are growing about 30% a year overall.”
Gainsight crossed $100M ARR prior to Vista transaction
“You know, we reported that we had crossed a hundred million of AR and all that.”
Gainsight expanded headcount from 700 to 900 in early 2021
“We started the year at 700 employees. I need to update my bio. We're already at 900.”
Mehta: Gainsight customers pay between $50k and millions annually
“Our customers pay us anywhere from in the sort of, you know, 50,000 dollar a year range all the way up to, you know, millions of dollars a year.”
Mehta: Gainsight burned about $3M before generating its first revenue
“You know, I'd say probably three million bucks in that range.”
Mehta: Gainsight has raised approximately $155M in venture capital
“We've now raised about one hundred and fifty five million dollars to date.”
Mehta: Startups benefit greatly from hiring executives who were target buyers
“Can't recommend it enough if you can have somebody in your company that's been in the shoes of your buyer.”
Mehta: Gainsight serves about 700 customers, including Okta and Workday
“We have about 700 customers now, and it's kind of a who's who in technology, so publicly traded SaaS companies like an Okta or Workday or Twilio or DocuSign, big companies that have gone to the cloud like an IBM or an Adobe or a Cisco, as well as companies in …”
Mehta: Gainsight maintains gross revenue retention in the 90s consistently
“So we don't report exact numbers, but we've had in the gross retention in the nineties, so very good gross retention. And generally speaking, our customers have been willing to partner with us for a very long period of time. And that's been very consistent ove…”
Mehta: Gainsight's net burn rate is roughly $1M to $2M monthly
“Yeah, I think it's in that rough range that you just said. We are aggressive, probably not, you know, if you kind of plotted everyone, we're not at the extreme of aggressive, but we're not yet at breakeven, right?”
Mehta: Gainsight's average customer spends well into the six figures annually
“Significantly higher than that. Our average customer is spending well into the six figures.”
Mehta: Gainsight's enterprise CAC payback period is typically 12 to 18 months
“You know, I think enterprise, it typically is like 12 to 18 months in that range. I think that's pretty common that our customers, a lot of them are spending a lot of money. So it fluctuates kind of quarter to quarter, but that's the rough range.”