Ten Laws of Building a SaaS Company

Software as a Service (SaaS) market leader and service provider Salesforce.com recently hosted a presentation by Bessemer Venture Partners, which has funded many of my favorite SaaS enterprises, including LinkedIn, Postini, Keynote, Eloqua, Skype, Force.com, and PTC.

Since this presentation is locked up in a hard-to-search format, I’m republishing its insights for your enjoyment here, along with links to watch it or download a PDF version.

  1. Know your key metrics: Committed Monthly Recurring Revenue, Churn, and Cash flow – “Bookings” is for suckers.
  2. Measure Long Term Value (CLTV – CAC).
  3. Tune before you scale.
  4. Separate “hunters” and “farmers”.
  5. Traditional IT channels don’t work in SaaS.
  6. Your sales prospects are online; online marketing is core.
  7. Stay local – know when to go global.
  8. One version of code, in just one instance.
  9. The most important part of Software-as-a-Service isn’t “Software” it’s “Service”!
  10. Bring funding. Enough to fund 4+ years of runway. Conserve cashflow.

Bonus Law: You can ignore one of these, but not more than two. Great companies innovate, but they also pick their battles.

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