Revenue per Employee: SaaS vs VC

Tomasz Tunguz, a general partner at Redpoint Ventures, studied a metric called ROIC, or return on invested capital. ROIC is the number of revenue dollars that one dollar from VCs bought. Tunguz’s analysis demonstrated that the ROIC initially increased for SaaS companies—but has been on a…

Some highlights have been hidden or truncated due to export l

... See more

Imagine another pair of businesses. The first makes $1 on each customer it signs up; the second makes $100,000 from each customer it signs up. To predict which company will grow faster, you need to know only one additional thing: how much it costs to sign up a new customer. Imagine that the first company uses Google AdWords to find new customers on

... See more

The reason I find this company so interesting is it doesn’t seem like a venture-backable business at first glance. In order to get $100M in revenue, they would have to have $1.0B in gross subscription volume. When they went through YC, they had an average revenue / subscriber of $70. If that stays the same, Substack will need about 14.3M paid subsc... See more

Bootstrappers have a more linear, constant growth than VC-backed. Top quartile bootstrapped companies reach $1M ARR in 2 years, only 4 months slower than VC-backed businesses.

In contrast, median VC-backed and bootstrapped companies are able to reach the 300K mark at similar times. But, from that milestone until $1M ARR, VC-backed companies hold a g... See more