{"id":1244091,"date":"2022-11-04T17:28:03","date_gmt":"2022-11-04T17:28:03","guid":{"rendered":"https:\/\/www.ghanamma.com\/2022\/11\/04\/tam-tough-love-building-in-public-6-key-saas-metrics\/"},"modified":"2022-11-04T17:28:03","modified_gmt":"2022-11-04T17:28:03","slug":"tam-tough-love-building-in-public-6-key-saas-metrics","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2022\/11\/04\/tam-tough-love-building-in-public-6-key-saas-metrics\/","title":{"rendered":"TAM tough love, \u2018building in public,\u2019 6 key SaaS metrics \u2022"},"content":{"rendered":"

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Are you ready to launch a bajillion-dollar startup? Before you start: Are you planning to build a centaur, a unicorn or perhaps a decacorn?<\/p>\n

Startup pitching has become an existential drama, in part because so many founders exaggerate the size of the total addressable market (TAM) in which they hope to compete.<\/p>\n

At Disrupt, I spoke to three investors about how they use TAM to guide their decision-making. Everyone agreed that the number itself is far less important than the process that produced it.<\/p>\n

\u201cThe way it\u2019s calculated and the way the founder is thinking about it tells us not necessarily about the business or its future, but about how the founder thinks about company creation,\u201d said Deena Shakir, a partner at Lux Capital.<\/p>\n\n

Full + articles are only available to members.
Use discount code TCPLUSROUNDUP<\/strong> to save 20% off a one- or two-year subscription.<\/i><\/p>\n\n

\u201cIt is almost guaranteed you\u2019re going to be wrong,\u201d said Aydin Senkut, the founder and managing partner of Felicis Ventures. \u201cIt\u2019s either going to be too large or too small.\u201d<\/p>\n

Kara Nortman, a managing partner at Upfront Ventures, said the TAM numbers given in a pitch do not control whether she\u2019s likely to invest.<\/p>\n

\u201cI would say [it is] more important to be able to articulate how big something can become and to show that you have a thought process around TAM, if it\u2019s early,\u201d she said.<\/p>\n

Choosing a mythical TAM won\u2019t put dollar signs in investors\u2019 eyes, as unrealistic numbers reflect unrealistic expectations, a red flag for any VC.<\/p>\n

As Senkut said, \u201cthe plan doesn\u2019t have to be accurate \u2014 the plan has to be directionally correct.\u201d<\/p>\n

Thanks very much for reading TC+ this week!<\/p>\n

Walter Thompson
Editorial Manager, +
@yourprotagonist<\/a><\/p>\n

3 investors explain how finance-focused proptech startups can survive the downturn<\/h2>\n
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Image Credits:<\/strong> Kuzma (opens in a new window)<\/span> \/ Getty Images<\/p>\n<\/div>\n

How are finance-oriented property tech investors reacting to the ongoing downturn in public markets?<\/p>\n

Senior reporter Mary Ann Azevedo interviewed three VCs to learn more about how they\u2019re counseling the companies in their portfolios, which types of startups are best positioned to weather the downturn and how they\u2019re managing risk:<\/p>\n

    \n
  • Pete Flint, general partner, NFX<\/li>\n
  • Zach Aarons, co-founder and general partner, MetaProp<\/li>\n
  • Nima Wedlake, principal, Thomvest Ventures<\/li>\n<\/ul>\n

    How Metafy founder Josh Fabian caught the attention of 776 by building in public<\/h2>\n
    \"(L-R)<\/p>\n

    Image Credits:<\/strong> Kelly Sullivan \/ Getty Images<\/p>\n<\/div>\n

    At Disrupt, Josh Fabian, CEO of video game coaching platform Metafy, explained why he\u2019s committed to \u201cbuilding in public,\u201d or sharing aspects of his founder\u2019s journey with an audience.<\/p>\n

    \u201cConsumers don\u2019t trust corporations; I don\u2019t trust corporations,\u201d he said. \u201cI don\u2019t think any of you do, even if you\u2019re running your own.\u201d<\/p>\n

    Katelin Holloway, a founding partner at 776 (an investor in Metafy), said Fabian\u2019s approach was a breath of fresh air. \u201cWe were able to just engage and talk like humans, and Josh told us his story in a very different way,\u201d she said.<\/p>\n

    \u201cNot only was it incredibly compelling from a business perspective, it was incredibly compelling from a human perspective,\u201d she said.<\/p>\n

    Is the modern data stack just old wine in a new bottle?<\/h2>\n
    \"Bottle<\/p>\n

    Image Credits:<\/strong> Mikhail Dmitriev (opens in a new window)<\/span> \/ Getty Images<\/p>\n<\/div>\n

    Before Ashish Kakran became a principal at Thomvest Ventures, he was a data engineer who transformed disparate consumer data points into optimized offers for consumer telecoms.<\/p>\n

    \u201cPart of my job involved unpacking encrypted data feeds, removing rows or columns that had missing data and mapping the fields to our internal data models,\u201d he writes in a TC+ guest post. \u201cOur statistics team then used the clean, updated data to model the best offer for each household.\u201d<\/p>\n

    Because today\u2019s datasets contain exponentially more information, \u201cthe rules are being rewritten on how data will be used for competitive advantage, and it won\u2019t be long before the winners emerge,\u201d he asserts.<\/p>\n

    In a deep dive, he compares modern and legacy data stacks to identify key trends for enterprises and opportunities for founders and investors.<\/p>\n

    \u201cPractitioners are spoilt for choices when building enterprise data pipelines,\u201d says Kakran.<\/p>\n

    Investor\u2019s advice during a downturn: Don\u2019t panic<\/h2>\n
    \"TechCrunch's<\/p>\n

    Image Credits:<\/strong> Kelly Sullivan \/ Getty Images<\/p>\n<\/div>\n

    Fewer investors are writing checks these days, but what kind of advice have they been giving their portfolio companies in recent months?<\/p>\n

    Mary Ann Azevedo spoke to three executives at Disrupt to learn more about the strategies they\u2019re promoting to preserve runway and their peace of mind.<\/p>\n

      \n
    • Eric Glyman, CEO, Ramp<\/li>\n
    • Thejo Kote, CEO, Airbase<\/li>\n
    • Ruth Foxe Blader, partner, Anthemis<\/li>\n<\/ul>\n

      \u201cIt behooves everybody to be really lucid about the macro environment that we\u2019re entering,\u201d said Blader. \u201cIt\u2019s likely to be long-lived, and it\u2019s very important to be judicious but not lose sight of your goals and the reason you founded the business in the first place.\u201d<\/p>\n

      6 key metrics that can help SaaS startups outlast this downturn<\/h2>\n
      \"Small<\/p>\n

      Image Credits:<\/strong> Andy Ryan (opens in a new window)<\/span> \/ Getty Images<\/p>\n<\/div>\n

      The most successful companies I\u2019ve worked at fostered parasocial relationships with customers in much the same way many of us invest emotional energy while following the lives of celebrities.<\/p>\n

      During a downturn, \u201cthe goal is to pick up on warning signs early and course-correct as you go, and those signs are often hidden in the breadcrumbs,\u201d writes Sudheesh Nair, CEO of ThoughtSpot.<\/p>\n

      \u201cNot all industries are affected equally, so don\u2019t assume your customers will cut spending this year just because the headlines are bleak.\u201d<\/p>\n

      Tips for e-commerce brands that want to win more market share this holiday season<\/h2>\n
      \"UPS<\/p>\n

      Image Credits:<\/strong> Justin Sullivan (opens in a new window)<\/span> \/ Getty Images<\/p>\n<\/div>\n

      Santa Claus makes a list and checks it twice before each holiday season. Can your e-commerce startup make the same claim?<\/p>\n

      \u201cConsumers are now living with inflation and an unofficial recession, and we can expect more selective and price-conscious shopping behavior,\u201d writes Guru Hariharan, CEO and founder of CommerceIQ.<\/p>\n

      Now that people \u201care feeling the squeeze on their everyday essential purchases\u201d and the holiday shopping season is starting earlier, \u201ccompanies will need to be ready to shift their strategy for discounting, inventory planning and ad marketing spend as the environment changes.\u201d<\/p>\n

      Dear Sophie: How can students work or launch a startup while maintaining their immigration status?<\/h2>\n
      \"lone<\/p>\n

      Image Credits:<\/strong> Bryce Durbin\/<\/p>\n<\/div>\n

      Dear Sophie,<\/strong><\/p>\n

      I\u2019m studying bioinformatics at a university in the U.S.<\/strong><\/p>\n

      What options do I have to work before and after graduation on my student visa? Do any of these options allow me to launch my own startup?<\/strong><\/p>\n

      \u2014 Wanting to Work<\/strong><\/p>\n<\/div>\n