You have to pick your fight

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Jay Nathan & Jeff Breunsbach
March 27, 2024

The Middle from GrowthCurve.io

Three ideas to level up your week.

Hey Reader,

Welcome to The Middle, your midweek rundown of the most interesting things we've read this week.

We're here to help SaaS Leaders level up to become better business leaders.

It's Wednesday, so let's jump into The Middle..

Is it time to roll out genAI to our customers?

a16z, a famed VC firm, released a report where they surveyed leaders at Fortune 500 companies about their approach to genAI.

One key takeaway: Enterprises are still cautious about using genAI in customer-facing engagement.

a16Z Generative AI Report

That’s because 2 primary concerns about genAI still loom large in the enterprise:
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1) potential issues with hallucination and safety, and
2) public relations issues with deploying genAI, particularly into sensitive consumer sectors (e.g., healthcare and financial services).

Given the recent economic conditions, every SaaS business seems to be shifting focus to Profitable Efficient Growth (shoutout to Sam Jacobs.)
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This means as a leader you are being asked to evaluate decisions with a specific lens: the financial impact on the business. It’s daunting. And most likely you haven't received any formal training. Doubly daunting.

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Come join us where we'll break down SaaS Financials to give you an Executive's lens. A lens that helps you make more informed, focused, and profitable decisions for the business.

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​You can register here for our webinar on April 11 at 11 am ET (again, that's a Thursday).

You have to pick your fight.

Wonderful quote down below from Axel Dumas about his definition on strategy:

The 5 business strategies say that each company is picking one of these as the primary strategy:

cost, quality, distribution, technology, and intellectual property (IP)

Companies still have to execute in all these areas. But your primary is where a company’s core strengths lie and where it puts its emphasis in driving how customers view it. The other strategy classes become tactical arms subservient to implementing the main strategy. (From The Chip History Center)​

Software has a feeling of commoditization - competitors can seemingly build the same thing (even easier now with AI).

So, what's the primary strategy with which you are going to compete?

What are the units on your lead SaaS metric - and what does it say about your culture

Dave Kellogg is an entertaining speaker if you ever get the chance to see him. And he's about the most compelling writer when it comes to SaaS (everything is practical).

​We came across his piece about Lead SaaS metric that put into perspective a feeling that everyone has in a SaaS company:

"Who" is really driving the ship?

The metaphorical "Who" is usually which department seems to have the most weight around the business. The department who's initiatives seem to be prioritized.

Here's how Dave frames it:

For example, in my opinion:

- A strong sales culture should focus on New ARR. Yes, the CFO and CEO care about Ending ARR and thus Net New ARR, but the job of sales is to fill the bucket. Someone else typically worries about what leaks out.
- A shareholder value culture would focus on Ending ARR, and ergo Net New ARR. After all, the company’s value is typically a linear function of its Ending ARR (with slope determined by growth).
- A strong land-and-expand culture might focus on Terminal ARR, thinking, regardless of precisely when they come in, we have contracts that converge to a given total ARR value over time [5].
- Conversely, a strong land and expand-through-usage culture might focus on New Logo ARR (i.e., “land”), especially if the downstream, usage-based expansion is seen as somewhat automatic [6].
- A cash-focused culture (and I hope you’re bootstrapped) would focus on bookings. Think: we eat what we kill.

Jeff Breunsbach

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Jay Nathan

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