Perspectives on SaaS + AI presented at Bowery Capital's March 2024 Annual Meeting
Bowery Capital AGM March 2024
PRESENTED BY
About Us
QUADRANTS
ROI STUDIES
INDICES
MEDIA NEWSLETTER
SAAS DEMAND INDEX
SAAS EMPLOYMENT INDEX
OPERATOR PODCAST
B2B AI INTEREST INDEX
INVESTOR PODCAST
A Maturing Growth Industry
2010 2021 Change CAGR Heatmap
Net Revenue Retention 106% 109% 3% Gross Churn as % ACV 5% 14% 9% % Revenue From Expansion 19% 46% 27% New Logo CAC $0.93 $1.78
2010 to 2021 Benchmarks: An Industry Maturing
91% 6% 118% 7% 107% 7% 56% 4% 1% 0% 38% 3%
Expansion CAC $0.28 $0.61 Field Sales CAC $1.00 $2.07 Inside Sales CAC $0.90 $1.40
2022 + 2023 Metrics Show Further Weakness
Revenue Per Employee ($k) *
$142 $143
Years To $5m ARR * Margins: Gross Margin
3.25
4.5
71% 73% 2% Sales + Marketing 32% 40% 8% R+D 23% 25% 2% G+A 14% 19% 5% EBITDA 1% -10% -11% Revenue Growth 45% 28% -17% Rule of 40 46% 18% -28%
But...
34% Average Growth Rate Is A Material Offset To “Only” MSD CAGR Metric Declines
Category Level Views
GRID EXAMPLE
SDR View: Effort Up, Results Down
# Attempts In A Cadence Quality Conversations Per Day
12.0
10.0
Attempts: 11.3
QC's: 8
8.0
6.0
Attempts: 7.3
4.0
QC's: 3.6
2.0
0.0
2014
2016
2018
2020
2022
AE View: Missed Quota, Slower Ramps
Quota Attainment
Ramp > 5 Months
80.0
80%
5+ Mo Ramp: 63%
60.0
60%
Quota: 74%
Quota: 51%
39%-46%
40.0
40%
20%
20.0
5+ Mo Ramp: 17%
0.0
2012
2015
2017
2020
2022
2024
Product + NPS: Be So Good They Can’t Ignore You FACTOR VS GRID RANK
Grid Rank:
Leaders
High Performers
Contenders
Niche
High Performers Leaders
Meets Requirements
Niche Contenders
High Performers Leaders
Ease of Use
Niche Contenders
High Performers Leaders
Ease of Set Up
Niche Contenders
High Performers Leaders
Ease of Admin
Niche Contenders
Modest differences in user experience factors...
Emerging, younger High Performers need outsized NPS to break through
High Performers Leaders
Ease of Doing Business
Niche Contenders
High Performers Leaders
add up to a large NPS gap
Quality of Support
Niche Contenders
High Performers Leaders
Product Direction
Niche Contenders
High Performers Leaders
NPS
Niche Contenders
-30%
-20%
-10%
0%
10%
20%
Leaders High Performers Contenders Niche
Contenders Niche
Winners Take Most + Win Efficiently GRID RANK VS FACTOR
Leaders High Performers Contenders Niche
5.0000
Efficiency mirrors G2 Grid rankings
70
25
4.0000
60
20
50
3.0000
40
15
2.0000
30
10
20
1.0000
5
10
0.0000
0
0
Effciency
G2 Market Presence
Years Old
Winners Beware: Satisfaction Scales + Ages Poorly
Source: “Martech in 2024”
It All Comes Back to ROI
Can Buying AI Yield A ~15% Risk-Adjusted Return?
55% Median Gain From AI
COMPANIES DISCLOSING AI RESULTS
Missing Claims Data Hours Saved Quality Control Defect Reduction GAIN TYPE + PERCENTAGE:
COMPANIES:
Scheduling Times Data False Positives Reduced Processing Time Customer Satisifaction Resolution Rate Uplift Journal Post Increases Code Whisperer Software Development DevOps Security Time Reduction Automated Inspection Supply Chain Time Reskilling Customer Service Share Shift Coding Creative Sales To New Logos Customer Service Time Spent on Platform Sales Uplift
0.00 0.20 0.40 0.60 0.80 1.00 20% 40% 60% 80% 100%
AI TAM = All OpEx?
CREDIT SUISSE (2021): ROBOTIC PROCESS AUTOMATION
MY AI TAM VARIABLES
Framing THE Work
SaaS In 2024
Doing THE Work
SaaS PLUS AI
Key Messages A Maturing Growth Industry Best Seen At “Tip of Spear”
Opportunities = “Be So Good” + Aging Winners Leave Openings
It All Comes Back To ROI
AI TAM Expansion = From Frameworks to Doing The Work
Matt Harney matt.harney@cloudratings.com saasletter.com
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