1. 40 times unicorn
1.1 Perfect version SaaS
Today's protagonist is Datadog, founded in 2010, a SaaS enterprise that provides security monitoring of cloud application software, with the stock code DDOG.
was listed in 2019, with a market value of US$10 billion when it was listed. With a revenue of US$1 billion in 2021, the latest market value is 40 billion (once exceeded 50 billion), a 40-fold unicorn, with a market value of quadrupled in two years.
2021 gross profit margin was 77%, sales management expenditure accounted for 49%, and revenue increased by 70% in 2021. This score is a top student everywhere.
defeated all the sales efficiency companies sample groups mentioned in the second chapter of the four breakthroughs. The star enterprise Zoom, Atlassian was also completely defeated in front of him.
Other key commercialization data:
Commercialization organization consists of four revenue departments: enterprise-level large customers, SaaS high-frequency sales, customer success and channel sales, with a total number of 1,500.
commercialization strategy is a typical logic of entering first and then expanding: customers can try it for free, pay according to the usage after continuous use, new customers start by using it through self-service, and then increase customer unit price through a rich product matrix and 500 external system interfaces.
Total number of customers: 18,800. ARR Customers above USD 100,000: 2,010. ARR customers above USD: 216.
has achieved revenue of US$1 billion in 11 years. Gartner expects its target industry to have 53 billion TAMs, so there is still a lot of room for growth. The distribution of customers is mainly in the United States and has invested a lot of resources in global expansion.
1.2 Let’s take a look at the growth process of the perfect version of SaaS from two perspectives.
or above is a vertical financing timeline. DDOG spent 9 years from seed round to IPO listing.
If we look at the financing timeline horizontally:
carefully look at the corresponding income level of each round of financing, DDOG achieved the revenue growth of Silicon Valley's classic D2T3 (three times each year in two years, and doubling each year in three years).
In fact, the income in the sixth year also doubled. So it's T2D4.
Every step is not easy, but he did it every step. If the triple growth in the first two years depends more on product strength, then the doubling growth in the next four years is the result of the cooperation of commercial organizational capabilities and product strength.
From the perspective of commercial design, the more you can keep it doubled every year, the harder it will be.
2. How perfect is made
2.1 Four stages of commercialization system
Essentially, the construction of the T2D4 commercialization system of DDOG has gone through four stages:
The first stage
T2D4 Before finding the product market fit: it determines the pricing model, and builds a commercial system around which repeatable income model is built. The choice of DDOG is a SaaS model that charges usage. It took the seed turn to round A for over 2 years before entering the six years of T2D4.
The second phase
T2 found a commercial fit: before the scale growth of stage, the basic commercialization model and process were completed, and these processes could be replicated at a large scale.
The third phase of
D4 has achieved large-scale growth in the first two years, that is, it has rapidly increased its market share and customer unit price.
The fourth phase of
D4 achieved sustainable growth in the last two years, and the focus of revenue was on increasing profits while continuing to grow rapidly.
This process is definitely a textbook execution of high-quality growth. Under the premise that the three elements of high valuation (gross profit, growth and efficiency) have maintained three highs for many years, facing a high-speed growth track, doing everything right and stepping on every point right, we will achieve great success in the future.
2.2 commercial system is built, what points are you going to do right?
Let's take a look at the specific process of DDOG's scouting:
Stage 1: Product market fit point
1. Pricing model and business model were determined before the round of A. The second stage: Commercial fit point
Stage 2: Commercial fit point
2. founder's early sales entrepreneurship is very useful, but it cannot be copied. You must transform to a professional sales organization as soon as possible. Use round A financing to gradually solve
3. began to use unified business data to define and analyze the main business, establish an integrated data model, and track the optimization of unit economy
4. established a complete customer success process on the acquisition of new customers, although it is still unreplicable. The preliminary commercialization system, from winning new orders to starting to define and optimize the process of generating end-to-end revenue,
5. The input and output of each step of the business process are further aligned, eliminating any potential bottlenecks, and achieving the process is fully replicable
6. Before the C round of financing, explain clearly how the business can be scaled through digital models through digital models
The third stage: achieve scale growth
7. Continuously optimize the commercialization system through business data
8. Try more levels/products/regions. DDOG began to hierarchicalize large and medium-sized customers, acquire and develop more products, and began to expand globally. Each new tier/product/region needs to go through the first and second phases again.
9. The multi-level complex commercial system realizes a unified business language and operation model
3. What can we learn from perfect
1. PS multiple growth is at least as important as revenue growth
DDOG The cash flow in each round of financing before listing reached 4-6 times the annual revenue, and the listing round was more than 11 times. In contrast, even if China's SaaS raises funds with 100 million ARR and 25 times PS, its valuation of 10% of cash flow is only 2.5 times the revenue. What's more, 25 times PS is already the ceiling of China's SaaS, and it is generally excellent to be able to achieve 10 times. DDOG's financing cash flow reaches 4-6 times its annual revenue, so its PS is more than 50 times.
- Therefore, the core of the SaaS model is to increase the PS multiple, quickly build an excellent commercial system through a large amount of financing cash flow, and form a closed-loop for revenue growth with each round of financing
- Low financing cash flow will make SaaS companies more need to survive through their own hematopoiesis, and it is difficult for them to give up some project-based income, which will affect the proportion of repeatable income, thereby further reducing the PS multiple and falling into a dead cycle.
2. Commercialization is much more valuable than product technology
From the underlying technology to product to commercial success, the key is to build a commercial system and modern sales organization that can support scale growth. If we attribute the logic of DDOG's A round valuation to product technology, the valuation of US$40 billion until it is listed is mainly attributed to the success of commercialization, and commercialization is obviously much more valuable than product technology.
3. Commercial construction has paths and orders
DDOG takes 5-6 years to solve the right problems in the right time, first determine the strategic direction of the business model, and then continue to invest in the strategic direction with revenue and financing, continuously create a replicable process, and continuously optimize based on data, and finally create a commercial organization with more than 1,500 people without shorting a single point.
4. To improve sales efficiency and achieve scale is the core
high-quality growth, solving the problems of founders' sales, replicable processes, unit economy running, data-driven decision-making, scale model running, and multi-level unified operation. Each step is aimed at improving sales efficiency. First run the basic model and then expand. Doing too many things at the same time, these are all following the basic business laws.
5. The importance of speed
The market is not waiting for people.The growth rate of T2D3 can prove that this company: the market capacity is large enough, it has an absolute advantage over competition, and the track is worthy of continuous investment. The growth rate in any of the five years was significantly lower than expected, and the substantive problem was that the commercialization path was not correct. After the speed drops, the PS multiple will also drop, and I will fall back into the dead cycle of 1 above.
4. If this unicorn was born in China, the success of
DDOG is a typical case of successful commercialization of a product company using the SaaS model to cooperate with the capital market.
If the environment of this product company is changed, will the result be the same if we assume he was born in China?
answers everyone should have the answer in mind. That is, under the current conditions, there is a high probability that it will not be.
From an environmental perspective, limited exit paths, market maturity, and policy stability determine that China's SaaS usually has to take more pitfalls than American SaaS, the growth cycle will be longer, and the probability of dying or giving up the SaaS model will be greater. In terms of internal conditions, compared with the American SaaS level reflected in DDOG, our SaaS is still in its infancy. Software level, product capabilities, management level, commercialization awareness, everything is lacking.
It is gratifying that all these limitations have not hindered SaaS to become one of the mainstream models of entrepreneurship in the enterprise service track today. As the market's acceptance of SaaS becomes increasingly high, more and more practitioners in the SaaS industry are also increasing.
Sadly, we still have a long process to truly learn imported products like SaaS. Our lessons learned from the United States with their blood and tears, from rejection to understanding, to being able to transform into action and organizational capabilities.
After all, SaaS represents the peak of Western commercialization. Many logics and practices are abnormal in the eyes of Eastern thinking. The basic principles of modernization of sales organizations he represents are consistent with the underlying logic of traditional 2B sales organizations and 2C businesses, but they are also inconsistent.
This causes, in China, many people can only understand the correct commercialization of SaaS when they hear the experiences and best practices of the United States, and can only truly recognize and accept basic business laws by hitting the wall themselves. They will think that as long as it is a business, basically all the pitfalls should be jumped. It is called "enjoyment process" and long-termism.
From the DDOG case, we can see that long-termism and SaaS are actually completely opposite.
SaaS should pay attention to speed, because SaaS cannot afford time in the face of huge market opportunities, huge money-burning model and possible changes in geopolitical domestic policies.
Use a long-term mentality to do SaaS. Not to mention the success rate, the survival rate will be very low.
5. How to overtake in China's SaaS
Overall, is it possible for China's SaaS to overtake in China? have. If you don’t jump to the pit, is it possible to step on each point right? have.
Then the CEO needs to learn and think clearly about the strategic direction of commercialization from the beginning of entrepreneurship, and devote more energy to the construction of the commercial system from the A/B round to the C round to form the ability to continuously adjust the commercial structure, strive to get on every point, so that the PS multiple and ARR income can grow at the same time, so that the road ahead can be smoother and faster.
suggests some practical paths to break the deadlock.
1. The core of breaking the deadlock is that more companies go public or exit. Only by letting some people get rich first can everyone see hope.
2. The core of 's listing is to form a closed loop of growth in financing cash flow and the growth of ARR revenue and PS multiples, quickly improve valuation, seize the market, and become the absolute leader in segmented tracks.
3. Let’s take a look at the paths suitable for listing in China’s SaaS. A shares value profits, Beijing Stock Exchange has no trading volume yet, US stock has a high risk, and the best path now seems to be listing on Hong Kong stock .
4. Take the 500 million revenue of Hong Kong stocks as an example. A product company takes ARR 5 million revenue as the basis of the A round. After endogenous growth of T2D3, it will be 360 million. You can start reporting, and if you increase by 50%, it can exceed 500 million, which meets the listing standards.
5. In essence, T2D1 is not difficult. T2 to 50 million is a hurdle, and D to 100 million is another hurdle. This is also in line with our experience and somatosensory. There are more and more Chinese SaaS with ARR reaching 100 million, but there are very few that can double the annual SaaS in the next two years. It seems that many companies have seen their growth rate drop sharply after their revenue exceeding 100 million. This shows that the original commercial system is not ready for scale.
6. In order to increase the volume, people seem to be more advocating vertical SaaS with large-scale average customer price. If the average customer price is 5 million, it is enough to achieve 500 million and only 100 orders. However, if the relevant issues of large-scale unit price sales cannot be handled well: sales delivery cycle, complex process and low replication, it is still difficult to achieve rapid growth.
7. DDOG's commercial model is a very pragmatic PLG start, and small and medium-sized customers' unit price naturally grows into three levels of business at medium-sized enterprises and enterprise-level customers. They were successful.
8. When looking at e最新官方新方新方新方新方新方新方新方新方新新方新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新� No problems.
9. So for startups, they should be very sensitive to their own growth form and speed. How much income is in round A? Before round B, you should achieve 3 times that number, and then 3 times the number of round B in round C. How to do it requires planning.
10. If enterprises that have grown to round C or above have a weak growth, they still have to come back to make up the courses built by the commercial system. It not only lays a solid foundation for sustainable development after future listing, but also lays a solid foundation for possible acquisitions and mergers. High valuation is definitely a good thing.
11. For large enterprises that have been listed or are not listed, how to improve sales efficiency is always a good question. Any track you can't escape inverter . The only way to win in the competition is to continuously optimize sales efficiency.
6. The compulsory course for SaaS in China
1. SaaS is a game for the strong. It must be financed, focused, do something, and speed must be achieved. Don't enter if you're not ready.
2. This preparation not only includes the product, but more importantly, the planning of the commercialization path and how the commercial organizational capabilities evolve at each step. How to make ARR's T2D3 every step.
3. has entered the three elements of discovery that it cannot be achieved and cannot achieve the three elements of high valuation. Then, let’s settle for the second best and become an excellent project-based enterprise, a traditional software and hardware service enterprise, without financing, and relying on one’s own blood production to develop and live a prosperous life. It is understandable.
4. Next we may see more acquisitions and mergers. Being acquired by a large company is also a good choice. However, if you are not able to achieve a certain scale, you will be acquired. The purpose is to be technical talents rather than markets and customers, which means that your commercialization is actually a failure. Combined with the above, the most valuable thing is actually the commercialization system after the A round, and the consideration will not be high.
5. Big companies will make their plates bigger through acquisitions, and there will be more and more in the future. Acquisition transactions are easy, but acquisitions are difficult to digest. If the acquirer's organizational ability, system maturity and sales efficiency are one level higher than the acquired party, then the success rate of the acquisition will be higher.
6. The global average number is less than 20% of companies with seed round records. If companies without seed rounds are added, they will generally reach less than 5% of companies with A rounds. Therefore, 100 SaaS startups and 95 companies cannot reach the A round.
7. The probability of companies with round A records reaching round B is as high as 50%. This is the trust of investors in companies that have products but not commercialized.
8. The probability of rounds from B to rounds C, D, E, F, and G will gradually fall back to 20%, indicating that commercialization is successful worldwide, and it is challenging for companies with sufficient funds.
China SaaS needs to make up a lot of lessons. The first thing to be corrected may be the urge to recreate the wheel. The essence of Chinese SaaS is not different from that of American SaaS, and the underlying logic of China's capital market will not be different from that of the United States.
Believe in rationality, believe in numbers, believe in science, and believe in the best practice of predecessors to scale. It should be that China's SaaS can overtake and finally come out in batches before.
originated from Silicon Valley. Silicon Valley Blueprint Strategy Consulting has helped more than 600 world's top 500 and unicorn companies to implement modern business systems and sales organizations, accelerate the process of scale growth, and achieve integrated refined management. Chinese customers include Unicorn eSignPower, Special Praise , Hairou Innovation, G7, Huilianyi , and Rongrun Group, the largest distributor in China.
2.2 commercial system is built, what points are you going to do right?
Let's take a look at the specific process of DDOG's scouting:
Stage 1: Product market fit point
1. Pricing model and business model were determined before the round of A. The second stage: Commercial fit point
Stage 2: Commercial fit point
2. founder's early sales entrepreneurship is very useful, but it cannot be copied. You must transform to a professional sales organization as soon as possible. Use round A financing to gradually solve
3. began to use unified business data to define and analyze the main business, establish an integrated data model, and track the optimization of unit economy
4. established a complete customer success process on the acquisition of new customers, although it is still unreplicable. The preliminary commercialization system, from winning new orders to starting to define and optimize the process of generating end-to-end revenue,
5. The input and output of each step of the business process are further aligned, eliminating any potential bottlenecks, and achieving the process is fully replicable
6. Before the C round of financing, explain clearly how the business can be scaled through digital models through digital models
The third stage: achieve scale growth
7. Continuously optimize the commercialization system through business data
8. Try more levels/products/regions. DDOG began to hierarchicalize large and medium-sized customers, acquire and develop more products, and began to expand globally. Each new tier/product/region needs to go through the first and second phases again.
9. The multi-level complex commercial system realizes a unified business language and operation model
3. What can we learn from perfect
1. PS multiple growth is at least as important as revenue growth
DDOG The cash flow in each round of financing before listing reached 4-6 times the annual revenue, and the listing round was more than 11 times. In contrast, even if China's SaaS raises funds with 100 million ARR and 25 times PS, its valuation of 10% of cash flow is only 2.5 times the revenue. What's more, 25 times PS is already the ceiling of China's SaaS, and it is generally excellent to be able to achieve 10 times. DDOG's financing cash flow reaches 4-6 times its annual revenue, so its PS is more than 50 times.
- Therefore, the core of the SaaS model is to increase the PS multiple, quickly build an excellent commercial system through a large amount of financing cash flow, and form a closed-loop for revenue growth with each round of financing
- Low financing cash flow will make SaaS companies more need to survive through their own hematopoiesis, and it is difficult for them to give up some project-based income, which will affect the proportion of repeatable income, thereby further reducing the PS multiple and falling into a dead cycle.
2. Commercialization is much more valuable than product technology
From the underlying technology to product to commercial success, the key is to build a commercial system and modern sales organization that can support scale growth. If we attribute the logic of DDOG's A round valuation to product technology, the valuation of US$40 billion until it is listed is mainly attributed to the success of commercialization, and commercialization is obviously much more valuable than product technology.
3. Commercial construction has paths and orders
DDOG takes 5-6 years to solve the right problems in the right time, first determine the strategic direction of the business model, and then continue to invest in the strategic direction with revenue and financing, continuously create a replicable process, and continuously optimize based on data, and finally create a commercial organization with more than 1,500 people without shorting a single point.
4. To improve sales efficiency and achieve scale is the core
high-quality growth, solving the problems of founders' sales, replicable processes, unit economy running, data-driven decision-making, scale model running, and multi-level unified operation. Each step is aimed at improving sales efficiency. First run the basic model and then expand. Doing too many things at the same time, these are all following the basic business laws.
5. The importance of speed
The market is not waiting for people.The growth rate of T2D3 can prove that this company: the market capacity is large enough, it has an absolute advantage over competition, and the track is worthy of continuous investment. The growth rate in any of the five years was significantly lower than expected, and the substantive problem was that the commercialization path was not correct. After the speed drops, the PS multiple will also drop, and I will fall back into the dead cycle of 1 above.
4. If this unicorn was born in China, the success of
DDOG is a typical case of successful commercialization of a product company using the SaaS model to cooperate with the capital market.
If the environment of this product company is changed, will the result be the same if we assume he was born in China?
answers everyone should have the answer in mind. That is, under the current conditions, there is a high probability that it will not be.
From an environmental perspective, limited exit paths, market maturity, and policy stability determine that China's SaaS usually has to take more pitfalls than American SaaS, the growth cycle will be longer, and the probability of dying or giving up the SaaS model will be greater. In terms of internal conditions, compared with the American SaaS level reflected in DDOG, our SaaS is still in its infancy. Software level, product capabilities, management level, commercialization awareness, everything is lacking.
It is gratifying that all these limitations have not hindered SaaS to become one of the mainstream models of entrepreneurship in the enterprise service track today. As the market's acceptance of SaaS becomes increasingly high, more and more practitioners in the SaaS industry are also increasing.
Sadly, we still have a long process to truly learn imported products like SaaS. Our lessons learned from the United States with their blood and tears, from rejection to understanding, to being able to transform into action and organizational capabilities.
After all, SaaS represents the peak of Western commercialization. Many logics and practices are abnormal in the eyes of Eastern thinking. The basic principles of modernization of sales organizations he represents are consistent with the underlying logic of traditional 2B sales organizations and 2C businesses, but they are also inconsistent.
This causes, in China, many people can only understand the correct commercialization of SaaS when they hear the experiences and best practices of the United States, and can only truly recognize and accept basic business laws by hitting the wall themselves. They will think that as long as it is a business, basically all the pitfalls should be jumped. It is called "enjoyment process" and long-termism.
From the DDOG case, we can see that long-termism and SaaS are actually completely opposite.
SaaS should pay attention to speed, because SaaS cannot afford time in the face of huge market opportunities, huge money-burning model and possible changes in geopolitical domestic policies.
Use a long-term mentality to do SaaS. Not to mention the success rate, the survival rate will be very low.
5. How to overtake in China's SaaS
Overall, is it possible for China's SaaS to overtake in China? have. If you don’t jump to the pit, is it possible to step on each point right? have.
Then the CEO needs to learn and think clearly about the strategic direction of commercialization from the beginning of entrepreneurship, and devote more energy to the construction of the commercial system from the A/B round to the C round to form the ability to continuously adjust the commercial structure, strive to get on every point, so that the PS multiple and ARR income can grow at the same time, so that the road ahead can be smoother and faster.
suggests some practical paths to break the deadlock.
1. The core of breaking the deadlock is that more companies go public or exit. Only by letting some people get rich first can everyone see hope.
2. The core of 's listing is to form a closed loop of growth in financing cash flow and the growth of ARR revenue and PS multiples, quickly improve valuation, seize the market, and become the absolute leader in segmented tracks.
3. Let’s take a look at the paths suitable for listing in China’s SaaS. A shares value profits, Beijing Stock Exchange has no trading volume yet, US stock has a high risk, and the best path now seems to be listing on Hong Kong stock .
4. Take the 500 million revenue of Hong Kong stocks as an example. A product company takes ARR 5 million revenue as the basis of the A round. After endogenous growth of T2D3, it will be 360 million. You can start reporting, and if you increase by 50%, it can exceed 500 million, which meets the listing standards.
5. In essence, T2D1 is not difficult. T2 to 50 million is a hurdle, and D to 100 million is another hurdle. This is also in line with our experience and somatosensory. There are more and more Chinese SaaS with ARR reaching 100 million, but there are very few that can double the annual SaaS in the next two years. It seems that many companies have seen their growth rate drop sharply after their revenue exceeding 100 million. This shows that the original commercial system is not ready for scale.
6. In order to increase the volume, people seem to be more advocating vertical SaaS with large-scale average customer price. If the average customer price is 5 million, it is enough to achieve 500 million and only 100 orders. However, if the relevant issues of large-scale unit price sales cannot be handled well: sales delivery cycle, complex process and low replication, it is still difficult to achieve rapid growth.
7. DDOG's commercial model is a very pragmatic PLG start, and small and medium-sized customers' unit price naturally grows into three levels of business at medium-sized enterprises and enterprise-level customers. They were successful.
8. When looking at e最新官方新方新方新方新方新方新方新方新方新新方新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新新� No problems.
9. So for startups, they should be very sensitive to their own growth form and speed. How much income is in round A? Before round B, you should achieve 3 times that number, and then 3 times the number of round B in round C. How to do it requires planning.
10. If enterprises that have grown to round C or above have a weak growth, they still have to come back to make up the courses built by the commercial system. It not only lays a solid foundation for sustainable development after future listing, but also lays a solid foundation for possible acquisitions and mergers. High valuation is definitely a good thing.
11. For large enterprises that have been listed or are not listed, how to improve sales efficiency is always a good question. Any track you can't escape inverter . The only way to win in the competition is to continuously optimize sales efficiency.
6. The compulsory course for SaaS in China
1. SaaS is a game for the strong. It must be financed, focused, do something, and speed must be achieved. Don't enter if you're not ready.
2. This preparation not only includes the product, but more importantly, the planning of the commercialization path and how the commercial organizational capabilities evolve at each step. How to make ARR's T2D3 every step.
3. has entered the three elements of discovery that it cannot be achieved and cannot achieve the three elements of high valuation. Then, let’s settle for the second best and become an excellent project-based enterprise, a traditional software and hardware service enterprise, without financing, and relying on one’s own blood production to develop and live a prosperous life. It is understandable.
4. Next we may see more acquisitions and mergers. Being acquired by a large company is also a good choice. However, if you are not able to achieve a certain scale, you will be acquired. The purpose is to be technical talents rather than markets and customers, which means that your commercialization is actually a failure. Combined with the above, the most valuable thing is actually the commercialization system after the A round, and the consideration will not be high.
5. Big companies will make their plates bigger through acquisitions, and there will be more and more in the future. Acquisition transactions are easy, but acquisitions are difficult to digest. If the acquirer's organizational ability, system maturity and sales efficiency are one level higher than the acquired party, then the success rate of the acquisition will be higher.
6. The global average number is less than 20% of companies with seed round records. If companies without seed rounds are added, they will generally reach less than 5% of companies with A rounds. Therefore, 100 SaaS startups and 95 companies cannot reach the A round.
7. The probability of companies with round A records reaching round B is as high as 50%. This is the trust of investors in companies that have products but not commercialized.
8. The probability of rounds from B to rounds C, D, E, F, and G will gradually fall back to 20%, indicating that commercialization is successful worldwide, and it is challenging for companies with sufficient funds.
China SaaS needs to make up a lot of lessons. The first thing to be corrected may be the urge to recreate the wheel. The essence of Chinese SaaS is not different from that of American SaaS, and the underlying logic of China's capital market will not be different from that of the United States.
Believe in rationality, believe in numbers, believe in science, and believe in the best practice of predecessors to scale. It should be that China's SaaS can overtake and finally come out in batches before.
originated from Silicon Valley. Silicon Valley Blueprint Strategy Consulting has helped more than 600 world's top 500 and unicorn companies to implement modern business systems and sales organizations, accelerate the process of scale growth, and achieve integrated refined management. Chinese customers include Unicorn eSignPower, Special Praise , Hairou Innovation, G7, Huilianyi , and Rongrun Group, the largest distributor in China.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-