What is The Most Important Indicator When Forecasting The Scalability of a SaaS Scale-up?
I asked my network this exact question.
Here are some of the responses.
Two interesting ones for me:
- Insight #10: Many businesses are trying to scale without hitting the milestones. The solution here is "Anti-Scaling" thinking.
- Insight #13: The only real mention of sales and marketing alignment.
The full list.
The scalability of any SaaS startup is highly dependent on multiple factors, and no single one ultimately drives success independently. With that said, the MOST important indicator is the management team -- not just if they have prior experience scaling SaaS startups, but also their general mentality + approach to growth, as all other factors ultimately depend on management decisions.
I'd imagine one would have to start with TAM.
Two elements I consider. Combining new client growth with existing client organic growth allows for strong SaaS growth metrics.
It depends on the stage of a startup, but typically churn matters.
Unit Economics or Churn rate, IMO.
Depends on the stage. Quality of the team at early stages. Technical debt will grow no matter what, and a high-performance team will be able to balance re-architecting with maintenance.
Later, the database access strategy becomes very important with many concurrent users. A company culture that ships only software with 100% unit test coverage is pretty important too.
Net retention > 120%
CAC doubling time (CACD) is what we look for.
Founder, TAM, GTM, CAC/LTV, Cap Eff
Year 2, CAC at 0.8 payback period.
In my experience, many businesses are trying to scale without hitting the milestones that indicate they can, without risking catastrophic disappointment. Probably a symptom of hustle culture, to be honest.
I often think it is a roll of the dice. But time often proves that the experience of the founder and team plays a definite role.
A multi-tenant architecture which scales to add resources as the number of SaaS customers and their respective service sessions incur.
Of course, there could also be an accompanying commercial element where the costs remain predictive and can be forecast for 100 to 1Mil sessions.
Excellent question... I come from the global enterprise tech world, where sales and marketing teams mix like oil and water. Having a revenue target of $1.5B USD per year, I got very good and integrating the focus, alignment, effort, and outcomes of marketing and sales.