EPISODE SUMMARY
In the competitive world of B2B SaaS, understanding the nuances of billing, financial operations, and growth metrics is crucial for success. Recently, we had the pleasure of hosting Randy Wootton, CEO of Maxio, on the Scale Your SaaS podcast with host and B2B SaaS Sales Coach Matt Wolach.
With over 25 years of leadership experience at tech giants like Microsoft and Salesforce, Randy brought knowledge about scaling businesses and driving growth. Maxio, a B2B SaaS platform, simplifies billing, invoicing, subscription management, accounts receivable, and collections, offering a comprehensive solution within a single system.
Here’s a deep dive into the conversation, where he shares his insights on SaaS metrics, financial management, and the secrets to success for SaaS CEOs.
PODCAST-AT-A-GLANCE
Podcast: Scale Your SaaS with Matt Wolach
Episode: Episode No. 330, “What is the Best SaaS Metric to Track – with Randy Wootton”
Guest: Randy Wootton, Chief Executive Officer at Maxio
Host: Matt Wolach, a top B2B SaaS Sales Coach, Entrepreneur, and Investor
Sponsored by: Leadfeeder
TOP TIPS FROM THIS EPISODE
Key SaaS Metrics for Early-Stage Software Companies
Randy emphasizes that a software company’s metrics should evolve as it matures. In the early stages, when founders are primarily concerned with generating interest and securing bookings, growth metrics are paramount. As the company secures investors and grows its customer base, gross retention becomes a critical focus—measuring the percentage of revenue and customers retained over time.
Net retention, which evaluates the ability to grow existing customers, follows closely behind. Randy also highlights the importance of recurring margin—a metric reflecting the efficiency a company can invest in growth after covering its operational costs.
The Seven Secrets of Success for SaaS CEOs
Randy concludes by sharing his distilled wisdom from decades of leadership experience. His “Seven Secrets of Success for SaaS CEOs” include:
- Deliver Results: As a CEO, your primary responsibility is to drive shareholder value. If you’re not delivering results, you risk losing your position.
- Establish a Winning Strategy: Clearly define your business strategy to align your team and drive toward common goals.
- Shape the Culture: Build a robust and values-driven culture that connects and motivates your team.
- Build an Effective Executive Team: Hire functional experts who can contribute to the company’s overall success, not just their specific area.
- Manage Your Board and Investors: Set clear expectations with your investors and manage them effectively to ensure alignment on growth and valuation.
- Allocate Capital Wisely: Balance short-term needs with long-term investments to drive sustainable growth.
- Invest in Your Tribe: Cultivate a support network of mentors, coaches, and peers to guide you through leadership challenges.
Ingraining a Strong Company Culture
Randy highlights the importance of culture, especially in a hybrid work environment. Maxio has developed a set of core values—honesty, openness, passion for progress, and excellence—that are celebrated and reinforced throughout the company. These values are not just aspirational; they reflect the current culture and are ingrained in daily operations through recognition programs and consistent communication.
EPISODE HIGHLIGHTS
A Unified Approach to Financial Operations
Randy’s journey with Maxio began two years ago when he joined as CEO after Maxio was formed through the merger of SaaSOptics and Chargify. Maxio serves over 2,200 customers worldwide, streamlining billing and financial operations for SaaS businesses. But what sets Maxio apart is its focus on revenue recognition and reporting, critical aspects often overlooked by early-stage companies.
Maxio’s platform helps SaaS operators track metrics such as Customer Acquisition Cost (CAC) ratio, gross retention, net retention, and Lifetime Value (LTV) to CAC ratio. These metrics are essential for understanding a business’s health and growth potential, making Maxio an indispensable tool for B2B SaaS companies.
The Hidden Complexity of SaaS Financials
One of the biggest challenges early-stage SaaS companies face is managing their financials. Many software founders start with simple cash accounting, often handled by a family member or friend. However, as the business scales, the complexities of accrual accounting, revenue recognition, and financial reporting can overwhelm even the most diligent founders.
Randy points out that these financial intricacies become particularly daunting when dealing with multiple products, discounts, and varying contract terms. At this stage, a more sophisticated approach is required, including partnering with CPA firms specializing in B2B SaaS and eventually adopting platforms like Maxio to automate and streamline financial operations.
The Role of Financial Systems in M&A and Investor Relations
Randy shares a compelling story from his time at Seismic, where accounting issues nearly derailed a major acquisition. He explains how improper financial management can introduce significant risks during due diligence, potentially killing deals. For SaaS founders, understanding how investors evaluate financials during due diligence is critical for securing funding and ensuring a smooth acquisition process.
Maxio plays a vital role in this context by providing accurate, real-time financial data, enabling SaaS companies to navigate M&A processes with confidence. For companies approaching a Series B or C round, Randy recommends implementing a system like Maxio to ensure that financials are in order before engaging with investors.
Conclusion: Preparing Your Saas for the Future
For SaaS CEOs and founders, understanding the financial side of the business is just as crucial as driving sales and growth. Randy’s insights offer a roadmap for navigating the complexities of financial management, investor relations, and building a successful SaaS business. Whether you’re just starting or scaling to new heights, the lessons from Maxio can help you prepare for the future and ensure long-term success.
TOP QUOTES
Randy Wootton
[04:12] “The key to success in any SaaS business is understanding your customer acquisition cost (CAC) and how it drives your growth engine.”
[08:47] “One of the most overlooked aspects of SaaS growth is gross retention. If you’re not keeping your existing customers, all the growth in the world won’t matter.”
[12:23] “Building a strong executive team is critical. You need people who understand the numbers and how to turn those numbers into actionable strategies.”
Matt Wolach
[03:25] “Understanding your Ideal Customer Profile (ICP) is the first step in creating a scalable SaaS business.”
[07:14] “The most successful SaaS companies I’ve worked with are the ones that truly understand the power of storytelling in their sales process.”
[14:38] “Consistency in your sales process is key. You need a repeatable system that delivers predictable results.”
LEARN MORE
To learn more about Randy Wootton, visit: https://www.maxio.com/
You can also find Randy Wootton on LinkedIn: https://www.linkedin.com/in/randy-wootton-910/
For more about how Matt Wolach helps software companies achieve maximum growth, visit https://mattwolach.com.
Head over to leadfeeder.com and sign up for a 14-day (no strings attached) free trial: https://www.leadfeeder.com/
________________________________________________________
Check out the whole episode transcript here:
Matt Wolach 00:00
Hello, welcome to Scale Your SaaS. I am delighted that you’re here for today’s show. By the way, if you’ve never been here to Scale Your SaaS, this is the show where we help you understand how to generate a whole ton of great leads, how to close those leads quickly and efficiently, and how you can get a sales team to do it for you. If you want to know any of those things, hit the subscribe button so you don’t miss a show. And on these shows, what we do is we bring in experts and people who are doing this and have done it themselves, including SaaS CEOs, like one that I have with me now I’ve got Randy Wootton. Randy, how you doing?
Randy Wootton 00:30
Doing great. Thanks so much for having me, Matt, looking forward to the conversation.
Matt Wolach 00:33
I am as well. Let me make sure everybody knows who you are. So Randy, he’s the CEO at Maxio, and Maxio, it’s a B2B SaaS platform that streamlines billing and financial operations for SaaS businesses by automating tasks such as billing, invoicing, subscription management, accounts receivables and collections. And what it does, it offers this holistic solution within a single system. So it’s very slick, and in his career of 25 plus years, Randy has worked in leadership roles with tech giants like Microsoft and Salesforce, and really, he helps business units within both companies, and he’s done a lot of great stuff in terms of growth rates and scaling, and he absolutely knows his stuff. So, Randy, thanks for being on the show
Randy Wootton 01:14
again. My pleasure. You nailed it. You should be in our marketing department.
Matt Wolach 01:20
We’ll see about that. Maybe I’ve got a different career there. But tell me what’s been going on with you lately, and what do you have coming up?
Randy Wootton 01:25
Well, look, it’s been an incredible journey. I started with Maxio two years ago. This, as I was mentioning in our preview is my third gig as CEO. First one was a public company CEO gig. Second one was a VC backed and this one is really a PE backed firm. It was the mash up of two companies, SaaSOptics and Chargify both who had been industry leaders in their specific area, around billing and financial operations. And then battery brought them together in 2021 and I joined in 2022 and I’m one of those guys, kind of professional CEOs that helps come in and figure out what why something might be stuck, or how to take it to the next level. Been here for two years. It’s been a lot of fun. I’ve moved from my background has primarily been in go to market tech, so sales, service, advertising tech, which we can talk about, germane to your topic, about generating leads, and all how that has evolved. But I wanted to make the shift to the office of the CFO, because I think that that function and that specific office and that role has not undergone the revolution that we’ve seen in the other functions, like sales, marketing and service, in terms of workflow, automation, efficiency and effectiveness. And so it’s a journey. It’s been good. Maxio, we have about 2200 customers worldwide. We service exactly what you described, billing and financial operations. The other thing we do, which we can chat a little bit about, is revenue recognition and reporting. So the real value of the tool for SaaS business operators is understanding what’s happening. What I mean by that is like CAC ratio, gross retention, net retention, LTV to CAC, magic number, all of these metrics that you and your audience are probably trying to think about, learn about, maximize, come out of the system. And so I think of it as an essential tool for any B2B operator.
Matt Wolach 03:14
I think it is as well, and it’s something that a lot of people struggle with, especially in the early days, is really understanding what are all those metrics? First of all, a lot of people don’t know what they are, then they don’t know how to track them, and then they don’t know what to do once they have the tracking. And how do you manage around that? And I, in fact, was just talking with one of my clients this morning about CAC payback, one of those metrics that I’m sure your system can help with. So what are some of these metrics that people should know if they are an early stage company.
Randy Wootton 03:42
Well, I would say that it’s sort of a as you mature, there are different metrics you look at, I think when you first are getting out of the gate, especially if you’re a founder, bootstrapped and you’re trying to just generate interest in the marketplace, you’re really talking about bookings growth. As you move from that early stage seed series A and you start to get investors, what you’ll and customers, what you’ll find is people start to really focus on gross retention. Gross retention being what percent of dollars, and then also gross retention, what percent of logos are you maintaining? And then that evolves to net retention. Net retention is, are you able to take those customers and grow them, either by selling additional features or across divisions, etc. So I think that bookings, growth, gross retention, net retention, are really some of the core metrics you look at in your early stage. There’s one that I really like. As you start to move from Series B to Series C, we call it recurring margin. It’s basically like an operating leverage and what that means is is how much, what percent of every dollar Are you spending on GNA, R and D and other op ex, that then you can invest in growth, your ability to get more leverage out of that core, hey, I got to produce the product to then invest in growth, sales, marketing acquisition is a really good indicator Of your ability to scale. So, net, net, there’s a bunch of metrics you could be looking at. Gross retention is probably the one that everyone looks at, if you if you’re looking to get funded, you need to have that gross retention. The biggest challenge, Matt is you find early stage founders. I describe it as they often have their uncle doing the books. They’re doing cash accounting, and they’re just, you know, they got money in their bank, and they’re just trying to make sure they got enough money to pay payroll. The thing that the challenge is, with the SaaS business model, not the SaaS software distribution model, is you start to get into accrual accounting and having to do revenue recognition, and it gets tricky. It gets tricky when you have multiple products. That get tricky is when you have a lot of different customers, like, Hey, did you give a discount for a 15 month contract for but they’re only paying for 12? There’s all these nuances, and Bob, your uncle, is not gonna be able to do it. And so that’s when you move to, like, a CPA firm. But we’ll really want to have a CPA firm that focuses on B2B SaaS, and then you’ll move to a fractional CFO. And this is when it starts to get really complex, and when you need a system like ours to help you with the rev, rec and reporting. Technical founders probably don’t speak accounting, and so making sure they got partners at each of those different inflection points is really critical. So they got the right data to help them run their business and manage their investors.
Matt Wolach 06:20
I love it, because I work with a lot of early stage software companies, as you know, and they go through those cycles, and a lot of people are thinking of, oh, I need to hire a growth person, a sales person, a marketer. I need to hire more tech. But they often forget about the financial side. You’re right. It’s just, oh, my uncle, like you said, is tracking all this for us, or I do it on the side, and I can tell you, from being a founder and an owner of companies, I don’t do a good job of of tracking all that stuff. That’s why I’m glad I have people that do it, but it kind of gets put on the back burner, which is crazy, because it’s your financials. It’s actually the the blood of the business. So Isn’t that ridiculous that that’s kind of second fiddle?
Randy Wootton 07:00
Well I think so. And I think it’s I think it’s because people don’t appreciate the complexity of it when they can just track it in the Excel file, right? They can do their spreadsheet, they can model it, and they got cash in the bank. What I will tell you, having done a bunch of M and A both on the buy side and the sell side, having sold two companies and bought a couple of companies, is the and it’s not me who says this. This is a quote from a national firm that talks about the number one deal killer is accounting issues. And I’ll tell you one story. So when I was at seismic, we were going to buy a large company sales enable in I had sold percolate to them. I then moved to a role, Chief Strategy Officer. During that time, deployed about $300 million in capital, bought a couple of companies and did a strategic investment. One company had legacy SaaS optics, so they had all the rev, rec, right? They had the reporting. They were 10 times bigger than the other company we bought, but we spent 10 times more dollars in time on the smaller company because their contracts were basically in a filing cabinet. And so when you go through that due diligence, you do the forensic accounting, and you’re trying to match the MRR roll forward the customer cohort analysis, and it’s not making sense, and you can’t find the contracts. It puts gunk in the due diligence process, and a lot of deals get killed because you can’t, for example, draw a distinction between contracted ARR and live ARR. Or you can’t break out your segments and be able to talk about what the different gross retention values are by segment. And so I think that if you’re an early stage founder who’s never raised money before, understanding how an investor thinks about doing due diligence is critically important for you to get funded.
Matt Wolach 08:35
I love it. I love it. So critical. I absolutely agree. So how does Maxio help that like, And when’s the right time to bring that in?
Randy Wootton 08:43
Yeah, well, Maxio has a couple of different offers. One is, we are billing solutions, so we can help you get money. And I think when founders have a product and they want to put up like a PLG (Product-Leg Growth) motion, they want to have a billing portal, and they want to have customers be able to interact autonomously through the billing portal, we’ve got that option. It competes with the Stripes of the world. We do billing and payments. So that’s one value prop, this other value prop, what we find is it usually resonates when a company is about 30 employees, and they brought on that first fractional CFO, and they’re looking for professional money, because they’re going to have to get all their stuff in one sock to represent it to the many investors that they’re going to be doing conversations with and they go into due diligence. So you know, where is that? The $2-$3 million range is when you would want to have a product like ours. We can grow with you. So we do have 50 public companies that are using maxio for different types of billing, complex billing scenarios. And we have a couple of 100 companies are greater than 100 million. So once you get it in, it will grow with you. The story I like to tell is so my second time CEO gig. I was CEO of a company called Percolate, between us girls and all the hundreds of 1000 people listening to your podcast. It was about a $25 million company, and we would spend. Then the first six to eight days, the CFO would close the books, which is standard, right? And then the next half of the month, we’d be working through the Excel file to figure out what was going on with all of our customers, who renewed, who who churned, who contracted, who expanded. And it was a it was madness, chaos, working through that Excel file, and we would show up at the board meeting hoping it was right, and worried that it was different because someone had fat fingered a cell in the Excel file from the last time we were at the board meeting. And you’re nodding your head, you’ve probably had that experience where you know, they look at you and say, Hey, you said Q1 gross retention was 87.4% last time. Now you’re telling me it’s 88.2% what happened? And you’re like, boom, I have no idea. We bought SaaSOptics. It was over my hesitation because I didn’t want to buy more software, but the CFO forced it, and I’m so glad he did, because then we went from a world where we would spend the entire month, first six to eight days closing the books, next 10 days working on the operating metrics, to the day the books closed, I have my operating metrics. I can tell you what the ARR so like it’s July 31 for we’re recording this tomorrow on August 1st, I will know how much ARR we made in the month, and I’ll know what our churn was, and I’ll know what our overall net ARR is. Gonna ask your audience, can they do that? And if they can’t, then I would suggest that is where the real value comes from. Having a tool like ours, we’re not the only one who does it, but having a tool like ours allows you as an operator, to be thinking about what’s happening with the business, diagnosing it, engaging in it, putting mitigation plans in two to three weeks before you would have in the old model.
Matt Wolach 11:37
Amazing. I mean, just the amount that you can start making decisions and manage your business, the quickness is incredible. I want to shift gears a little bit, because I know you’ve talked about the seven secrets of success for SaaS CEOs, and we’ve got a lot of SaaS CEOs that listen to us. So what are these secrets, Randy? You have to share them with us.
Randy Wootton 11:56
Yeah. Well, what I find is I’m just recycling great content from other people. So a tip of the hat to people like Peter Drucker and and Clay Christensen and all the other folks that have written all the awesome books out there, John Doerr with OKRs. But my distillation of it is that there seven basic secrets. One is, you’re ultimately responsible for the overall results. If you’re not delivering results to the CEO not driving shareholder value, you’re going to get fired. Number two is you got to establish a winning strategy so everybody knows what business you’re in, especially if you’re in a role like mine, where you come in as the professional CEO, and you have to help chart the new course. That winning strategy will help you deliver the results. But if people don’t know what they’re going to work on, then you know you got lots of people moving in lots of different directions to that point. The third thing is around shaping the culture, and this really comes down to the values and standards, like, how are you going to operate as a company? We can talk more about that. The fourth, which I think a lot of early stage CEOs under appreciate, is building an effective executive team. So what does it mean? And Patrick valenciani, who wrote The Five Dysfunctions of the team, has this mental model he calls the first team. What does it mean to hire someone who’s a functional expert, who then can participate running the business with you as the CEO, where their loyalty, the way they think about things, is what’s best for the business versus what’s best for the function that is wicked important. Early Stage CEOs, in particular, who are used to doing everything themselves, learning how to leverage and delegate and hold accountable an executive team then sets the mandate for the rest of the organization.
Matt Wolach 13:30
I haven’t read that book. That sounds phenomenal.
Randy Wootton 13:33
Oh, it’s awesome. I mean. And then there’s another book in there called execution by bosity, which has that same idea of, how do you build an operating system, a company operating system to allow you to execute. And then how do you think about that broader team? But I do think of that as like so I had the good fortune to be at both Microsoft and Salesforce during times when they were really doing really well, and had done a couple of their bench programs. And I just remember someone in one of these bench programs saying, like, if your executive team is not effective, that entire function where that executive is not functioning is diminished. And so your core opportunity as a CEO is to create a highly effective executive team, then you focus on the broader leadership cadre, then you focus on the management team. And because if you’re a manager, you’re only, I don’t know, impacting six to eight people, but if you’re an executive, you’re responsible for an entire function. And so as a CEO, getting that team alignment around, what does success look like, making sure the corporate bonus is aligned. Everyone has objectives and key results. They build trust across is incredibly important in any business. And I tell people, I’m not the first to say this, but software is a people business, and so getting the people structures system in place the executives is really one of the most important things you can do to then execute on the strategy and deliver the results you. Uh, the other three, which I’ll throw out, and we can talk about what, whichever ones resonate for you is managing your board and investors and setting the expectations. They’ve put money in at a specific valuation. They have expectations of both valuation and timing, and so you be able to have a growth plan that delivers on that, especially if you have investors coming in at different stages, so they have different valuation markers, is wicked important. You want to do that before you get into a deal cycle. And we’ve talked about that allocating capital. I think one of the challenges for early stage companies is you’ve got all this you’ve got to do right now. And everything is on fire. And you want all your engineers solving these customer problems, but you’re to grow faster than your competitors and grow out faster than the market. You also need to have the bifurcated view of long term capital allocation. McKinsey has an old model. It’s called the three horizon model, which I love. It’s basically, what are the set of things you’re doing in the next year allocating a bunch of resources? What are the set of things you’re doing that are going to translate into dollars in the next 18 to 24 months? So it’s like a continuation of capabilities. And then what are the little bets you’re making that are going to be the next act that is going to be the future of the company? Because, as the CEO and the executive, your time and energy should be mostly focused on the next act, not delivering what the month needs to be if you’re doing that you’re ever functioning. So that’s number six. And then the seventh one is, describe it is investing in your tribe, and this means, throughout my career, I’ve benefited from having a mentor, a coach, a peer group. So I’ve never been part of Entrepreneurs Organization. People have great things to say about it. Yeah, I do Vistage currently, but I’ve done other ones, and then the fourth group to have is, they call it a peer advisory board. So go find some people who knew you when you were young and dumb, and who can call you on your BS, so that when you’re making career decisions or you’re doing things that you need help that and you want it from people who have nothing in it other than wanting you to be successful. It’s super helpful. The CEO is a lonely job. No one ever tells you the truth, and so having that peer advisory group can really benefit you during those times when you’re just beside yourself with working yourself all on a, you know, a Tiz about some decision or some inflection point. So those are, it those are the seven I’ve been writing about, happy to chat more.
Matt Wolach 17:44
Yeah, I love it. They’re all definitely extremely helpful and super critical based on, you know, where you are in your growth stage. I want to talk about the culture one you talked about how, how you can, I think the word you use was ingrained, the culture.
Randy Wootton 17:57
Yeah, ingrain or inculcate. I think that, okay, one of the things I find about culture is you get in this conversation around values. And look, I’ve been at big companies where you have values, and they put them on the wall, and everyone says, yeah, those are our values, but you’re not actually living them. I think values can become a Dilbert exercise, and everyone sort of scoffs at it. I think, though, especially in this hybrid world, one of the things the CEO like I am always focused on, how do I build connections and community, and that is rooted in values. And so we went through an exercise. We when I first started, we were bringing two companies together. And so I think it was important for us to try to create a common set of values and language for how we reward people and recognize them. We every single monthly all hands we have. It’s called hype, honest and open your input matters, passion for progress and expect excellence. So making it easily memorable. So it’s something that people can remember. It’s not super complicated. Have it be something that every all hands we recognize. We use a program called bonusly, where people can give token amounts of points to folks, and they do it through the lens of one of the one of the values, and then people get points, and they can buy swag, gift cards, whatever it’s called. It has to be part of your whole system. The thing that people get wrong with values, I think, is they try to create aspirational values. They come and say, Hey, we want to do we want to be like this. And they don’t recognize what are the current expressed values. If you come out with just a set of aspirational values, every it will, it will. It will fall flat. It won’t feel true, it will create dissonance in the organization. And so I think the first step is to, well, what are the values? How do people interact with each other? How do we treat each other? And then, if you want to introduce aspirational values, how do you introduce reward and recognize and change the behavior
Matt Wolach 19:58
that’s phenomenal. I have always believed that as well. And I think that what you’re doing is is creating that kind of sense of of community, and it’s creating that vibe that everybody really appreciates being a part of that company.
Randy Wootton 20:12
And I think what’s, I don’t know, if you’re in a remote context, we’re in a hybrid model. So we have about 240 employees around the world. We don’t have them come in the office, except for we try to get them in one day a week, and then one day a month for our Maxio All hands, and then we do an event together. And I am totally scared that people don’t have connection to the broader company. They’re sitting at home like I’m in, you know, Haley, Idaho, looking out in the mountains. I’m working for maxio. I could just as easily be working for another company. What is it that makes Well, I’m CEO, so got it. But you know, regular employee, like, what makes me feel like it is worth investing my psychic energy, my time and, you know, betting my life on maxio? You gotta create a place where they feel like they like the people they’re working with, they feel like they can make an impact, and they’re doing great work. They’re doing great work.
Matt Wolach 21:03
Yeah, and I think something that we’ve lost with the remote work, and one of my guests a couple months ago said This is, yeah, you can still have the meetings, you can still do the job efficiently. It’s the in between times, in between the meetings where she tells you about her kid at school, or you talk about the game, or whatever it is, that we’ve kind of lost that, and keeping that in a hybrid or a fully remote environment is difficult.
Randy Wootton 21:04
yes, and I would say you need to be deliberate and intentional about how do you build culture and connection in this world. I worked at seismic, which I was mentioning earlier, great CEO, guy named Doug winter. And they were a big company, 1000 something employees worldwide, and he had committed every year to bring everybody together. And he called it the seismic of the event. It was a huge investment, and he said it was the one thing he was never going to compromise on. And so at maxio, we’ve started with a company kickoff in February, and then we just got done with a go to market summit in the summer. We’re not able to bring everyone together yet, because we have a bunch of engineers in Poland, and it’s wicked expensive. But my mission is that at least once a year we bring everybody together for the company to kick off and to get what you described is that bouncing into each other time, we also support each function to try to get together on a quarterly basis, so they bring their teams together in some city and do something so it’s not less expensive to be in a remote first model. You just need to think differently about how you’re spending that money and how are you creating those employee experiences.
Matt Wolach 22:38
Yeah, that’s well said. I love it. So as we wrap up here, Randy, what advice can you give for an early stage company? Maybe, let’s think about their the financials that we talked about earlier, and they feel like they are in that boat that we talked about, how they’re not really putting enough attention to it. What advice? Obviously, getting Maxio would be a great boost. But besides that, what would what should an early stage founder or CEO do to make sure they’re on the right path so that their company can continue to scale smartly financially?
Randy Wootton 23:10
Well, I think what you saw in the era of growth at all costs, which was fueled by crazy amount of investment with VC and PE, was people just blew money on go to market. And I think the getting super clear on what it means to have product market fit, before you bring in a VP of sales and blow a bunch of money on expensive sales people is, you know, have you had a bunch of deals that you can point to? Why are you winning? Do you have the marketing and the messaging? Maybe hire a fractional CMO that can help you get that wired in before you make the big investment on the sales team. The metric that will help you understand if you’re doing well is what they call Well, it’s CAC ratio customer acquisition costs. There’s two parts of it. One is new CAC versus expansion CAC. So if you’re just focused on bringing on new customers. It’s how much money are you spending for every dollar of ARR there’s a great guy out there, Ray Reich, who runs Benchmarkit. Benchmarkit is a he does a bunch of things, but in part, what he offers is a survey of benchmarks. So you can look at your dollar ACV of your average deal and what your revenue is, and you can triangulate to say, what is a best in class, CAC versus a bad CAC. And so as a CEO, I would get my arms around, how much am I spending to acquire $1 of ARR and how do I compare to peer groups? Because that is something that investors what one is going to help you better manage your investments and go to market. But it’s also something that investors are going to be looking at to say, outside of gross retention, are you able to retain customers? Is, are you able to have you built an efficient growth model, which is, how many dollars is it taking to acquire a new dollar of ARR
Matt Wolach 24:58
beautiful. I Love what you’re sharing. It just dropped so much knowledge. So this is really fantastic stuff. Randy, I appreciate you coming on. How can people learn more about you and Maxio,
Randy Wootton 25:08
yeah, so I’m writing about the seven secrets of success on LinkedIn. There’s a bunch of articles there. You can click in and read those. You know, pop on and comment or send me a note on LinkedIn. Also, Maxio.com is we’ve got an enormous amount of resources there. We have a thing called SaaSpedia where all the metrics are defined. You can see the reports. We also are just about to release our new growth report, which is based on our 2000 plus customers, what their growth has been, split by different models that you can use to inform your own planning, and if they want to Randy.wootton@maxio.com, I always have time to chat.
Matt Wolach 25:51
Awesome. I love that. We’ll put all that into the show notes. So if you’re listening, you can get all Randy stuff there, go connect with him. Sounds like some awesome stuff. Randy, this has been fantastic. Thanks for coming on the show.
Randy Wootton 26:00
My pleasure. Thanks for having me.
Matt Wolach 26:02
You’re welcome, everybody out there. Thank you for being here as well. Make sure you’re subscribed so you don’t miss out on any other amazing leaders like Randy coming through. This has been a great conversation, and I hope that you don’t miss the next ones. Thanks for being here, and we’ll see you next time. Take care. Bye.
