To deliver on our vision of providing a continuous forecasting capability for SaaS, we know we need to enable you to connect your other operational tools, like payments, billing, accounting, and sales, to your forecasting engine. This was validated by consistent feedback and requests during the beta and 1-1 interviews.
In response to this need, we're excited to announce the first wave of planned integrations, beginning today and rolling out over the course of 2019.
As you can see, we're beginning with some extremely popular services to cover the most ground. However, if you don't see an integration you'd like, please drop us a line to let us know!
We may also announce a few surprise integrations along the way as we encounter new partnership opportunities. If you're a SaaS company that has a strong alignment with what we're doing, let's talk.
As of today, we are live with the first version of an API to retrieve forecast data and upgrade growth models and metrics in real-time.
While too early to be used externally (formats can and will change), this sets the stage to easily connect key points of data from products like Baremetrics, ProfitWell, Stripe, Chargebee, Xero, and QuickBooks, keeping the model that powers your forecasts up-to-date in real-time.
In the future, this can be used to build new products and enable clients to connect SimSaaS data to their own dashboards and BI tools.
If you're interested in API access to your forecast data, shoot us a note. We'd love your feedback as we develop the foundations!
The Financing section just got an upgrade for anyone considering alternatives to venture capital. Lighter Capital joins the list of supported structures, alongside indie.vc, Earnest Capital, and TinySeed.
Lighter Capital modeling is available in all free and paid plans.
NOTE: This structure and the output have not (yet) been reviewed by Lighter Capital. However, the terms have been implemented after a careful reading of their site and terms, and is based on samples of their structure provided by founders that have considered or are currently considering investment from the financier. If you have familiarity with Lighter Capital and would like to recommend changes or improvements, we'd love to hear from you via twitter, or email at email@example.com.
The earlier version of the model used a rough estimate of $500/mo. per employee to estimate spend on external SaaS tools and vendors.
While better to estimate high than low, this needed refinement. Thankfully, the folks over at Blissfully publish an annual report that provides average cost of SaaS per employee annually, organized by company size!
Which means your forecasts now contain a more accurate "Vendor" expenses bucket (the orange portion of the stacked bar chart here):
This expense forecasting improvement applies to all forecasts at all subscription levels, free and paid.
I get asked pretty frequently about churn rates being available as an input to the modeling that happens underneath the SimSaaS hood.
The truth is, although it's easy to multiply last month's revenue by a fraction to get a new MRR number, gross churn is a terrible way to forecast the growth of a SaaS business, which lives and dies by the survival of its subscriptions. And what dictates survival? Product stickiness, aka "long-term cohort survival rates."
To illustrate this point, consider the following two lives of the same SaaS company.
In both cases, we will assume fairly normal 8% churn MoM of monthly subscriber. Both are enjoying good growth for now (although the weaker one doesn't know he's living in the worse universe), thanks to a referral program that's generating 4 new leads per signup. Awesome!
But what happens when each has a different percentage of subscribers cancel or stay with the service long-term?
First, the weakest case -- everyone cancels eventually. This is a common situation with SaaS products with weak fit. As soon as acquisition slows, revenue will flatten and ultimately decline. The product simply isn't mission critical, or is easy to replace with a competitor.
Before you think this is terrible ... keep in mind that the longest-lived customers will still subscribe for almost 4 years!
And here's the revenue:
Looks okay at $59k average MRR. Right?
But what would happen if we figured out a way to create a moat around our business, such that canceling is inconceivable for 75% of our customers? The kind of product that people plan to buy and keep as long as it's sold. The kind where switching to a competitor isn't easy, or perhaps just not worth it?
Revenue on the same time horizon nearly doubles to $116k average MRR!
Maybe 75% feels unrealistic, too ambitious for your product strategy. Let's lower it to 35%. Roughly 1 out of 3 of your paying customers absolutely loving your product for the price they pay. Revenue becomes this:
Thanks for learning more about the stickiness feature. The ability to select a long-term retention rate is available through our Advanced plans. You can find the slider under "Product."
"Like the CEO, CFOs have a company-wide view on the business. They operate in the middle of all the data flows in and around the business. A good CFO uses this vantage point to make a good company great, leading a high quality finance organization that manages critical responsibilities for the company. They do this by informing important strategic and operational decisions; finding new insights to improve business performance; and ideally being a consigliere to the CEO." --Jeff Jordan, a16z (link)
Analytics on future revenue and expenses are interesting, but recommendations on what to about those numbers are the real value of a CFO function. As part of our free offering, SimSaaS has started generating its first set of insights: a Health Check around runway, Solutions to navigate risks, Experiments to try, and ways to Sharpen your skills.
The Solutions section includes a mixture of targeted recommendations, relevant bits of financial planning wisdom, and direct links to solution providers that may be a strong fit for your business.
Insights are live for all accounts, free and paid. We're excited to evolve this from its current v1 status into a valuable co-pilot for early-stage founders.