If you want to break even, go APE.
Cloud companies generally rely on efficiency metrics like CAC payback and LTV-to-CAC, but “they feel more like financial metrics than operational ones, and it is difficult for employees to execute against these concepts,” according to Neeraj Agrawal, Brandon Gleklen and Jack Mattei of Battery Ventures.
Using data from Capital IQ and Battery’s research, this post contains key benchmarks for public companies and privately held SaaS businesses, along with recommended targets for companies with different ARR ranges.
“APE is an extremely simple metric we think could serve as your north star as you navigate these volatile times.”
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This metric is not a panacea: APE varies by geographic region and other benchmarks, such as gross margin or a company’s forecasted growth rate.
“Getting to a higher APE earlier in the maturity cycle is likely a net positive,” they write. “Overall, we believe a goal of getting to $200,000 would serve most mid-stage/late-stage growth companies well.”
Take note, this is not a one metric to rule them all piece of thought leadership.
As Gleklen quipped on Twitter, “thou shalt only write about a metric in a blog post if you’ve discussed it with multiple management teams and you get consistent feedback that it is valuable.”
Thanks very much for reading,
Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist
ARR per employee is the North Star efficiency metric you’ve been looking for
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Dear Sophie: What should we know about the H-1B lottery before we hire STEM OPTs?
Dear Sophie,
What do I and my founding team at our early-stage startup need to be aware of so we can be on track for the next H-1B lottery for the STEM OPT candidates we’re hiring?
— Strong Strategizer
Dear Sophie: What should we know about the H-1B lottery before we hire STEM OPTs?
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