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Christoph Janz is a Co-Founder and Managing Partner at Point Nine Capital.In 1997 he co-founded DealPilot.com (acquired by  Shopping.com) and in 2005 he co-founded  Pageflakes (acquired by LiveUniverse). 

With investments in Zendesk, FreeAgent, Geckoboard, ChartMogul and other SaaS companies, he is a recognized SaaS expert.

He shares his advice for startup founders on his 'The Angel VC' blog. Topics he covers include  early-stage startups, venture capital, metrics and everything about SaaS. Among other pieces of wisdom, his post on cohort analysis is frequently cited as a go-to resource.

  • AB

    Aleksandar Bibovski

    almost 4 years ago #

    Hey Chris, thank you for AMA.
    As you are recognized as SaaS expert and many of us are in SaaS startups my question is:

    From your experience, what is the 'unknown' secret of very successful SaaS startups and do you (P9 Capital) use any techniques (brainstorm, design thinking etc.) to find that secret?

    • CJ

      Christoph Janz

      almost 4 years ago #

      Thank you for your questions, Aleksander!

      I don’t think there are any secret magic silver bullets. :) I think the success of successful SaaS startups always rests on many factors (product/market fit, founder/market fit, timing,...). One thing to add maybe though. My impression is that the very best SaaS startups have innovated in more than one area. They usually built a much better product but also found a superior distribution channel (Zendesk, Salesforce) or business model (Zenefits) than the incumbents.

    • BB

      Baptiste Boulard

      almost 4 years ago #

      Hi Christoph,

      I'd like to get your knowledge on raising fund.

      When you invest at Serie A in a SaaS and mobile app startup that is focus on growth only (no monetization), how do you define that a startup is having traction ?

      Do you wait until the startup has a minimum number of registered and active users (e.g. 300.000 users or more) ? So it becomes attractable.

      Or, Do you look into the future ? Like, what could be accomplished even if the startup has some traction but not phenomenal one?

      Thanks a lot for the insight

      Cheers
      Baptiste CEO Swapcard

      • CJ

        Christoph Janz

        almost 4 years ago #

        Thank you for your question, Baptiste!

        We typically invest at the seed level. At that stage, we typically want to see:

        - Some proof of product/market fit
        - A large opportunity
        - A team which we believe is great or will become great :-)

        At the Series A, most investors want to see significant traction. If you're not monetizing yet, the bar is very high in terms of users. Hard to give you a precise number because it depends a lot on the product and market, how active those users are, how often they come back, and so on.

        3 Share
    • SH

      Shane Howard

      almost 4 years ago #

      Hey
      We are a a college athletic recruiting service. We are about to 2x and possibly 3x our revenue from last year. We have proven market fit and have become the official service for a few branches of sport of entire countries and large portions of other countries. Recently broke into the Shanghai Market and working with the Minister of Education. We have nearly 40 partnerships with schools, clubs, national and local associations. We have helped the athletes that have used our service receive nearly $40Million in free scholarship and aid. We have accomplished this with virtually $0 marketing. We are looking to roll out a funding round and take this thing to the next level but struggle with contacts of investors outside of Kentucky where we are located. How do we go about sharing our amazing story with potential investors?

      • CJ

        Christoph Janz

        almost 4 years ago #

        Hi Shane, thank you for your question, and congrats on your success!

        There are a lot of things that you can do to get in touch with investors outside of where you are located:

        - I would start by putting together a target list of the investors who you think would be the best fit for you, e.g. based on investments they've made previously.
        - Then, see if you have any mutual connections on LinkedIn.
        - If not, try to engage with them over Twitter, by commenting on their blog, ...
        - If that doesn't work, send them an email. Make it look as little "cold" as possible ... read the investor's blog posts if he has a blog, refer to one of his posts,...

  • SE

    Sean Ellis

    almost 4 years ago #

    One more question from me (if you have time). What do you think are the biggest challenges/advantages when starting a B2B SaaS company in Europe compared to Silicon Valley?

    • CJ

      Christoph Janz

      almost 4 years ago #

      Good question, Sean, and one that is near and dear to me, because we work with so many European SaaS founders.

      The advantage is that (unless you're in London, maybe) everything is dramatically less expensive here in Europe. For the price of one junior developer in Silicon Valley you can hire two senior developers in Berlin or Barcelona. The costs of living are just dramatically lower compared to the Bay area.

      The challenge is finding senior people who have done it before, especially in sales and marketing. There are very few companies to poach the right people from. The number of experienced SaaS VP Sales and VP Marketing is very, very small in Europe.

      Another challenge is raising a large Series A/B/C. Our portfolio companies Algolia and Typeform have both recently raised large rounds from Accel and Index in London, so it can be done. But the amount of capital available is smaller by orders of magnitude.

      Yet another challenge is that you're likely further away from your key customers, partners and the entire ecosystem. Finally, exiting might be harder.

      So - there are a ton of challenges if you stay in Europe, which is why I think European SaaS founders need to move to the US at some point, one way or another. Doesn't mean they necessarily have to move the entire company (usually they shouldn't), but they need people in the US.

      5 Share
  • SE

    Sean Ellis

    almost 4 years ago #

    Thanks Christoph, great to have you join us for an AMA. We haven't had enough European AMA guests up to this point. My question is what is the most important metric that you focus on for an early stage SaaS investment versus a later round SaaS investment. Is it MRR growth rate in both cases or is there another KPI that's more important for an early stage SaaS investment?

    • CJ

      Christoph Janz

      almost 4 years ago #

      Thank you for your question, Sean! Here are my thoughts.

      At the very early stage, when you don't have any meaningful metrics yet, it's all about product/market fit. If you're selling to SMBs we want to see if you can get people to your website and move them down the funnel with a low-touch sales approach. If you're selling to larger enterprises, we want to talk to some customers or pilot customers. So in that phase it's more qualitative than quantitative.

      Once you're off the ground, I do think that MRR growth (net of churn, that is) is the key metric because almost everything you do – get customers, increase ARPA, decrease churn etc. – is geared towards increasing your net new MRR.

      5 Share
  • LB

    Lili Balfour

    almost 4 years ago #

    Hello Christoph,

    I'm a finance junkie and big fan of your work. Thanks for the AMA.

    I love the SaaS financial model you created. Slick and to the point. I was curious about hosting costs. I've always used a monthly assumption of $250 per 500k visitors. I see that you use $500 per month throughout the model. I was curious about the rationale behind this...

    Thanks!

  • MS

    Mark Simon

    almost 4 years ago #

    Hi Christoph,

    Thanks for taking the time to do an AMA.

    I see a lot written around what founders should have prepped before approaching investors. My question is around qualifying investors.

    What questions should founders ask Angels & VC investors early on to see if there is a good fit?

    • CJ

      Christoph Janz

      almost 4 years ago #

      Thank you for your question, Mark!

      There's probably not enough space/time here to do justice to this question, but here are some thoughts:

      - Ask yourself what area you need help with and then try to find out if the investor has expertise in that area.
      - It's very important that the chemistry works well between you and the investor ... it's common sense, but the investor/founder relationship is a bit like a marriage. :)
      - Domain expertise or deep expertise in an area like product, marketing or sales is great, but intelligence, drive, passion and integrity are just as important.
      - Most VCs can talk and sell themselves reasonably well. Otherwise they probably wouldn't have gotten so far. It's the same like when you're interviewing senior executives. That's why it's hard to determine if someone can really deliver based on an "interview", and that's why you should take references (founders who the investor has backed, in this case).
      - Take a close look at the investor's portfolio. Did they invest into similar companies like yours? Did they have any bigger successes? Are the founders in the investor's portfolio people you'd love to meet and learn from?

      3 Share
  • AP

    Anthony Panepinto

    almost 4 years ago #

    Hey Christoph,

    It's awesome that you're doing this man!

    A couple questions,

    1. I'm working on building out my company to $40,000 MRR this year. I'd like to continue building out the user base, what marketing channels would you recommend for a marketplace Saas application. Here's the site: www.venuevortex.com. I'd like to provide as much value as possible the venues I've signed up!

    2. Are you still making angel investments? What's the best way to pitch you? :)

    Thanks,
    Anthony

    • CJ

      Christoph Janz

      almost 4 years ago #

      Thank you for your questions, Anthony!

      On 1: Hard to give solid advice based on this information, I'd need to know more about your product, target group and pricing. Generally our SaaS portfolio companies have seen a lot of success with inbound/content marketing, but there are of course many other channels that you should consider.

      On 2: I don't do angel investments any more but happy to take a look at your company from a Point Nine perspective! Just email me at christoph@pointninecap.com.

  • HQ

    Hila Qu

    almost 4 years ago #

    Hi Chris, thank you for the AMA. From your experience of investing in early start-ups, other than metrics, are there any other qualitative indicators you find that are more likely to lead to success?

    • CJ

      Christoph Janz

      almost 4 years ago #

      Thank you for your question, Hila!

      Definitely. Metrics can be deceiving, at least at the very early stages, which is why we always want to understand the product and the market, and most importantly we need to trust the team.

      It sounds obvious, but it's still true: In the end it's always about the team.

      3 Share
  • DD

    Deandre Durr

    almost 4 years ago #

    Hey Christopher,

    1. Did starting off as an entrepreneur make you a better angel investor?

    2. When you invest in companies are you investing in the captain of the ship or the ship itself?

    3. It seems SAAS startups are the newest sexy business models for start. From an entrepreneur and an investor point of view.

    Is it better to have a SAAS business that improves on another proven SAAS product. So the ease to product market fit is easier because the market is proven

    or

    A company that has first to market advantage but takes longer for product market fit, because the market has never had innovation?

    Thank you so much for this AMA:-)

    • CJ

      Christoph Janz

      almost 4 years ago #

      Hi Deandre, thank you for your questions!

      On 1: It made me a better angel investor because without having started and sold a company myself before I wouldn't have been able to invest any money into startups. :) That aside, yes, I think it made me a better angel investor, firstly because of the domain expertise that I've gained as an Internet entrepreneur and secondly because I know so well how it is like to be a founder ... probably makes it easier for me to relate to founders compared with investors without that experience.

      On 2: If "captain" means "team" and "ship" means "product/business", then the answer is: both, but in case of doubt, the team trumps everything else. If "captain" means "CEO" and "ship" means "rest of the team" ... then the answer is "both", too. :)

      On 3: First of all, I wouldn't recommend doing anything because it's sexy. I'd rather try to find something which most people don't consider sexy.

      On your question: There can be great opportunities in both of the scenarios that you've described. I don't know which scenario I'd prefer. Maybe others can weigh in?

  • KS

    kenza S

    almost 4 years ago #

    Hello Christoph,
    Thank you for making yourself available to share some advice and views, I would actually like to have your opinion on business software review sites/marketplaces: we've seen many platforms that allow to compare, review, rank and sometimes buy software. Do you think this approach to Saas distribution is a viable alternative to display advertising at a time where ad-blocking is on the rise?

    • CJ

      Christoph Janz

      almost 4 years ago #

      Thank you for your question, Kanza!

      In my experience, these sites are a low-hanging fruit channel for lead generation. That is, it's easy to do and it gives you some leads, but it won't scale very much.

      So you should do it and get as many leads from these sites as possible, but don't expect that it will get you to millions in ARR.

      3 Share
      • KS

        kenza S

        almost 4 years ago #

        Thank you Christoph,
        Short and clear:)
        Would be happy to get to have more insight from you, actually we're positionned on the other end as a Software advice platform:)
        We're currently thinking about how we can provide more value to this kind of service not only for the user point of view but also for SAaS merchants...
        Thank you very much!

      • KS

        kenza S

        almost 4 years ago #

        Thank you!

        • KS

          kenza S

          almost 4 years ago #

          One more question, if i may,
          What do you think about the north african startup market (b2b or b2c...)?
          Is it something you are looking at from a Point nine portfolio diversification perspective? I read your answer about us vs europe saas startups and the cost savings/optimization you can achieve in Europe, do you look at North africa (Morocco for instance) from that perspective?
          Thank you Christoph, this AMA is very intersting!

  • AD

    Anibal Damiao

    almost 4 years ago #

    Hi Christoph,

    Great blog and even greater from an european guy.. that's rare, kudos.

    How would you frame a discussion with an investor if you bootstrapped to profitability through the typical pre-seed/seed stage, and how would you then think metrics vs investment valuation ?

    • CJ

      Christoph Janz

      almost 4 years ago #

      Hi Anibal, thanks for the question and the kind words!

      If you're profitable at a small scale that's great because it means you have less time pressure for raising a round. Investors also like scrappy founders who can get a lot of stuff done with very little in resources.

      Apart from that, whether or not you're profitable doesn't have a huge impact at the investment discussion at the seed level. Investors want to know if you can build a huge company, so they will ask questions like: How large is the market? Can you build a defensible position? Are there scalable ways to acquire customers? Do you have the team to build a $100M ARR company? For these questions, it doesn't matter a huge amount if you're currently profitable or not.

  • DS

    Daniel Sosa

    almost 4 years ago #

    Hey Christoph - Thank you very much for your time.

    I have a somewhat un-related question, but it is an AMA :). We have a project we are working on that revolves around a question we have not been able to answer.
    1. WHY does email not incorporate video natively?
    2. Do you think there is an opportunity for an "Outlook meets Snapchat" style solution for the next phase of personalization and professional communication?

    Thanks bud!

    • CJ

      Christoph Janz

      almost 4 years ago #

      Hi Daniel, thank you for your questions!

      On 1: Unrelated, indeed. :) I can only speculate, but my guess is that it's because when email was built, no one thought about video because transmitting videos was impossible at that time.

      On 2: I don't know ... I think there might be a use case of ephemeral messages in the B2B world, but I'd assume it's a very limited market. Could be wrong of course. What do you have in mind?

      • DS

        Daniel Sosa

        almost 4 years ago #

        Hey Christoph - Thank you very much for the response. I guess snapchat is a bad analogy because we do not plan on take the ephemeral part, as much as we would like to incorporate video into professional messaging to humanize the conversation again.... People only buy what they trust. We can't just trust a wall of text anymore. We are building wiind.com - very early stage tool at this moment (I would say at the moment it is the absolute easiest way to send a video email, about 2-clicks), but mainly we are learning from users and working on an email platform that incorporates video natively.

        • AS

          Akash Sharma

          almost 4 years ago #

          Hi Daniel, guess, you'll find this interesting - Intercom's Mike Stewart's wrote about how they've built video into their in-app messenger. "Messaging with video is a brand new feature that we’ve just added to Intercom. So recently, in fact, that it’s not fully released yet. It lets you respond in a conversation by recording a video right there in the Intercom app, which the person you’re talking to sees straightaway, like the image below." https://blog.intercom.io/created-video-chat/

          • DS

            Daniel Sosa

            almost 4 years ago #

            Akash - Thank you very much for that! Great article. I also happen to be a big fan of Intercom.

  • OH

    Obinwanne Hill

    almost 4 years ago #

    Hi Christoph,

    Thanks for doing the AMA.

    I can't say I speak for all SaaS entrepreneurs, existing and prospective, but I personally find that it's a little tough coming to terms with the important thresholds in SaaS metrics i.e. the leading indicators.

    There are some great tools out there like BareMetrics, ChartMogul, etc., but I find that they are great for mostly visualization. The intelligence required for action is not always apparent from the tool if you're not experienced with these kind of interpretations.

    I know every SaaS company is different from a business model standpoint, but [based on your experience funding SaaS companies] what do you think are the specific actionable thresholds in SaaS metrics that every entrepreneur should know and understand?

    • CJ

      Christoph Janz

      almost 4 years ago #

      Hi Obinwanne, thank you for your question!

      I'm not sure if I understand the question. What do you mean by "actionable threshold"?

      • OH

        Obinwanne Hill

        almost 4 years ago #

        As an analogy, it's kind of like a kettle on the stove: when you hear that humming sound, you know that it's going to start boiling soon, even though you can't actually see or feel the kettle.

        In David Skok's blog post, "SaaS Metrics 2.0 – A Guide to Measuring and Improving what Matters", there are some guidelines e.g. LTV should be greater than 3 x CAC, and Months to Recover CAC should be less than 12 months. These are thresholds that give you some idea of 'good' and 'bad' zones, and they are also actionable so if you're in a 'bad' zone, you know it, and you can then focus on righting the ship, as opposed to being clueless and crashing into the rocks (Excuse all the metaphors).

        Are there any other thresholds like that around MRR, ARR, Churn, etc. that you think would be beneficial to entrepreneurs when working on their business/revenue models, so that they get a sense of the specific points they shouldn't go below [or above]?

        • CJ

          Christoph Janz

          almost 4 years ago #

          Got it, thanks for the clarification!

          I've touched on this topic in this post:

          http://christophjanz.blogspot.de/2015/03/how-fast-is-fast-enough.html

          Assuming you want to build a $100M ARR company (which of course not everyone aspires to, which is perfectly fine) you can kind of start at $100M ARR and then work backwards to see how fast you should get to $1M in ARR - and what that means in terms of how many leads do you need, what conversion rate, what ARPA, churn, etc.

          Happy to come back to the question with some additional thoughts and benchmarks but I need to run now. :)

          • OH

            Obinwanne Hill

            almost 4 years ago #

            Thanks for the time, feedback, and link to the blog post. I found it quite insightful.

            Regarding my question, I was talking more about 'red lines' that we [entrepreneurs] should keep a keen eye on.

            For example, let's say a SaaS company has an MRR of $50,000, of which $3,000 is churned. When you calculate a metric like %MRR Churn, the resulting value is 6%. Now, is 6% too high? Is it too low? What's a reasonable range? It's hard to tell what the thresholds are by just knowing the number.

            In my opinion, it will be a tragedy for an entrepreneur in this day and age to tell a sob story like "[One of the reasons why we failed was because] we found out our %MRR Churn was too high too late and we couldn't take corrective measures to correct the situation." It makes more sense to do a simulation of different revenue scenarios before you launch your SaaS product, so you can gauge if the pricing sustainable, etc.

            But, if you don't know the good/bad thresholds, how can you do such a simulation? I think it was Otto von Bismarck that said "Only a fool learns from his own mistakes. The wise man learns from the mistakes of others." I'm just trying to do learn by simulating future mistakes.

            Sorry for the length of this, and thanks again for the time.

  • BZ

    Bjoern Zinssmeister

    almost 4 years ago #

    Hey Christoph ;)
    Point Nine is a great partner especially for early stage companies. In the U.S. the preferred company structure from a VC's point of view is a Delaware C Corp. What about companies in the E.U., what corporation structure do you recommend to founders? German UG/GmbH, British Ltd...?

    • CJ

      Christoph Janz

      almost 4 years ago #

      Hi Björn,

      Nice to meet you here. :)

      We like German GmbHs and British Ltds, mainly because we and others have already done a lot of VC investments in these entities, so you don't have to re-invent any wheels. When we invested in other countries it was sometimes harder to e.g. implement an ESOP. That said, we have invested in many different countries and types of entities and don't have a strong preference for a specific solution.

      2 Share
  • TS

    Terence Strong

    almost 4 years ago #

    Christoph:

    Thanks for doing this!

    What is the failure rate of the post product market fit companies that you have invested in (please estimate)?

    -Terence

    • CJ

      Christoph Janz

      almost 4 years ago #

      Thanks for your question, Terence!

      Interesting question. It depends on how you define "failure". If you define it as "shutting down the company or doing a fire sale", we didn't have any failures yet among the SaaS companies that we invested in post product/market fit (obviously the definition of PMF is another issue, but let's leave that for now). If you define it as "will probably never get to $100M ARR" ... too early to tell. I can come back to you later with a somewhat better answer on what I think our hit rate could be (running out of time now).

  • JH

    Justin Harris

    almost 4 years ago #

    Hey Christoph,

    Thanks for doing this AMA!

    1.) What type of customer feedback or metrics do you look for when reviewing companies in the .9 stage?

    2.) Great investment in ZenDesk. What did you see in them that made you invest at such an early stage?

  • CJ

    Christoph Janz

    almost 4 years ago #

    Hi Anibal, thanks for the question and the kind words!

    If you're profitable at a small scale that's great because it means you have less time pressure for raising a round. Investors also like scrappy founders who can get a lot of stuff done with very little in resources.

    Apart from that, whether or not you're profitable doesn't have a huge impact at the investment discussion at the seed level. Investors want to know if you can build a huge company, so they will ask questions like: How large is the market? Can you build a defensible position? Are there scalable ways to acquire customers? Do you have the team to build a $100M ARR company? For these questions, it doesn't matter a huge amount if you're currently profitable or not.

  • AA

    Anuj Adhiya

    almost 4 years ago #

    Hi Christophe - really cool of you to spend this time with us.

    Should an early stage startup just starting to get its first users on board consider using tools like Segment, Customer.io, Mixpanel etc right from the get go or is that something that can wait till later - and simply focus on qualitative feedback through high-touch interactions and what you see through GA with these first few users?

    If all the "fancier" tools can wait, then what's that inflection point at which (any) tools that give you more insight into indivual behavior be considered? Is it simply a function of more users or is it a specific kind of learning or something else?

    Hope that made sense.

    Thanks!

    • CJ

      Christoph Janz

      almost 4 years ago #

      Thanks, Anuj! Great question.

      In the very beginning you can focus on qualitative user feedback indeed. At that stage, quantitative data wouldn't be statistically significant anyway.

      I'd say by the time you get dozens of signups per month you should start to look at the funnel from a quantitative point of view. It also depends on whether you're targeting SMBs or enterprises: If you're targeting SMBs you will likely have much higher numbers (of small customers) sooner, whereas if you're targeting enterprises you might have only a handful of customers during the first year.

  • SH

    Shane Howard

    almost 4 years ago #

    Hey
    We are a a college athletic recruiting service. We are about to 2x and possibly 3x our revenue from last year. We have proven market fit and have become the official service for a few branches of sport of entire countries and large portions of other countries. Recently broke into the Shanghai Market and working with the Minister of Education. We have nearly 40 partnerships with schools, clubs, national and local associations. We have helped the athletes that have used our service receive nearly $40Million in free scholarship and aid. We have accomplished this with virtually $0 marketing. We are looking to roll out a funding round and take this thing to the next level but struggle with contacts of investors outside of Kentucky where we are located. How do we go about sharing our amazing story with potential investors?

  • AS

    Akash Sharma

    almost 4 years ago #

    Hi Daniel, guess, you'll find this interesting - Intercom's Mike Stewart wrote about how they've built video into their in-app messenger. "Messaging with video is a brand new feature that we’ve just added to Intercom. So recently, in fact, that it’s not fully released yet. It lets you respond in a conversation by recording a video right there in the Intercom app, which the person you’re talking to sees straightaway, like the image below." https://blog.intercom.io/created-video-chat/

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