Oda and Mathem merging

With significant overlap among investors, it is not a surprise that Oda and Mathem is merging.

While Mathem is more known in Sweden, it is Norwegian Oda (previously an Alliance portfolio company) that is the interesting part of the combination, quoting Sifted:

“Since July, Oda has been focused on its home market, Norway, where it’s doing well. On an operating level, it has a positive EBITDA and has the world’s most efficient warehouse system, with a UPH (average units processed per labour hour) of 250, which is way ahead of the competition, according to Oda.”

Oda is the best operator in the world, so after integration the new company should be bigger and stronger.

Dead unicorns

Battery Ventures’ OpenCloud 2023 report included this chart of private unicorns (more than 1000) vs software IPOs in the last ten years (176).

Some thoughts:

  • The unicorns are at last round valuation (often from 2020-2021). Public cross-over investors like Fidelity has already written down the valuations of highly valued companies like Reddit and Discord. I.e. many unicorns at last round valuation really aren’t unicorns today.
  • Many unicorns were unicorns in name and structure (i.e preference shares and other terms) only, not in performance (with something like $50+ million in revenue/ARR, good gross margins and strong growth required)
  • Many startups that build great products and grow revenue fast to $50-100 million and beyond will remain unicorns and become even more highly valued

Elad Gil interviews Brad Gerstner (Altimeter)

Both a tour back in history (ca 2000) via 2007 to the current market. Interesting on investing across public and private markets, including the valuation of unicorns in 2021 unicorns and today. Short version, most private unicorns from 2021 are not really unicorns today unless their metrics match public stock metrics.

Benchmark data: New 2023 SaaS metrics. Slower revenue growth than 2022, 26 % fewer employees

OpenView has released its SaaS Benchmarks Report 2023. It’s an interesting report (requires registration for the full PDF) that can be compared to earlier reports from ChartMogul and Insight Partners. In general, revenue growth is slower but efficiency and profitability is much stronger.

75th percentile companies (with $1-5 in revenue) grew 100 % year-over-year in this data, which indicates overall revenue growth rate has slowed as top quartile companies grew 183 % in the ChartMogul data and 190 % in the Insight Partners data from earlier this year. It is not an apples to apples comparison, but to me it makes sense that growth has slowed somewhat.1

As revenue growth has slowed, startups has cut the number of employees. For companies with $1-5 million in revenue the average number of employees is down 26 % between 2022 and 2023.

This means revenue per employee, which is a good top-level metric, for top quartile startups with $1-5 million in revenue is up 47 % between 2022 and 2023 to $150k.

  1. 75th percentile and top quartile is not the same, which I messed up in the initial version of this post. Top quartile is the top 25 % companies and 75th percentile is the data on only the first (a.k.a. “worst”) company in the top quartile. ↩︎

What does product/market fit look like?

Jason Cohen, among other things CEO and founder of WP Engine, has written a good article about product/market fit with real-life examples.

He defines product/market fit as all of the following:

  1. Easy growth (Pull, not push): Growth rate suddenly spikes up, and sustains at the new rate. You often don’t know why.
  2. High retention: Cancellation at or under 3%/mo (for B2B) or 5%/mo (for B2C), because if customers are leaving in droves, you are not a “fit.”
  3. Critical mass: At least $20,000/mo in revenue or increasing WAU’s by at least 200/mo. Everyone can grow 1000% month-of-month when the baseline is 7 customers; the fact that you have only 7 customers means there’s not yet evidence of “fit.”