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Why startups can’t afford to ignore customer retention

Venture-backed companies must walk the line between fast growth and efficient growth. Even as VCs value high-quality revenue , companies are still held to a minimum growth rate. We think of this threshold as the “ Mendoza Line ,” a baseball term we’ve adapted to track the minimum growth needed to get access to venture funding. Above this line, startups are generally attractive to investors and even have a good chance for a strong exit. To achieve sustainable growth, maximizing customer lifetime value is an important component and one that is often underestimated, particularly for SaaS and other subscription-based businesses that generate recurring revenue. It is estimated to cost somewhere between five to 25 times more to acquire a new customer than to keep one you already have. Additionally, Bain research has shown that a five percent increase in retention rates can increase profits by 25 to 95 percent. Even by conservative estimates, retention is a powerful mechanism for growth. As companies face greater pressure to grow both quickly and responsibly, we are placing more value on customer retention as a barometer for long-term success. And we are seeing smart startups invest in measuring customer happiness in more sophisticated and consistent ways. In looking at SaaS deals over the past 10 years, we’ve found that a few key metrics and best practices are predictive of healthy business fundamentals.

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Why startups can’t afford to ignore customer retention

Venture-backed companies must walk the line between fast growth and efficient growth. Even as VCs value high-quality revenue , companies are still held to a minimum growth rate. We think of this threshold as the “ Mendoza Line ,” a baseball term we’ve adapted to track the minimum growth needed to get access to venture funding. Above this line, startups are generally attractive to investors and even have a good chance for a strong exit. To achieve sustainable growth, maximizing customer lifetime value is an important component and one that is often underestimated, particularly for SaaS and other subscription-based businesses that generate recurring revenue. It is estimated to cost somewhere between five to 25 times more to acquire a new customer than to keep one you already have. Additionally, Bain research has shown that a five percent increase in retention rates can increase profits by 25 to 95 percent. Even by conservative estimates, retention is a powerful mechanism for growth. As companies face greater pressure to grow both quickly and responsibly, we are placing more value on customer retention as a barometer for long-term success. And we are seeing smart startups invest in measuring customer happiness in more sophisticated and consistent ways. In looking at SaaS deals over the past 10 years, we’ve found that a few key metrics and best practices are predictive of healthy business fundamentals. Here’s the advice I give startups looking to achieve smart growth through customer retention. Create a system for measuring customer happiness First, measurement must be an executive priority. Ensure you have a system in place to measure retention on a quarterly basis (at least) and meet as an executive team to diagnose potential problems. While benchmarking against similar businesses can be helpful, trending your own metrics is the best way to see how your performance is improving or deteriorating.

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Anchor brings its free suite of mobile podcasting tools to the iPad, following its relaunch earlier this year as a podcast creation platform (Sarah…

Sarah Perez / TechCrunch : Anchor brings its free suite of mobile podcasting tools to the iPad, following its relaunch earlier this year as a podcast creation platform   —  Following its relaunch earlier this year as a podcast creation platform, Anchor today is bringing its suite of mobile podcasting tools to the iPad.

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PitchBook now offers users suggested companies when they search

This one’s for all the due diligence fiends and competitive landscape mapping mavens out there. PitchBook , the data and analytics service for private equity and public markets, is rolling out an automated suggestions feature for premium users when they’re doing searches on companies for market intelligence. The new service is based on machine learning technology that scours PitchBook’s financially focused information and data set. Each word in a description is represented in 300 dimensional space using the global vectors for word representation software lifted from researchers at Google and Stanford, and those vectors are then applied to companies to determine their various relationships. “The differentiator for why the output of this is going to be high quality. When we look up a company is because we have this proprietary set of financial related news and information,” says Tyler Martinez, the director of software engineering and data science at PitchBook. During an advanced search, the Suggestions algorithm stores the entire search as a vector ad compares it against a larger word embedding model to find similarities among companies. Behind the new features is a years-long effort to get more financial data at more scale, according to the company. PitchBook invested in web mining tools and an automated news collection technology that can process 30 billion words. And the amount of material that PitchBook and its competitors have to track has expanded exponentially since the company was initially launched years ago. There was $28 billion invested into 1,700 deals across the globe in the first quarter of 2018, and the geographic expansion of the private equity business and the explosion of interest in private markets has created a new demand among investors who don’t know what they don’t know, according to PitchBook.

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Using tech and $100M, Dr Consulta transforms healthcare for the poorest

Healthcare delivery is an incredibly complex topic, but one that has a simple truth: health security is key to living a good life, and, ultimately, for developing a strong economy. Unfortunately, billions worldwide suffer from lack of access to even the most basic of medical diagnostics and treatments , since doctors often aren’t available and the costs when they are can be exorbitant. That’s the world that Thomaz Srougi grew up with in his native Brazil. Brazil has made health security a major priority, offering comprehensive and free medical coverage to every citizen, a right enshrined in its constitution . That simple right though is riven with challenges , from a lack of public funding, to long queues for services, to geographic disparities between urban cores and rural areas. Those with the means use private medical services, but those costs are far outside the reach of the majority of Brazil’s inhabitants. The country may have made a commitment in words, but it has in many ways failed to fulfill that commitment with actions. Srougi wanted to bridge that gap. He had medicine in his DNA: his father was a urologist , and so saw first hand the challenges of the public health system. He spent years as an investment banker and financier, and also netted two masters degrees from the University of Chicago in business and public policy.

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Patriot Boot Camp wants to turn soldiers into entrepreneurs

From the earliest moments of boot camp, budding soldiers learn about entrepreneurship. They learn how to operate in unknown terrain, how to listen to signals and, perhaps most importantly, how to make things happen with extremely limited time and resources. Yet, when soldiers return home following a deployment, the transition to civilian life can be jarring. Even with those valuable soft skills, there aren’t many obvious jobs in the private sector for a combat engineer or a fire support specialist. Perhaps even more challenging, according to Josh Carter, is their lack of connections. “The biggest thing that veterans are facing is network — they don’t have a big network,” he said. Carter is working to change that situation through Patriot Boot Camp , a series of programs under the Techstars banner that gives veterans the tools and connections they need in order to launch a startup. The nonprofit, which was founded by Taylor McLemore, Congressman Jared Polis and Techstars founder David Cohen, hosts multi-day “boot camps” in cities across the country that are designed to quickly immerse participants into the life and thinking of startups. Since its founding in 2012, the program has held nine boot camps in cities like San Antonio, DC and Austin, with its next program in Denver later this year. Carter’s own experience making the transition from the navy to the private sector is telling. He joined the service when he was 17 in the mid-90s, and over the following three years, traveled to 30 countries. The experience matured him, he explained, and on his return, he joined the telecom industry, starting his career climbing poles and eventually joining Twilio as an escalation manager and early employee. Twilio changed Carter’s life, encouraging him to pursue startups as his own career.

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Bag Week 2018: Chrome’s Vega Transit Brief makes your work vibe less uncool

You’re either a Chrome bag person or you’re not. And if you’re not a Chrome bag person, it might be time to give the newly Portland-based bag maker another look. I’ve been a fan of Chrome Industries bags for a long time, but over the years I’ve only owned two: the discontinued Mini Buran , a 15L, extra-small messenger by Chrome standards, and the Niko camera pack . I still use the latter periodically but I traded the messenger away early on because, in spite of being Chrome’s smallest pack and the only one that didn’t look cartoonishly big on my 5′ 4″ frame, I could never get the weight quite right. There are two reasons for that: 1) Chrome bags are huge and designed for huge hulking men and 2) I’m just not a messenger bag person. Taylor Hatmaker/TechCrunch Chrome’s lineup of industrial-strength messenger bags has typically appealed to hardcore bike types and dudes big enough to hoist its famously burly packs, but the company is branching out with a few new offerings that should excite anyone like me who covets their designs and build quality but just can’t make most of their stuff work. The Chrome Vega Transit Brief , part of Chrome’s new work-centric Treadwell collection , is one of those new bags. The Vega is made to appeal to professional types who maybe need to keep their look away from the “I’m a bike messenger who lives in a punk house” kind of vibe, but it’s still made of the pretty much indestructible ballistic nylon that gives Chrome bags their iconic look and feel. At first glance, the Vega looks like any generic laptop messenger, but unlike those (boring) you can carry the Vega three different ways. The first mode lets you carry the Vega briefcase-style, with a leather hand strap. The second mode converts the bag into a messenger with a detachable strap. The third mode (my favorite) happens when you pop out two hideaway straps from the back of the bag, turn it 90 degrees and carry the Vega like a backpack. For my purposes, I switched between hand-carrying the bag and putting it on my back to carry a 13″ MacBook and other odds and ends

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San Francisco-based Peek raises $23M Series B and inks partnership with Google in push to digitize travel activities (Jon Russell/TechCrunch)

Jon Russell / TechCrunch : San Francisco-based Peek raises $23M Series B and inks partnership with Google in push to digitize travel activities   —  Peek, a U.S. startup aiming to digitize the travel activities industry, has pulled a $23 million Series B round of financing and uncorked a partnership with Google that will help increase its visibility.

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