How much churn is too much?

leaky-bucket

I have often said that churn (the rate at which customers cancel their subscriptions or otherwise stop buying from you) is the most important metric for  a recurring revenue business. Why?

  • The longer a customer stays, the more they are worth.
  • The more they are worth, the more you can pay to acquire them.
  • The more you can pay to acquire your customers, the faster you can grow.
  • The faster you grow, the more capital you can raise to further accelerate everything. It’s a virtuous cycle.

The question I often get then is how much churn is too much? Read More

No more limits for Canadian Tech

Screen Shot 2015-05-22 at 6.25.14 AMYesterday was a huge day for the Canadian tech scene with Shopify‘s long-awaited IPO finally happening. In its first day of trading the company that began as Tobi’s little rails app gained 51% in market value and is now worth approx. ~ $1.8B.

Having been involved in the Canadian startup scene since the 90s the big thing for me here is that there are no more limits. It was accepted wisdom for many years that we just couldn’t build big technology leaders here in Canada. Yes, we had some exceptions (Blackberry, Nortel, etc.). But by and large our tech companies have been smaller and sold early.

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The importance of board control

I spoke with a friend recently who was forced to step down as CEO of his startup. The board felt he wasn’t getting the job done and that was that. Happens regularly. But in this case, he had only raised a small amount of capital, so his CEO job should never have been in question.

The issue here was that this founder had ceded control of the board. What this means is that outsiders had a right to appoint the majority of the seats in the board.

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Can this be a $B Startup???

billion

How often have you sat in front of VCs or advisors and been asked ‘Can this be a billion $ business?’. I have. I find it to be an incredibly frustrating question. When you’re at the start of your business, if you’re spending time thinking about how to be a billion $ business, you’re wasting time.

Here are some stats: There are 100s of venture firms investing in many 1,000s of startups. Out of all of that activity there are 80 privately held technology companies worth $1B (source: CBinsights) in the US. In Canada, there are two (Shopify and Hootsuite).

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