Dear Reader,
Welcome to the 50th edition of the good reads newsletter by Malpani Ventures. Sharing your weekly dose of articles for this weekend’s reading!
The Five Waves of Fintech
https://www.bvp.com/atlas/the-five-waves-of-fintech
The past does not predict the future but gives you good learnings and turning points to help you paint the future. Bessemer Venture Partners have identified 5 waves of the past which helped them make over 50 investments. Lessons from these will help today’s builders easily spot the swells of the next opportunity ahead:
Wave 1: Disrupting legacy business models- Fintech businesses created due to regulatory and macroeconomic shifts, not just technological advancements.
Wave 2: Unbundling financial services- Fintechs creating a structurally cheaper operating model to provide more user-centric products for customers via freemium pricing
Wave 3: Leveraging the vertical SaaS playbook- Vertical SaaS companies demonstrated significant growth potential, unseating incumbents and creating new markets by using a "Trojan Horse strategy" to land large customers and expand with new products and services over time.
Wave 4: Embedding fintech everywhere- Vertical SaaS leaders leveraged new payment products and embedded fintech solutions to expand their addressable markets, drive product stickiness, and expand their average contract values. And many application software providers began with monetization as their initial business model and using inexpensive software that solves industry-specific problems as their go-to-market strategy.
Wave 5: Re-bundling financial services with an “API for everything” and new orchestration layers- A renewed focus on sustainable economics led to a re-bundling of financial services with companies becoming full-stack financial institutions. Orchestration layers enable re-bundlers to provide a platform where its value was greater than the sum of its parts.
Auren Hoffman - A Deep Dive on Data
https://www.joincolossus.com/episodes/13721230/hoffman-a-deep-dive-on-data
What makes a great business?
To me, a great business is you could fire the top 100 people in the company and the business is still amazing. So the best business would be Visa. I'm sure the people who run Visa are amazing, and they're great, and yes, it's probably slightly more amazing that those people are there. But if we fired all 100 of them and replace them with my dead grandmother, it still probably works really well.
What is a key metric of the best businesses?
The best businesses have decreasing CACs over time. So a lot of really great software businesses, their CACs actually have been going up every year. To me, those are interesting businesses, but they're not great businesses. The best businesses, even if you think of like a great B2C business like Facebook or Google or Apple, their CACs are going down every single year. And then the higher the market share you have, the more likely you are, the CACs are going to go down.
Building or investing in a data business? Read this
The data businesses historically have not been great businesses. In fact, in the last 20 years, the only data business that's really, really broke out pure data business that has become huge is ZoomInfo. So there's been like 1,000 SaaS companies that have been unicorns and maybe ZoomInfo, maybe one or two other data companies that have been. So it's been probably a much better place if you were an entrepreneur or investor to be in SaaS than to just be in a pure-play data business..
Malpani Ventures is an investor in Clodura which competes with ZoomInfo in the data business - but offers much more value like insights & outreach along with data.
There are No Shortcuts: Intentionality and How to Scale Your Sales Org
Mike Flores drives GTM at Fractal Software. He shares his views on how B2B sales organizations become successful.
Sales shortcuts don't work
The startup world has a harmful habit of looking for shortcuts
There are no sales shortcuts and no shortcuts work, only hard work does
Intentionality leads to success
All successful startups are intentional about finding & pitching to the right customers, hiring the best sales reps, using the best tools, and analyzing the right data
Early adopters and pattern recognition
Find few account executives to lead sales motion and have experts in disqualifying opportunities
Use repeatable sales motion by finding the ideal customer profile
Intentional prospecting leads to scalable sales
Intentional prospecting trend gaining more traction
Intentional cold outbound email should demonstrate why the recipient and why your solution. This has 3x better win rates than a mass email
Measure everything
Without tracking sales metrics, it's impossible to make informed decisions
Don't rapidly scale sales org before establishing a repeatable and predictable sales process
Being intentional about sales data and metrics prevents guesswork and ensures sustainable and effective solutions
Until next time!