Rakesh Pullabhatla
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SaaS budgeting

7/21/2018

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I have created budgets for a lot of SaaS and non-SaaS startups and am sharing the budget template. If the company is mature enough you will need to use a system like Adaptive or Hyperion. However, the below google template can be used as a good starting point to create your budget for most of the startups. Please feel free to copy, modify and use.

Link to the Master SaaS budgeting spreadsheet
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SaaS Pricing

7/1/2017

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I created a SaaS pricing deck for one of my entrepreneur friends a while back. Updated it with changes and putting it here.
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Will an IPO by AppDynamics Succeed?

1/8/2017

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In wandering around the Internet as I follow interesting companies, I noticed some action with AppDynamics. AppDynamics is an intelligent application performance monitoring company. Check more here. Their total funding as of date is 350M+. More details here. They just filed an S-1 on December 28th, 2016. See here.
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The company highlights are as follows:
  • AppDynamics has 1,975 customers in 50 countries
  • There is a healthy growth. Comparing 9 months of 2016 with 2015, subscription revenue increased by 82% and revenue per customer increased by 51%
  • A great gross margin of 85% in its subscription business
  • Cohort analysis and dollar based retention rate show that “land and expand” strategy is working well

This Raises Some Questions and Thoughts

The cash flow from operations (CFO) for the 9 months ending Oct 31 2016 was only negative 2.2M USD. Can that be improved? CFO in the last quarter of 2016( Oct 31 2015 - Jan 31 2016) was 7M+. Is the company approaching positive cash flows?

How much of the current $12B TAM can AppDynamics capture? There is already plenty of competition including New Relic, which went public a couple of years back. They aren’t profitable either.

The Sales & Marketing (S&M) spend seems high. S&M spend is $118M for 9 months ending Oct 31st 2016 while Revenue increased only 56M during the period over the corresponding 9 months in 2015. Is this just “landing” in the “land and expand” strategy?

The S-1 takes this concern head on by stating:

“ Investments we make in our sales capacity will occur in advance of any return on such investments, making it difficult for us to determine if we are efficiently allocating our resources in these areas”.

New Relic ended the first half of the year with 122M in revenue whereas AppDynamics finished the last 9 months with 158M in revenue. New Relic as of Jan 6th had 1.6B in market cap and had been as high as 2B a few months back. What should AppDynamics valuation be? It last raised capital at 1.9B valuation.

​To sum it up, this will be a closely watched IPO in the tech industry, especially after a lackluster 2016.


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Business Systems for a Start-Up

6/8/2015

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First and last rule of choosing a system in this cloud era, never choose a client-server system.


Here are some of the business system recommendations for a startup:
  1. ERP system :  All startups start with Quick Books since it is cheap and very robust. There will come a time when you start hitting $1M in revenue and look forward to scaling fast. This is the time you bring in an experienced finance hire and a good system.  I would recommend two in particular, Financial force and Netsuite.  FinancialForce is built on Salesforce platform and is very easy to use and at least 8-10 times cheaper than Netsuite. However, financialforce is still a work-in-progress. Netsuite is the best of the breed for startups. Don't yet think about SAP or Workday, they will cost you an arm and a leg.
  2. Planning Tool:  Excel has many disadvantages but it is the easiest to use. However, you will need to start thinking about a tool as you rapidly grow. Adaptive Planning and Anaplan are your best bets.
  3. SalesForce:  I guess there is no competition here. 
  4. Expense Management: There are plenty to choose from. I would recommend Concur or Expensify.
  5. Invoice Payment system: Go with Concur or bill.com. Both have extensive routing and easy payment options. Concur has an added advantage of being integrated with Concur Expense management.  
  6. Applicant Tracking System: You can choose from Jobvite or Greenhouse. Get it early so you can have a headstart on the talent search.
  7. Stock compensation Management:  Your external legal team is already using either Solium or eShares to manage your cap table. Bringing it under your umbrella is very easy so you can do accounting stuff and get cap table as and when needed.
  8. Xactly:  There is not much competition here too. Xactly is the best Commission management tool and it will keep your sales folks up to-date and integrates well with Salesforce
  9. GSuite : It will get you a host of collaboration tools like Gmail, Calendar, GoogleDocs, GoogleSheets and GoogleSlides without the hassle of Microsoft suite.
  10. Business Intelligence(BI) System: BI systems become important as there is so much data and you need a single source of truth.  Invest in either Domo, Tableau or Zoho.
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Role of Head of Finance (CFO) in an Organization

12/13/2013

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As I embarked on my journey as a Head of Finance earlier this year, I envisioned it to be challenging. What I learned is something vastly different and very refreshing.

A typical CFO, I thought, is supposed to take care of only Accounting, FP&A, treasury, corporate development, taxes and compliance but to my pleasant surprise there is a completely different side to it.  A CFO is now supposed to assume the COO, CCO, CIO, CPO, CDO and CSO roles on a consistent basis.

Chief Operating Officer and Chief Collaboration Officer  The CFO is now called upon to execute strategies set by the board/management team.  That means collaborating across the organization and setting the big picture and goals for every department. The CFO is also now responsible for delivering results on a day-to-day basis.

Chief Information Officer  The CTO should focus more on the product and execution of the engineering team and not on the job as CIO. As the landscape moves to cloud, it is getting easier for the CFO to assume this role. The CFO should understand and integrate all the critical systems to facilitate a single source of truth.

Chief Data Officer There is data everywhere especially with the advent of big data analytics.  A CFO is supposed to simplify, convert and interpret data into real actionable insights. The CFO needs to understand and own not just financial but also sales, marketing, product and other operational KPIs.

Chief People Officer  Hiring and retaining talent has always been important. The CFO is now being constantly asked to talk to critical hires very early in the interview process for giving comfort. The CFO should also constantly keep the employees updated on the company’s plans and prospects. The CFO should also make sure that every department has enough bench strength to keep going in case of some unforeseen critical departures.


Chief Strategy Officer A CFO need to the big contributor to the Sales and Product strategy.  The CFO should also be able to marry finance, operational and external data(if any) into actionable strategy.

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   copyright 2010 Rakesh Pullabhatla                                     iamrakeshp@gmail.com                                                                   
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