Brad Feld

Month: February 2015

I am on the board of Sitrion, who just released their latest version of Sitrion ONE, which allows enterprises to deliver mobile solutions in one single day.

Many companies travel a long and interesting journey. When we invested in NewsGator in 2004, RSS was just starting to emerge as a protocol and wire up much of the content on the web. At the time, it was impossible to anticipate how the web would evolve, as 2004 was a particularly low point in the evolution of venture capital and tech companies. Of course, it was also the year that Facebook was founded, which is an important thing to remember about the relationship between perception in the moment and long term reality.

A little over a decade later, mobile is dominating much of the growth of the web. Every company we are involved in is working on a mobile app. Every Fortune 1000 company I’m in touch with is focused on its mobile strategy and figuring out how to build and deploy mobile applications to its employees, many of them who are now engaging in BYOD where their personal mobile device and work mobile device is the same iPhone or Android phone.

A year and a half ago NewsGator acquired Sitrion to expand from their historical Microsoft SharePoint ecosystem product footprint to include SAP via Sitrion’s products. We decided to rebrand the company Sitrion as we liked the name better. As a hidden gem, we got the beginnings of an amazing mobile product that Sitrion had started working on.

NewsGator also had developed key mobile technology, especially for the enterprise, but with a tight dependency on SharePoint. Last year the combined product team stepped back, thought about what it had, and redefined the vision of the company around the notion of “the industrialization of mobile.”

Daniel Kraft, the CEO of Sitrion, has a very simple explanation of what the product and team addresses. Today, mobile apps are hand-crafted solutions for a specific use case. Accordingly enterprises make investments in very specific projects and just start to look for ways to mobilize their entire workforce.

Instead of building a new app for each use case, Sitrion provides the customer with one app for each platform (iOS, Android, Windows Phone) and pushes all the required services (micro-apps) to this app based on people’s roles, context or even behavior. As a result, you can create many custom apps, for specific use cases, without having to have a developer create multiple apps.

We think this will result in up to 90% reduction in development costs as you actually don’t need any OS developers. Time to market is correspondingly faster and TCO drops dramatically. Instead of an employee having 25 different company apps on their BYOD phone, they have one “container” app with 25 micro-apps.

What do you think? Are we in front of an industrialization of mobile, or are enterprises just slow and need to wait many more years for mobile being the main way things get done in large companies, just like how it’s playing out with consumer behavior?


There are lots of blogs and anecdotes on (a) how to build a successful SaaS company and (b) what a successful SaaS company looks like. Yesterday’s post by Neeraj Agrawal from Battery Ventures titled The SaaS Adventure is another great one as he describes his (and presumably Battery’s) T2D3 approach.

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I was at a board meeting recently and heard something I’ve not heard before from a late stage investor. He described what his firm called the 40% rule for a healthy software company, including business SaaS companies. These are for SaaS companies at scale – assume at least $50 million in revenue – but my Illusion of Product/Market Fit for SaaS Companies correlates nicely with it once you hit about $1m of MRR.

The 40% rule is that your growth rate + your profit should add up to 40%. So, if you are growing at 20%, you should be generating a profit of 20%. If you are growing at 40%, you should be generating a 0% profit. If you are growing at 50%, you can lose 10%. If you are doing better than the 40% rule, that’s awesome.

Now, growth rate is easy in a SaaS-based business. Just do year-over-year growth rate of monthly MRR. You can do total revenue, but make sure you do MRR also to make sure you don’t have weird things going on in your GAAP accounting, especially if you have one time services revenue in the mix. It’s always worth backtesting this with YoY growth of gross margin just to make sure your COGS are scaling appropriately with your revenue growth, regardless of whether you are on AWS, another cloud provider, or running bare metal in data centers.

Profit is harder to define. Are we talking about EBITDA, Operating Income, Net Income, Free Cash Flow, Cash Flow or something else. I prefer to use EBITDA here as the baseline and then back test with the other percentages. If you are running on AWS or the cloud, this should be pretty simple and consistent. However, if you are running your own infrastructure, your EBITDA, Operating Income and Free Cash Flow will diverge from your Net Income and Cash Flow because of equipment purchases, debt to finance them, or lease expense. So you have to be precise here with which number you are using and “it’ll depend” based on how your SaaS infrastructure works.

While the punch line is that you can lose money if you are growing faster, the minimum point of happiness is 40% annual growth rate. Now, some people will focus on MRR growth rate, others ARR growth rate, and yet others on weird permutations of year of year growth rate by month. Others will focus on the same strange permutations for GAAP revenue to justify growth rate. Regardless, you need a baseline, and I’ve always found simply doing year-over-year MRR growth rate to be the easiest / cleanest, but I always make sure I know what is going on underneath this number by using the other calculations.

I often hear – from sub-scale SaaS companies, “we can get profitable right away if we slow down our growth rate.” And – that’s often a true statement, but you will end up being sub-scale for a much longer time when you end up with a 20% growth rate and a 20% profit. So – if you are going to raise VC money, get focused on the T2D3 approach to get to scale, then start focusing on the 40% rule.


I’ve been reading a bunch of history lately. So I was psyched to see a long post titled Never trust a corporation to do a library’s job highlighting some of the amazing stuff that the Internet Archive has done with the Wayback Machine and its other properties including the Live Music Archive and their Software Collection.

So – I decided to go down a website memory lane trip for Intensity Ventures (my personal investment company), SOFTBANK Technology Ventures (my first VC firm), and Flatiron Partners (Fred Wilson and Jerry Colonna’s first VC firm, which was an affiliate of SOFTBANK). As a special bonus, I was the webmaster for Intensity Ventures and SOFTBANK Venture Capital (for at least the first few years.)

Let’s start with Intensity Ventures on 12/23/96 (the first entry in the Wayback Machine). The URL is www.feld.com (just like site for the page you are currently on) – I’ve owned the feld.com domain since 3/2/95, although apparently I have to get Seth Levine’s permission to change things now. Here’s the home page.

Intensity Ventures website

If you want to play around, just click on the image above and then start exploring from within the Wayback Machine. For example, take a look at the Companies page.

Intensity Ventures Company Page

Ok – time to move forward in time to 12/5/98, the first time the Wayback Machine grabbed a copy of the SOFTBANK Venture Capital page which at the time was called SOFTBANK Technology Ventures. Note the four partners and the various office addresses, including mine in Eldorado Springs, Colorado.

SOFTBANK Technology Ventures

If you want a little more SOFTBANK Technology Ventures, take a look at the Partners page.

SOFTBANK Technology Ventures Partners

You’ll note a few extra partners here. Ron Fisher, who at the time was Vice Chairman of SOFTBANK Holdings was responsible for watching over us for SOFTBANK. Ron is one of my favorite people on the planet and has been an incredible mentor for me. Any time he calls me about anything, I make sure I do everything I can to help make sure it happens.

You’ll also notice Flatiron Partners on the list. At the time, it was jointly funded by SOFTBANK and Chase. Fred Wilson and Jerry Colonna owned the firm but SOFTBANK and Chase were their LPs, they were an extended part of the SOFTBANK team, and we were an extended part of their team. There is a ton of history here that’s good basis for longer blog posts at some point, but for now I’ll leave you with the Flatiron Partners website from 3/29/98 along with a special bonus link to the Flatiron Partners 1996 Holiday Card.

Flatiron Partners

It’s always useful to remember that humans can modify their view of history, but the Internet never forgets.