🏴☠️ ⚡️ The Physics of Growth & Reverse Engineering Success (Portfolio Performance & Strategy)
Welcome! This newsletter is dedicated to acquiring and operating Micro SaaS firms. Join us every Saturday morning for a chapter of this month's issue...
As noted in the last cut of Issue #17, moving forward we will be shipping ‘Portfolio Performance & Strategy’ editions as a standalone - just like this….
The publish date will also map to our evolving operating cadence, as opposed to part of our typical monthly issues.
With that said, this edition is likely a flavor unto its own. We are officially 6mths into owning / operating Port Co #1 so it’s appropriate we calibrate mid and long-term goals. Further, we are transitioning the majority of operations from 6wk Sprints to Quarterly OKRs.
I’ll leave it at that, let’s dive in…
TABLE OF CONTENTS:
REFLECTION & DIAGNOSIS
BY THE NUMBERS
STRATEGIC PLANNING
SWOT ANALYSIS
REVERSE ENGINEERING SUCCESS (Y3, Y2 and Y1 PLANS)
Q423 OKRs
🏆 PORTFOLIO PERFORMANCE & STRATEGY
📺 WATCH:
📻 LISTEN:
// REFLECTION & DIAGNOSIS
🥅 BY THE NUMBERS
MRR & ACTIVE SUBSCRIBERS
Comments & Observations:
We averaged .93% growth per month in Q3, which sets us up well to hit our target of ~1% MoM heading out of Q4 (FYI - much more on all of this in the Strategic Planning section). Net New MRR is choppy, but we’ve added $1.09k in the last 6mths. This gives us a $400 delta to hit our MRR ($) growth target in Y1. ARPU is the most important growth lever for us this quarter so look for a big impact here in Q124. Lastly, LTV is Steady Eddie. We are super proud of this, given we’ve managed to improve an already extraordinary churn rate (going from 1.5% to 1.35% YTD).
CORE PERFORMANCE METRICS
Comments & Observations:
You’ll notice we’re looking at new visitor sessions more closely now that we’ve dialed-in our always-on / owned channels (blog and social) and started to execute growth experiments (ie Webinars). Trial signups show signs of structural improvement, though I’m most proud of the improved quality - I skim trial user details each week - as we get ambassador referrals rolling coming out of our user’s busy season. This should translate to more paid users in subsequent weeks. Lastly, we’ve added Support Tickets to our core metric dash. We’ve had full visibility here for a long time, though inclusion on a comprehensive leadership dash is a signal of data / systems maturity.
WEEKLY SCORECARD
Comments & Observations:
We saw a nice pop in visitor sessions after our 1st webinar in W39, though traffic has come back down to a base rate of ~290 new visitors / wk. We’re thrilled to see the growth in Google / Search Engine following the energy invested in our blog (content) and social (distribution). In the same vein, the ambassador program is starting to bear fruit. LFG 🤘.
// STRATEGIC PLANNING
SWOT ANALYSIS
Switching gears, a refreshed take on SWOT is appropriate after 6mths in the saddle. SWOT can be a bit wonky (think: is this a strength or an opportunity? what’s the difference between a weakness and a threat?) so I wanted to share this simple visual representation before diving in:
STRENGHTS (INTERNAL & POSITIVE)
User retention (98.66%)
Modern Brand & Digital Presence
Always on channels: Blog and Social
User Engagement (Facebook Group, Monthly User Newsletter)
Tech stack: cohesive SOR (CRM, Support, Blog and Knowledge), Slack notification and alert hub
Documentation: Product workflows
Tech stack: v3 Scorecard (no code via Databox)
Support Leadership & Reputation
WEAKNESSES (INTERNAL & NEGATIVE)
Legacy / grandfathered pricing and monetization strategy
Universal onboarding (non-ICP / Segment based)
Lack of success-driven video content
Scaling support function (domain expertise / onboarding learning curve)
Dated UI; Misguided UX
Limited product usage viz
OPPORTUNITIES (EXTERNAL & POSITIVE)
400 users on legacy pricing (under-monetized)
Marquee ambassador
14x Ambassadors
THREATS (EXTERNAL & NEGATIVE)
205 Lifer-time deal users (no monetary contribution, service burden)
Horizontal competitors slashing prices
REVERSE ENGINEERING SUCCESS
“Truth - more precisely, an accurate understanding of reality - is the essential foundation for producing good outcomes.” - Ray Dalio
Before jumping into Y3 plans, I wanted to start with a table that is our guiding light, as it represents the reality (or the physics) of what we’re hoping to achieve. In sum, we’re here to 2x revenue in 3yrs. Sounds simple enough, though it involves a wide range of assumptions to answer questions like:
How fast will we grow at peak performance?
How long will it take us to achieve peak growth performance?
How much MRR do we need to add on average per quarter in Y2 vs Y3?
The table below represents our view. Where we know 3% MoM MRR growth is top quartile for comparable Micro SaaS firms. We also assume we won’t achieve that level of performance until Y3, though we’ll get better faster after Y1.
A point of view here is an important point of departure before seeking to further quantity mid/long-term goals. Base rates / comps and documented assumptions are your best friend. Own the physics.
NORTH STAR METRIC
MoM MRR Growth Rate (%)
Y3 PLAN
Date: 2026
Revenue: $460k
Measurables / what does it look like:
Exit at >3x multiple of ARR
YoY Growth (%): 35%
YoY Growth ($): >+$10k MRR
~MoM MRR Growth: 3%
Churn: <1.7%
General Manager / CEO
Y2 PLAN
Date: 2025
Revenue: $300k
Measurables / what does it look like:
YoY Growth (%): 20%
YoY Growth ($): >+$5k MRR
~MoM MRR Growth: 1.81%
Churn: <2%
Persona/ICP-based onboarding
1x established channel (Product channel fit)
Y1 PLAN
Date: Jan 2024
Revenue: $265k
Measurable / what does it look like:
YoY Growth (%): 12%
YoY Growth ($): >+$3k MRR
~MoM MRR Growth: .63%
Churn: <1.5%
Stable support and engineering function
Centralized visibility across business functions (metrics and alerts)
Always on marketing capabilities (SEO / Owned, Social)
~2x ambassador UGC / mth
Product UI / UX refresh designed and underway
1st growth lever (pricing & monetization) executed
Q423 OKRs
Thoughtful, well-communicated release of new pricing model to better monetize our users resulting in >15% MRR growth
Determine user impact (% of users moved to new plan and $ change), break even point (spectrum of MRR and Churn sensitivity) and revenue (net effect)
Execute competitive audit to inform view on negative impact to new trial users and paid user conversions
Execute multi-touch / channel communication strategy (3x email, 3x facebook group) to ensure awareness
Provide FAQ document / templates to support to navigate related convos in best practice manner
Update pricing page across digital surface area (Website, in-app)
Set up alert to monitor negative sentiment (Social / review monitoring) and template responses
Achieve an 85% or higher user approval rating for the release of new design system and brand settings
Execute multi-channel communication plan (email, social, in-app) to educate and orient users to the improvements (User feedback and communication)
Receive Tyler’s stamp of approval for each release in testing environment (Testing and QA)
Establish a comprehensive rollback plan for each release allowing for immediate action in case of unforeseen issues (Rollback plan)
Establish a method for flagging support issues re new releases, and assigning top priority (Monitoring and issue resolution)
Provide training materials and resources for all new features to the customer support team, ensuring they can address 90% of user queries without escalation (Training and Support)
Execute user survey regarding the smoothness of the transition (User Experience and Feedback Collection)
Test an alternative UGC tactic and compare against webinars to determine the next always on channel
Execute 2nd webinar and measure campaign results
Apply the RICE Framework to Select the Optimal User-Generated Content (UGC) Tactic from Multiple Options
Develop a clear hypothesis statement for the chosen alternative User-Generated Content (UGC) tactic, outlining the expected impact on engagement, conversion, and user satisfaction, within [specific time frame].
Execute the UGC tactic before Dec 15th and measure campaign results
Compare results and provide structured leadership recommendation
It’s always a pleasure my friends, see you next week with a deal tear down!