The Model

Honestly, when I started building YayPay in 2016, it was a challenge for me to understand clearly how the SaaS business works. It took me some time to get comfortable with it. And even now, after becoming an investor and mentor, I continue to learn new ways to look at the metrics of the SaaS business. If I'd a tool like this back then, it would have made my life much easier.

To help founders I advise, I've developed a SaaS model that helps founders to:

• Build an intuition around SaaS metrics and how they're connected
• Play with the numbers to see how they can be optimized
• See the data on clear charts
• Learn the industry guidelines and make changes to meet them

To start, you can make a number of assumptions, such as:

1. Projected level of spend on R&D, Sales, G&A etc.

2. ACV

3. Churn Rate

4. Client Growth Rate

Based on these assumptions, the model calculates the company's performance for the next 2 years, which is presented as a series of more than 30 common SaaS metrics:

1. Runway

2. Net Burn

3. Gross Margin (%)

4. S&M as % of Revenue

5. ARPU (MRR/Total Clients )

6. CAC

7. LTV/CAC

8. Burn / MRR

You can check the performance of this imaginary company in the detailed charts.