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THE CENTER OF GRAVITY FOR ENTREPRENEURS IN TEXAS

The Unprofitable SaaS Business Model Trap

By Joshua Baer |  08/07/2013 | Growth Phase

(Contributed by Jason Cohen, Capital Factory Partner)

Marketo filed for IPO with impressive 80% year-over-year growth in 2012, with almost $60m in revenue.  Except, they lost $35m.  WTF?

It’s not impressive when you spend $1.60 for every $1.00 of revenue, force-feeding sales pipelines with an unprofitable product.  Don’t tell me this is normal for growing enterprise SaaS companies. I know the argument: The pay-back period on sales, marketing, and up-start costs is long, but there’s a profitable result at the end of the tunnel.  Just wait!

Read the full blog post here.

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