When Macro Questions Appear, Focus on the Micro

April had a whole lot of macroeconomic whiplash - with promises of more to come. 

When the economy gets bumpy, it’s easy to get caught up in all the big-picture questions: What’s happening with interest rates? Will tech budgets freeze? How long will sales cycles stretch? These are important questions—but in B2B SaaS, the companies that stay resilient don’t just track the macro. They double down on the micro: deepening customer relationships and proving real value, day in and day out.

Here’s why it matters. In tight markets, customers who already trust you are your best source of expansion revenue. This may seem obvious, but the differential seems to be growing in B2B SaaS – for most companies in all industries it’s 5–7 times cheaper to retain an existing customer than to acquire a new one (hat tip to Harvard Business Review on this stat). Existing customers are also your best advocates—critical at a time when word-of-mouth and peer references carry even more weight.

Another hard truth: buyers are demanding rock-solid ROI before signing anything. According to Gartner, 77% of enterprise technology buyers require clear, quantified ROI before approving a purchase, up from 54% just five years ago. (And for what it’s worth, we think that percentage is only going to go up now based on what Big Band sales teams and CEOs report back.) So, no matter how promising your features are, if you can’t show real financial outcomes—cost savings, productivity gains, direct revenue impact—you’ll struggle to get deals over the line.

That means now is the time to get serious about data. Build ROI calculators, create case studies with real numbers, and hold regular business reviews that tie your impact directly to customer goals. In a market where every dollar is under the microscope, being able to prove your value isn’t optional—it’s essential.

Focusing on existing customers and measurable impact isn’t just about survival, either, it’s about prospering via retention. Loyal, successful customers expand more, churn less, and open the door to new opportunities through referrals and upsells. So, the ROI calculators and the hard data on how you help your customers aren’t just for new sales: they are also for customer success teams and expansion revenue.

The bottom line? You can’t control the macro. But you can control how valuable you are to your customers right now. Focus where it counts—on delivering clear, provable outcomes—and let that momentum carry you through whatever the market throws your way.

THE PLAYLIST (What We're Watching, Reading, and Listening to)

HBR Roundtable: Adapting to the New Reality of Tariffs - Three experts give their weigh-in on how organizations are navigating the prospect of new U.S. tariffs.

Real-Time Inflation Tracking & Forecasting – Our majority investors, ParkerGale Capital, speak with their portco OpenBrand and Chief Economist Ralph McLaughlin on their approach to tracking inflation through CPI-DPG.

A Reminder from Warren Buffett – Circle of competence and patience matters.

IRL (Where You Can Find Us)

Kevin, Chris, and Chloe are looking forward to representing the Band in New Orleans from June 23-27 at SaaS Academy, connecting with driven SaaS founders. Feel free to reach out if you attended and want to continue conversations!

The Band is also hosting a founder Jam Session office hours and happy hour in Philly this upcoming week. Register here and spread the word!

Our Philly “Jam Session” is officially one week away. Mark your calendars for an authentic “office hours followed by happy hour” with Big Band CEO, Kevin McArdle, Big Band COO, Jason Heath, WorkZone CEO, Ash Didwania and DocLib CEO, Stephen Rosenthal, among incredible founders like you.

Following the office hours, we invite you to stay for our unstructured happy hour with light snacks and bites. Completely free— including priceless company.

Office hours will begin at 4:00pm, located at Frankford Hall (see registration for address).

You can register here, and share with your friends who are close to the Philadelphia area.

No slides. No panels. No pitches. We are excited to see you!

Big Band is rollin’ into town, and we’re bringing something new with us.

On May 1st, Big Band Software CEO, Kevin McArdle, and COO, Jason Heath, will be in Philadelphia, joined by two of our incredible portfolio CEOs local to the area  — Ash Didwania and Stephen Rosenthal — for a new kind of founder meetup we’re calling the SaaS Jam Session.

It’s part office hours, part happy hour, and 100% for SaaS founders.

No slides. No panels. No pitches. This event is made for pure collaboration and casual connection. Whether you're still figuring out what customers want, or you're working through how to scale what’s already working, we think there’s value in stepping out of the day-to-day and talking it out with others walking the same path. This is your chance to hang out, share learnings, and connect with people who get it.

You can register here, and let us know other incredible founders who may be interested that we can send an invite to. The location is to be determined, so keep an eye on your inbox!

We are excited to jam with you!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

Google’s Perspective on AI & Startups - Predictions, advice and “what’s next” from the perspective of incredible leaders at Google

Pass the Torch. Trust in Izzi – Izzi Software CEO Jennifer Nelson is hosting an anonymous webinar to educate on their mission and answer any questions for founders looking to sell. You can register using the link.

San Diego SaaS Scene – in honor of SaaS Academy’s latest event being hosted in San Diego, CEO Johnny Page highlights the top 30 local SaaS companies

IRL (Where You Can Find Us)

Kevin, Chris and Chloe represented the Band in San Diego at SaaS Academy, connecting with driven SaaS founders. Feel free to reach out if you attended and want to continue conversations!

And of course… we can't wait to see you in Philly!

February had two major events for the Big Band team and portfolio: our inaugural Big Band Leadership Summit in Nashville and the SHARE Conference in Washington, D.C. We came away super energized by both events and also aware that more our teams, customers, and partners are craving in-person connection. Count us in!

At the first Big Band Leadership Summit, our team came together to build deeper connections, share insights, and collaborate as we start to execute on 2025 plans. With discussions ranging from the evolving role of AI in product roadmaps to excelling via EOS within our companies, the event reinforced a simple truth: we are stronger with collaboration. Also true: If your company name is Big Band, Nashville is a great place to convene…Do visit if you haven’t!

Our next event was also high energy but is much more established. The SHARE conference in Washington, D.C., has been around decades and is where the folks who manage the core of the enterprise - the mainframe - go to learn and innovate.  Our team engaged with industry leaders on mainframe modernization, security, and cloud integration, just to name a few. It was the first time debuting our new operating company, Izzi Software, which recently acquired ColeSoft Marketing. CEO Jennifer Nelson captured the spirit of SHARE in her reflection:

“This week at SHARE in Washington, D.C. has been phenomenal. Reconnecting with good friends and colleagues has truly rejuvenated both heart and mind. It’s been inspiring to learn about everyone's current focuses, exchange ideas, and discuss potential collaborations—reflecting the grassroots principles upon which this organization was founded.”

From leadership roundtables to technical deep dives, both events reminded us of the value of learning from one another. As we move forward, we’re excited to build on these insights, strengthen our partnerships, and continue driving innovation in the enterprise IT space.

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• The Complete History and Strategy of Berkshire Hathaway - How did a folksy, middle-class kid from Omaha become the single greatest capitalist of all-time?

• Chris Hoffman - A reminder of the unseen struggles in PE

• 400 Pages of Warren Buffett and Charlie Munger - Alex Morris’ analysis on over 1700 questions answered by Munger and Buffett’s annual meetings

  IRL (Where You Can Find Us)

• Looking forward, Kevin, Chris and Chloe will be representing the Band in San Diego throughout the next week at SaaS Academy, connecting with more driven founders. Feel free to reach out if you will be in attendance!

We are thrilled to announce the official launch of Izzi Software, dedicated to acquiring and nurturing innovative businesses in the IBM z and IBM Power industries. Our vision for Izzi is that it will become a trusted provider  in the enterprise and midrange software space by bringing together successful companies and solutions that serve the mission-critical needs of its users.

In its first major move, Izzi Software has acquired ColeSoft, a Virginia-based leader in debugging tools for IBM mainframes. After spearheading outreach in the space, Jennifer Nelson has officially joined as CEO. Steve Nelson, whose career includes 15 years at Rocket Software and executive leadership roles at CCA and VMS Software, will work alongside Jennifer to steer the company as it continues to acquire complimentary companies throughout 2025.

Izzi’s mission is to revitalize and expand the ecosystem of tools and services that have long been the backbone of enterprise and midrange systems infrastructure. By building a portfolio of innovative companies, Izzi ensures these foundational systems remain indispensable in the modern world.

Explore the Full Story
For more details about Izzi Software’s launch, its acquisition of ColeSoft, and plans for the future, read the full press release here.

This is just the beginning of an exciting journey for Izzi Software, and we are eager for collaboration as we expand our reach. Feel free to reach out to info@izzisoftware.com to learn more.

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• Now Wanted in Silicon Valley: Ho Hum Businesses - Venture-capital firms are bringing AI and dealmaking to accounting, property management and other unglamorous fields

• Predictions and Strategies for 2025 - Jim and Paul discuss economic uncertainties, private equity challenges, and evolving market strategies

• Trends to Expect in The Mainframe Space in 2025 - What many see as a sleepy technology, the mainframe is set for another year of permanence and relevance

IRL (Where You Can Find Us)

• Several members of the Big Band team are preparing to attend the SaaS Academy March Intensive in San Diego. Feel free to reach out if you are planning to attend!

• The Big Band team hosted their first leadership summit in Nashville last week! It marked an important milestone for the company as all of our executives had a chance to meet and strategize for the year to come.

Our Portfolio Companies are Hiring!

• Workzone SVP of Engineering and Product: apply here.

• Workzone Senior Customer Success Manager: apply here.

• Inphonite B2B Sales Representative: apply here.

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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In light of ringing in the new year, we’re excited to share reflections from Ash Didwania, Workzone's CEO, on implementing the Entrepreneurial Operating System (EOS) into WorkZone’s operations. After Big Band acquired Workzone in December 2023, Ash and his team dove into building a strong operating rhythm to drive clarity and scalability. From creating a shared vision to refining processes and aligning priorities, EOS has been a game-changer.

What challenges or pain points led your organization to adopt the Entrepreneurial Operating System, and how did you identify EOS as the right solution?

After Big Band’s acquisition of Workzone in December 2023, one of the foundational blocks we wanted to establish was a solid “operating rhythm.” That meant putting in place a core set of guiding principles and processes that govern how the company operates on a day-to-day basis. 

More specifically,

• A long term vision that employees, customers and partners could feel inspired by

• An organizational structure with clearly defined roles and responsibilities 

• A structured approach to ensuring we constantly had the right people in the right seats 

• Specific measurable goals to pursue in the short, mid and long term

• Using data to track progress against the goals, assess, and course correct as need be

• A set of core values that define how individuals show up on a daily basis

• An approach to identifying and solving issues throughout the organization 

• An effective way to running meetings, at the leadership and department levels

• A common set of processes everyone followed to scale the company effectively

As one can imagine that is quite a list! Fortunately, in prep for the CEO role, the Big Band team had recommended the book Traction by Gino Wickman, the creator of EOS. 

Half way into the book, it was clear to me that we couldn’t find a more practical set of tools and frameworks to govern the organization than EOS.

3 months in, we identified an implementer and formally kicked off the EOS program with the Workzone leadership team.

What changes or improvements have you noticed in your organization since implementing EOS? Any success stories?

To say that EOS has transformed Workzone’s operating rhythm, would be an understatement. Three specific changes EOS has enabled for the better are:

1. Establishing not only a long term vision for the company but specific 10 year, 3 year, 1 year goals. This has enabled us to adopt a long term lens even in day-to-day activities which has led to a more scalable way of doing things 

2. Getting the organization focused on fewer but clear priorities every quarter through “rocks” - 90 day goals set at an organizational, department and individual level. This has ensured execution remains a constant priority and has eliminated distractions 

3. Equipping managers with people assessment tools like “get it, want it, capacity to do it” (GWC) that make performance management an objective exercise. Additionally, the framework eliminates the possibility of unconscious bias by standardizing the approach of people related decision making.

How has adopting EOS impacted your leadership team and the way you make strategic decisions?

At a tactical level, the weekly L10 leadership meeting format has made it easier to identify and constantly elevate issues throughout the organization thereby minimizing “problems waiting for solutions.”

On a more strategic note though, the decision making approach itself has become more objective wherein the emphasis is on a combination of three factors: (1) impact of the decision on 90 days rocks (2) alignment with the vision of the company (3) alignment with the company’s core values.

Lastly, EOS has equipped the leadership team with “shared language” that makes it easier to resolve conflicts and align on a common path amidst differing opinions.

For example, we often revert to one of our core values “being customer obsessed “ when dealing with conflicting opinions on product or GTM decisions.

Similarly, when faced with competing priorities, we revert to the 90 days rocks being the guiding light to decide what takes precedence.

Were there any initial challenges during the implementation of EOS, and how did you address them? How has it evolved in the organization?

Like any new initiative, there is always a sense of the unknown in the beginning including healthy skepticism. 

I was personally skeptical of EOS being one of the many other frameworks that appeared theoretically sound but difficult to implement, so the very first step was to get out of my own head and let our implementor, Nick Perold, and the tools do their job.

Subsequently, something like an EOS was entirely new to Workzone which meant it was important to not only communicate the “why, what, how” to the team but do so repeatedly till it all started making practical sense at an individual employee level. EOS itself recommends repeating something seven times for it to truly land, a guiding principle that was effective.

Lastly, the awesomeness of our implementor combined with the fact that EOS rollout includes the entire leadership team from Day 1, made the learning and implementation process a collective exercise, resulting in expedited progress.

Since then, we’ve rolled out EOS to all employees who now use a combination of rocks and company core values to go about their day-to-day. 

Now that you've been using EOS, how do you see it evolving within your organization over the next few years? Are there aspects of EOS that you’ve tailored to better fit your company’s unique needs?

Even though we’ve been running on EOS for 9 months, I believe we’ve barely scratched the surface of its true potential!

The pieces we are most excited about on the EOS evolution journey are:

• Working backwards from our mid-long term goals (3 years, 10 years) by chipping away through quarterly rocks. Being able to translate vision to execution is a great motivator at Workzone

• Becoming more consistent with hitting rocks and scorecard benchmarks, thereby optimizing operating rhythm

• Seeing how our core values hold up over time as the company scales

Speaking of tailoring EOS to our unique needs, a component we’ve gone all in on are core values.

At most companies, core values remain constrained to slideware, but at Workzone we’ve truly tried to make them come to life. We do weekly shoutouts on the All-Hands acknowledging people for exhibiting core values, have a slack channel for real-time shoutouts, and even have a monthly award to appreciate individuals who not only move the needle on rocks but do so by exemplifying our core values. Lastly, every key decision is based on core value’s alignment.

This approach has helped us institutionalize them across all levels and departments of the organization.

In our experience, EOS shines brightest when its core guiding principles, tools and frameworks are combined with the unique traits of an organization - firm enough to let the core components do their job while being flexible enough to nurture the inherent strengths of a company.

EOS has revolutionized how Workzone operates, fostering a culture of focus, alignment, and shared values. With Ash Didwania leading the charge, the team has embraced EOS to work smarter and achieve consistent progress. At Big Band, we aim to support our portfolio companies in implementing EOS because we believe in its results. We look forward to seeing its further success into 2025!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• Debanking (and Debunking?) - Patrick McKenzie highlights the interplay between private banking decisions, regulatory actions, and political influences

• Breakfast with Brad Jacobs - Brad Jacobs discusses his book, How to Make a Few Billion Dollars

• Fed Cuts Rates by 25 Basis Points - Reflections on The Federal Reserve reducing interest rates by 25 basis points this past December, and what it signals going into 2025

IRL (Where You Can Find Us)

• Several members of the Big Band team are preparing to attend the SaaS Academy March Intensive in San Diego. Feel free to reach out if you are planning to attend!

• In mid-January the Big Band team is convening with portfolio company leaders in Nashville, TN for our annual Leadership Summit.

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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Just eight months ago, Stephen Rosenthal was wondering what an exit might look like and took a step by engaging with Big Band Software. Fast forward to today, he’s not only successfully partnered with Big Band but has also chosen to remain in his role at DocLib as CEO, continuing to drive its growth and bring his vision to life. From a pre-med student with dreams of becoming a surgeon to a tech entrepreneur reshaping an industry, his journey has been anything but conventional.

A pivotal moment came when he transitioned from selling medical devices to diving headfirst into tech, joining his father’s business to tackle its most pressing challenges. Not one to shy away from risk, he took the ultimate leap—buying out his father and his business partner to make DocLib his own. Recognizing the opportunity to scale beyond its niche, Stephen found in Big Band a partner whose vision and values aligned with his own.

 The rest is history, but you can hear it for yourself:

Can you tell us first how you first got involved in - and ended up buying DocLib?

Depends on how far back you want to go! I went to school with my sights set on becoming an orthopedic surgeon. This started with a Biology / Pre-Med degree and ended when I realized I couldn’t start my career as a surgeon until my 30s! An opportunity to sell medical devices sprung up and I was able to work my way into Stryker Orthopedics selling their trauma line. This quickly burnt me out and I decided to pivot into tech. I had always told myself that I would not work for my father and that I needed to prove myself on my own instead of working within his business. This all changed when he gave me the awesome opportunity of coming on to help figure out sales and marketing for his software product, DocLib. But I had a longing to work on the biggest problems in his business which at the time were not just sales growth. This led me to starting my own consulting business and bringing DocLib on as a customer. After a year of this, the opportunity presented itself to buy out my dad and his business partner. I leveraged it all and bought his business!

What made you think - after successfully growing a business you’d bought - that it might be time to sell and get help for the next legs of growth?

Believe it or not, I was not ready to sell! It was all Chris Reedy’s good looks and charm. In all seriousness though, I had planned to sell this business in 2027 or beyond at the right price. My decision to sell is very closely linked to who Big Band is as a company and what they offered. I believe the offer they made was phenomenal and worth looking into.

Can you talk a little bit about your team and the work culture you’ve prioritized there?  How have you done this - including key team members?

I am a STRONG believer that business is not worth doing without prioritizing relationships. We have hired a police officer, a hotel clerk, and everything in between. I believe that we are designed as people to be in community with one another and are not designed to simply build the biggest empire for ourselves to enjoy. One of my closest friends, Jeshal Mistry, has served as our Director of People & Culture since day 1 of my involvement with DocLib and we have immensely benefited from his leadership in this area. He has a knack for applying the concepts I just mentioned to each decision in our business. He is my right hand man in the business and we allow our prioritization of people to influence and guide each of our decisions. We have made plenty of mistakes along the way but by God’s grace we have been able to build a business to be proud of. Here is a link to a great video about our culture.

What initially drew you to engage with Big Band?

I had not heard of Big Band until a SaaS Academy Intensive in February. SaaS Academy is a great organization to learn everything you might need to know about running a successful software business with great content, community, and events. Big Band is a Partner of this organization and it is through my work with SaaS Academy as a client that I first met Chris and was introduced to Big Band. What drew me to Big Band was their unique perspective on continuing to build the businesses they buy. I have had some experience both first and second hand in private equity and in general, there is negative sentiment about what happens to your business after it is sold. Big Band has shown a commitment to building for the long term and has undergirded this verbal commitment with action.

What aspects of Big Band’s vision or strategy convinced you that this was the best move for your company?

Circling back to the prioritization of people, I saw Big Band’s long term focus as essential in continuing to build the right type of company. There is certainly a strong prioritization on financial health as this is essential to Big Band’s business model however, there is also a recognition of the types of investments that are required for sustained growth.

What excites you most about staying on with Big Band Software / as the CEO of DocLib?

I have so much to learn. Jason, Kevin, Chris, and Chloe have a wealth of knowledge that I long to glean from. The financial proficiency is top notch at Big Band. I work directly with Jason on this front and his history with GoDaddy, Lead Pages, WebPt, and others give him the credentials for an honorary doctorate in financial management of software companies rooted in reality. The rooted in reality part of this statement needs to be underlined. Jason has a strong sense of how to keep a company financially healthy and how to leverage financial health for growth. I have learned and am continuing to learn so much from Chris and Chloe about acquisitions especially since there are some awesome opportunities to build out DocLib with more acquisitions. I get to work directly with them on deal mechanics for the businesses we have targeted and am actively learning how to build a robust closing memo! Kevin introduced me to the concept of a Quarterly Business Review and has had great, constructive feedback for me. The Quarterly Business Review is a powerful tool and I wish I had been doing them prior to our deal. It has provided alignment for our leaders and focus on the most important priorities in our business. It also brings some brilliant minds together to stress test each of our goals and the assumptions behind how we will meet them.

What opportunities do you see for your product/team as part of Big Band Software?

Moving into new markets is the top opportunity we see at DocLib as a part of Big Band. We can move with confidence and grow DocLib out of the singular niche it has served for 3 decades. Proper execution of this opportunity will propel DocLib into the next level as a software company and I see Big Band and their expertise as essential in bringing this opportunity to fruition.

What is a piece of advice you would give Founders as they are thinking about a potential exit partner?

When thinking about an exit for your business, I have one recommendation . . . Do your homework. I know Kevin has a great resource in planning for an exit and you should check that out but once the process is started, you do not want to lose momentum by doing your homework for the first time. Make sure you find some top notch professionals to support your deal. You need a good lawyer that has experience in these deals and that you can keep in line to ensure the deal gets done. Don’t be afraid to compromise and don’t sweat the small stuff with your deal. You need a good accountant that can help you navigate what each of the deal terms means for you financially and has the heart of a teacher to help you understand holdbacks, working capital, tax implications, rollover equity, and much more. Look for people with experience in your industry / deal size, and ensure it is someone you can trust. There will be challenges in getting a deal done. It will feel like the deal might die. It’s ok. Put one foot in front of the other and keep pushing it along. 

What’s been harder than you thought about the acquisition - either the process or executing within Big Band? (Yes, we’re really asking that question in public, because we want to know and others will, too.)

There are two answers that come to mind for this question. One is very tactical and one is very theoretical. Tactically speaking, I struggled a bit with the role of Big Band’s board in my deal. It was not clear to me prior to signing the Letter of Intent that the Big Band board could keep the Big Band leadership team from executing on a transaction. Ultimately this did not come to fruition otherwise our deal would not have been done! I think Kevin in particular really helped me navigate this bump we hit in our process and provided clarity on how to overcome the obstacle. Secondly, I have been challenged with my mindset post acquisition. I am a scrappy entrepreneur and entrepreneurship is what I love. Selling my main business has been a challenge for me since a part of what I do professionally has dramatically changed. I appreciate Big Band and how they operate post sale but it is still a big shift away from my previous mode of operating. This, of course, is not all negative but it is one of the biggest adjustments / challenges in executing within Big Band. Keep in mind, I am also unique in this position as all other business leaders within Big Band’s portfolio were not the owners / operators of their businesses pre-acquisition. They are newcomers to the business.

Stephen’s decision to partner with Big Band Software wasn’t just about numbers—it was about aligning with a team that shared his vision for long-term impact and people-first leadership.

As CEO of DocLib under Big Band’s umbrella, he’s poised to guide the company into new markets and levels of success, all while maintaining the culture and values that make DocLib exceptional. His advice to other founders considering their next steps? Do your homework, find partners who align with your vision, and never stop learning. With Big Band, Stephen is doing just that—building off of a foundation of success with a team that believes in him.

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• Brent Beshore - A reflection on the what it takes to run a successful holdco–from the head to the heart 

• Run Your Career as a Business - Stephen Rosenthal talks identifying your ICP, creating meaningful products and services and exchanging value to drive results in your business

• CRO to CEO - Ash Didwania, CEO of Workzone, reflects on shifting your growth mindset from short to long term

IRL (Where You Can Find Us)

• Several members of the Big Band team flew to Chicago for the SaaS Academy events October 23-25 and 27-29. We were happy to connect with countless founders and are eager to follow-up with more attendees to talk about their potential dream exits and how the Band can help today.

Join The Band

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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It’s an exciting time here at Big Band Software. Despite what’s being called a challenging M&A landscape, we’re thrilled to report we’re staying busy and building! With our recent addition of DocLib to the Big Band family, alongside Workzone and Inphonite, we are hard at work growing our existing portfolio of businesses. But there’s more...

It seems like it was just yesterday that we welcomed Jennifer Nelson into the Band and started building out our IBM mainframe and power system portfolio vision. Now, we’re thrilled to share that we’ve just closed on an exciting foundational company in this space! Thanks to Jen’s incredible leadership, we’ve not only found great alignment but also established a shared vision with a widely trusted company and product critical to the core of enterprise development. Together, we’re laying the foundation for a cohesive, high-impact IBM portfolio under her guidance.

This company chose Big Band Software as their exit partner because we’re committed to the values that really matter to founders and leadership team. We make culture a top priority, ensuring a smooth integration that respects each company’s unique identity. Our track record for closing deals is another big draw, especially in today’s market. Beyond that, we’re dedicated to elevating each product and team, building real connections across our portfolio to drive growth, innovation, and collaboration. Each team sees the chance to be part of something bigger, and we’re excited to keep growing that vision together as we build a thriving IBM mainframe ecosystem alongside the rest of our portfolio.

In summary, the Band is jamming! And we’re more excited than ever to keep up this momentum with other planned closings in the coming months. 

Thank you for being part of our journey. Here’s to an impactful, productive close to 2024!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

•  How to Build a World Class Team - How Zach Bryan and Bruce Springsteen were able to build foundational teams that catapulted their success

• The State of Private Equity in 2024 - an observation of how the M&A market has been defying or following expected trends throughout this year

• Working Capital Cycles - a reflection on how your working capital cycle may be secretly killing your business’ cash flow

IRL (Where You Can Find Us)

• Several members of the Big Band team flew to Chicago for the SaaS Academy events October 23-25 and 27-29. We were happy to connect with countless founders and are eager to follow-up with more attendees to talk about their potential dream exits and how the Band can help today.

Join The Band

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

Was this newsletter forwarded to you? If so, subscribe by clicking the button below and follow along with our journey!

It is hard to believe it has been a year since the Band released our first edition of the Annual Exit Planning Workbook. Since then, we have had the chance to present and send it to hundreds of software founders so that they could start to envision their dream exit and understand the steps to start taking in order to achieve it. We like to think that this workbook is truly a collection of a thousand experiences of founders we have had the pleasure of working with, and we are always looking for ways to improve and change the material.

This past year, as we showcased the workbook at many events we actively invited founders to not only complete it but also give feedback and let us know what's missing. We are excited to release our revamped “Version 2”, with the hope to continue building off of ongoing feedback and we invite every founder to play a role in its development. 

So what is new?

Big Band received a lot of feedback on how to define and mitigate risks as well as how to tell a story with your metrics.

As you identify the risks in your business today, the answer is not always to make them disappear. Potential buyers are eager to find gaps for value creation within the business as it stands today, and having a plan for mitigation or building strategy off of your risks can turn into an enticing incentive on the buy-side. For example, we listed some of the top identified risks we have seen and how they can be staged for value creation:

 Secondly, it is not only important to understand how your key metrics are standing today but from a year over year perspective as well. Metrics are the key to communicating success, and it is not useful to throw historical perspectives out the window. Your metrics are pieces of your company's story and show the growth and payoff of initiatives and strategy.

We worked in a spot for you to compare your metrics year over year in an attempt to tell the story instead of “reading the cover”. Here are examples of how you may tell a story using your metrics:

• Increased marketing expenditure bolstered logo acquisition

• New contract structure + price increase boosted ACV and improved NRR

• Gross margin increase as we shifted to increasing SaaS revenue and diminished reliance on service revenue

Big Band is excited to present this refreshed workbook to you all and remain eager to continue building off of the foundation using the voices of more founders.

• Feel free to download it here!

•  If you have any questions or feedback, feel free to connect with Kevin here and drop him a message.

THE PLAYLIST (What We're Watching, Reading, and Listening to)

•  Chenmark’s Weekly Thoughts: Lee’s Donuts - “Your business will grow to the same extent that YOU do”

• The AI-Powered Solopreneur - Arvid Kahl, friend of the Band talks about how AI has transformed his strategy for building his business

• SBA’s New Approach to Rollover Equity - How the recent shift in SBA funding may level the playing field for searchers

IRL (Where You Can Find Us)

• Chris Reedy, our Head of Acquisitions, will be presenting at Main Street Summit October 8-10th. Let us know if you plan to attend and would like to attend his session on Planning for an Exit: Software Edition

• Several members of the Big Band team will be in Chicago for the SaaS Academy events October 23-25 and OCTOBER 27-29, CHICAGO, IL. We are eager to connect with anyone planning to attend!

Join The Band

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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SOC 2: Basics + Tips from Our CEOs

This month, we're diving into a topic that's on the minds of many founders—and it's front and center for some of our portfolio companies. As security and compliance take the spotlight, customers and prospects are no longer just asking; they’re demanding that their software vendors prove they can be trusted. That's where SOC 2 compliance steps in. But what exactly is it? Do you really need it? And why is it more critical now than ever?

So what is SOC 2?

Like a lot of fun things, SOC 2 originated with CPAs! Established by the American Institute of Certified Public Accountants, it ensures that third-party service providers store and process client data in a secure manner. The journey to compliance is built on the framework of 5 trust principles: Security, Availability, Processing Integrity, Confidentiality, and Privacy. After assessing current practices and identifying gaps within a company's processes and controls in regard to these principles, new practices are implemented, documented and audited on an annual basis. 

So why is it so important? SOC 2 compliance ensures that a company is effectively managing and protecting sensitive data, which is crucial for maintaining trust with customers, mitigating risks and sustaining a competitive edge by showcasing a commitment to best-practices.

Building Customer Trust 

If your company handles or stores customer or partner data, being SOC 2 compliant means you've not only put the right security measures and infrastructure in place but also agreed to undergo regular audits to ensure compliance. This audit process can lead to fines if any violations are discovered, so committing to compliance shows you take your business relationships seriously—nobody wants to be caught in a violation.

"Business moves at the speed of trust" (a quote by Stephen Covey), and this is more relevant than ever. Customers won’t work with you if they believe you're not protecting their data because a breach could hurt them. By investing in securing their data, you build their trust and make it easier to grow your revenue.

Competitive Differentiation

SOC 2 becomes a big differentiator for customers when choosing between two 'like' businesses that have the same or similar offering. When one is compliant and can show their certification, customers are likely to choose the company that takes data protection seriously. This becomes even more crucial in companies swimming up-market as many larger organizations often have stringent requirements for data security and privacy. As a smaller company targeting enterprises, being SOC2 certified levels the playing field in regard to security and compliance, allowing them to compete with larger players and showcase more matured operations.

Mitigating Risk 

SOC 2 compliance is far more than just a checkbox - it’s a crucial step in actively managing and mitigating risk. By adhering to SOC 2 standards, a company implements strict protocols that may not have been on the radar before, helping to build a solid foundation for data security. In an era where open source code and hybrid cloud environments are widespread, SOC 2 compliance helps you navigate the complexities of choosing reliable partners. When selecting a hosting provider or payroll service, you'll prioritize those that are SOC 2 compliant, ensuring that your partners meet rigorous security standards. This approach has a ripple effect. By committing to SOC 2 compliance, you’re also setting a high bar for your own network infrastructure and encouraging a culture of security. 

Insights from Big Band Leaders: Workzone and DocLib

Luckily, two of of our portfolio companies Workzone and DocLib are currently pursuing SOC 2 compliance and are eager share their thoughts on the process so far:

What motivated you to pursue SOC 2 compliance for your business, and how do you believe it will benefit your customers?

Ash Didwania, Workzone CEO: Workzone serves companies in highly regulated industries such as Financial Services and Healthcare. Such companies expect their vendor partners to demonstrate high levels of data security and regulatory compliance both operationally and through their product offerings. Achieving SOC 2 compliance is an industry-accepted standard of demonstrating such readiness. This will enable our customers to trust us with their sensitive data, processes, and systems.

Stephen Rosenthal, DocLib CEO: We consistently work with large manufacturers who abide by strict industry standards in terms of both security and process management. As a part of our efforts to automate financial processes for these customers, we required to undergo extensive reviews on data management, internal process controls, and cybersecurity analysis. A SOC 2 Type 2 report provides a phenomenal vote of confidence for our customer base in our efforts to abide by the highest standards available. They are able to quickly and easily check off the necessary boxes to use our software in their validated systems.

What challenges have you encountered during the SOC 2 compliance process, and how have you addressed them?

Ash Didwania, Workzone CEO: There are 5 key challenges we've faced while undergoing the SOC 2 compliance process:

The process of getting certified is highly resource intensive, requiring significant time and effort investments from the technology and operational teams

Driving change management across the organization in terms of training and adoption of new processes while ensuring the changes don't become distractions in the day-to-day

Record-keeping standards that are more representative of larger organizations

Ongoing monitoring of controls in a manner that is not too manual and can be automated

Establishing incident management policies that are practical in the day-to-day

Using well established third-party tools such Vanta go a long way in addressing some of these challenges while ensuring ongoing compliance.

Stephen Rosenthal, DocLib CEO: We are a small business and the SOC 2 standards are robust and extensive. This required massive allocation of resources over a 12 month period to develop new processes, prepare extensive documentation, and sure up security vulnerabilities. The toughest challenge was to consistently prioritize a proactive shared priority in our business across all departments for an extended period of time.

How do you expect SOC 2 compliance to impact your company’s growth and reputation in the market?

Ash Didwania, Workzone CEO: We believe that SOC 2 compliance will enable us to expand into markets and customers that were previously out of reach due to eligibility requirements. Additionally, SOC 2 compliance brings with it a reputation of security, organization, and trust.  We believe this will go a long way in shortening security audits in the sales process and move us up the reputation ladder in our industry. Lastly, the inherent policies required to remain SOC 2 compliant will help our organization mature significantly from an operational efficiency and risk management perspective.

Stephen Rosenthal, DocLib CEO: We can punch above our weight. There have been multiple occasions where we were completely unable to bid on work simply because of our lack of standards and SOC reports. There have also been instances where customers rolled out a strict requirement to only do business with companies who’ve obtained high marks on a SOC audit. In those cases, we would have simply lost those clients were it not for our report. We are now able to take a swing at large contracts with major companies because of our report. It is a ticket to playing a bigger game by providing the market confidence in our business practices and our approach to providing our software to customers.

Although SOC 2 compliance is a lengthy and demanding process, it is highly rewarding. Not only does it build trust with customers, offer a competitive edge, and mitigate risk, but it is also a key tool in improving retention and bolstering sales. It allows an organization to scale efficiently and effectively without compliance barriers. If you are wondering if becoming SOC 2 compliant is right for your business, we would love to connect and talk further!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

•  The Speed of Trust - Stephen M. R. Covey shows how trust—and the speed at which it is established with clients, employees, and all stakeholders—is the single most critical component of a successful leader and organization

• GTM Continues to Decline - Ongoing study results showing continued struggle in 2024 with delivering growth while managing an increase in go-to-market spend

• This Guy Bought Over 50 SaaS Companies and Raised $100M - Kevin joins The SaaS Academy Podcast and talks drivers of enterprise value, cultural alignment, and the Big Band playbook

IRL (Where You Can Find Us)

• Chris Reedy, our Head of Acquisitions, will be presenting at Main Street Summit October 8-10th. Let us know if you plan to attend and would like to attend his session on Planning for an Exit: Software Edition

• Several members of the Big Band team will be in Chicago for the SaaS Academy events October 23-25 and OCTOBER 27-29, CHICAGO, IL. We are eager to connect with anyone planning to attend!

Join The Band

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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Welcome DocLib to The Band!

We are thrilled to announce our latest acquisition - DocLib!

DocLib is accounts payable automation software for manufacturers (have we told you how much we love niche vertical market software?). Specifically, the software works alongside QAD, NetSuite, and SalesForce. This is an outstanding product that has evolved over 20 years to drive very specific workflow and provides tremendous value and ROI for its customers.

DocLib is led by Stephen Rosenthal and an amazing team in and around Philadelphia. Stephen will continue on as the CEO.

We first met Stephen at a SaaS Academy event. (Sidebar - if you are a SaaS Founder and you aren’t already a part of the SaaS Academy community, you need to check them out.) We hit it off immediately and very quickly came to terms on a deal that is a win for everyone.

“Joining Big Band as a portfolio company was the best thing I could do as the CEO of DocLib in stewarding my position. I first and foremost believe this is the perfect scenario for my people. DocLib's employees have been the driving force towards tremendous growth and potential. I am blessed to steward this effort and believe it would glorify God to put this company into ownership that will continue to be long term focused and people oriented. There is a TREMENDOUS opportunity in our market and Big Band is the perfect partner to pursue and take advantage of this opportunity.

The process of selecting Big Band as my new business partner and closing on the deal with their team was seamless. From the very first cocktail hour where I met Chris to the day of closing, their energy was positive, encouraging and future focused. This approach is incredibly unique and I am honored to have had them choose to work with me in closing on my company. Their due diligence process was streamlined and their depth in experience showed. I highly recommend looking to Big Band when considering an exit for any software entrepreneur.”

Keep following here for updates on the DocLib journey and more acquisition announcements!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• Traction by Gino Wickman - Through the lens of the EOS, how focusing on the 6 key components of your business can take it to the next level and strengthen your leadership team

• The Singularity Is Nearer: When We Merge with AI by Ray Kurzweil - A fresh perspective on the impact of AI on technology and the broader world as we know it

• Exit Readiness as a PE-Backed CFO - ParkerGale sits down with CFO Jon Danielson to reflect on what he has learned from a recent sale process and the key items to focus on within preparation

Join The Band

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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Big Band Software

It’s been a busy month!

My June started with some great family time. We had a graduation celebration followed immediately by the annual family fishing trip in Northern, MN. (Quick PSA - if you’ve never visited Minnesota in the Summer, you are missing out!)

I flew from there to Chicago for a Big Band board meeting. I love connecting with our investors who are great at challenging our thinking and/or pushing us when needed. We also have some new, extended team members who it was great to see in person for the first time. I also got to see a cousin and college roommate while there. I love blending life and work when traveling. 

The next week was a trip to Denver to connect with the SaaS Academy group. My friend and partner in Big Band, Dan Martell, has been running this community for ambitious SaaS Founders who want to challenge themselves to grow both personally and professionally. Below are pictures of me rappelling off of a 450 foot building. Reader, I do not like heights! It’s good that this angle did not capture the fear in my eyes. But, as Dan says, “Life begins at the edge!” Though I was terrified, I felt quite proud to have conquered that fear and challenged myself.

The next week, the whole Big Band crew flew to Philadelphia. This trip was a banger! We got to spend time with the Workzone leadership team (one of our portfolio companies), doing a quarterly business review. We also got to meet Val, our new VP of Customer Success for that business. The team is rocking in business and really fun to hang out with. 

We also got to spend a couple of days with a company that is considering selling to us. I can’t share any details yet (obviously), but this is a group of stars! I love their teamwork and culture and can’t wait to share more once they are (hopefully) part of the Band. 

The whirlwind hasn’t stopped, but I’ve shifted gears. I’m writing this from a plane to FL, where I’ll be spending a week at the beach with my extended family. 30 people across 3 generations in a big house together. We’ve been doing this trip for a while, and I know I’ll come back refreshed and with a whole new batch of great memories. 

Happy Canada Day to our friends up North. And Happy Independence Day to my fellow Americans. I hope everyone reading this can enjoy a bit of the life and work joy and IRL experiences that I’ve had in the last 30 days. 

Onward!

Kevin McArdle

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• Searcher Cody Agee breaks down the Stanford 2024 Search Fund Study

Twitter tweet

• The Knowledge Project - Shane Parrish sits down with Brent Beshore to discuss private equity, how to hire (and fire) CEOs and much more

• The Science of Hitting - “The most important part of hitting is waiting for the right pitch.” - Ted Williams. Warren Buffett distills down on how having an opinion on a few things creates an enormous advantage

Join The Band

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

• WorkZone is hiring a Digital Marketing Manager! If you or anyone you know are interested, feel free to apply directly through LinkedIn here.

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The worst deal killers for business owners looking to exit sneak up when diligence has already progressed to a late stage - but are really hard, expensive, or even impossible to resolve. 

Two of these killers are IP ownership and contract assignability. 

When selling a SaaS business, any confusion about who owns the codebase or whether contracts can be transferred can ruin the whole deal. Buyers want to know they’re getting what they paid for, and that everything will transfer smoothly - in terms of both these items. If there’s any doubt, even the best deals can fall apart fast. 

So why are both of these items so essential?

Deal Killer #1: IP Ownership 

Owning and operating a SaaS business involves more than just having a great product; it also means you need to secure your intellectual property (IP). This includes owning the code that runs your application, patents, trademarks, copyrights, and trade secrets related to your software. Think of IP as the legal shield that protects your unique ideas, brand, and technology from being copied or used without permission. When you own your IP, you're in control of your software's future, you can prevent competitors from replicating your product, and you can enhance your business's value. Plus, having clear IP ownership makes your company more attractive to potential buyers or investors, as it shows you have solid legal foundations and exclusive rights to what makes your business special.

Why is it so essential a founder has full IP Ownership?

Without clear IP ownership, your business is vulnerable to infringement claims and disputes over IP rights, which can scare off buyers due to potential legal battles and associated costs. Legal uncertainty is one of the fastest deal killers, uncovered in legal diligence if not disclosed earlier. Even if infringement claims are baseless, they still cost a lot to deal with. So preparing for potential claims and documenting the company’s full ownership of all IP in employee agreements and contractor relationships is a requirement to get a deal done.  

Key Issues in IP Ownership- Custom licenses and records on use of open source code

Custom license agreements that impair IP / letting others build into code - very occasionally customers might ask for custom license agreements.  When this happens, make sure to consult a seasoned software IP attorney to make sure that your custom license agreement doesn’t yield full ownership or control of the code.

The use of open source libraries is a big and growing topic in software deals.  Use of open source code continues to grow, but owners need to keep records of what code they used, how it was used, and what license the code was accessed under.  This is a real pain - full stop.  But it’s also a requirement for building value in a software company today.  For more on tools to document use of open source code, you might check out this article.

Clear IP Ownership is the end goal for any seller because it ensures there aren't any lingering legal threats hovering above a potential buyer’s head. Founders love to build, but if you haven’t done these things already, prioritize them now because fixing them later gets harder and harder: 

• Clear employee contracts so that all IP created is assigned to the business

• Clear, counsel-approved licensing agreements

• Clearly defined and enforced policy on using and documenting open source code

Deal Killer #2: Contract Assignability 

Contract assignability is the ability to transfer your contracts from one party to another without needing further approval from the original contracting parties. When selling a SaaS business, it's crucial because it ensures that all existing customer agreements, vendor contracts, and service licenses can seamlessly transfer to the new owner even if the new owner is just buying the assets of the business, not the legal entity. (An asset purchase is often the preferred legal structure of buyers, especially for smaller acquisitions.) Without assignable contracts, the seller and the buyer have to ask for specific approval from customers to assign the contract to the buyer.  Doing this is a headache, creates churn risk, and is logistically difficult or even practically impossible if you have a lot of customers.

The good news is that literally a single sentence in your customer contracts can prevent this headache.  Get your lawyer’s help to make sure contracts are assignable if someone buys the business - even as an asset sale - and if they aren’t today try to roll out updated contracts with every renewal.  Sometimes customers push back on this one-way assignability, but it’s important that you know that keeping this part of your contracts is critical to getting a lot of deals done - and done efficiently at a good price.  

TLDR: Ask for Legal Help Long Before a Sale

The outcomes of both unclear IP ownership and contract assignability are depressed valuations or deals that completely fall through. Due to the risks associated with litigation and overall perceived value, buyers may significantly deflate valuations or simply walk away. Having a trusted lawyer - who knows how deals are done in software - as a resource long before you sell is critical. Note: The attorney is probably not the same person you consulted to set up your company unless you sought out a software attorney with deal experience. If you’re looking for a few ideas, please let us know or reach out to other founders for ideas.  The right counsel can be expensive, but it’s better than having your exit path killed because of questions about your IP or contracts.

THE PLAYLIST (What We're Watching, Reading, and Listening to)

•  April 2024 SaaS Market Report - B2B’s strongest month in over a year

• Creator Science Podcast - Friend of the Band, Jay Clouse, talking the intersection of parenthood and business

• Good Businesses have Margin - Friend of the Band, Justin Jackson, dives into the importance of your business having a margin for your emotional and physical health, relationships, sanity and integrity

Join The Band

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

• WorkZone is hiring a Digital Marketing Manager! If you or anyone you know are interested, feel free to apply directly through LinkedIn here.

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Big Band’s Debut: The Private Equity Funcast

I still remember where I was when I first emailed Devin and Jim. I was on a run. It was November, 2016. And I was in the middle of listening to an episode of the Private Equity Funcast.

To this day, I almost always listen to podcasts when I’m exercising. I had been listening to the PE Funcast for a few months. I had been acquiring businesses for a while after a pivot out of a long corporate career in healthcare IT. I needed to level up my knowledge on the business of private equity. Thankfully, I had stumbled upon ParkerGale’s podcast exploration of the world of private equity…humorously narrated by Devin Matthews and Jim Milbury.

In my opinion, a great podcast has to have something “more” than just the stated purpose or topic to be really interesting. And with a topic as potentially dry as private equity…this one certainly has something more than great information on the topic. The title makes it obvious that they are going to try to make Private Equity “Fun”. The jingle draws you in with a catchy tune and irreverent lyrics. And when you start to hear the witty banter of two old friends in Devin and Jim, where the conversation inevitably bends toward dad jokes and movie references, you are likely to be hooked like I was. I found myself listening more for the funny parts while learning from the “inside baseball” conversation about PE.

Back to that email… I was binge listening to several years worth of episodes and getting caught up. In the middle of my run, I stopped, took out my phone and sent the email below.

If you have listened to the PE Funcast, you know that Devin and Jim (and all of the other and subsequent hosts) are good humans. So I wasn’t actually that surprised when Devin wrote back. What was surprising was his generous offer to help whenever I needed it.

Fast forward to 2018. I’m raising a new fund. I’m coming through Chicago to visit some of my team, and I have a lot of questions about fundraising in my particular context (cross-border issues between US and Canada, how to think about diversity among investors, how to think about distributions, etc. etc.). So I reach out again, and Devin says, “Come by the office and meet with me and Ryan Milligan.” We booked 60 minutes, but they gave me a 90 minute masterclass in PE structuring and economics…for no reason other than that they are good people.

A year later. 2019. I’m passing back through Chicago and we met up for dinner to talk about opportunities to collaborate in a meaningful way (those ideas didn’t work out for very good reasons…but it helped to build our relationship further).

Summer of 2022. I had the vision for what eventually became Big Band Software. I needed strategic investment partners who would “get” what I was trying to do and who could help us achieve the vision much faster together. Devin was one of my first calls.

December 1, 2022 - Big Band incorporates, and we’re off on the journey as business partners with ParkerGale.

I’m sharing all this as a long-winded preamble to share some exciting news. The Big Band team was just featured on the PE Funcast! We’ve been in business together for over a year, so it felt like a good time to share the story with that audience. It was fun sharing the virtual studio with Ryan Milligan, who is a great host despite not being as fully committed to the “5-4-3-2-1 Thunderbirds are go!” introduction as Jim.

This is definitely not the outcome I envisioned when I sent that first, quick email during my run. I’m proud to be in business with Devin, Ryan and the whole PG team. They have been even better partners that I expected…and my expectations were quite high. Hearing me, Chris, and Jason on the Funcast is both surreal and natural at the same time. 

If you are both a subscriber to this newsletter and the PE Funcast at the same time, congratulations…you are in a very narrow sliver of a Venn diagram, and it is likely we know one another personally. And if that describes you, you probably know that this blog post isn’t about a podcast at all. It is about building trusted relationships with people where you want to “do business and life” together. We have already accomplished a lot as a team and we are just getting started!

Listen here to the Private Equity Funcast

THE PLAYLIST (What We're Watching, Reading, and Listening to)

•  SaaS Stats and Facts for 2024 - SaaS Academy’s take on the direction of the SaaS market in 2024 and how KPI preferences are changing

• Choosing Big Band Software - WorkZone CEO, Ash Didwania, reflects on his process finding his ideal operator role and why he chose Big Band Software

• Mitch Rales: The Art of Compounding - Dives into the elements of compounding, including the importance of leadership & harboring a long-term mindset

Join The Band

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

• WorkZone is hiring a VP of Customer Success! If you or anyone you know are interested, feel free to apply directly through LinkedIn here.

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Retention: A Deep Dive for Founders

It’s no secret that metrics are key in SaaS, and for us no metrics are more important than customer retention and acquisition measures.  Why?  In short, we’re a holding company focused on the long-term and we need to know that customers rely on the companies we buy - year-in and year-out.  We also want to know that more growth is possible, and that customers today are still choosing our companies over other options.  

For this edition of the newsletter, we wanted to give you a full view of the three key retention metrics we look at, why they are important, and what they say about what more might be possible for these businesses - especially when combined with a simple sales metric.  It’s a bit of a deep dive - and a lot of SaaS folks out there may already know these terms - but they are really important and we wanted to share a few case studies (anonymized examples) at the end to share what narrative the numbers tell about a company.

The more important retention metrics we review are gross dollar retention, net dollar retention, and logo retention. Of course we prefer each of these pieces to be strong on their own, but the differences can tell a larger story behind the positioning of the company and what more might be possible under our ownership. Beyond factoring into a potential exit valuation, we think understanding a buyers’ view of retention can inform how founders think about ways to improve their business today.

So how are each of these three retention metrics measured and what important insights can they offer?

Gross Dollar Retention

Gross dollar retention is the most essential retention metric we look at. It evaluates the change in revenue solely from existing customers without factoring in any upsell in order to take a distinct look at churn and downsell (in how we calculate it - others may differ). To calculate gross dollar retention, you will take the sum of revenue from all existing customers at the end of a given period, excluding any upsell/expansion, divided by the revenue from only those same customers at the start of the next period. (Usually gross dollar retention is abbreviated GDR.)

What’s our minimum?  80% on an annual basis - and higher is clearly better.  Aren’t there great, growing businesses with higher churn / lower retention?  Yes, of course - but for a holding company, our view is that gross retention under 80% means the product-market fit doesn’t have the staying power we want to see for our ownership model.

Often if gross dollar retention is on the lower end of our spectrum, a company may have not yet established an ideal customer profile so customers really are just trialing the software, not committing to it.  Sometimes that can be necessary in an early, high growth phase - especially for product led growth SaaS - but it still makes us uncomfortable with our ownership model. In our experience - and we’ve seen a lot of businesses raise retention over time - the combination of better ICP / tighter marketing focus and product + customer happiness improvements can raise gross dollar retention significantly.

Net Dollar Retention

Net retention is similar to gross dollar retention, except it factors in all churn, downsell, upsell and cross-sell within the existing customer base. You can calculate net dollar retention by summing up the revenue from all customers at the end of the period and subtract any revenue lost from churned customers. Then, add any additional revenue generated from upsell and cross-sell to existing customers during that same period. Finally, divide this total by the revenue from existing customers at the start of the period. (Usually, net dollar retention, a.k.a., net revenue retention, is abbreviated NRR.)

The end product is a metric that not only tells us how well a company is retaining existing revenue, but also their ability to grow revenue within its existing customer base excluding new customers. While our version of gross dollar retention looks specifically at churn, net dollar retention can now indicate how customers scale and average revenue per customer might rise over time. 

What’s great NRR?  We (and most SaaS buyers) love to see NRR above 100% - or we see a path to above 100%.  Usually NRR above 120% indicates a super high growth period that might make the company a good fit with venture capital or other growth capital.  That said, we often believe we can improve NRR by helping teams at our companies improve and build out upsell and cross sell motions and product enhancements.

Logo Retention

Logo retention is the simplest view of churn, and only factors in whether customers renew - not how much they spend when they renew. Logo retention takes total beginning of period logos (customers) minus churned logos, and divides this value by total beginning of period logos. What’s a good number?  For us, the floor isn’t as hard as for gross dollar retention, but we really like to see 90% of customers coming back year after year.  

New Logos: Any Important Framing Metric for Retention

Last, it’s critical to see how many new customers (logos) a company is adding.  It’s actually not that uncommon to see companies with very solid retention metrics - but few or even no new customers.  That indicates that future growth will very likely slow as the ability to cross sell and upsell (a.k.a. raise prices) may well hit a ceiling.  And without new customers in the mix, it can get really hard to keep growing.  Very slow new logo acquisition might mean a tough mature market, broken GTM motions - but might also mean opportunity if we think a new marketing mix or product approach can appeal to new customers.  

A Few Helpful Follow Up Questions When Metrics are Lacking

Look, we know running a SaaS business is really hard.  Just because the metrics may be a bit short, follow up questions can help drive improvement.  Here are a few good ones we’ve seen and heard about from our operators and founders we talk to:

• Is logo retention improving over time (as companies better know their ideal customer profile (a.k.a. ICP)?

• Is logo retention different by customer segment?  This can tell you a lot about where to take your business next?

• If you have a complex product offer, what does retention by product look like? 

• What has happened to retention when the economy struggles?  (For example, many software companies found out if their solutions were must-haves or nice-to-haves when Covid hit and in the downturns of 2001 and 2009.)?

Case Studies - Our POV on a few typical examples and possible unlock

#1 - 85% GDR, 85% logo, 85% NRR, +10% new logos - Indicates a mature market with a simple, one-size-fits all pricing strategy but customers like the product pretty well - including new customers. There may be more value to unlock with an updating of the product / pricing strategy to unlock upsell and cross-sell and push net retention over 100%.

#2 - 65% GDR, 80% logo, 100% NRR, + 50% new logos - indicates a higher growth, newer market with significant land-and-expand possibilities but (perhaps) lack of clarity on the ICP today as the company races to grow.  There may be more value to unlock with more focus on selling to and onboarding only the customers likely to stick - and expand.  This kind of business might turn into a huge growth story - as long as the lower gross dollar and logo retention numbers don’t indicate product weaknesses that customers expose after they buy.

#3 - 75% GDR, 80% logo, 105% NRR, + 2% new logos - indicates the business may look pretty healthy in the P and L but slow growth of new logos is being masked by huge upsell and cross sell to a few customers.  There is a very real danger that the business will start to decline quickly because upselling and crossing if filling the gap from churn - for now - but there aren’t new customers (logos) showing up to fill it in future.

Summary and Call to Action

We hope this deep dive into jargon has made these critical metrics more understandable - and might have given you some ideas of areas you could improve your business.  Feel free to reach out to us if you want to seek our take on anything you’re wondering about or struggling with on customer retention. 

ANNUAL EXIT PLANNING

We’ve put together a must-do exercise for Founders - Annual Exit Planning. This workbook will walk you through the various steps and questions you need to answer and document in order to get better prepared to sell your business. Grab the file, find some time work through it, and get in touch if we can help you think through any of the components along the way!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• Paddle's SaaS Market Report - B2B growth and sales are picking up in early 2024 with MRR increasing in February +7.4% on avg y/y among the companies using their platform

• Top 50 Technology Investors - Big Band's own Chris Reedy was recognized as a top investor by Axial, the leading online middle market acquisition marketplace

• Resilience matters in success - Nvidia's CEO Jensen Huang discusses the juxtaposition of high levels of resilience vs. high expectations and how greatness is born out of suffering  

Join The Band

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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Introducing Jennifer Nelson: Executive in Residence

The Band is excited to introduce Jennifer Nelson, our newest Executive in Residence. She has joined the team with a goal to acquire solid B2B businesses operating within the IBM iSeries and zSystems space.

Jennifer has an extensive track record of strategic transformation in various roles within the IBM Mainframe space, notably at Rocket Software for 15 years where she successfully led a global team of engineers to modernize their legacy applications and drove the technical roadmap. She went on to become the VP of Engineering Operations at BazaarVoice, expanding the R&D organization internationally. Most recently, she concluded her role as VP and Global PMO in the Business Transformation unit at Diebold Nixdorf. 

zSystems and iSystems platforms remain important and pivotal today with approximately 10,000 zSeries and 50,000 iSeries customers globally. Efforts to modernize these platforms and their applications have been a big focus to not only evolve these systems for the future, but to also introduce new generations to these reliable and secure platforms. With the addition of Jennifer to our team, Big Band aims to create a cluster of mission-critical software applications that serve the core of the enterprises running on IBM zSystems and iSeries.

Jam with Jen

What opportunities do you see unfolding today in the iSeries/zSeries space?

First of all, a huge portion of enterprise computing still relies on these platforms and will for a long time because of the proven security and reliability for business-critical transactions. Second, there’s a big opportunity right now to revolutionize the SaaS pricing model in the enterprise software space for z/OS and Power Systems so that world-class software solutions are accessible to smaller companies. Our mission is to create a portfolio of high-quality enterprise software solutions from great founder-led companies so that we can continue to build upon their success and grow into the future. 

What do you look for in an investment opportunity within this space?

We’re looking for founder-led or founder-owned z/OS or Power Systems software companies whose revenue streams are smaller than most private equity companies would be interested in. We look for those with less than $10M annual recurring revenue who have great products and loyal customers that we can invest in and continue to grow. We want to partner with those founders/owners of software companies who don’t have a business continuity plan, a succession plan or who may need help with growth for the future. And I’m hopeful that they see, like I do, that becoming part of a holding company that is focused on long-term growth is the best path forward for their business, their customers and their employees.

What excites you about collaborating with Big Band?

I’m excited to join an exceptional team of experienced founders that embrace agility, value customer feedback and believe that investing in people pays dividends. Their excitement about investing in z/OS and Power Systems shows that they understand the criticality and longevity of these platforms, just like I do. I can’t wait to see what we can build together!  

ANNUAL EXIT PLANNING

We’ve put together a must-do exercise for Founders - Annual Exit Planning. This workbook will walk you through the various steps and questions you need to answer and document in order to get better prepared to sell your business. Grab the file, find some time work through it, and get in touch if we can help you think through any of the components along the way!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• Poor Charlie’s Almanack - “Spend each day trying to be a little wiser than you were when you woke up.”

•  Your Next Five Moves - For entrepreneurs looking for inspiration and guidance within their next steps.

• The Private Equity Funcast - Tune into ParkerGale’s private equity podcast, where we will be featured soon!

UPCOMING IRL GIGS

• Jennifer will be attending the SHARE Conference in Orlando from March 3-7th. If you or anyone you know are planning to attend and want to connect, you can contact her at jennifer@bigband.io.

JOIN THE BAND

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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Big Band Software

Welcome Workzone to the Band!

Workzone, a top-rated Project Management platform, is now part of Big Band! 

Workzone streamlines project workflows and enhances team collaboration - and has been doing this for many high-performing teams for decades. 

This acquisition is a great example of what we like to call "business in harmony." First, Workzone is a company of innovators that saw a need and built an amazing product that their customers love.  (Nothing is more important to the Workzone team than their customers’ success, and their onboarding, training and support set a very high standard.) In other words, although there are a lot of project management software tools, the Workzone team has honed in on a solution mentality to make sure their product not only has great features but different and better outcomes for users. The harmony with customers also extends within the team and this transition to Big Band, and we are excited to build off of Workzone’s continued success by bringing in new leadership as accomplished founder/owner Rick Mosenkis retires as part of the sale. 

_{Introducing Ash Didwania, CEO of Workzone}

We’re thrilled to introduce Ash Didwania to those who don’t know him.  (We got to know Ash’s smarts and ambition from when we launched Big Band and he sought us out wanting to be a first-time CEO in sync with the Big Band operating model.) His proven track record in driving growth and scaling transformative products in the B2B SaaS sector, along with successful stints at Fortune 500 tech companies, positions him uniquely for this role. Ash brings 14+ years of go-to-market leadership and tech experience, having recently served as Chief Revenue Officer at Resilia. Ash’s vision to unlock the massive potential within Workzone aligns with the company's mission to transform how companies get work done in an increasingly complex world. 

^{What’s Next for Workzone}

The Workzone team has been doing great, post-transition work on what’s next for the business:

Looking ahead, we will keep you updated on the successes and learnings at Workzone as well as ask that you keep us in mind as you meet owners or leaders thinking that the Big Band model appeals. Stay tuned and happy February (spring already?).  And please do let us know if we can help you or people you serve.

To read our full Workzone announcement, please see the press release linked here.

ANNUAL EXIT PLANNING

We’ve put together a must-do exercise for Founders - Annual Exit Planning. This workbook will walk you through the various steps and questions you need to answer and document in order to get better prepared to sell your business. Grab the file, find some time work through it, and get in touch if we can help you think through any of the components along the way!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• The Rule of X - Balancing growth and profit in SaaS from a different perspective.

•  Top to Bottom Guide on Running a Bootstrapped Business - Laura Roeder unpacks her system of efficiently running her 7-figure bootstrapped business, part-time.

• Tax Changes - Specifically impacting software founders.

UPCOMING IRL GIGS

• TEXAS! Most of the Big Band Team will be spending next week (2/4-2/9) in Austin and Dallas at SaaS Academy and meeting with founders. If you want to connect in Texas, give us a shout.

JOIN THE BAND

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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Big Band Software

Celebrating the Wisdom of Charlie Munger

As we welcome the new year, the Band extends a tribute to Charlie Munger, the esteemed investor, philanthropist, and vice chairman of Berkshire Hathaway who passed away on November 28th of this year. Munger's extraordinary career has been a beacon of inspiration, and as we honor his contributions, we reflect on some key takeaways from his unparalleled professional journey that we are taking into 2024. 

1. The Power of Multidisciplinary Thinking:

Charlie Munger's emphasis on embracing a broad array of disciplines has been a cornerstone of his success. By integrating insights from diverse fields such as psychology, economics, architecture, and business, he has demonstrated the potency of multidisciplinary thinking in decision-making.

2. Long-Term Vision and Patience:

Munger's commitment to long-term value investing and his unwavering patience have set a paradigm for investors globally. Combined with his discipline, agility, and strategic foresight in order to make successful investments, Mungers long-term approach inspires Big Band’s very own. 

3. Continuous Learning and Adaptability:

A perpetual learner, Munger advocated for continuous self-improvement and adaptability. In a world of constant change, his commitment to staying informed and evolving with the times underscores the importance of embracing a growth mindset. At Big Band, we strive to keep curiosity high and remain as agile as possible, learning all we can from founders and business partners. 

Here at Big Band and beyond, Charlie Munger's timeless wisdom guides us in the year ahead. We are ecstatic to embark on the new year with the spirit of continuous learning, disciplined investment, and a commitment to long-term success. Here's to a prosperous and enlightened journey in 2024!

Twitter tweet

ANNUAL EXIT PLANNING

The start of the New Year is the perfect excuse to carve out some time to reflect on your business. We’ve put together a must-do exercise for Founders - Annual Exit Planning. This workbook will walk you through the various steps and questions you need to answer and document in order to get better prepared to sell your business. Grab the file, find some time work through it, and get in touch if we can help you think through any of the components along the way!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• Poor Charlie’s Almanack - Munger’s collection of speeches, talks, and writings across diverse subjects like investing, business, psychology, and life philosophy leaves a rich well of wisdom for all to explore

• Practical Holding Company Acquires Profitable SaaS Businesses - Big Band’s Kevin McArdle sits down on the PracticalFounders podcast to answer common questions from practical founders about the holding company approach as an exit path.

• To get acquired, remove yourself. - Kevin also sat down for an interview with Indie Hacker’s James Fleishmann to talk through entrepreneurship through acquisition, launching Big Band, how to get acquired, and more.

UPCOMING IRL GIGS

• The Band is taking a much needed break from the road to spend some time in their respective home states to ring in the New Year!

JOIN THE BAND

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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Big Band Software

Happy Anniversary to Us

Not a lot of people know this given we launched publicly in March…but Big Band Software was officially organized on December 1, 2022! It has been a rewarding and enlightening ride, and as we are gearing up for an exciting year's end, we wanted to take a moment to reflect on how far we have come in this first year. Although it appears to be a small and mighty team behind it all, the size of the Band that contributes to our success is massive and growing everyday. 

In light of Thanksgiving this year, the Band wants to extend our gratitude to all who have contributed to our first successful year:

To all of our business partners and investors who make our mission possible, we are grateful for your support and trust in us.

To our families and friends who encourage us every day along our journey, we could not do this without you.

To anyone following our success via our newsletter and socials, we really do appreciate the support and we read every email or DM that comes our way.

To founders who have trusted us to be the next stewards of their business, there is no greater validation to what we are doing than your trust.

We are incredibly grateful for the momentum that all of you have helped us to gain this year. The band is hard at work, close to announcing more exciting news, and we could not do it without you all. We are just getting warmed up!

ANNUAL EXIT PLANNING

We’ve put together a must-do exercise for Founders - Annual Exit Planning. This workbook will walk you through the various steps and questions you need to answer and document in order to get better prepared to sell your business. Grab the file, find some time work through it, and get in touch if we can help you think through any of the components along the way!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• Openview’s 2023 SaaS Benchmarks Report- A must read for anyone building or operating a SaaS. Over 50% of the respondents had ARR < $5MM, making these benchmarks very relevant to our audience. With Y/Y growth rates declining across the board it is not surprising that Founders are most worried about ‘Go-to market execution’, ‘Product execution’, and ‘Burning too much cash’. Efficiency remains the name of the game as companies with $1 to $5MM in ARR had a median ‘Rule of 40’ of 45%.

• Big Band partner Dan Martell tweets (do we still say that?) about the opportunity cost of being “too busy” or “too comfortable”

Twitter tweet

• #4 Marquette Routs Top Ranked Kansas - This one got a little personal (and fun!) with alumni of both schools on the Big Band team. This was Kevin’s opportunity to gloat - we hope he enjoys it while it lasts and we’ll check back in April to see what team comes out victorious when it counts.

UPCOMING IRL GIGS

• The Band is taking a much needed break from the road to spend some time in their respective home states to ring in the New Year and celebrate the holidays!

JOIN THE BAND

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

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Big Band Software

A New Chapter: Big Band Software’s First Acquisition

The Big Band team is thrilled to announce our first acquisition: Inphonite, a leading provider of communication and messaging solutions in patient engagement software. This opens an exciting new chapter for our company, and we are enthusiastic about building upon the value Inphonite has already created for its customers.

https://www.prnewswire.com/news-releases/big-band-software-acquires-inphonite-to-boost-patient-engagement-301957092.html 

Unveiling Inphonite

Owned by Christine and David Tosi since 2007, Inphonite LLC arose from their vision to introduce automation and innovation to patient engagement software. They successfully transitioned from on-premise to cloud-based solutions and expanded Inphonite into what it is today. Specializing in communication and messaging solutions, with a distinct focus on enhancing patient engagement in the healthcare industry, Inphonite is renowned for its commitment to streamlining communication processes, improving response times, and boosting overall operational efficiency. Their extensive portfolio includes solutions designed to bridge the gap between healthcare providers and patients, making healthcare interactions more accessible and effective. 

The Big Band Fit

We got to know Christine and David over several months to find a win-win solution for them, the company, and for Big Band. This exciting acquisition not only enriches Big Band's portfolio but exemplifies our mission to preserve culture, align goals, and unite teams. David and Christine communicated this importance early-on, recognizing that intentional collaboration and autonomy was going to be necessary for the next stage of growth. 

What is Next?

The collective team is excited about the patient-engagement space and eager to explore other opportunities. Healthcare is a growing industry that still lags behind in personalization and modern, person-centered communication. As we move forward with Inphonite, we can’t think of a more exciting, first acquisition for our team.

And if you love reading about acquisition announcements…stay tuned. The end of the year is going to be BIG for Big Band.

ANNUAL EXIT PLANNING

In case you missed last month’s newsletter, we’ve put together a must-do exercise for Founders - Annual Exit Planning. This workbook will walk you through the various steps and questions you need to answer and document in order to get better prepared to sell your business. Grab the file, find some time work through it, and get in touch if we can help you think through any of the components along the way!

THE PLAYLIST (What We're Watching, Reading, and Listening to)

• Why We’re Leaving the Cloud - DHH’s article on Basecamp’s decision to migrate from AWS back to their own hardware is striking a chord with the Big Band team. We’ve been talking with many companies lately that have been making the same decision due to increasing cloud costs - it seems the promise, and cost, of scaling up unlimited bandwidth on demand often isn’t something that steady and stable growth businesses require. Let us know what your thoughts are on the subject!

• A Few Laws of Getting Rich - Morgan Housel pens his ‘money doesn’t buy you happiness’ take. It’s a good reminder of what matters: ‘Be happy while you are living, for you are a long time dead’

• Building a Fun and Profitable Portfolio of B2B SaaS Companies - Big Band’s Kevin McArdle joined the How2Exit pod to discuss what we’re building and the factors that make a business attractive for acquisition.

UPCOMING IRL GIGS

• Kevin is speaking at Main Street Summit in early November alongside an impressive lineup of investors and founders.

JOIN THE BAND

We’re building our database with the best leaders and operators out there. If you know exceptionally talented people that may one day want to work with us, please have them get in touch with us at hiring@bigband.io or fill out the form on our Connect page.

• We’re currently focused on meeting leaders with deep experience in the Microsoft 365 app environment. If you or someone you know have a history with building, deploying, or working in and around Microsoft 365 apps then please reach out!

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