We reviewed the IPO prospectuses (knownas S-1’s) of SaaS companies that have gone public since 2021. They include names like Samsara, Braze,GitLab, Netskope, Figma, Weave, ForgeRock, and Informatica among them. While eachof these businesses is different: some serve SMBs, some target globalenterprises, some were built on open source, others on direct sales, there arebest practices and commonalities among them. Below are the SaaS best practices we heard repeatedly from theseprospectuses:
Land and Expand
Almost every elite SaaS company on this list runs a land-and-expand model,and the ones that do it best treat initial deal size as nearly irrelevant.GitLab lands customers at 50 to 100 licenses and watches them grow from there;their fiscal 2016 customer cohort compounded ARR at 90% annually through 2021.Braze actively retrained its sales team away from incentivizing large upfrontdeals, switching to a named-account model because "we know that we cangrow customers more effectively over time." Samsara measured cohortexpansion diligently and reported net dollar retention north of 115% overalland 125% for customers over $100K ARR. The message is consistent: resist theurge to land the whole elephant. Win a beachhead, deliver undeniable value, andexpand from there.
Pricing Should Reflect Value, Not Just Seats
The lazy SaaS pricing model is per-seat, billed annually. It works, butthe best companies are more creative. Samsara prices per asset, per applicationwhereby a single vehicle using two applications counts as two subscriptions,which elegantly ties revenue to actual platform utilization. HashiCorpdeliberately pushes toward usage-based pricing, billing hourly on its cloudplatform to align cost with value delivered. Amplitude prices on committedevent volume, not user count, so as customers grow their data pipelines,revenue grows with them. ForgeRock prices on the number of identities managed whetherit consumers, workforce, or IoT rather than users of the software. Even Brazeuses a hybrid of monthly active users and message volume. The lesson is to priceon the dimension or value that grows naturally with customer success.
Contracts Matter A Lot
One of the starkest cautionary tales in our research is Enfusion, whichwent public with monthly-cancellable contracts that required only 30 days'notice. That is a structurally fragile business regardless of how good theproduct is. By contrast, the companies that weathered macro headwinds best hadannual or multi-year non-cancelable contracts billed upfront. Expensifyexplicitly made its contracts non-cancelable in May 2020, right as COVIDhammered its business, and this decision meaningfully cushioned revenuedecline. Samsara runs three-to-five year contracts. Informatica averages justover two years. GitLab collects cash upfront on annual and multi-year terms. Annualcontracts billed in advance are table stakes for a well-run SaaS company.Multi-year contracts are better.
The Open Source and Freemium Flywheel
Several of the strongest businesses on this list like HashiCorp, GitLab, andAmplitude built their initial user base without a traditional sales team, bygiving away a meaningful free product and letting usage spread organically.HashiCorp's products were downloaded 100 million times in fiscal 2021 before asalesperson ever got involved. GitLab made its entire roadmap public, invitingcommunity contributions and feedback that accelerated product development.Amplitude's free Starter plan with unlimited user seats allowed the product toproliferate inside organizations before procurement ever got involved. Thefreemium and open-source flywheel is a way to build a product that is genuinelyso good and so embedded in daily workflows that the sales motion becomes mucheasier.
Enterprise Customers Are Worth the Extra Effort
Across every company we studied, the data is unambiguous: biggercustomers are more valuable, more loyal, and more likely to expand. Brazereported that customers with over $500K ARR contributed 56% of total ARR andexpanded at a faster rate than smaller accounts. Informatica doubled itsaverage subscription ARR per customer from $98K to $198K between late 2018 andmid-2021, largely by moving upmarket. ForgeRock defined "largecustomers" as those paying $100K+ annually and those customers represented92% of total ARR by Q3 2022. Amplitude reported that more than 70% of revenuecame from companies spending over $100K per year. The lesson is to Go for enterprisecustomer. If you're selling to SMBstoday, don't stop there. Plan on buildingthe features and the sales motion to push upmarket over time. The retention isbetter, the ACVs are larger, and the expansion opportunities are more reliable.
Your Net Dollar Retention Rate Is Your Report Card
If we had to pick one metric that separates the excellent SaaS businessesfrom the average ones, it's net dollar retention, specifically whether it isconsistently above 110%. GitLab hit 179%. HashiCorp hit 131%. Braze ran at125-126%. Amplitude reached 123%. Samsara cleared 115%. A business with 110%+NDR compounds on itself. Existing customers fund new customer acquisition. Thegrowth machine becomes self-reinforcing. Businesses that had lower NDR almostalways traced the weakness to the same root cause: they stopped releasing newproducts or features. Weave explicitly acknowledged that when the initial WeavePayments rollout upsell cycle faded, NDR declined. Amplitude cited a post-COVIDnormalization where customers that had expanded sharply during the pandemicpulled back. NDR is the north-star for the health of the business, especiallyif your ICP is changing or moving up-market.
Go-to-Market Has to Match the Buyer
There is no single right go-to-market strategy. Expensify sells toindividual employees first and decision-makers second; it’s not a top-downenterprise sales motion. On the other hand Informatica sells to CIOs and CDOson behalf of complex multi-cloud data strategies. Samsara combines free trialswith a direct enterprise sales force focused on physical operations companieswith large fleets. Backblaze gets 80% of revenue from self-serve customers, butthe sales-assisted customers are 20x larger on average. The GTM is differentfor all these companies, but what they share is alignment between go-to-marketand the buyer's natural purchasing behavior. Founders who try to force-fit anenterprise sales motion onto a bottoms-up product, or who build a PLG strategyfor a complex seven-figure deal, have a mismatch.
Transparency and Culture
Intentional culture and transparency with customers was a common theme.GitLab made its entire strategy and roadmap public, solicited open-sourcecontributions from thousands of developers globally, and published a companyhandbook running to thousands of pages. Backblaze published quarterly harddrive failure data, shared its storage algorithms openly, and built a loyalfollowing of engineers who trusted the product because they could see how itworked. GitLab committed to releasing a new version on the 22nd of every monthfor more than 130 consecutive months.
Thank you for your readership. Seemore blogs and SaaS data at blossomstreetventures.com. Email the author atsammy@blossomstreetventures.com.