
How Much Revenue Does It Take To Be A $1B Public Company? - dwynings
http://techcrunch.com/2012/04/29/how-much-revenue-does-it-take-to-be-a-1b-public-company/
======
_delirium
So some of this makes sense, but I don't entirely get the focus on
recurring/subscription revenue as a new/disruptive thing in the B2B space.
Isn't that the 60-year-old standard model for enterprise sales, pioneered by
IBM? SaaS is certainly a new delivery model, but a subscription licensing
model itself seems pretty well established.

~~~
3pt14159
One key difference is due to non-standard data formats and features, software
has a far greater lock in. Cell phones might drop 90% of their "recurring"
customers over 3 years, but that's because the phone number goes with the
client and there isn't much of a down side. With something like an accounting
app or a CRM there is often way too much work to move to a new system, so the
churn rates are smaller and the profit margins higher.

~~~
_delirium
I agree with that, but that's not a SaaS-specific difference, is it? Classic
enterprise solutions like SAP have pretty high lock-in, too.

------
dereg
Revenue means nothing. Revenue can be gamed. No prudent investor would invest
or value a company based on revenue figures alone. Aside from acquisition
targets like Instagram, if a company is to be a going concern, it needs to
generate sustainable cash flows, not revenue.

------
fennecfoxen
Let's see. Take your 1 billion and look at the opportunity cost, and assume
that the market at large can earn you a real return of ~4%, which is ... $40
million profit a year, so divide that by your margins and there you go. If
you've got Apple-like margins of 30% you're looking at $130 million in revenue
a year (+ revenue growth that matches inflation). A software-only company
might do it with less; if you're selling more physical goods you're probably
going to need more.

Growth can substitute for that for a while, but in the long run that's about
the return you're going to need to have to justify a $1 billion market cap to
investors, who also have the opportunity to invest somewhere else.

------
jmboling
0

