Recently, I asked a friend in the investment community to provide feedback on our business plan. His response was that the information lacks the metrics that would be needed to attract “sophisticated investors”. This is typical of every discussion I’ve had with investors in the last five years and reminded me that back in 2021, I wrote a blog on the topic of “Metrics that Matter”. Being familiar with the metrics typically used throughout the Software as a Service industry, I feel even more strongly today that I must respectfully disagree with the current method of valuing businesses.
I’m sure that a lot of very smart people in the best universities in the world have carefully crafted these metrics over the years. However, I don’t think the reality supports the effectiveness of the model. What is certain is that the metrics allow smart people around the world to avoid investing the time to really understand market trends and business values. The current metrics for SaaS are like credit scores that allow businesses to be turned into commodities.
At TownCloud we focus on the metrics that matter to customers, employees, and investors. Let’s review a few of those metrics.
1. Customer Satisfaction – These days, “NPS” surveys are used for everything from oil changes to ATM deposits. But does anyone really believe a NPS Survey score is a reflection of the depth of a customer relationship? The only way to truly understand customer satisfaction is to actually talk with customers on a regular basis. This is necessary to internalize the things that are valuable to customers and to anticipate future needs.
2. Churn – I am constantly surprised by the acceptance of churn in the SaaS business. Most people don’t believe me when I tell them that TownCloud has no churn. We understand our market and we make sure that our products are a fit before the customers sign up. We offer free trials to allow the customers to experience the solution. Once they sign up, we intend to keep them for 50 years. To us, a $50 Agenda subscription is a million dollars in lifetime value.
3. Time to Value – We recently got some customers in a state where a vendor changed ownership and the new company destroyed most of the customer relationships. Hundreds of customers suddenly wanted to replace their systems. Our competition requires more than a year before they can even start the migration process. TownCloud can start the same day that they sign up. This is not because we have a large bench of people. It’s because our software is designed to be implemented immediately.
4. Simplicity – The M&A frenzy has not been good for customers. No matter what the metrics say, combining companies, platforms, and cultures makes everything much more complicated. It might look like an integrated system on the corporate website, but down at the customer level, it’s a maze of complexity and fragmentation. The real differentiator in the future of Govtech will be simplicity.
5. Architecture – A modern, multi-tenant architecture application with fully built out “devops” is much more valuable than a worn-out legacy system on an unsupported platform. In all my meetings, I’ve never been asked about architecture. TownCloud Architecture is what facilitates our rapid deployment, implementation, and updates.
6. Operating Margins – All of the items listed above contribute to the bottom line. A modern system that is easy to purchase, onboard, and support represents the opportunity for unprecedented scalability and profitability. In 2024, TownCloud experienced 90% operating margins. This is a direct result of our investment in creating a truly innovative and disruptive business model.
In the end, it all adds up to a sustainable competitive advantage that exceeds anything ever created for Govtech.
I would invite the investment community to find a Govtech company that can match what we have built. TownCloud wasn’t built to flip…TownCloud was built to be an industry leader.