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I think that's because too many SaaS CEOs think something else mentioned in the article: "Margins, to a first approximation, don’t matter...If they’re quickly g

by lquist 9y ago

I think that's because too many SaaS CEOs think something else mentioned in the article: "Margins, to a first approximation, don’t matter...If they’re quickly growing, the company can ignore every expense that doesn’t scale directly with the number of customers" It makes sense in theory, but businesses don't grow to infinite size so fixed costs do matter. Ignorance of this fact drives the lower than anticipated gross margins of many SaaS businesses.

tomnipotent 9y ago
> Ignorance of this fact drives the lower than anticipated gross margins of many SaaS businesses. It's intentional. Great margins don't matter if you don't have customers, and no VC is going to get excited about a few extra margin points on OpEx when should be focusing on growing.