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> Obviously, a rational CEO would see $1m cost savings the same as a $1m gain in profits This is generally incorrect, especially at SaaS companies where revenu
by pgodzin 4y ago
> Obviously, a rational CEO would see $1m cost savings the same as a $1m gain in profits
This is generally incorrect, especially at SaaS companies where revenue is recurring. It's very likely that you'll see much of that $1m gain again in future years, possibly even growing, while cost savings are hard to repeat consistently without impacting future growth.
- Brystephor 4y agoIf you save $500k this year by optimizing some pattern or behavior (eg infrastructure) then why wouldn't that $500k also be saved the next year? You're right if it's a one-time cut (eg no free snacks this year) but most savings are going to be on things that happen more than once.
- pgodzin 4y agoAgree on things like infrastructure optimization. Most significant savings happen on people costs though, and layoffs/hiring freezes tend to not last forever, and also have impacts on future growth as well. Compared to the same amount of revenue offering, most top SaaS companies have >100% net dollar retention, which means that their existing contracts tend to grow year-over-year from usage/upsells, so the long-term value of that $1m in revenue increases over time.
- whimsicalism 4y agothat makes no sense at all
- ncmncm 4y agoCost savings we count are usually recurring in the same way.