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What is good *Net Revenue Retention*? Benchmarks from the experts:

• Consumer SaaS: 55%👌 80%🔥
• Bottom-Up SaaS: 100%👌 120%🔥
• Land and Expand VSB SaaS: 80%👌 100%🔥
• Land and Expand SMB / Mid-Market SaaS: 90%👌 110%🔥
• Enterprise SaaS: 110%👌 130%🔥

(more in thread)
1/ What is Net Revenue Retention?

Essentially, it's how much revenue you're driving from one cohort of customers after 12 months. Concretely, it's a company’s monthly recurring revenue (MRR) one year ago divided into the current month’s MRR from that same group of customers.
1b/ NRR captures the lost revenue from churned customers, but also the positive impact of price increases, up-sells, growth in usage, and growth in seats within the existing base of customers.
2/ What are example of NRR for public companies?

• Twilio: 140 - 170%
• Zoom: 140%
• Slack: 135 - 155%
• PagerDuty: 139%
• Box: 130%
• Datadog: 130%
• Okta: 124%
• New Relic: 115%
• Dropbox: 100%
3/ Why is NRR important?

This metric tells you three things (particularly for B2B businesses):
1. How badly your customers need your product
2. How much growth opportunity you have within each organization
3. How much growth you'll see if you do nothing
4/ Read the full post for much more
lennyrachitsky.com/p/what-is-good…
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More from @lennysan see all

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Lenny Rachitsky
@lennysan
So many valuable nuggets of wisdom about building consumer apps from Alex Zhu's chat with @joshelman (artisanally transcribed by @blakeir)

See thread below for some of my favorites 👇
notion.so/Alex-Zhu-TikTo…
1/ "If you want to build a new user-generated content platform or social network, then the content has to be extremely light. The content creation AND consumption need to happen within seconds, not minutes."
2/ "For a new social platform to take off, your early adopters need to be young. Especially teenagers in the U.S. — why? They have a lot of time and they are creative. You won't need to spend as much for distribution. Zero cost distribution."
Read 10 tweets
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Lenny Rachitsky
@lennysan
What is good user retention? Advice from the experts:

• Consumer Social: 25%👌 45%🔥
• Consumer Transactional: 30%👌 50%🔥
• Consumer Subscription: 40%👌 70%🔥
• SMB / Mid-Market SaaS: 60%👌 80%🔥
• Enterprise SaaS: 70%👌 90%🔥

(Read on)
2/ What are these benchmarks based on?

These are averages across benchmarks from 20+ of the world's top growth experts and investors, based on their experience building and investing in some of the world's most successful businesses.
3/ Is it OK if my retention is lower?

Yes, in three cases:
1. You’re just starting out
2. You have low CAC and marginal costs
3. You’re not building a venture-scale business

"Ultimately, what matters is that your retention supports sustained growth" – @far33d
Read 8 tweets
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Lenny Rachitsky
@lennysan
Additional things to look for when evaluating a *marketplace* startup idea

1. 🤤 Demand PMF
2. 🤑 Supply PMF
3. ✨ Scalability with quality
4. 📈 High frequency and average order value
5. 🔒 Reasons to stay on-platform
6. 😏 Non-monogamy
7. 🧩 Fragmentation

(thread)
1/ 🤤 Demand Product-Market Fit — Do *customers* really want this?

“A lesson I have learned many times in my 20 years as a marketplace investor is that aggregating demand is the one and only key.” – @bgurley
1/ What to look for:
✅ Is this much cheaper or easier than the (non-marketplace) alternative?
✅ Can they maintain good unit economics while delivering this cheaper/better alternative?
✅ Will they be able to aggregate all of the demand eventually?
Read 16 tweets

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