Doug Camplejohn
(00:00)
Hello everyone, this is Doug Camplejohn, your host of Revenue Renegades. This week, I’m excited to welcome to the show David Spitz, the founder and CEO of BenchSites. I first heard David speak at a Winning by Design conference back in the spring and was blown away by the stats he shared with the audience. So I’m very excited to have him on the show. David, welcome.
David
(00:24)
Thank you. It’s a pleasure to be here. Sorry it’s taken me so long, but I’m excited to have this conversation together.
Doug Camplejohn
(00:31)
Fantastic. We like to talk about founding stories. You are the founder and CEO of BenchSites. Tell us a little about why you decided to start a company.
David
(00:42)
That I am. I’ll try not to make this too long-winded because it’s been a four-plus-year journey so far. It’s been really fun. I’m not your typical founder of a software startup. I was an investment banker for 25 years. The genes that make you good at investment banking probably do not make you good founders or even operators for that matter. So I’m still learning, but I was passionate about metrics. At BenchSites, I basically approached investment banking in a metrics-driven way. I went into banking as a nerdy kid who was good at spreadsheets—a grunt, if you will. In investment banking, there’s always a transition from being a grunt to a salesperson, because ultimately if you’re going to succeed, especially in investment banking, you have to be a good salesperson. In the middle part of my career, I realized I probably wasn’t a very good salesperson at that point, and it took me a few years to get going. What I found, which worked for people who were thinking about how they wanted to tell their story, was metrics. I covered software from the get-go, so I’ve always been passionate about technology and software—I was a computer science major as an undergrad. I just figured out that metrics was a great way to tell the story. I was coming of age when SaaS was coming of age, so I was lucky to work on some fun deals, even your old firm, Salesforce, was one of my clients. There were a lot of questions about what makes a company good or bad, and how do you think about the new metrics? The perpetual license model had very different traditional metrics, and we were all figuring out what SaaS metrics should look like.
David
(03:03)
I remember Steve Cakebread came to us as a banking group when we were figuring out the prospectus. He asked, “How do we think about churn?” Salesforce’s churn was really high back then—this was 2003—and we speculated about industry parallels, like the cable industry. Their churn was about 2% a month, which was pretty high because they were selling to small businesses at that point. I’m not saying I invented those terms, but it dawned on me that I think this way: I think about metrics a lot, and I didn’t know what “good” and “great” meant. Nobody did—there were hardly any companies doing it back then. Over time, more companies started using metrics. Fast forward to about 2010—now there were dozens or maybe hundreds of SaaS companies, but I still don’t think anyone knew what good and great meant. The only way you can do that is if you understand what’s going on in the population. If you’re the best, you’re great. If you’re the median, that’s a benchmark. So I started a survey in 2010. We could do it by email then—I had everyone’s email address because they were my prospects. I would run the survey and people would respond anonymously and share their basic metrics. Terms like NRR didn’t yet exist, but we gradually refined things. We got great responses, partnered with some firms, and it became a significant thing.
It became really big. To bring it back to sales—for this podcast—I got good at sales by being the nerdy metrics guy who could help you tell your story. Each year, we’d run the survey at Pacific Crest Securities. The “Pacific Crest Survey” became the thing. I’d go into meetings with CEOs I’d never met before of the hottest software companies.
David
(05:26)
I’d have the banker book—you were supposed to, had the slicked-back hair—but basically, they’d say, “Put that away, I just want to go through your survey and talk about our metrics.” Fast forward to 2021, and all those years, it worked well for me. But I also felt there were fundamental flaws in how we did it. For one, who likes taking surveys? Nobody.
Doug Camplejohn
(05:35)
Nice.
David
(05:56)
Right? That was an issue. And then, when you compare year to year, there was just a lot wrong and everyone would say, “Yeah, I love your benchmark, but I’m different—I’m a security company, my average contract value is below $10k, so my benchmark should be different.” Do you have that? Sometimes, for important prospects, we’d create a custom presentation. But I thought: You can automate this. Make this process real-time and always up to date, so you don’t run a survey once a year. Everyone inputs metrics continuously so you can understand “what’s the population?” And now, the population is thousands of SaaS companies.
So we’ve been building a benchmarking platform that lets you contribute anonymously. Anonymity is built into it; everything is aggregated, so you’re always safe in numbers. Whether you’re one of hundreds or thousands of companies contributing data—even if you note specifics about your company—you’re still very safe: safe in the herd, if you will. What we’ve built really works well for that.
BenchSites SaaS Metrics is the product. We use the platform for other things, but the main thing is, we’re rolling it out to the market now, mainly through investors, but ultimately to individual companies. You contribute your metrics anonymously to participate—it’s a “give to get” model, and it’s totally safe. People will pay us over time, but we know we need to build the dataset first. That’s where we are now.
Doug Camplejohn
(08:23)
How are people contributing their data, rather than the survey approach? Are they connecting one or more of their systems to you?
David
(08:31)
Yes, that’s a key learning. You still have to provide your data in some fashion, but rather than a survey asking for NRR or growth rate, which brings skepticism, now you fill in an interactive waterfall. It’s visual and gives you feedback—always a one-year look back. What was your ARR a year ago? What did you add from new logos, in dollars or euros (it’s multi-currency)? What did you add from your base? Then, what did you lose, whether churned entirely or downsold? The numbers fill a waterfall or snowball graphic, and you get feedback at the bottom. So it’s graphical, interactive. When you enter your numbers, you might say, “That’s not my NRR; I calculate it differently.” And that’s fine—public companies do it slightly differently too. I was a banker—you always do it in a way that makes your numbers look best. What we’re trying to do is keep everything apples to apples. You get instant feedback—everyone’s numbers are done the same way. When you submit for the first time, you get a code name. From that point, you’re that code name. As soon as you submit, you see the benchmarks: headline stats, with the option to drill into details. For example, your NRR might be 105%, but maybe you have a lower average sale price, so you can see how that compares. Basically, instead of seeing benchmarks for 500 companies, you might drill into a more relevant subset.
David
(10:56)
Currently, we’re focusing on investors. Most companies in the platform now don’t even have to put their metrics in, because investors collect this data monthly or quarterly and use our API to put it in anonymously. We don’t know the company identities—every company goes in as a code name. Investors provide access for companies to see their metrics and benchmarks. Sometimes, companies say, “That number’s not right, that’s not my NRR.” We go back and forth on that, but the process works well. Guess what? The investors think it’s the right number. Over time, we’re adding more metrics and opening up the platform to more companies, going after them individually.
Doug Camplejohn
(12:14)
Very interesting. So it seems there’s individual value for the company or investor, but also aggregate insights across all these companies. You said there are now several hundred on the platform—is that right?
David
(12:28)
Several hundred, most added via private equity and VC customers. We also have public companies on the platform. Much of what I spoke about with Jaco and post about on LinkedIn is based on public company data—which is very good. You can’t get every metric. Not every company will disclose NRR, and almost none disclose GRR (gross churn), but you can get strong metrics. Arguably, the public company metrics may be even better than what you get from private companies; they’re bigger firms, etc. Lately, I’ve focused on public company metrics, because we’re still building critical mass on the private side—though we have some good data there. It’s a chicken-and-egg business, and the good news is we have a really nice-looking chick that’s growing and is high quality, thanks to our extraordinary partners—many long-term relationships from banking days help a lot.
Doug Camplejohn
(13:33)
No.
David
(13:49)
I’ll focus mainly on public companies and what we’re seeing in those over time. I’ll have more to share about private companies later. In public companies, the metric I focus on most as a starting point is growth. People tend to get confused—at least, with my banking hat on—there’s a notion of “good now, profitability is better,” but those are really the two main things. Growth is way down from 2021. For example, among roughly 75 public SaaS companies, the median growth rates in 2021 were in the mid-30% range, about 35-36%. If you go further back, some people say 2021 was an aberration, but the numbers weren’t off the charts compared to previous years. Yes, there were some stand-out companies, especially those serving venture-backed customers, but that mid-30% growth was typical for a while; the same if you look at 2019 or 2015. Now, the median growth number sits at about 15%—so it’s down over 50%. What’s notable is that it’s not just some up, some down—virtually every company is down. Only a very small handful, like Palantir, bounced up; basically, growth declined and stayed down. That reflects broad conditions, not just in public SaaS, but nearly everywhere. The exception: AI-native companies.
David
(16:13)
The most startling exceptions are these fast-growing, AI-native companies. I don’t mean to say they don’t count—they count a lot—but they’re smaller. We tend to focus on those that are highly visible, like Cursors, OpenAI, Anthropic, or Replit, but there’s more than a handful growing very rapidly. We’ll see what happens there, but the vast majority of companies (and likely podcast listeners) are dealing with the public SaaS environment. That sets the table.
On the profitability side—that’s gone up a lot. Breakeven in 2021, now the median sits at about 18%.
Doug Camplejohn
(17:00)
Mm-hmm. Yep.
David
(17:12)
Free cash flow margins. That’s good—and we shouldn’t take that away. But that shouldn’t make us feel like valuations should be higher now too, because of the Rule of 40: the idea you can trade off profitability for growth. From the data and considering valuations for a while, that’s not valid. Valuation is much more sensitive to growth. Now, you can borrow money more easily or get private equity funding, so profitability is nice, but growth is what matters most.
Doug Camplejohn
(18:06)
What are you seeing in terms of growth bands? For companies with a certain growth, what valuation multiples are you seeing?
David
(18:16)
I don’t have those stats on the tip of my tongue, but I just did this about a week ago: I looked at companies growing over 35%—say, firms with $500 million ARR or more.
Doug Camplejohn
(18:19)
Okay.
David
(18:44)
Most publics are in that size range, some much bigger. The percentage growing north of 35% now is just 5%. That’s it among public companies. Those companies will typically trade north of 15 times ARR. Back in 2021, it was mid-20s times ARR—much higher, during the bubble years. If you go back earlier, say 2019, even the multiples for those companies were lower. So 2015—about a decade ago—the multiples for companies growing at that rate were trading at seven times ARR. So there’s an extraordinary premium now; that line is steeper than ever. You really get rewarded for growth, which is interesting—we don’t usually think of it that way, because we’re all focused on how hard it is now to get a good valuation.
Doug Camplejohn
(19:58)
…for growth, right? It’s supposed to be profitable, right?
David
(20:08)
Actually, if you’re growing fast, you’ll get a much better valuation. The curve is steeper. While not at the 25 times ARR that was possible in 2021 (which was brief), if you’re an AI-native company, you might get an NM (not meaningful) valuation—it’s hard to compute, and we’ll see how it shakes out.
Doug Camplejohn
(20:33)
So in general, if you’re public or private, you’re saying focus less on profitability and more on growth?
David
(20:41)
If you can. It’s tempting to say, “Let’s go back to growth at any cost,” but that won’t work. Here’s my view—you shouldn’t trade off growth for profitability, if you can attain the growth. But if your growth is driven by customers who churn quickly, that’s not worthwhile. The third metric—the third slide I’d show—is about this. I sort of repeat myself, but you can’t emphasize it enough. Sometimes with data, people have a hypothesis and want to pull it out of my platform—but sometimes the data doesn’t say anything, and that’s important. Sometimes there isn’t a pattern, or you just need more data. But other times, you find expected results: growth goes down, profitability goes up, and you can look at the data and say, “This message is loud and clear.” That’s true here. There’s another message that’s loud and clear too—this is that third slide.
David
(23:03)
Across 85 companies over five years of quarterly data, the trends are super clear. In “go-to-market” as we can see it (using accounting data from 10Ks and Qs we pull automatically), the key is sales and marketing. We don’t have it disaggregated, but you can look at how effective sales and marketing spend is by comparing it to growth or net new ARR numbers. What you see: sales and marketing spend as a percentage of total revenues is going down. If you do the math, you’ll see free cash flow as a percentage of revenues goes up. Companies are getting more efficient in terms of expenses; sales and marketing is a big part there. Around half the improvement comes from sales and marketing decreasing as a percentage of revenue—from the low forties to mid-thirties, as I recall. People should take a victory lap for that, but not get too comfortable, because if you’re a SaaS business, the idea is that renewal should cost less. Yes, you spend a lot on sales and marketing to bring customers in, but renewals and customer success should be easier and cheaper.
David
(25:20)
The economics of SaaS is that you should measure sales and marketing expense not as a percentage of total revenues, but as a percentage of net new ARR. Growth comes from new logo sales, upsell (should be cheaper), and avoiding churn. Measure sales and marketing spend against the net new ARR. One way to think about it is a cost ratio—how much did we spend last year, and how much did our ARR increase? Do a simple division; maybe you spent $2 for every $1 of net new ARR. That’s actually where things sit now—about $2.08, up around 70%, meaning worse (higher is worse).
Doug Camplejohn
(26:46)
All right.
David
(26:47)
It was a dollar twenty-three or twenty-four back in 2021. That year was a low point. I’m not saying you have to return to a dollar twenty-eight. Different companies have different realities—if you’re early-stage and adding lots of new logos, it’s going to cost more. You can’t just benchmark yourself to a fixed number. Benchmarking is not just about peers; it’s also about where you were last year, two years ago.
Doug Camplejohn
(27:40)
So let me understand: you described that sales and marketing spend has decreased—from the forties to the thirties—but the cost to acquire new ARR has gone up from $1.24 to more than $2. How do you reconcile that?
David
(27:56)
Yes, it feels like a contradiction. But the actual total costs have gone up—most people are spending more. Be aware, though, what you said isn’t wrong. Sometimes the math makes sense: if you’re not growing as fast, you shouldn’t be spending as much. If you’re losing a lot, that’s another story. You need to get past the idea that those two trends don’t fit together. You’re spending less as a percentage of revenues, but more as a percentage of net new ARR. The fallacy is that, as you get bigger, you just spend more. You do in a way, because it increases profitability, which is the beauty of SaaS. But if you look at private, PE-backed companies on our platform with ARR over $50 million (a pretty low threshold), we have around 60 companies with super high-quality data—their free cash flow margins are in the thirties, twice as high. That tells you something.
Doug Camplejohn
(29:04)
Okay.
David
(29:20)
Being PE-backed and scaled leads to higher profitability. If you want to be successful and get a good exit or valuation, the median 18% free cash flow margin isn’t enough. You still won’t get really high valuations unless you grow at 30%. If you can do that, go do that—and spend sales and marketing efficiently. But if you can’t, and you want to be successful, pay your people well, and get a good exit or valuation, sometimes PE buyers see inefficiencies they can fix.
Doug Camplejohn
(31:33)
Exactly. One thing you mentioned earlier is lumping sales and marketing into a single spend. What struck me when I last heard you talk is breaking revenue into different buckets: new logo sales, upsells, expansions, churn. Can you talk about how you advise companies to break this out?
David
(32:02)
Absolutely, I love this topic. Every year during our survey, I wanted people to break out that spend. Everybody does SaaS metrics for NRR and GRR calculations, so you need to break out top-line ARR—that’s being done, though many accounting platforms aren’t doing that yet. NetSuite does it now, and we’re excited to partner with them. What doesn’t sit in accounting systems (that I’m aware of) is a similar breakout for sales and marketing spend—how much is dedicated to new logos vs. upsells and expansions? Churn management (typically customer success) is, again, a distinct spend. Most people aren’t breaking this out, even among sophisticated companies. When I built this into our platform, we got too much pushback; people want simplicity, and most aren’t tracking this granularly. Some are, but most aren’t. If you want to fix your metrics, the first layer of diagnosis is breaking down these costs—even if you just guess (“We spent X at Dreamforce, how much went to serving the base vs. finding new customers?”) Even if it’s a guess, it’s the best first step. Next year, you’ll try to be more precise.
Doug Camplejohn
(35:05)
Shifting gears, we’re talking traditional SaaS metric terms: ARR, NRR. The hot topic now is pricing models. As companies shift to AI or consumption-based models (AWS, etc.), how do you tie traditional seat-based metrics to these new models?
David
(35:43)
Great question. I posted on this yesterday—arguing ARR isn’t dead. Let’s go back to basics: Any business with recurring revenue (whether subscription-based payment in advance or usage-based contracts) faces some primal questions. How big is your base of recurring revenue? Even if you’re 100% outcome-based, you still have a cohort paying you each year. That’s ARR, even in the new world. You can create a new term, but I’ll stick with ARR for now.
Doug Camplejohn
(36:52)
On the regular cycle.
David
(37:09)
Second question: How fast did you grow (ARR growth rate)? How much did your existing base expand or contract (NRR)? For purists: How much did your ARR contract (GRR)? These are crucial metrics, regardless of your viewpoint. I believe the subscription model is declining—a colleague, Brett Queener, wrote a piece coinciding with mine (“The End of the ARR World as We Know It”). Turns out, he focused on contracting and pricing, which I agree with; but as a metrics person, the four questions above remain—their names may change, but their importance doesn’t. Some new metrics are coming for AI and agentic solutions, but those core ones will stay.
Doug Camplejohn
(38:18)
Yeah.
David
(38:35)
Base metrics are critical, whatever you call them.
Doug Camplejohn
(38:38)
You’ll still have some financial relationship, even if it’s less predictable. All the crazy hypergrowth from dev tools players comes from that model.
David
(38:55)
Absolutely. It’ll be less predictable. For example, Snowflake’s NRR (which they call NDR) dropped the most—still higher than almost anyone, but fell from about 170 to about 130. It’s going to move. Just don’t get cute with calculations—don’t treat contraction one way in some calculations and another in others. Our platform forces you to be consistent; calculations are simple, but they reflect reality.
Doug Camplejohn
(39:43)
Putting a bow on everything: What are your key recommendations for revenue leaders and CEOs on what to focus on to remain best-of-breed?
David
(40:00)
As a metrics-driven former banker, my bias is clear—you should know these metrics cold for your business. Many people don’t. Good CFOs and often CEOs do, but even then, they may not keep everyone aligned. Marketing may talk about them one way, but for managers, everyone should focus on the same metrics and goals. For example, I remember Bill.com’s CFO John Reddick calling a two-hour meeting with senior people before their IPO, where we reviewed every metric. They tracked those going forward, and they weren’t the only company doing that—others should too.
I’ve also learned a lot about go-to-market. The head of sales—the CRO—is often my route into helping companies. I believe strongly that rev ops people and the CRO should be closely attached, especially with FP&A (from the CFO). These roles should be melded together, but at many companies, that still doesn’t happen.
Doug Camplejohn
(42:06)
If you have the chance to boost growth without affecting profitability, there’s obviously an efficient frontier. That’s what gets rewarded today.
David
(42:16)
Yes, that’s true. Some hear my focus on efficiency, and I am for sure, but at the end of the day, go for growth. That’s what gets rewarded.
Doug Camplejohn
(42:32)
Also, just get aware—don’t treat all revenue the same. Think about how to break out the top line and what the cost drivers are for each bucket.
David
(42:37)
Absolutely.
David
(42:45)
Yes. Find your lowest hanging fruit—you’ll see the biggest opportunities there.
Doug Camplejohn
(42:50)
Fantastic. We’re almost out of time, so let’s find out a bit about you. Here’s a speed round—what’s something we’d be surprised to know about you?
David
(42:55)
The fun questions—alrighty…
David
(43:03)
A fun fact: My mother was born to my maternal grandfather, who was quite old when she was born. I knew my maternal grandfather well—he lived to 100, was born in 1886 in Germany, and I feel like I know him well. He lived to 1986, worked until he was 100, and worked in the World Trade Center. I used to have lunch with him at Windows on the World. So I feel a connection to the pre-automobile world; it’s pretty amazing.
Doug Camplejohn
(44:16)
That’s crazy. I remember as a kid wondering whether the world was black and white, since I didn’t realize color existed. What do you like to do for fun?
David
(44:21)
You watch the Munsters and Addams Family, like me.
David
(44:31)
I’ve posted about this: I’m in an ‘80s rock cover band. Since we both live in Marin, Doug, I’m expecting you at our Halloween concert in Novato—everyone comes in costume, there’s a contest, and we’re actually pretty good. I play keyboards; it’s definitely one of the really fun things I do.
David
(45:03)
Yes, we play every month or two. It’s called “Cover Story.”
Doug Camplejohn
(45:09)
Cover Story—great name! Where are you playing for Halloween?
David
(45:14)
I forget the venue name—it’s in downtown, across the way, but I’ll get it to you.
Doug Camplejohn
(45:19)
Is it a hot month?
Doug Camplejohn
(45:26)
Alright, we’ll find it, I’ll put a post out before the show. What’s a product you love or that’s made a difference in your life?
David
(45:35)
This is interesting—of course, all the AI products. But when I started building this company, I realized I’m a solopreneur and haven’t taken funding, so for a lot of reasons, I needed to do the heavy lifting myself. Before ChatGPT launched, I started learning SQL—now I use Postgres SQL with benefits from Claude and OpenAI. But I really like working directly in Postgres. It’s like a spreadsheet on steroids: programmable and creates things I couldn’t have imagined a year or two ago. So that’s my favorite product—an open source tool, but an absolute killer product.
Doug Camplejohn
(46:51)
Spoken like a true data guy—and very old school. I love it. Finally, how can listeners stay in touch and help you on your journey?
David
(46:59)
Reach out! I’m focused on building our high-quality company base at BenchSites, so I’m eager for great companies to join the platform. You can do it directly at sassmetrics.benchsites.com—if I don’t know you, you’ll be asked to provide some information and then get anonymized. LinkedIn is the easiest way to reach me directly if you don’t have my email.
Doug Camplejohn
(47:35)
Fantastic. David, great chatting with you today. Thanks so much for coming on the show.
David
(47:38)
Thank you, Doug—really appreciate it.
