Last month we saw two incredible IPOs: Marketo and Tableau. I spent some time reading through these companies’ S-1s and it’s clear that they scaled by pulling three levers: (1) Raise money to invest in marketing, (2) Raise money to hire more sales people, and (3) Build extensions to their products to broaden customer reach. Marketo, for example, took more than seven years from founding to eventually listing on Nasdaq and it’s clear now that the average timeline for enterprise software companies from founding to IPO is about 9.5 years. However, that timeline is shortening. Why? Enterprise customers are becoming more accustomed to Cloud Services and the business model – monthly subscription – is now the preferred method of paying for services customers need. The monthly-recurring-revenue (MRR) model provides the flexibility of cancellation and reduces the up-front investment costs of implementation.
SOURCE: forbes.com
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