Iconiq recently published its State of Software 2025: Rethinking the Playbook. Whenever a new industry benchmark report is published, Dave "CAC" Kellogg and Ray "Growth" Rike try to quickly read, analyze and decide if the report should be discussed on an episode of the Metrics Brothers. The Iconiq State of Software 2025 is a solid industry report that includes several key findings that Dave and Ray discuss during this episode including:

• Ai-Native vs AI-Enabled vs non-AI segmentation
• Growth's impact on Enterprise Value to Revenue multiples
• Revenue growth trends by company size
• Net Revenue Retention Benchmarks
• CAC Payback Period Benchmarks
• Adoption vs Engagement vs Outcomes for AI software companies
• Funnel Conversion metrics for AI vs non-AI companies

If you are interested in how the top tier, maybe I should say top quartile of SaaS companies are performing, in context of SaaS companies leveraging AI, those not leveraging AI and AI-Native software companies - this episode has something for everyone!

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The Bessemer Venture Partners Cloud 100 Benchmarks Report 2025 provides a snapshot into the top 100 PRIVATE SaaS/Cloud/AI companies. This year's report is full of new insights and trends that highlight how AI is impacting the software industry as we know it. Some of the key points in the report that our hosts Dave "CAC" Kellogg and Ray "Growth" Rike discuss during today's episode include:

•  The Cloud 100 $1,117 billion in aggregate value - a 36% increase from $820 billion in 2024
• The top 10 companies account for $598 billion of the aggregate value - 54% of entire list versus 46% last year
• OpenAI valued at $300 billion exceeds the combined value of last year’s top 10
• AI companies dominate this year’s list, comprising $464 billion in value - last year AI company total valuation was $176B (21%)
• The average Cloud 100 company reached the $100M (Centaur) milestone in just 7.5 years - AI companies only 5.7 years

The story on the Cloud 100 valuation multiples provide an interesting story on how valuation and growth are not necessarily trending in the same direction:

• The average Cloud 100 revenue multiple was 20x fell for third straight and down from 34X (41%) since 2021

If you are interested in how the SaaS and Cloud industry is evolving - by the number, and how AI-Native software companies are changing the benchmarks this episode is a MUST listen!

Bessemer Cloud 100 Benchmark 2025 Report is available by clicking here

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Positive Business Outlook or Work-Life Balance - which is more important? The "Grindscore" metric combines the two to determine the attractiveness of a company for employees. 

Dave "CAC" Kellogg and Ray "Growth" Rike discuss the metric from many different angles including:

• The origin of the Grindscore metric
• Positive Business Outlook (PBO) + Work-Life Balance (WLB)
• Sample of Private and Public Company Grindscores
• Why a high PBO and high WLB scores the same as a low PBO and an average WLB (flaws of the metric)

This episode covers a metric that most software companies are not using - and the conversation may put a light on some of the reasons why?!

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Positive Business Outlook or Work-Life Balance - which is more important? The "Grindscore" metric combines the two to determine the attractiveness of a company for employees. 

Dave "CAC" Kellogg and Ray "Growth" Rike discuss the metric from many different angles including:

• The origin of the Grindscore metric
• Positive Business Outlook (PBO) + Work-Life Balance (WLB)
• Sample of Private and Public Company Grindscores
• Why a high PBO and high WLB scores the same as a low PBO and an average WLB (flaws of the metric)

This episode covers a metric\ that most software companies are not using - and the conversation may put a light on some of the reasons why?!

See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Bessemer Venture Partners recently released their State of AI 2025 Report, a space exploration manual for the AI software era. With AI now the dominant software force, let's dive into what Dave "CAC" Kellogg and Ray "Growth" Rike took away from the report in today's episode:

• The key differences in performance metrics between AI Supernovas and Shooting Stars
• Why Vertical AI companies have a unique opportunity to outperform horizontal AI companies in the early days
• The importance of building a structured Proof of Concept or Pilot program into your customer acquisition process
• The top 5 predictions for the AI market in 2026
• Top 10 takeaways for Native-AI founders and executive leaders

The top five predictions from the report for AI in 2026 include:

1. The browser will emerge as a dominant interface for agentic AI
2. 2026 will be the year of generative video
3. Evaluations and data lineage will become a critical catalyst for AI product development
4. A new AI-native social media giant could emerge
5. The incumbents strike back as AI M&A heats up

For the best listening experience, open the Bessemer Venture Partners State of AI 2025 report and follow along as Dave and Ray discuss the highlights.

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Aventis Advisors recently published a report on AI Valuations which covered the number of investments, size of those investments, median valuations and multiples on AI investments over a 15 year period from 2010 through first half of 2025!

Dave "CAC" Kellogg and Ray "Growth" Rike discuss some of the highlights including:

• AI industry categories included
• Number of financing rounds (2010 - 1H2025)
• Total Capital Raised (2010 - 1H2025)
• Median sizes by round (2010 - 1H2025)
• Valuations (2010 - 1H2025)
• Valuation multiples (2010 - 1H2025)
• Large Language Model valuations vs AI Coding Assistant Valuations
• Summary of the AI funding environment

You can follow along to Dave and Ray's conversation by clicking the below link to the report

Aventis AI Valuation Multiples Report

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AI-Native products and AI products integrated into a traditional SaaS platform have different Cost of Goods Sold (COGS) than a SaaS platform, which directly impacts Gross Margin. With over 80% of SaaS companies already integrating AI products into their platform, the Metrics Brothers knew it was time to discuss the Gross Margin and Cost of Goods Sold considerations of deploying an AI product:

Topics that CAC and Growth discuss during this episode includes:

• Gross Margin benchmarks for AI products versus SaaS platforms
• Cost of Goods Sold (COGS) for SaaS products
• Cost of Goods Sold (COGS) for AI products
• General Rules for COGS vs OPEX categorization
• Increasing AI product Gross Margins with scale
• The cascading reality of AI investments and build-outs

If you are considering investing capital and resources into an AI product, be it in an AI-Native product or as an add-on to a legacy SaaS platform, this conversation between CAC and Growth provides multiple insights and considerations for many Cost of Goods Sold components for AI products vis-à-vis traditional SaaS products.

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AI is creating a level of need for data centers, power and processing capacity that has not been seen before - but how to measure the magnitude of that need is the topic for the Metrics Brothers to take on during this episode.

During today's conversation, Dave "CAC" Kellogg and Ray "Growth" Rike discuss many key Data Center metrics including:

• FLOPS - Floating Point Operations per Second
• Model Parameters
• Watts and Gigawatts = Power
• Gigawatt/hours = Energy
• First multi-GW data center named Prometheus
• Why data center size is now being compared to the city of Manhattan

AI is changing the world as we know it - and the Metrics Brothers are diving into this trend metric by metric!

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SaaS companies were traditionally measured on how many years it took to achieve $100M ARR - a key milestone! In today's brave new world of AI, this milestone is now measured in MONTHS. Dave "CAC" Kellogg and Ray "Growth" Rike highlight discuss this new AI growth metric in today's episode with many examples including:

• Lovable
• Cursor
• Wiz
• Bolt
• Anthropic
• OpenAI

Dave and Ray discuss how these new hypergrowth AI-Native companies compare to some of the fastest growing traditional SaaS companies including DocuSign, Atlassian, Box, HashiCorp, Zoom and Slack.

The Metrics Brothers then dive a little deeper into the details of the "months to $100M" to discuss WHEN does that clock begin to tick, at launch or at $1M ARR? They then go beyond just AI and discuss how Product-Led Growth was once viewed as a key to accelerating growth to $100M and where the reality meets the expectations.

Lastly, CAC and Growth discuss one example of a fast growing AI company that could not quite sustain the early growth trajectory that was greatly helped by the hype and the hope of AI - a cautionary tale for other high flyers or just an interesting data point?

Take a listen to this episode if you are involved, interested or evaluating how growth rate expectations for software companies in the new era of software!!!

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The recent $2.4B deal by Google to purchase Windsurf's two co-founders, key staff and a non-exclusive license to the Windsurf software is an example of the new Reverse Acqui-hire structure. Dave "CAC" Kellogg and Ray "Growth" Rike discuss the tradition vs new acqui-hire structure model as evidenced by the Google-Windsurf deal.

During this episode, CAC and Growth cover not only the Goggle-Windsurf deal, they also discuss the broader impact to the future of acquisitions across the software industry. Topics discussed include:

• The timeline of the Google, Windsurf and now Cognition deal
• Overview of the traditional tech acqui-hire deal structure
• Discussion on how the new "reverse acquihire" is different
• Comparing professional athlete's top salaries to top AI and software talent in reverse acqui-hires
• WHY the use of the new reverse acqui-hires happen and why it will probably continue

If you enjoy going beyond the traditional headlines of industry acquisitions and thinking about the underlying reason why tech acquisition deal structures are evolving and changing - this discussion on the Google-Windsurf deal provides great content to go beyond what and think about the why!!!

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