Slicing Pie with Mike Moyer - Existing, Monolithic SAAS Company

slicing_saas_pie.md

• Starting point

  • Company A is a monolythic SAAS company built over the last ~15 years which is looking to improve their solution - it's bleeding customers and does not have the leadership, funds, or skills to take on the task
  • Company B is a new venture which will Slice Pie in the traditional way

• Company A

  • Main sources of value:
    • Existing customer base/revenue stream
    • Business process/concept/solution/lessons-learned (what they've figured out during the lifetime of the venture)
  • Owned by shareholders
  • Legacy product
  • Objective is to migrate all the value out of this company into Company B
  • Reward stakeholders of A
  • Compensation to A:
    • Company A owns slices in Company B
    • Royalties
      • Look at competitors
        • i.e. 2-7% in publishing industry
        • 5-10% in tech space
          • Wikipedia has good article on Royalties
          • Pay the royalties in pie within B
          • Royalty is non-cash contribution
            • x2 for slices of pie
    • Comissions on sales
      • Convert customer to new platform
  • Eventually A will just be a holding company in Company B
  • They will get proceeds from sales
  • Anyone who works on company A will earn pie from B

• Set expectations

  • New customers --> royalty but no sales comissions
  • Double dipping on existing customers
  • Comissions and royalties will end if/when B sells
    • No perpetual royalties
      • Potential buyer may block a sale if there's a perpetual royalty
      • Base royalty schedule on average lifetime of customer
        • Get average of customer engagement from existing data
  • Give stakeholders of A a meaningful way to participate in the new venture

• There is a dynamic solution to every one of the challenges