Matrix 78: Key to exponential growth in SaaS

[mstajminakter13]

A few days ago, I had the opportunity to give a series of 8 talks over the course of a week, where the SaaS Growth Model was the central theme and the #78matrix was its star. It was an enriching and revealing experience, both for the attendees and for me. The 78 matrix is ​​a fascinating concept that maintains that if you manage to steadily gain new clients and they don't churn, you will have a very interesting business assured in the future. But what makes this model so special and why is it so hard for us to project non-linear numbers?


The heart of the SaaS model: The 78 Matrix
The 78 matrix is ​​essential to understanding the growth of a SaaS business . This model is based on two essential pillars that, if maintained, guarantee sustained and successful growth. These pillars are:

Gain new customers on a sustained basis.

Minimize churn or customer loss.

Recurring payments are what make SaaS businesses extremely attractive . John Warrillow, in his book “Automatic Customer” published in 2015, proposed that every business, regardless of its nature, should be korean friends whatsapp number moved to a subscription model. This approach not only ensures constant income, but also facilitates long-term planning and projection.

Contextualizing the SaaS model
During the talks, I presented several exercises with two initial numbers and asked those present to quickly estimate the resulting number at the end of the tenth year. For example, if I invoice 20k at the end of the first year, I grow 35% in turnover year after year and I keep the losses under control, how much do you think I will be invoicing at the end of year 10?

Most of the time, the estimates were far from the actual number. This was not surprising, as the goal of the talk was not to delve into this cognitive difficulty, but into the characteristics and implications of the SaaS business model. However, the distance between the numbers produced by this qualified audience and the resulting actual number was surprising.

Why do we find it so difficult to project future numbers?
There are several reasons why we are bad at projecting future numbers, especially in exponential growth models like SaaS . One of the main reasons is that compound interest, which is at the core of exponential growth, is counter-intuitive to us. We are extremely linear in our thinking and have a hard time understanding how small increments can lead to big results over time.

Another reason is anchoring and bias in the present. We find it difficult to project into the future and to detach ourselves from the “small” numbers with which any business starts. This bias leads us to underestimate the growth potential and to not adequately consider the cumulative effects of compound growth.