Recurring Revenue & Cash Flow 101

In David Cummings’s blog post yesterday, Customer Value Financing Example, he referenced David Skok’s SaaS Economics posts (part 1 and part 2). I hadn’t heard of Skok or those posts, so I took a look today. They’re older posts from 2010, but their wisdom is still relevant. They do a great job of explaining the cash-flow trough of recurring-revenue businesses and how cash flow is impacted when companies scale by increasing sales and marketing spend.

I’ve spent today going through part 1 and will dive into part 2 over the holiday. This post contains wisdom that founders building recurring-revenue businesses need.