Can confirm a current Broadcom VMware customer went from $8M renewal to $100M

Post by senordevnyc » Mon, Feb 26, 2024, 3:22 PM UTC

mamonster wrote: post #101

badcppdev wrote: post #81

Earlier quoted context omitted.

It's a SAAS product why not take both customers. Don't leave breadcrumbs to feed your competitors. It seems nobody can believe your assertion that a company would deliberately fire a profitable customer by quoting an x12 contract increase. There's no point asking me to talk to people in my business. You're going to have to point to publicly accessible resources.

Tl; dr thing you should keep in mind(and this will happen to every SaaS): 1.5 mio in revenue per employee. Your SaaS vendor will hike prices or fire people until they get to this number. Why ? Because VC/Wall Street told them that if they want a Meta/Apple/Microsoft like valuation or a good upround they need to hit this key metric. Over the next 2-3 years every SaaS that is priced by some sort of market(so not passio…

Post by alephnerd » Mon, Feb 26, 2024, 3:33 PM UTC

mamonster wrote: post #101

badcppdev wrote: post #81

Earlier quoted context omitted.

It's a SAAS product why not take both customers. Don't leave breadcrumbs to feed your competitors. It seems nobody can believe your assertion that a company would deliberately fire a profitable customer by quoting an x12 contract increase. There's no point asking me to talk to people in my business. You're going to have to point to publicly accessible resources.

Tl; dr thing you should keep in mind(and this will happen to every SaaS): 1.5 mio in revenue per employee. Your SaaS vendor will hike prices or fire people until they get to this number. Why ? Because VC/Wall Street told them that if they want a Meta/Apple/Microsoft like valuation or a good upround they need to hit this key metric. Over the next 2-3 years every SaaS that is priced by some sort of market(so not passio…

Post by nunez » Mon, Feb 26, 2024, 3:39 PM UTC

alephnerd wrote: post #106

nunez wrote: post #102

Earlier quoted context omitted.

its kind of like AWS. with them, some customers are spending $20M+/month, while others (me) spend close to zero.

Pretty much, though AWS doesn't use direct sales to bring in lower revenue tier customers whereas VMWare did.

Post by Sebb767 » Mon, Feb 26, 2024, 3:53 PM UTC

red-iron-pine wrote: post #100

michaelt wrote: post #30

Earlier quoted context omitted.

> The strategy you described has no upside for the vendor (in this case Broadcom VMWare). The upside is you don't scare off other customers when they hear reports of a 12x price increase. Right now, in response to this post, VMWare's biggest customers will be drawing up plans for if they need to walk away at the next contract renewal. And they'll want those plans to be extremely credible - it's worth spending $5 mill…

VMwares biggest customers will be getting deals apropriate to their offerings. It sounds like this was a (comparatively) PITA small-fry legal / law office.

Post by solarkraft » Mon, Feb 26, 2024, 4:00 PM UTC

shrubble wrote: post #98

alephnerd wrote: post #7

This is basically a polite way to fire a customer. You don't want to sell to everyone - you need to make sure the cost of retention+support is significantly less than what they are paying. If a customer is too troublesome or spending too little (for a company like VMWare, a $8m contract is on the smaller end) this is the politest way to fire them. It sounds like this customer is a legal firm, which makes sense - they…

This strategy works... until it doesn't. You may well be correct for the next 3-5 years; but after that those customers will leave and they won't come back. Ever. Tech is littered with the twittering ghosts of companies that had something "essential" and "irreplaceable". The strategy is "a retreat to the high end" and a self-serving re-definition of "who are customers are" and "what we do".