Back in January, Mike and I sold Rustici Software to a British company called LTG. One thing I “learned” in that process is that recurring revenue is very valuable to a company (or its owners). As a business, we sell several products on term licenses, either through our Cloud offering, which is SaaS, or our on premise products which require term licenses as well. Our recurring revenue and high retention rates meant that LTG had to pay a premium over what they would have for a services business.
Take a look at the impacts of aaS on the valuations of several software businesses.
This valuation premium that SaaS gets can be seen more precisely, when we compare cloud software companies to the more traditional on-premise software providers. SaaS companies get higher valuations at all levels of revenue growth rates. For example, looking at the charts below, the median revenue multiple for on-premise software companies that grew their annual revenue 30-40% is 5.1x, while the same multiple for a SaaS companies that grew revenue at that same 30-40% rate is 9.2x.
This group of companies was worth 80% more than their non SaaS brethren.
We’ll talk more about Netflix in a subsequent blog post, but they’re a perfect example of a Content as a Service business from outside the elearning world. And they are recognized for their ability to generate recurring revenue and retain customers.
It’s time for elearning providers to do the same. Find a customer, serve them well, provide updates, control the content. And if they do it well over a period of time, both the company’s revenue and value will rise.
Welcome to week one of the post-acquisition Rustici Software world. I just thought I’d take a moment here to discuss one of the reasons we agreed to sell Rustici Software to LTG, because it’s not all about the money.
Mike and I were seeking investment funding for Watershed, but we really weren’t on the lookout for anything related to Rustici Software. It was a profitable business, I know very well how to run it, and we have several sets of work that give us cause for optimism. LTG, however, saw the value in both Watershed from an investment point of view and Rustici Software from a market and profitability point of view.
After LTG’s first visit, Mike and I asked ourselves two questions.
- Did we believe that we would be able to maintain our strange and highly-valued culture through an acquisition? Having a place we want to come to work has always been a fundamental requirement for us.
- Did we believe that we would be able to serve our customers in the way we always had?
Throughout the negotiations, due diligence, and these two long days as an LTG company we’ve consistently believed that we could do both of those things and still do. LTG is not an LMS provider like some of our prior suitors have been. We always used to worry that an acquisition of that sort might include aggressive interactions with our customers. With LTG, we’re going to continue to be agnostic, supportive of the standards, and generally the same company we always have been. We’re excited about it, and excited about continuing to support our customers and the industry in general in exactly the same way.
On August 13th, 2015, we launched a heavily revised version of tincanapi.com. Andrew Downes has been working away, as he does, creating new content. Rather than direct it all at the blog, though, he’s been rethinking and restructuring the core site and sharing his insights for first-timers, learning designers, learning product vendors, and organizations. There are countless other updates laid out below. Please spend some time with them.
Many readers of the site, though, will likely notice a significant change to our handling of the name… tincanapi.com. Years ago, Mike shared our perspective on the name, that we were going to call it Tin Can API. For some, this has been a contentious issue. With the new site, we’ve made the site behave as we have been personally for a long time. We call it whatever you call it.
On the site, you’ll notice a toggle in the upper left. If you prefer to call it Tin Can, do so. If you prefer xAPI, that’s great too. Whether you visit tincanapi.com or experienceapi.com, the site will present everything to you using your prefered name.
It comes down to this: arguing about an API’s name simply isn’t productive. We have far more important things to accomplish together.
So please, enjoy the new content. Go build a brilliant activity provider. Make some statements. Or ask us for help if you need it.
Here are the new sections of the site:
The existing Tin Can Explained page gives a really helpful introduction to Tin Can if you’ve never heard of it. We’ve brought this section up to date a little and added some pages around the different components of the new enterprise learning ecosystem that Tin Can enables. We’ve also added pages targeted specifically at organizations, learning product vendors and vendors of products outside L&D.
By now, if you haven’t heard of Tin Can and got a basic understanding, you’ve probably been living on mars. These days, the question we get asked most isn’t “what’s Tin Can?” but “how do I get started?” If that’s your question, then good news – we’ve created a new section just for you!
The get startedsection includes pages targeted at product vendors, content authors and organizations. It includes guides to help you see Tin Can in action, get a Learning Record Store (LRS) and run a pilot project in your organization. There’s a collection of pages to help you think about moving on from SCORM, too.
We already had a bunch of resources for developers, but not much really aimed at learning designers. We’ve added a page outlining the impact of Tin Can on learning design, including reflections on a handful of learning models and theories in the light of Tin Can. If you’re thinking more at the strategy level, we’ve got a page on incorporating Tin Can into your learning strategy, too.
The developers section was already crammed full of resources. We’ve tidied these up to make them easier to find and created an interactive statement explorer page to help you understand the structure of the statement.
The statement generator we created a few years ago was due for an update and ADL recently published a new more comprehensive statement generator. We don’t believe in reinventing the wheel, so we’ve taken the ADL tool, made it orange and included it on the site.
To help you put all these resources into practice, we’ve created a series of challenges for developers to try out writing code for Tin Can.
The previous webinar list contained embedded YouTube videos for all our webinars. We’ve got so many webinar recordings now that it was getting hard to find webinars on specific topics so we’ve created a new categorized webinar list. Each of the webinars is now on its own page, making it easier to share the recording with other people.
There are many organizations that have multiple LMSs, and many of them have the same problem—they wish they had just one LMS, with all of their data in one place.
Whew! Finally recovering from the holiday festivities and the small talk that seems to come along with it. Invariably when meeting new people, the stock question, “Where do you work?” comes up. We joke around here that this can be a loaded question. Some of us provide in-depth explanations of SCORM and Tin Can and that we create the software that handles these challenging, yet valuable standards. And others (me included) usually just keep it simple — “a software company in Cool Springs”. Either way, it’s not as easy to explain when talking to folks unfamiliar with the world of e-learning.
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