Everything from

Scale Venture Partners

2 resources from Scale Venture Partners we point people to, and the questions each answers.

📄 Article

✓ Link checked Free Intermediate

The magic number was invented at Scale, so this is the primary source, including the Omniture story behind the name and how the benchmark has drifted since 2005.

SaaS Metrics: A History of the Magic Number

From Scale Venture Partners by Dale Chang 8 min read

The magic number measures first-year revenue generated per dollar of sales and marketing spend.
It came from Scale's Rory O'Driscoll around 2005, when Omniture returned more than 2 dollars of first-year revenue per dollar of go-to-market spend.
The long-term private SaaS median is about 0.7x, which Scale treats as a healthy baseline rather than a pass mark.

Open scalevp.com →

Answers What is the magic number and should I care about it at my stage? How do I use CAC payback and magic number to decide whether to hire more reps?

📄 Article

✓ Link checked Free Intermediate

Separates gross sales efficiency, net sales efficiency and magic number, which most people use interchangeably and should not. Also sets the 0.7 long run median you will be judged against.

SaaS Metrics: A Primer on SaaS Sales Efficiency

From Scale Venture Partners by Dale Chang 10 min read

Gross sales efficiency is gross new ARR divided by total sales and marketing expense; net sales efficiency uses net new ARR instead.
The magic number version is the change in GAAP revenue between periods times 4, divided by sales and marketing expense.
Median sales efficiency in the Scale Studio dataset is around 0.7, and going above 1 is rare.

Open scalevp.com →

Answers What is the magic number and should I care about it at my stage? How do I use CAC payback and magic number to decide whether to hire more reps?

eChai Partner Brands