The Art and Science of Building Comp Sets

Try as you might, there’s no such thing as a “clean comp set.”

Sure, it’s sexy to draw yourself to look like DDOG and SNOW, who conveniently garner top EV / NTM Revenue multiples - but it’s a total ~~comp~~ cop out (and probably not academically honest).

Designing comp sets is an art project for everyone - I mean, look at Rubrik who just IPO’d. They play in 1) the “Database and Infrastructure” sector with their core backup and recovery product, 2) the “Security” sector with their Zero Trust Security Cloud, and one could even argue 3) the “DevOps”sector with their observability capabilities.

Rumor has it a 1st year Goldman Sachs analyst BUCKLED under the weight of the ppt Venn Diagram template below, which his MD purposefully designed for Rubrik’s comp set.

Identifying an initial Sector is like finding your beachhead for comp analysis; it’s a starting point. You should then go a step further to run that list through the following lenses:

Average deal size (Enterprise vs SMB)
GTM motion (Field Sales vs PLG)
Pricing (Seat Based Subscription vs Usage Based Pricing)

While Toast and Veeva are both “Vertical”, I don’t think a PLG / SMB / Fintech-ish company is a bang-on comparison to a Cloud Based / Enterprise SaaS behemoth. So you have to investigate further.

Recently, a tech CEO who I really respect reached out and asked:

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“Would you look at our business as Vertical or Back Office? My investors think I’m more Vertical because we specifically serve B2B SaaS customers.”

-Baller CEO who readers my book report thing

I felt seen. I told him:

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“Building a comp set is more art than science. It’s actually the reason I created Mostly Multiples - I was cobbling together bespoke comp sets to measure my own company. This newsletter is a jumping off point for people to better build their own.”

As the CFO of a (takes deep breath) Cloud Based Automotive Procurement Platform, I personally weight my own company as:

50% Vertical SaaS,
25% Backoffice, and
25% Marketplace.

But hey, that’s just me. Benchmarking is, at the end of the day, in the eye of the beholder; it’s my job to paint the landscape and ultimately let others pick the final characters for comparison.

So it begs the question - how do you see your business?