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"The Pulse" --#72 / Subscription-Based Businesses

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The Pulse
October 13, 2024

SA 2026 interview szn is fast approaching! Don’t fall behind your competition by wasting time tracking applications.

Instead, use our Premium Database to gain access to 200+ banks/consulting/buyside firms.

Venmo @ThePulsePrep $50 or pay with credit card (ThePulsePrep—Stripe.com) and shoot us an e-mail @[email protected]. Additional details of the database can be found below. Gain an edge over everyone by accessing a wealth of recruiting resources and detailed explanations of the interview processes of each firm.

Video of Premium Database——>The Pulse Database Video

Looking for interview prep or a coach to help you navigate the process? Check the “Going Forward” below.

Last year, 95% of students coached received offers.

  • Pay for 3 coaching sessions, get one FREE! For the next month, we will be offering an exclusive offer to pay $150 to receive 4 coaching sessions with a current or future analyst (Venmo @ThePulsePrep or pay with credit card: (Coaching Bundle $150 for 4 Sessions). Interviews are right around the corner and we want you to be as prepared as possible. Last year, 95% of those coached received offers!

Recruiting Timeline:

Banking:

Where We’re At:

  • SA 2026: No updates this week. RBC is the only bank to have opened. We recently added 20+ updates to our “Interview Processes” section of our Premium Database. Ever wondered what the interview process looked like for GS, JPM, Evercore, etc? We got you covered! Check out additional Premium Database details below 

  • FT 2025: Bank Street Group, Nomura, Keybank, and Lincoln International opened their applications. There are currently 57 firms actively recruiting for FT 2025. Please reach out if you are looking for coaching!

New SA 2026 Applications:

  • None

New FT 2025 Applications:

  • Bank Street Group: CT-based boutique (FT 2025)

  • Nomura: Large Japanese bank, hiring for its TMT group (FT 2025)

  • Keybank: Middle market bank (FT 2025)

  • Lincoln International: M&A team (FT 2025)

See below to gain access to our premium database, updated weekly, which houses the application processes for over 200+ banks/consulting/buyside firms! Gain an edge over everyone else by not having to spend countless hours tracking applications and deadlines.

Consulting:

Where We’re At:

  • 46 SA 2025 applications have been released along with 53 FT 2025 apps. Most applications for larger firms have closed.

SA 2025 released apps:

  • None

FT 2025 released apps:

  • SciVida - Associate Consultant (SA 2025)

Apply ASAP if you’re interested!

Buyside:

Where We’re At:

  • SA 2026: No updates here. There are currently 4 buyside firms recruiting for SA 2026 seats. Expect more volume closer to December. 

New SA 2026 released apps:

  • None

Premium Database:

The database is updated weekly and contains 200+ Investment Banking and Consulting internships/full-time positions along with:

  • Interview tips for specific companies

  • Interview prep material

  • Applications and deadlines linked so that you can apply with one click

  • Insider information about the application process

  • Professionals to network with

  • Buyside deadlines, interview prep, and people to network with for the sweatiest of students

We send the updated dataset every week with the latest banking and consulting job postings. We released our 72nd update today.

Students we have been helping have already landed roles at Blackstone, Goldman, J.P. Morgan, Jefferies, Citi, and Solomon.

To get access to the database and the weekly updates, you pay a one-time fee of $50 (Venmo: ThePulsePrep / Credit Card: (ThePulsePrep—Stripe.com) that grants you annual access to the updated database (You can enable purchase protection if concerned). If you don’t find our services helpful, we simply ask for feedback on an area we can improve upon and will refund your $50.

This is a small investment for a huge payout when you secure your dream offer!

Video of Premium Database——>The Pulse Database Video

Market Update:

Subscription-Based Businesses & SAAS

Everywhere you look you’re being asked to sign up for a ‘Basic, Standard, or Premium’ tier for some type of service where you’ll be billed the same monthly / annual payment into perpetuity.

You’ll eventually forget this payment and either a). use the service for the rest of your life or b). never use it and essentially donate to the company. 42% of Americans have ‘ghost subscriptions’—things they signed up for and totally forgot about.

Today, we dig into the rise of the subscription-based business model.

First, some history.

Subscription-based businesses have been around forever. They just never had the fancy labeling.

Dial back the clock a few hundred years and you have the advent of the printing press, which led to the creation of the newspaper. A newspaper business is a subscription-based business.

You pay a recurring charge to get a newspaper delivered directly to your door on a recurring basis.

*Class of 1900 Summer Internship*

So, the framework for a subscription-based business model has been around forever. But why have they become so popular?

It all comes down to tech. Below I chart out some basic differences between the old-school newspaper business and today’s typical B2B SAAS business

Newspaper Business vs. B2B SAAS:

  • User: consumer vs. enterprise

  • Product: physical newspaper vs. web-enabled software

  • Primary Service: delivery of the paper vs. access to the software

  • Pricing: one recurring payment vs. multi-tier recurring payment

  • Gross Margins: 45-60% (CSI) vs. 65-80%

  • Assets: print shop + delivery vehicle vs. software IP + hardware

I can keep going, but the primary takeaway is that innovation in tech provides a stronger engine for subscription-based businesses to get to scale. We saw this starting around the dot.com bubble of the early 2000s.

A clearer path to scale with strong margins tends to peak an investor’s interest. If you invest at all, I can almost guarantee you own stock of some subscription-based business—specifically SAAS— as they’re scattered throughout the Fortune 500.

So, what do investors look for when investing in SAAS?

We wrote about some tenets of a good investment here: "The Pulse" --#56 / Components of a Good Investment and many of the themes are applicable to SAAS businesses so today I’m only going to cover some of the SAAS-focused nuances.

Namely, the large emphasis on deciphering the top line of the income statement: revenue. SAAS investors pick the revenue bone clean—-which makes a ton of sense and tbh I think many other sectors of finance / investing take the revenue figure for granted. Below is a breakdown of a basic SAAS revenue build.

Little More Detailed Than Slapping a Growth Rate to Last Year’s Revenue (Source: BIWS)

Behind the scenes is usually an analysis of every single customer vintage. From that data, you can derive sub-line items such as churn by assessing the amount of $s rolling off over each period as customers don’t renew / cancel their subscriptions.

What we arrive at is a figure for ‘Ending Subscription Revenue’ which is ARR (annual recurring revenue). This is a unique component of the subscription game as companies are dependent on compounding revenues by extending customer lifetimes.

SAAS investors also pick apart every expense line item by digging through considerations like sales team efficiencies, lead generation / conversion, and marketing processes. This allows an investor to assess the viability of the business: the additional dollars made per each dollar spent—> obviously you want this to increase as the business grows.

Now, we start to get technical.

There are a few key SAAS metrics related to the breakdown of revenue and operating expenses:

  • CAC: Customer acquisition cost. How much is spent to acquire a customer?

  • LTV: Customer lifetime value. How much will someone pay the company throughout the period they’re a customer?

Deriving these metrics helps quantify the viability of the business. An LTV > CAC = the business is winning. The inverse means the business is losing. A good spot to be is 3.0x LTV / CAC which helps account for the timing of cash out the door vs. cash received.

I can get more technical on different metrics, but I’ll save that for another day. You might be asking, what do the cash flows look like?

For SAAS businesses, there is often substantial cash burn in the early years due to large R&D spend and heightened customer acquisition costs (always difficult to get the first few customers in the door). At the early stage, there is no benefit of compounded revenue since customer vintages aren’t very large or seasoned. However, with scale and seasoning these businesses can be reliable cash cows with sticky customers and favorable margins.

At the early days, there is a need for funding to fill the cash gap and there is promise of greener pastures with scale. Naturally, this creates a good spot for investors.

My final point is that newspaper businesses walked so SAAS businesses could run.

Innovations in tech and specifically software have allowed businesses to scale quickly without being encumbered by additional operational requirements.

The friction with SAAS is remembering your login information to access the software. This pales in comparison to the frictions of having to download individual software packages on every device or having to brunt the conditions of picking up the paper.

Is it all perfect? Of course not. There are hundreds of risks involved with SAAS investing.

A risk I think is particularly in-focus is related to a SAAS business’s reputation and possible security breaches. With SAAS, ownership of data protection is largely shifted from the customer to the provider. An outage or leakage negatively impacts the provider on a heightened scale as we saw with CrowdStrike in July 2024.

Disclosure: Nothing written here is financial advice or should be used for investment decisions.

Learning Point of the Week:

Recruiting = Your 6th Class

You need to be spending at least 5-8 hours a week on recruiting for banking, consulting, or buyside jobs. It takes work ethic.

A charming smile and a willingness to learn isn’t going to get you an offer and you know that. By now, you should have conducted extensive networking and are now positioning yourself more towards actually prepping for interviews.

Below I share my old schedule for how I approached a typical week recruiting for banking jobs around this timeframe (classes typically scheduled mid-day).

Monday:

  • Morning—5 messages to bankers from my school. Would tick through one bank at a time, tried to send 7-10 messages per bank before apps opened

  • Night—one new technical topic studied for an hour (will provide a deep dive into how to prep for these over the next few weeks)

Tuesday:

  • Morning—walk myself through my resume and quiz myself on other behavioral questions (will provide guidance on navigating behaviorals next week)

  • Night—quiz myself on questions related to the technical topic I learned the night before

Wednesday:

Thursday:

  • Morning—reach out to 5 more people via LinkedIn and Rocket Reach. Typically target messages to senior bankers on the latter half of the week after gaining some confidence with networking chats scheduled earlier in the week

  • Night—quiz myself on questions related to Wednesday’s technical topic (sacrificed many Thursday nights to prep instead of bars lol)

Friday (light on classes this day):

  • Morning—reach out to 5 more people via LinkedIn and Rocket Reach. Walk through a new technical topic

  • Mid-day—mock interview with a buddy going top to bottom from resume walks → technicals. Quiz myself on technicals learned during the week afterwards

  • Night—hit the party or hang with friends

Going Forward:

If you run a club, we want to connect with you to partner. Please shoot us an email @[email protected], would love to make your club the most prepared on campus.

Coaching Details:

Students we coached for SA 2025 have received offers at Goldman, JP Morgan, Evercore, and many other firms. Roughly 95% of those coached received offers last year!

Please reach out to us with any questions about recruiting or if you’re interested in meeting the team! ([email protected])

We are happy to chat, review resumes, or help set up a coaching session

Check us out on LinkedIn (The Pulse) and Instagram (ThePulse) too!

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The Pulse

“The Pulse” #72