So Circle is the latest tech IPO and it’s not really B2B or SaaS per se — it’s a fintech that issues and manages “stablecoins”. Cypto that converts 1:1 to U.S. dollars.
But there are still lessons to learn, and it’s great to see the IPO markets truly re-opened:
- $2.3 Billion Revenue Run Rate
- Growing a stunning 60%
- $16 Billion valuation, so about 8x revenue
5 Interesting Learnings for B2B and SaaS Founders from Circle’s IPO:
1. The “Interest Rate Risk” Learning: When 99% of Your Revenue Depends on One Variable
Circle generated $1.7B in revenue in 2024, with 99% coming from interest income on USDC reserves. This is the ultimate cautionary tale about revenue concentration. Circle estimated that just a 1% decrease in interest rates could result in a $441M drop in stablecoin reserve income.
The B2B / SaaS Parallel: Many SaaS companies build their entire business on one pricing model, one customer segment, or one distribution channel. Circle shows what happens when macro forces beyond your control can swing your revenue by hundreds of millions. Diversify your revenue streams before you need to.
2. The “Distribution Partner Dilemma”: When Your Biggest Partner Takes More Than You Do
Circle’s relationship with Coinbase is fascinating and terrifying. Circle paid $908 million in distribution costs to Coinbase in 2024 while generating only $156 million in net income. That means Coinbase made nearly 6x more from USDC than Circle did.
The B2B / SaaS Learning: Partnership deals that seem great in early days can become value traps at scale. When your distribution partner captures more economic value than you do from your own product, you’ve essentially become their supplier, not their partner. Structure partnerships with revenue caps or tiered economics that protect your margins as you scale.
3. The “Regulatory Moat” Strategy: Compliance as a Competitive Advantage
Circle was the first to receive a New York State BitLicense, which is famously difficult to obtain, in 2015. This early investment in regulatory compliance has become their key differentiator against Tether and newer entrants.
The B2B / SaaS Application: In highly regulated industries (healthcare, finance, government), being first to achieve compliance certifications can create durable competitive moats. While competitors focus on features, investing early in SOC 2, HIPAA, FedRAMP, or industry-specific certifications can become your strongest competitive advantage. Compliance debt is real debt.
4. The “Scale Economics Paradox”: Revenue Up 16%, Profit Down 42%
Circle shows the dark side of growth at scale. Revenue increased 16% year over year while net income fell by 42% and EBITDA decreased 29% year over year. The culprit? Rapid expansion and new service integrations negatively impacted net income.
The B2B / SaaS Reality Check: Growth doesn’t always mean better unit economics. Circle’s story is a reminder that adding new products, markets, or services can actually destroy profitability if not carefully managed. Before expanding, ensure your core business has strong unit economics that can subsidize new initiatives.
5. The “Transparency Premium”: Public Scrutiny as Product Strategy
Circle CEO Jeremy Allaire wrote: “In many respects, Circle has for a long time been under intense public scrutiny. Becoming a publicly traded corporation is a continuation of our desire to operate with the greatest transparency and accountability possible”.
The B/2B SaaS Insight: In an era where trust is the ultimate currency, radical transparency can be a product feature. Circle positions their public disclosure requirements not as compliance burden but as competitive advantage against less transparent competitors like Tether. For SaaS companies, consider how public metrics, open pricing, and transparent operations can become differentiation in crowded markets.
And a few more interesting learnings:
6. The “Customer Acquisition Cost” Inversion: When Distribution Partners Do Your CAC
Circle essentially has a negative CAC model – they don’t acquire customers directly. Instead, they pay distribution partners like Coinbase $908 million to access their customers. This is customer acquisition in reverse: instead of spending to acquire customers, they pay to access someone else’s customer base.
The B2B / SaaS Application: This distribution model works when you’re the only game in town, but becomes expensive as competition emerges. For B2B companies relying heavily on channel partners or marketplaces, Circle shows the long-term risk of not owning customer relationships. Your CAC becomes their revenue share, permanently.
7. The “Fixed Cost Leverage” Problem: $1.7B Revenue, Modest Operating Leverage
Circle’s operating expenses have grown alongside revenue without typical SaaS leverage. Their model requires ongoing compliance, treasury management, and operational overhead that scales with volume rather than achieving software-like fixed cost leverage.
The B2B / SaaS Insight: True B2B businesses can scale revenue 3-5x while operating expenses grow only 1.5-2x, creating expanding margins. Circle’s model demonstrates what happens when your core business more closely resembles financial services than software – operating leverage becomes elusive.
8. The “Interest Rate Sensitivity” Lesson: Building on Quicksand
Circle’s revenue formula is simple: Interest Rates × USDC in Circulation = Revenue. When rates were 0% in 2020-2021, this model generated minimal revenue. At 5% rates in 2024, it generates $1.7B. This creates extreme business model volatility that no SaaS founder would accept.
The B2B / SaaS Takeaway: Variable revenue models can be dangerous. Circle’s dependency on macro factors beyond their control (Federal Reserve policy) means their business performance is essentially correlated with interest rates rather than execution. SaaS founders should avoid revenue models tied to external variables they can’t influence.
Bottom Line: Circle’s IPO reveals a company with massive scale ($60B+ USDC in circulation) but significant structural challenges around revenue concentration, partner dependency, and margin compression. IT shows both the power and perils of platform businesses at scale. And that for now at least — IPOs are back. And hot again.
