4 Steps to Finding an Opportunity at an Atlanta Startup

Several times per month I meet with people looking to join a startup in Atlanta. After talking through what they’re looking for in terms of startup size, stage, industries, and culture, I offer up a four step process to get more methodical with the search:

  1. Make a spreadsheet of potential startups from the Atlanta Tech Village Job BoardVenture Atlanta Presenting Companies, and ATDC Signature based on which ones look interesting (or use every startup listed to be exhaustive).
  2. Cross reference the startups in LinkedIn to get their current number of employees and CrunchBase to get their current amount of funding to understand size, stage, and scale.
  3. Filter the overall list down to 5-10 startups based on the different attributes and further research.
  4. Reach out to the startups directly about opportunities as well as ask for an introduction through a mutual acquaintance.

Entrepreneurs love to talk to people that are proactively interested in finding an opportunity at their startup. Follow this four step process to find an opportunity in Atlanta.

What else? What are some other ideas to find an opportunity at an Atlanta startup?

“Heck yeah!” or “No”

Recently I was reminded the Derek Sivers post that has stuck with me for years: No “yes.” Either “HELL YEAH!” or “no.” The idea is that too often we say “yes” as it’s the easy answer even though we don’t feel strongly about. Too many “yeses” and there’s no time for yourself and the important priorities.

When it isn’t worth your time, just say “no.”

When you’re not passionate about it, just say “no.”

When you have more pressing priorities, just say “no.”

When life feels overwhelming, just say “no.”

When you’re super excited and want to do it, just say “yes.”

The next time someone makes a request of you, ask the “heck yeah!” or “no” question.

Video of the Week: Tim Ferris – Tools of Titans

Last week I started reading Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers by Tim Ferris. I’ve been a fan of his for years as his blog and books are excellent. For the video of the week, watch Tim Ferriss: Tools of Titans. Enjoy!

From YouTube: Whether you’re a millionaire-in-the-making or just trying to check off your to-do list every single day, you’re always on the hunt for how to do your best, but where do you even start? Enter Tim Ferris of Four-Hour Work Week, and his latest book Tools of Titans: The Tactics, Routines, and Habits of Billionaires, Icons, and World-Class Performers. Just for you, Tim picked the brains of 200+ of the most creative, successful leaders from around the world to help you do better every day, including Brene Brown, Malcolm Gladwell, Jamie Foxx, Reid Hoffman, and dozens of others. He asked them actionable questions (What does the first hour of their day look like? What do their workout routines look like and why? What are the biggest time wastes they avoid?) so that you can apply their philosophies to your own life.

Notes from the MuleSoft S-1 IPO Filing

MuleSoft, a fast-growing data and application integration software provider, just released their S-1 IPO filing. As more companies move to the cloud, the demand for connecting these applications, and the legacy installed applications, has grown as well.

Here are a few notes on the MuleSoft S-1 IPO filing:

  • Key metrics as of December 31, 2016 (pg. 1)
    • > 1,000 customers
    • 117% dollar-based net retention
    • 70% revenue growth
    • $188 million in revenue
    • -1.4% operating cash flow margin
  • Customers use the Anypoint Platform to connect their applications, data, and devices into an “application network” in which these IT assets are pluggable using application programming interfaces, or APIs, instead of glued together with custom integration code. (pg. 1)
  • Estimate the current market opportunity to be $29 billion. (pg. 3)
  • 30 customers with over $1.0 million in annual contract value of subscription and support contracts. (pg. 3)
  • Revenue (pg. 3)
    • 2014 – $57.6 million
    • 2015 – $110.3 million
    • 2016 – $187.7 million
  • Net losses (pg. 3)
    • 2014 – $47.8 million
    • 2015 – $65.4 million,
    • 2016 – $49.6 million
  • Professional services revenue (pg. 8)
    • 2014 – $9.1 million
    • 2015 – $22.2 million
    • 2016 – $34.9 million
  • Accumulated deficit of $236.2 million as of December 31, 2016 (pg. 12)
  • In 2014, 2015, and 2016, total sales and marketing expense represented 102%, 84%, and 65% of revenue (pg. 15)
  • Outsource the cloud infrastructure to Amazon Web Services, or AWS, which hosts the platform (pg. 16)
  • Platform is deployed in a wide variety of technology environments, both on-premises and in the cloud (pg. 16)
  • 38% of the revenue from customers located outside the United States in 2016 (pg. 27)
  • 156 employees located in Argentina at the end of 2016 (pg. 29)
  • Ross Mason created Mule in 2006 to address the frustrations of manually connecting disparate systems and applications. Mule took its name from Ross’s desire to take the “donkey work” out of legacy approaches to technology integration. (pg. 57)
  • Annual contract value of $169,000 in 2016 (pg. 58)
  • Subscription pricing is based primarily on the amount of computing capacity on which the customers run the software (pg. 58)
  • Founder owns 5.9% (pg. 134)
  • VCs own 67.8% (pg. 134)

MuleSoft is a hybrid cloud and on-premise software provider with a pricing model that bills everything like SaaS. Data and application integration is a massive market and MuleSoft is well positioned to grow for many years and have a strong IPO. Like AppDynamics, look for large strategics to take an interest in MuleSoft as well.

Quick Thoughts on Product Pricing

Earlier today an entrepreneur asked about thoughts on product pricing. I’ve found that product pricing evolves over the life of the startup based on a number of factors including competitive dynamics, target markets, corporate strategy, and overall value to the customer. Here are a few more specific ideas around pricing:

Pricing should be treated like everything else in the startup: an iterative element that warrants regular experimentation and improvement.

What else? What are some more good resources on product pricing?

Think Gross Margin When Considering Metrics

Earlier today I was talking to a growth stage startup in town and was reminded of the importance of gross margin when considering metrics. From Wikipedia:

Gross margin is the difference between revenue and cost of goods sold, or COGS, divided by revenue, expressed as a percentage.

In the SaaS world, gross margins are assumed to be in the 75-85% range such that the heuristics, like The Golden Metric for SaaS – $1 Burned for $1 of Recurring Revenue is consistent from company to company. Yet, most companies don’t have SaaS gross margins (and different cost of goods sold), such that when thinking about metrics and best practices, they should be recalibrated for the gross margins of the specific company. Meaning, if the Golden Metric for SaaS is $1 of cash burned for $1 of net new annual recurring revenue, that assumes 80% gross margins. If the company has 40% gross margins, the Golden Metric would be $1 of cash burned for $2 of net new annual recurring revenue (half the margin so need twice the revenue).

Whenever you hear metrics and best practices mentioned, factor in the gross margin.

What else? What are some more thoughts on considering gross margin when thinking about metrics?

The Golden Metric for SaaS – $1 Burned for $1 of Recurring Revenue

Thinking more about the post from a couple weeks ago titled Evaluating a Startup Based on Cash Burned vs Recurring Revenue and how the same idea was brought up again two days ago in Bessemer’s 2017 State of the Cloud Report, I’ve come to believe that $1 of cash burned for $1 of net new recurring revenue is the Golden Metric for SaaS.

As an idea, it’s easy to understand.

As a metric, it’s easy to track.

As a way to create value, it’s excellent.

As a benchmark for entrepreneurs to measure against, it’s perfect.

Some startups will choose to burn more than $1 for each $1 of new new recurring revenue, but most won’t have that luxury. Startups that achieve scale, and burn $1 (or less!) for every $1 of net new recurring revenue, will do well for all stakeholders involved.

What else? What are some more thoughts on the Golden Metric for SaaS being $1 of cash burned for $1 of net new recurring revenue?