For our video of the week, watch Jack Dorsey: The 3 Keys to Twitter’s Success. Enjoy!
From YouTube: Jack Dorsey outlines three core takeaways from his experiences building and launching Twitter — and more recently — Square, a simple payment utility. 1) Draw: get your idea out of your head and share it, 2) Luck: assess when the time (and the market) is right to execute your idea, 3) Iterate: take in the feedback, be a rigorous editor, and refine your idea.
Twilio just released their S-1 IPO filing to go public after a tech IPO drought for much of the year (except Atlanta-based SecureWorks). Twilio provides a cloud-based communications platform for phone, text messaging, video, and more (think of it as an easy API for communications). I remember first learning about Twilio back in 2010 when we integrated it into Pardot. We made a connector such that when a lead filled out a form on a site, Pardot would trigger Twilio to call the sales rep assigned to that new prospect, read out the prospect’s information, and say press 1 to connect to the person at which point Twilio would call the new lead with the sales rep on the phone. We used to pitch it as “sales reps hate dialing out but love answering the phone.”
Here are a few notes from Twilio’s S-1 IPO filing:
With a $240+ million run-rate, Twilio is poised to have a great IPO. As there are telecom fees that lower gross margins and a fair amount of variable revenue, Twilio won’t be priced like a true SaaS company but will still get a healthy multiple due to the great growth rate.
What else? What are some more thoughts on Twilio’s S-1 IPO filing?
This week I’ve already had conversations with multiple seed stage entrepreneurs that are having a hard time raising money. In each case they have some modest metrics that show progress but don’t have enough revenue to get investors excited. Now, with limited capital, it’s a catch-22 where they need more money to get to the point investors where investors want to invest but can’t get there without investment. My advice: figure out how to show a growth momentum story, even if it’s a modest scale.
The goal is prove momentum and show month-over-month growth for the last 4-6 months. Here’s what that might look like:
In both of these examples the metrics are still in the seed territory (e.g. institutional investors want to see at least $1 million in annual recurring revenue for a SaaS startup) but there’s a clear story of sustained growth at a modest scale over several months. That sustained growth proves something is working and helps an investor believe that there’s opportunity for even more growth in the future.
What else? What are some more thoughts on demonstrating growth momentum as a way to get investors interested?
Continuing with 7 Takeaways from Mike Maples on the Black Box of VC at the end of the slide deck the author introduces the 6/10 Law as a growth framework to evaluate the scale necessary to build a legendary company. Generally, the idea is that the IPO sweet spot is between years six and 10 such that a startup needs to reach a scale in that timeframe to achieve escape velocity. Here’s the 6/10 Law process:
The next time you’re looking for a leadership team exercise, or a personal thought experiment, go through this process and analyze your startup relative to a legendary one with a similar business model.
What else? What are some more thoughts on the 6/10 Law growth framework?
Mike Maples, Jr has a great slide deck up titled Inside the Black Box of Venture Capital. Over the course of 77 slides he shares a number of excellent ideas. After reading through it, seven takeaways stood out to me:
Interested in venture capital? Interested in raising money from VCs? Go read Inside the Black Box of Venture Capital.
What else? What are some more takeaways from Inside the Black Box of Venture Capital?
Bloomberg Businessweek has a chart with the sales and marketing costs as a percentage of revenue in the last 12 months for several notable public SaaS companies:
https://twitter.com/guan/status/734536100027478017
A few thoughts:
Knowing this, it’s easy to see why Sales-Oriented Startup CEOs are preferred. The most successful SaaS companies are incredibly focused on sales.
What else? What are some more thoughts on sales and marketing as a percentage of revenue for SaaS companies?
For our video of the week, listen to Sal Khan of the Khan Academy explain Raising Money for a Startup. Sal has such a great, straightforward way of teaching concepts. Enjoy!
From YouTube: Raising money from an angel investor. Pre-money and post-money valuation.
Recently I overheard an entrepreneur in the halls of the Atlanta Tech Village say, “I’m going to be successful like X.” Now, ‘X’ in this case, was a successful company in the Tech Village. The fact that another company, in the very same building, achieved success made the entrepreneur more confident.
Proximity to success inspires entrepreneurial confidence.
The early employee at a startup that goes on to do great things has more entrepreneurial confidence to start their own venture.
The high school student who reads about the entrepreneur down the road is more likely to say “I can do it too.”
The next door neighbor that just had their first successful exit inspires their neighbor to think “what if” on a new idea.
The idea that successful entrepreneurial activity attracts other entrepreneurial activity is real. Inspiration comes from many places and proximity to success is one of them.
What are you doing to increase your entrepreneurial confidence? What are your doing to put yourself around successful entrepreneurs?
Recently I was talking to an entrepreneur and we got into a discussion about the difference between an executive and a manager. Many people claim to be an executive, especially in the startup world, but they aren’t as common as claimed. While executives and managers both manage teams, there are several differences with an executive.
Here are a few ways an executive is different from a manager:
An executive is different from a manager. Entrepreneurs would do well to recognize the difference, especially as the business starts to grow and scale (it becomes more apparent with time!).
What else? What are some more thoughts on executives vs managers?
One of the lead generation strategies that works well, but takes time and engineering efforts to do right, is micro apps. Micro apps are super simple web applications that do one thing in exchange for providing an email address. Just like people are often willing to give their email address to download an ebook, people are also willing to give their email address for use of a simple micro app that provides value. Here are some popular examples:
The key is for the micro app to be meaningful yet self contained with little friction to get value. Often, the value is a tiny piece of what the main product provides such that it’s the same audience and a lead generation opportunity.
The next time you’re thinking about lead generation ideas, consider a micro app.
What else? What are some more thoughts on micro apps for lead generation?
David Cummings on Startups 