Defending a Startups Greatest Asset through Recession & Recovery
Tomasz TunguzVenture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Defending a Startups Greatest Asset through Recession & Recovery
Yesterday, Office Hours welcomed Lee Kirkpatrick, former CFO at Twilio to share his experiences managing through three different recessions: the dotcom era, the Global Financial Crisis, and today. Lee headed finance for the company from $15m in ARR to more than $1b. In addition, Lee shared his view on usage-based pricing and defending a startup’s great asset, talent, from poaching during the next recovery. Usage-Based PricingTwilio was one of the pioneers of usage-based pricing. The company adopted UBP to achieve three aims.
UBP presented an opportunity to reinvent the account executive (AE) compensation model. AEs retired quota by closing annual contracts for a base level usage. Customers paid for overages at higher rates - a two part tariff. AEs deliberately undersized the contract commitment to ensure customer happiness and create opportunities to re-engage the customer for expansion. Contracted revenue constituted less than 50% of ARR. This model propelled the company to better than 130% NDR. Planning during RecessionsLee shared the story of his first promotion. His first task: a layoff. Lee underscored the importance of involving a broader team in hard-financial decisions to build trust. During those processes, the team should collaborate on different scenarios and identify the signals to slow, maintain, or accelerate spending. The areas to trim cost depend on each business’s situation. While slashing marketing program spend may reduce burn quickest and with the least difficult conversations, the company sacrifices medium-term pipeline. Lee shared a counterpoint to the reflex to cut GTM spend. At one startup with product-market fit, Lee and the team paused product and engineering hiring, and instead funneled those funds into the sales and marketing teams to sustain the company’s acceleration. CompensationPerhaps the most surprising and insight popped up at the end of the session. During the Office Hours, we talked about startups repricing their equity with new 409a valuations. That’s important today. Startups must prepare for the inevitable economic rebound. Competition for talent will resume its fervor. When startups and incumbents ramp growth aggressively once again, management teams, who haven’t ensured their key employees earn attractive salaries and vest in-the-money options, risk talent flight. Thank you again to Lee for illuminating three significant and timely topics. |
Key phrases
Older messages
How VCs Value Rainbow Foals in 2022
Tuesday, June 21, 2022
Tomasz Tunguz Venture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. How VCs Value Rainbow Foals in 2022 When Aileen
Bezos' Shareholder Letter in 2000
Monday, June 20, 2022
Tomasz Tunguz Venture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Bezos' Shareholder Letter in 2000 OUCH.
The Most Popular Financing Round in 2022
Friday, June 17, 2022
Tomasz Tunguz Venture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. The Most Popular Financing Round in 2022 The
What's Better than a Cookie? A Wallet - How Crypto Will Revolutionize Marketing
Friday, June 17, 2022
Tomasz Tunguz Venture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. What's Better than a Cookie? A Wallet - How
Office Hours with Lee Kirkpatrick, former Twilio CFO on Managing through Turbulence
Tuesday, June 14, 2022
Tomasz Tunguz Venture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Office Hours with Lee Kirkpatrick, former Twilio
You Might Also Like
Issue#117: Building $1K-$10K MRR Micro SaaS Products around Agencies, AI Processing & AI Content - Part 2
Friday, May 10, 2024
Welcome to the 239 new subscribers who joined this week. With 33000 members, today our Micro SaaS HQ ecosystem is one of the biggest ecosystem exclusively meant for Micro SaaS builders/founders. 👉 Get
Check out 4 of the best affiliate programs for creators
Friday, May 10, 2024
Plus tips, news & Buffer updates for your social media journey Image Hey there 👋🏾 Is it just me or was this a good week for TikTok? They're fighting back against the ban, plus they
10words: Top picks from this week
Friday, May 10, 2024
Today's projects: Erda • Elliott • ImageSpawn.com • Aptori • DreamGen • Supergrow • Tulsk • JobMate • WebDev Town • pCloudy • Zeabur • AnimStats 10words Discover new apps and startups in 10 words
Reminder to start your 90-day trial
Friday, May 10, 2024
Important , 85% off and a 90-day success guarantee? That's just part of the special Spring enrollment offer that's gonna end in the next few days. You have just 72 hours to claim it. Check it
A Series of Unfortunate Decisions
Friday, May 10, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. A Series of Unfortunate Decisions When a person asks a
My SaaS Server Exploded (& How I Salvaged It) — The Bootstrapped Founder 319
Friday, May 10, 2024
Earlier this week, I finally found time to work on a large code change. When I deployed it, things got worse quickly. Here's what happened.
Ready for an agenda sneak peek? 🔎
Friday, May 10, 2024
Hear what Tania Boler, Miki Kuusi and Jonas Andrulis have to say at Sifted Summit! View this email in your browser. 1200 x 380 (Desktop & Tablet) (14) Hey there, The Sifted Summit agenda drop is
April's early-stage funding data
Friday, May 10, 2024
Plus: Bill Gates weighs in on new German fund to back capital-intensive climate tech and how to share startup failures. View in browser Logo - Zoom_flagship (1) Good morning there, Leading the agenda
SaaSHub Weekly - May 9
Thursday, May 9, 2024
SaaSHub Weekly - May 9 Featured and useful products 1Password logo 1Password 1Password can create strong, unique passwords for you, remember them, and restore them, all directly in your web browser. #
AI strategy insights
Thursday, May 9, 2024
tell us who you want the scoop on. we'll tailor our insights to your responses. Hi there, Our expert is diving into where the world's largest companies are making moves in AI. In this webinar.