The New Discipline Web3 Software Companies Must Develop
Tomasz TunguzVenture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. The New Discipline Web3 Software Companies Must Develop
Suppose you launch a web3 company tomorrow. The business builds software to help other crypto companies grow. Perhaps you’ll sell infrastructure to help other startups scale or software to manage internal operations. After you’ve launched the product, you’ll encounter a new phenomenon. Your customers prefer to pay you in crypto. Fast forward three years, your business thrives. The customer roster brims with the best names, each client increases their spend every year, and the sales team outpaces its quota handsomely. You decide to pull up your balance sheet. You have $20m in dollars and $40m in tokens of various flavors. The token balance fluctuates quite a bit. Some months, that $40m is $80m; others, it’s $20m. You wonder, how do I best manage these tokens for the business? Most US web2 software companies might progress through their lifespans without ever uttering the words treasury management in a board meeting. Abroad, the story differs. When a startup sells software to users outside their home country and receives payment in foreign currencies, they must manage foreign-exchange risk. B2B web3 companies will need to manage their treasuries from the very first few customer contracts because there are consequential questions to answer from day one. First, does the startup retain tokens or immediately swap them for dollars? By hodling, the business implicitly operates a hedge fund. Keeping tokens means taking a constructive/long view on those tokens and selling vice-versa. How should the company decide which tokens to hold and which to swap? Should the business hire a full-time analyst to manage this balance sheet question? Second, if the business keeps the tokens, the company bears some tax risk. Imagine your top account executive books a $5m USD contract paid in tokens. The business pays 20% tax annually which implies a $1m tax liability on the tokens. In the subsequent two quarters, the token’s price collapses by 95%, so the $5m is now worth $0.25m. Signing the customer contract costs the company $750k, excluding the sales commission. Of course, the treasury could swell if the token were to appreciate significantly. Third, how will your business manage payments and accounts receivable? A big bill comes due and the company can opt to pay in dollars or crypto. It might be monthly payroll. Which option is better: tokens or dollars? These are just some of the questions web3 software companies face as they begin to scale. Treasury management will become an essential function even at the early stages for most web3 software businesses. |
Older messages
Intensity Oozes from these Pages
Thursday, February 3, 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. Intensity Oozes from these Pages I remember the
How Much Money is Flowing into Crypto?
Tuesday, February 1, 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 Much Money is Flowing into Crypto? How much
Expect Your VP Product to Sign Up for a Lead Quota
Saturday, January 29, 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. Expect Your VP Product to Sign Up for a Lead Quota
Dremio - A Foundational Component of the Modern Data Stack
Tuesday, January 25, 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. Dremio - A Foundational Component of the Modern
How Will the 52% Correction in the Stock Market Impact the Startup Fundraising Market?
Thursday, January 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. How Will the 52% Correction in the Stock Market
You Might Also Like
🚀 Axiom Facing Liquidity Issues
Friday, September 20, 2024
Plus DirecTV and Dish merger talks, $LUNR's $4.8B IDIQ, Wall Street upgrades/downgrades, and more! The latest space investing news and updates. View this email in your browser The Space Scoop Week
Shiftx AI, View AI Ready Data as a Service (DaaS), and hanabi.rest
Friday, September 20, 2024
AI-based API building platform BetaList BetaList Daily Shiftx AI Improve your processes with AI View AI Ready Data as a Service (DaaS) Get Your Company's Data Ready for AI hanabi.rest AI-based API
Will We See a Better Exit Market Next Year?
Friday, September 20, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Will We See a Better Exit Market Next Year? The Fed cut rates
Tips to help make consistent content creation a habit
Friday, September 20, 2024
Plus tips, news & Buffer updates for your social media journey ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
Issue #126: Building $1K-$10K MRR Micro SaaS Products around Automated Address Change Management, Rundown Creation…
Friday, September 20, 2024
Build Profitable SaaS products!! ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
10words: Top picks from this week
Friday, September 20, 2024
Today's projects: Relay.app • memoiri • Strike Analytics • Notion Finance Tracker Template • OpenLang • Ruly • Ad Agency • Homer • Super Agent • PhotoFairy • Revnue • VideoTrim.app 10words Discover
🚨 48 hours left - are you in?
Friday, September 20, 2024
Don't get left behind - $100m lesson! Hey Friend , You've been waiting for the right moment to start your own premium ecommerce business… Well, this is it. In about 48 hours, the Start Your
The AI-Powered Solopreneur — The Bootstrapped Founder 347
Friday, September 20, 2024
AI is revolutionizing the way I work as a solopreneur. So why not share exactly how I use it?
Let's talk about E-S-G
Friday, September 20, 2024
Plus: The French billionaire upping his tech investments; latest deals View in browser Silo flagship Good morning there, Yesterday at one of London's central schmoozing spots a couple hundred
🗞 What's New: YouTube just launched Hype to help small creators get discovered
Thursday, September 19, 2024
Also: Running newsletter ads!