The Importance of Time Value of Money for Startups

A dollar today is worth more than a dollar tomorrow. This statement underpins all of finance. The idea has a fancy name: the Time Value of Money. It applies to all types of investments, including startups. Time Value of Money is the economic argument for startups to raise money when it’s available. If I give you a million dollars today, you can invest it. You might buy 151 bitcoins. Or invest in a certificate of deposit at 1.

The Importance of Time Value of Money for Startups

A dollar today is worth more than a dollar tomorrow. This statement underpins all of finance. The idea has a fancy name: the Time Value of Money. It applies to all types of investments, including startups. Time Value of Money is the economic argument for startups to raise money when it’s available. If I give you a million dollars today, you can invest it. You might buy 151 bitcoins. Or invest in a certificate of deposit at 1.5%. Or pay a team of four engineers to build a feature for your software startup. Each of these are investments with some risk and some potential reward. If I promise you a million dollars a year from now, that’s worth much less. Bitcoin might 10x in that time, and you wouldn’t have missed the rally. You would have lost $15k in interest income from the CD. You would have to wait Continue reading "The Importance of Time Value of Money for Startups"

How do you deal with an incompetent CEO?

You leave. Quietly, with notice, and with respect. Start-ups attract driven, independent thinkers. And with that, often come critical thoughts. Including constant critiques of the CEO. In a Fortune 500 company, you can think the CEO is incompetent, and maybe it’s even OK if you keep that mostly to yourself. You can probably gripe at lunch, and even quietly mock the CEO at happy hours outside the office. It may be a bit disrespectful, and maybe impact any promotion path … but you’ll likely never even meet her/him. But in a startup, expressing thoughts about the competence of the CEO is toxic. It’s just too small, and everyone is interconnected even up to employee 100 or so. And everyone’s opinion matters, at least a little, in a startup for quite a while. So long as there are only 1 or 2 people in each key role — from office-manager to Continue reading "How do you deal with an incompetent CEO?"

Did Elizabeth Holmes manage to cash out from Theranos?

I think this is a super-interesting question. Because it helps show you how she was thinking about the company. It appears she did not cash out any shares (or take a dividend) from Theranos. If she had, I can only assume the SEC would have forced her to pay more than a $500,000 penalty, etc. Given the huge amounts invested in the company and how hot it was for a while, she could have easily sold $10m-$20m in the later stage rounds without much of an issue. Perhaps a lot more. This is very common in late stage “unicorn” rounds. See, e.g.: But if she sold nothing, as it appears — that’s truly the sign of a believer. In fact, it may be that she owes Theranos $25m for exercising shares early: Elizabeth Holmes Reportedly Owes Theranos $25 Million … which is a very bullish move on the Continue reading "Did Elizabeth Holmes manage to cash out from Theranos?"

SaaStr Crosses 40,000,000 Views on Quora!

It took a little while, but SaaStr finally crossed 40,000,000 views on Quora: It’s been a fun journey sharing and learning from 2,684 answers on Quora, and being named a “Top Writer” for 6 years in a row: Some of the top posts from the past year, with hyperlinks to most of them:

SaaStr Podcast #168: Ryan Williams, Founder @ SalesCollider Shares Why 70% of Startup’s VPs of Sales Fail

Ryan Williams is the Founder of SalesCollider, the organization that helps technical founders jumpstart sales. Ryan got his start as the first sales manager at Adroll where he grew the team from 3 to 32 reps in just 8 months, a team that was responsible for ARR growing from $4m to $58m in under 2 years. Ryan then became an advisor to the early team at InVision where he coached both CEO and sales reps to close the first dozen enterprise deals. Then his last stop before founding SalesCollider was as VP of Sales at LeadGenius where he grew enterprise sales by over 400% and added clients such as Ebay, IBM, and Google, just to name a few. Ryan is also an Entrepreneur in Residence @ 500 Startups and a Mentor with First Round Capital. In Today’s Episode You Will Learn:

Five Things I Learned as an Early-stage Entrepreneur

Editor’s Note: This article first appeared on the Eventerprise blog here. I was recently inspired by this post from Shuly Galili about her experiences as an early-stage investor and how she views early-stage businesses from the perspective of an investor. I am currently in the trenches with an executive team that has over 80 years of combined experience in various fields, and whose members have been responsible for deals and budgets totalling hundreds of millions of US dollars. So I thought this would be a good time to share the insights of a company that was digitally born and has grown rapidly from the ground up. Building an early-stage company is as demanding as it is exciting. There are many unexpected outcomes that require ongoing, agile problem-solving. When I co-founded Eventerprise with my partner Charlie Wright, who is a veteran of the events industry, we decided to take our combined
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Re-Imagining the Workplace of the Future: In Conversation with Stewart Butterfield, Slack (Video + Transcript)

We were so excited to have Slack’s very own CEO and Co-Founder, Stewart Butterfield, back on our stage this year to kick off SaaStr Annual 2018! Alongside Forbes reporter, Alex Konrad, Stewart and Alex took center stage as our opening keynote to have an open discussion on the workplace of the future. It was really special for us to have Stewart back since he was actually one of our speakers at the first SaaStr Annual in 2015 conference, right when Slack was beginning to gain momentum. Under Stewart’s leadership, Slack has only continued its momentous growth and he shares his vision for continuing innovation in the workplace during this session. stewart butterfield slack saastr annual TRANSCRIPT Announcer:  Please welcome Alex Konrad, staff writer at Forbes, and Stewart Butterfield, CEO and co‑founder of Slack. Alex Konrad:  Wow, every year this place has to get a bigger venue. There are more faces here. You were one
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Imparting Business Value and Clarifying Technical Specifics: Nailing the Technical Demo With Chartio’s Matt Cassel

On this edition of The Predictable Revenue Podcast, we welcome Matt Cassel, Account Executive at Chartio, a business intelligence software firm in San Francisco specializing in providing dashboards and analytics. The post Imparting Business Value and Clarifying Technical Specifics: Nailing the Technical Demo With Chartio’s Matt Cassel appeared first on Predictable Revenue.

(Almost) Everything You Need to Know When Your Convertible Notes are Approaching Maturity

Editor Note: This article was first published on the SaaStr blog here. Congratulations: You pounded the pavement, brought in outside capital, and spent the last 12 months putting it to work to get your business off the ground. Now, your convertible notes are due to mature in six months and you’re wondering, what’s next? At this point, there are two possible outcomes.
  1. Your notes convert to preferred equity
  2. Your notes do not convert
Multiple paths lead to these two outcomes with each path carrying its own implications for your business. Let’s take a look at each path and the various obstacles you may encounter along each. Disclaimer: I am not an attorney, and I’m not familiar with the specific structuring of your notes. While you and your counsel probably worked with your note holders to create simple, easy-to-understand note agreements, make sure your counsel helps you fully understand the underlying
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