A Startup’s Two Financial Plans: the Board Plan and the Stretch Plan


This post is by Tomasz Tunguz from Tomasz Tunguz


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Last week I wrote about the importance of a financial plan for startups at every stage. It’s a challenge to balance the predictability the board requests and the ambition the company wants. Often, as startups grow, they adopt two plans: a board plan and a company plan. By creating two plans and presenting each to the right audience, founders can communicate and motivate their teams effectively. The board plan is the more conservative of the two. Typically, the founding/management team has a high degree of confidence in the board plan, something like 90% confidence. The board plan’s audience is the board. It’s often viewed as the commitment the management team makes to the board, so it can be used as a framework for evaluating the team’s performance at quarter or year end. The company plan is the stretch plan, a 70% confidence plan. The company plan is often a roll Continue reading "A Startup’s Two Financial Plans: the Board Plan and the Stretch Plan"

Financial planning for startups


This post is by Tomasz Tunguz from Tomasz Tunguz


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Over lunch last week, I asked a Redpoint entrepreneur, who had recently sold his company, how his board could have been more helpful to him. His answer surprised me. He wished the company had built a financial/operational plan sooner. Building an financial plan is challenging and it is often perceived as a waste of time because the plan can be so inaccurate. Lots of entrepreneurs tell me their plans are just WAGs - wild assed guesses.

Financial planning for startups


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Over lunch last week, I asked a Redpoint entrepreneur, who had recently sold his company, how his board could have been more helpful to him. His answer surprised me. He wished the company had built a financial/operational plan sooner. Building an financial plan is challenging and it is often perceived as a waste of time because the plan can be so inaccurate. Lots of entrepreneurs tell me their plans are just WAGs - wild assed guesses. And to some degree they are. But, in the words of this entrepreneur, financial planning helped him sleep better at night - even if the plan was a guess. When I asked him why he felt better with a plan in place he outlined three reasons:
  1. Reverse engineer the next round - For most of the life of a startup, the company is targeting a subsequent round of financing and working towards a milestone Continue reading "Financial planning for startups"

Segmenting customer pipelines


This post is by Tomasz Tunguz from Tomasz Tunguz


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When building a freemium SaaS company or an ecommerce company or any product that requires users to move through a funnel towards an objective, it’s important to track this funnel to understand where the funnel can be improved. But tracking one funnel may not be enough. The aggregated funnel may be masking conversion differences across customers segments. For example, at Expensify conversion rates to paid vary quite a bit across customer size.

Segmenting customer pipelines


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




When building a freemium SaaS company or an ecommerce company or any product that requires users to move through a funnel towards an objective, it’s important to track this funnel to understand where the funnel can be improved. But tracking one funnel may not be enough. The aggregated funnel may be masking conversion differences across customers segments. For example, at Expensify conversion rates to paid vary quite a bit across customer size. But the total conversion-to-paid rate hides these nuances. It’s critical to understand each segment well. For each, which features are missing or are too complex? How do they prefer to try and pay for the product? Which acquisition mechanic is the most effective? What marketing message resonates with the segment? This understanding is ultimately critical to the success of the product and marketing teams who must determine how to serve the different segments of the customer base effectively Continue reading "Segmenting customer pipelines"

Great products are like ducks


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Great products are like ducks. They are calm above the water but paddling furiously below the water. An entrepreneur told me this quip last week and I think it had great wisdom in it. In other words great products are graceful. They make something complex look effortless. Great athletes are the same. So are great dancers. And even great entrepreneurs. The secret within this aphorism is that success is a grind.

Great products are like ducks


This post is by Tomasz Tunguz from Tomasz Tunguz


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Great products are like ducks. They are calm above the water but paddling furiously below the water. An entrepreneur told me this quip last week and I think it had great wisdom in it. In other words great products are graceful. They make something complex look effortless. Great athletes are the same. So are great dancers. And even great entrepreneurs. NTQ3ODQ2NTUz_o_prsf---howard-the-duck-review.jpeg The secret within this aphorism is that success is a grind. It is hard work. It’s easier to let it all hang out for others to see how hard work can be. Often we want others to understand how challenging a problem was to solve or how stressful a deal was to close or how complex a product is. But the people and products who capture our imaginations are the ones who grind like everyone else but remain placid on the surface. These are the graceful ones - the ducks. Continue reading "Great products are like ducks"

The stewards of vision and culture


This post is by Tomasz Tunguz from Tomasz Tunguz


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Vinod Khosla penned a great overview of the three phases of a company this weekend. He identifies the hub and spoke phase, the organized chaos phase, the functional management phase. Once a founder has experienced each of these phases, it’s easy to identify the them in retrospect. But companies don’t transition from one phase to another in discrete steps. Instead, they morph and evolve fluidly into these phases. Throughout this metamorphosis, two things must remain constant to keep the startup functional: the vision/mission of the company and the culture of the company.