A Rule of 40 walkthrough

For SaaS businesses, I’ve found the rule of 40 to be a useful management tool. The basic idea is that as a SaaS business, you want your growth percentage plus your EBITDA percentage to be 40 (or better).  So if you’re growing at 50% per year, you can “invest” in growth by having a 10% burn (expense as compared to revenue). If you’re breakeven at 40% growth, that’s also great. But if you’re only growing 30% you’ll need at least a positive 10% margin to stay healthy.

I’ve found myself explaining this concept to lots of founders lately, so if you need a simple walkthrough of what the rule of 40 is all about, I hope this 8 minute video with examples is helpful.

There’s also a good argument that the “rule of 40” doesn’t really matter much until the SaaS business is at $15M-$20M+ in revenue run rate.

Continue reading "A Rule of 40 walkthrough"

Deciding to say no should be easy sometimes

Have you ever found yourself in a situation where you’re in a group that is debating something–such as whether to take on a new investment–for a very long time?

Let’s say your group is healthy and high-functioning. Normally decision making feels natural and strong, and you have a rhythm going for how you make decisions. But suddenly you have this potential investment and the group is debating at length, but having a difficult time coming to a decision.

Keep in mind, I’m not talking about when you have many strong “yes-es” and many strong “nos.” That’s a very different situation, and you should have a process in place to deal with that.

What I’m posing here is a different kind of scenario. Maybe one person is lightly championing the idea, and other people in the group are generally supportive, but sort of wishy washy about it. You can all

Continue reading "Deciding to say no should be easy sometimes"

A bridge (round) to somewhere

We’re living at a time when valuations are very high, as Fred Wilson and Ari Newman have both recently pointed out. When valuations rise, so do the caps on notes, which are upper limits on valuation at conversion.

In many cases the caps are very high because the entrepreneurs are telling the investors that they’re super confident they’re about to raise a larger round and they just need to “bridge” the company to that larger round. The reason the entrepreneur want a high cap is to signal a high price for the next equity financing of a larger amount of money. If they accept convertible notes now at a low cap, how could they possibly justify a higher equity price in a few short months when this larger financing is bound to happen?

For example, a company may be raising $1M in notes at $15M pre-money valuation cap with a

Continue reading "A bridge (round) to somewhere"

Deep Work out of the office

Quality time with your loved ones isn’t the only benefit of working away from the office.

In fact, I’ve found that one of the best things I can do to increase my productivity and to start knocking off those particularly pesky tasks on my to-do list is to get out of the office. A bit counterintuitive, yes, but true nonetheless. The office is a hive of productivity, and hives are noisy. Sometimes so noisy and hectic that it’s nearly impossible to sit down and see something all the way through, especially the problems and solutions that require a fair bit of focus. More often than not, there are just too many fires that need to be put out, too many meetings that need to be had, and too many phone calls that need to be answered or made in order to start tackling that list of ‘important but not necessarily

Continue reading "Deep Work out of the office"

PillPack – Journey to a billion

Yesterday the news broke that PillPack is being acquired by Amazon for $1 Billion.

I’m incredibly happy for TJ Parker and Elliot Cohen, co-founders of the pharmaceutical delivery startup. They started the company at Techstars in Boston in February 2013, and raised $4 Million around the time they completed the accelerator program. A couple years ago at a Techstars Q&A they discussed how their respective backgrounds led to the founding of the company, and described some of their early experiences with raising money.

Through their hard work and dedication, these founders have taken PillPack from an innovative idea to a $1 Billion company.

It’s always such an honor to be able to use Techstars’ worldwide network to help entrepreneurs succeed. Congratulations TJ and Elliot, and thank you for letting all of us here at Techstars be a part of your journey thus far!

The post PillPack – Journey to a

Continue reading "PillPack – Journey to a billion"

Making a KPI or metric useful

What makes an effective Key Performance Indicator (KPI)? How do you design your metrics to help your company achieve its objectives?

First off, a good KPI will actually help you make a decision. The information should clearly tell you where you’re at and give you something actionable to do.

Secondly, a useful KPI will typically be a ratio—one thing divided by another. For example, if your goal is to decrease your employee attrition rate, simply knowing the number of people who leave per month isn’t meaningful. If ten people left last year and 15 left this year, that sounds like things are moving in the wrong direction. But what if your total number of employees has increased dramatically in that time? Let’s say you had 100 total employees last year, but 200 this year? As a ratio of the total number of employees, your attrition rate has actually improved.

Continue reading "Making a KPI or metric useful"

Volunteering in Costa Rica

When each of my kids is 12, I take them volunteering on a dad/kid trip with Globe Aware. This spring break it was Delaney’s turn. We just returned from a week in the Orisi Valley of Costa Rica. Like when I did this in China in 2013 with Andrew, who is now 16, I wrote a daily email home and am just posting them all here chronologically with a few photos.

Day One
Picked up delaney at school on friday before spring break at 1pm. Flew to Houston, and had dinner there. two hours on the connection then on to San Jose, Costa Rica. We got an upgrade on that second flight due to my status, so had first class. 3 hour second flight. Arrived just before midnight (it’s the same time zone as colorado here). Luggage came quickly, super easy customs, took 5 minutes. I changed a little
?
Continue reading "Volunteering in Costa Rica"

The Startup Playbook

Techstars is the worldwide network that helps entrepreneurs succeed. So, when Techstars mentors, investors, and friends Rajat Bhargava and Will Herman told me that they were writing a book to help guide founders on their startup journey, I was immediately excited. I’ve known Raj and Will for a number of years now and they are great entrepreneurs and also great mentors at Techstars. Their experience and wisdom can help many of our companies and extend the reach of the entrepreneurial ecosystem. I particularly like their approach which is a founder-to-founder discussion. Founders need more data points from other founders!

If you are a founder, part of a startup team, or thinking about starting a company, grab a copy of The Startup Playbook. I think you’ll be happy you did.

 

The post The Startup Playbook appeared first on Hi, I'm David G. Cohen.

The Startup Playbook

Techstars is the worldwide network that helps entrepreneurs succeed. So, when Techstars mentors, investors, and friends Rajat Bhargava and Will Herman told me that they were writing a book to help guide founders on their startup journey, I was immediately excited. I’ve known Raj and Will for a number of years now and they are great entrepreneurs and also great mentors at Techstars. Their experience and wisdom can help many of our companies and extend the reach of the entrepreneurial ecosystem. I particularly like their approach which is a founder-to-founder discussion. Founders need more data points from other founders!

If you are a founder, part of a startup team, or thinking about starting a company, grab a copy of The Startup Playbook. I think you’ll be happy you did.

 

The post The Startup Playbook appeared first on Hi, I'm David G. Cohen.

One Last Talk in Boulder

A friend of mine is putting on a really interesting event called One Last Talk in Boulder on March 3, 2018. It’s called One Last Talk. All profits go to the non-profit Believe in Youth.

From the One Last Talk web site: “Imagine standing on a stage, and delivering your One Last Talk to the world in 15 mins. In these talks speakers have previously shared the core of their greatest triumphs, their greatest failures, and what are the building blocks of what has created the essence of their leadership style. In short, their stories give us a glimpse into who they really are, why they do what they do and how they want to change the world. One Last Talk is a potent mix of raw courage and pure inspiration. It is the perfect arena to explore the nuances of the modern day human experience. It is the place

Continue reading "One Last Talk in Boulder"

One Last Talk in Boulder

A friend of mine is putting on a really interesting event called One Last Talk in Boulder on March 3, 2018. It’s called One Last Talk. All profits go to the non-profit Believe in Youth.

From the One Last Talk web site: “Imagine standing on a stage, and delivering your One Last Talk to the world in 15 mins. In these talks speakers have previously shared the core of their greatest triumphs, their greatest failures, and what are the building blocks of what has created the essence of their leadership style. In short, their stories give us a glimpse into who they really are, why they do what they do and how they want to change the world. One Last Talk is a potent mix of raw courage and pure inspiration. It is the perfect arena to explore the nuances of the modern day human experience. It is the place

Continue reading "One Last Talk in Boulder"

One Last Talk in Boulder

A friend of mine is putting on a really interesting event called One Last Talk in Boulder on March 3, 2018. It’s called One Last Talk. All profits go to the non-profit Believe in Youth.

From the One Last Talk web site: “Imagine standing on a stage, and delivering your One Last Talk to the world in 15 mins. In these talks speakers have previously shared the core of their greatest triumphs, their greatest failures, and what are the building blocks of what has created the essence of their leadership style. In short, their stories give us a glimpse into who they really are, why they do what they do and how they want to change the world. One Last Talk is a potent mix of raw courage and pure inspiration. It is the perfect arena to explore the nuances of the modern day human experience. It is the place

Continue reading "One Last Talk in Boulder"

The pessimist in the room

In my startup investing, inside portfolio companies at the highest leadership and board levels, I always want to make sure that a pessimist has a seat at the table. I want a table full of optimists, but I also want at least one respected pessimist sitting there.  That pessimist should carry a general lack of confidence in humans to behave logically or ethically. They should also have seen many shit-shows in their lives. You don’t want someone who is just irrationally afraid that the sky is falling, but you do want someone always thinking about the downside case.

As it turns out, often that pessimist is the CFO or the General Counsel. These tend to work well as long as they are respected and have a voice. Without a pessimist in the room, with a seat at the table where the big discussions happen, there is no balance.

The

Continue reading "The pessimist in the room"

The pessimist in the room

In my startup investing, inside portfolio companies at the highest leadership and board levels, I always want to make sure that a pessimist has a seat at the table. I want a table full of optimists, but I also want at least one respected pessimist sitting there.  That pessimist should carry a general lack of confidence in humans to behave logically or ethically. They should also have seen many shit-shows in their lives. You don’t want someone who is just irrationally afraid that the sky is falling, but you do want someone always thinking about the downside case.

As it turns out, often that pessimist is the CFO or the General Counsel. These tend to work well as long as they are respected and have a voice. Without a pessimist in the room, with a seat at the table where the big discussions happen, there is no balance.

The

Continue reading "The pessimist in the room"

FaceID vs TouchID

Regarding the iPhone X vs previous models, so far I prefer TouchID to FaceID.

TouchID is something I learned to forget about. I trained multiple fingers on it, so even if the phone was lying flat on a desk and not facing me face, my finger successfully unlocked the phone without me thinking about it at all.  Now, in that flat on the table position, my phone requires my code because my face is not within view. That takes a lot longer.

I like everything else about the iPhone X, especially the battery life and better use of screen real estate. The absolute best new feature is wireless charging (not new to Android, but new it iPhone), but you can also get that on the iPhone 8.

FaceID works great when your face is in view.  It’s every bit as convenient as TouchID 90% of the time, but

Continue reading "FaceID vs TouchID"

FaceID vs TouchID

Regarding the iPhone X vs previous models, so far I prefer TouchID to FaceID.

TouchID is something I learned to forget about. I trained multiple fingers on it, so even if the phone was lying flat on a desk and not facing me face, my finger successfully unlocked the phone without me thinking about it at all.  Now, in that flat on the table position, my phone requires my code because my face is not within view. That takes a lot longer.

I like everything else about the iPhone X, especially the battery life and better use of screen real estate. The absolute best new feature is wireless charging (not new to Android, but new it iPhone), but you can also get that on the iPhone 8.

FaceID works great when your face is in view.  It’s every bit as convenient as TouchID 90% of the time, but

Continue reading "FaceID vs TouchID"

FaceID vs TouchID

Regarding the iPhone X vs previous models, so far I prefer TouchID to FaceID.

TouchID is something I learned to forget about. I trained multiple fingers on it, so even if the phone was lying flat on a desk and not facing me face, my finger successfully unlocked the phone without me thinking about it at all.  Now, in that flat on the table position, my phone requires my code because my face is not within view. That takes a lot longer.

I like everything else about the iPhone X, especially the batter life and better use of screen real estate. The absolute best new feature is wireless charging (not new to Android, but new it iPhone), but you can also get that on the iPhone 8.

FaceID works great when your face is in view.  It’s every bit as convenient as TouchID 90% of the time, but

Continue reading "FaceID vs TouchID"

Integrity

Saw this post from Techstars co-founder David Cohen and thought I’d explore it a little more deeply.  David talks about the moment of integrity.  Your life leads up to that moment.  Sometimes your family values it and so it’s deeply ingrained in you.  Sometimes it doesn’t.

Integrity is messy because even though there is a Webster’s definition, the human interpretation is pretty variable.

When I went to the US Air Force Academy I dropped off my bags and I toed a white line.  An upper-class cadet taught me how to stand at attention.  Then he backed up and uttered these words.  “From this moment on you will say five statements.”

  • Yes Sir/Ma’am
  • No Sir/Ma’am
  • Sir/Ma’am may I make a statement?
  • Sir/Ma’am, may I ask a question?
  • No excuse Sir/Ma’am

Here is a blog post by a West Point cadet on their similar ritual. Continue reading "Integrity"

The moment of integrity

I was on a panel at FounderCon last week with Noah Pittard from Cooley and Service Provider Capital. Something Noah said on that panel was so insightful that it really stuck with me. Someone asked about the types of founders we want to invest in and the types of people we want to surround ourselves with, and the conversation meandered until we were talking about the concept of integrity.

People do stupid things all the time. They make bad decisions. It’s just a part of life. But a bad decision is not an indicator of integrity. How you handle yourself after you make a bad decision is a much better measure of integrity.

The part that really stuck with me was when Noah talked about the moment that inevitably occurs where you first have to answer the question “what happened?”. Those with high integrity quickly take responsibility, disclose uncomfortable

Continue reading "The moment of integrity"

The moment of integrity

I was on a panel at FounderCon last week with Noah Pittard from Cooley and Service Provider Capital. Something Noah said on that panel was so insightful that it really stuck with me. Someone asked about the types of founders we want to invest in and the types of people we want to surround ourselves with, and the conversation meandered until we were talking about the concept of integrity.

People do stupid things all the time. They make bad decisions. It’s just a part of life. But a bad decision is not an indicator of integrity. How you handle yourself after you make a bad decision is a much better measure of integrity.

The part that really stuck with me was when Noah talked about the moment that inevitably occurs where you first have to answer the question “what happened?”. Those with high integrity quickly take responsibility, disclose uncomfortable

Continue reading "The moment of integrity"