Comment by 7Figures2Commas | Hacker News Reader

Comment by 7Figures2Commas | Hacker News Reader

Parent Full thread

7Figures2Commas

> For the first few months, it is likely infinity.

> What about the first month they make money?

Mattermark has nearly $300,000/month in revenue and several dozen plus employees. It's not newly hatched, and it's a fairly straightforward B2B play in which customers pay for access to a service.

At what point would you suggest that metrics like rent to revenue become meaningful? 10 years in? When its revenue reaches some meaningless, arbitrary amount? When NASA announces the discovery of extraterrestrial life?

Just look at slide 12 at http://www.slideshare.net/DanielleMorrill/mattermark-2nd-fin.... Less than a year ago this company was projecting $400,000 in monthly revenue by June 2015. According to this post, it generated less than $300,000.

This is precisely why you pay attention to metrics like rent to revenue. "We're VC funded and the rules don't apply to us" doesn't work forever, and it often works for far shorter than expected when growth in revenue starts to lag projected growth in revenue and your spending has been based on projected revenue.

Just to be clear re: Mattermark Series A deck slide 12 it was a goal based on our growth rate at that time, not a prediction.

First, I commend you for being so open about your company's finances. A lot of people don't really understand how venture-backed companies operate, so it's really helpful to have real-world examples.

That said, it doesn't really matter whether you refer to your financial projections as projections, goals, etc. What I would observe is that the growth in revenue you targeted and presented to investors apparently has not materialized. At the same time, based on this[1], it appears your burn has doubled in less than a year, and your quarterly burn appears to be significantly higher than what you projected here[2].

This is a quintessential demonstration of what I wrote above: it's far easier to spend money in anticipation of growth than it is to actually grow revenues. I would add that it's usually doubly difficult for venture-backed companies to cut spending, even when it becomes clear it's the fiscally prudent thing to do, because it sends all sorts of negative signals to the investors you're going to be asking to continue buying into your growth story.

[1] https://medium.com/@DanielleMorrill/is-my-startup-burn-rate-...

[2] http://www.slideshare.net/DanielleMorrill/mattermark-1st-ser...

Reply on news.ycombinator.com