dmor

Oh yeah, usually i just send a spreadsheet. Even the stock options aren't legally binding usually... they still get approved by the board after the hire is made. It is not possible to pre-approve them, but you can do it but UWC (unanimous written consent) without holding a full board meeting. That's what we do.

Offer letter should be super standard. The offer letter generated by Zenefits is a single page...

I commend you for sharing this. A couple issues for you to consider:

Share price isn't always set in that clean a manner, as you'll learn when you fundraise. It's nice when your math works out like this: "if Clef is worth $20m and we raise $5m, we are now worth $25m. If you owned 5% of $20m before, you now own 4% of $25m (we sold 20% of the company, or, said differently, diluted you by 20%). The 5% stake was worth $1m before the fundraise and the 4% stake is now worth $1m." but often you end up with a bit more complexity. Beware simple examples can still set expectations. Converting notes with discounts is one example of this. Preferred and common are not treated the same way, and it is unlikely you will escape selling preferred shares to your next investor.

Early exercise would actually be far more tax advantageous to your employees. You can do this "cashless" as an even greater benefit.

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.

From what we understand from investors, it is actually pretty typical to raise enough money for 18 months of runway. Additionally, we still had ~1.5m in the bank when we raised.

I will certainly report back on how it goes though!

Actually, we announced the Referly shut down in March 2013 (1) and played with several ideas after that. Based on our most popular content, we thought we would be a tech blog for about 4 weeks... code named "Cursive".

The first commit for Mattermark was made Apr 22, 2013 and we didn't buy the domain for more than a month after that.

(1) http://www.daniellemorrill.com/2013/03/zombie-startups/

Part of the company all-hands on a monthly basis

Love this question, I think most SaaS companies underprice (including us!). We have raised our prices once since we started, and probably will continue to do this yearly. We make most of our money on expansion revenue (additional seats or services like our API), so the per seat pricing isn't that limiting. But why collect $600 when you could collect $1000? We try to price at the highest point where people will complain but still buy.

Thank you, I am afraid there isn't enough published on this, which is part of what motivated me to write it. I know the content is a bit dense, I hope it was at least palatable enough to get to the end.

For further reading I highly recommend SaaStr.com which is a blog on SaaS and helpful for most recurring revenue type businesses. I also think it is wonderful to work with an accountant, and once you start getting revenue it is worth it. We waited a long time to do this (which is part of why I know as much as I do about this stuff) and that was probably a mistake, as it made a lot of cleanup work for us later on. Hope that helps, good luck with starting your company!

I think it varies in terms of what companies do, but I loved having this visibility at Twilio from our CEO while I was there so I brought the practice with me at Mattermark. It always made me feel like I had a better understanding of the trade-offs we were making and level of risk, and I hope it brings the same feelings and thoughts to my team.

Cool, this is great feedback. I'll check out Stephen Few's work too -- thanks for reading and caring!

Creator of the graphs and author of the original post (here: https://medium.com/mattermark-daily/why-is-the-number-of-see...)

All the quarters from Q1 2005 through Q4 2014 were plotted. The axis labels do not show all of them due to space constraints. Apologies that this was confusing, I will make sure to add all the tick marks and labels in the future.

This is great for niche SaaS that can get recurring revenue going within 6 months but might have market size challenges that would make it difficult to get venture backing.

But if all you need to do that is $100K, there are a lot of ways to get that (like saving money for a couple years).

Thank you.

After we announced the 2nd seed round the interest in us increased and we ended up raising more, and then when Brad Feld (at Foundry Group) offered to do the FG Angels syndicate on AngelList I figured "why not?" and I was curious to see the internal mechanics of doing one of those. So basically we raised because we've always be fans of "take money when you can".

By this point we had a ton of momentum in sales, had clarified our vision a ton in our month-long company retreat in August, and were not in a position of desperation for once. I felt like I should take heed of the old advice that "the best time to raise is when you don't need the money" so we did some analysis, had some coffees, and picked 6 firms to pitch. We committed to testing the market again.

This time, it worked.

This stuff is just messy.

trolls gonna troll

(author of the post here) I agree, we don't see ourselves as searching for a business model anymore. We are scaling something that works now.

If you can grow faster than by all means do! The 10-20% guidance you get in YC is not realistic as you get bigger, smart VCs are much more realistic about revenue growth (given it is recurring and you don't have to pay to acquire that revenue again each month).

So £84k - £96k total spent per month right (assuming the 30 person team you said before) BEFORE you subtract revenue?

It is absolutely still taught -- it gives you control over your future which is very important. From my post:

"We’ve had two break even months. The first was by accident in October 2013 because we had an unexpected revenue spike. For a moment we felt what it would be like to completely control our own destiny. The second time was in February 2014, because low growth in December scared the living shit out of us and it didn’t look like our Series A was going to come together."

I think people are just confused by your use of the word "burn". What is your fully loaded average cost per employee (total spend divided by headcount of 30 people)?

Seems kind of like how many people wish they'd found their significant other, or their dream job, earlier in life. They would have found happiness and fulfillment sooner.

I started programming at 14 and I think it had a huge influence on my approach to problem solving and learning in general, so maybe some people also see that and wish they could have experienced that influence from a young age, too.

I didn't assert that.

I looked into the market trend question, and it looks like YC Series A is trending up significantly faster than the market as a whole.

Graph: https://twitter.com/DanielleMorrill/status/49357608066654208...

My thinking here is that YC would try to get better at helping companies with their Series A with each deal... regardless of what amount of time elapsed between these deals. I think it fits well with the way investors think about the learning process, which is why I tried it out.

Regarding annotations in the 1st chart, they are to set context for readers who do not necessarily follow major milestones in the private markets landscape.

This isn't quite right, those 76 are the ones that have not yet exited. Many of the exited companies also raised money and were not included in that particular stat.

I did some cohort analysis comparing YC, 500, and Techstars over a year ago. Probably time for another one: http://mattermark.com/startup-index-y-combinator-companies-h...

Hi Sam, I was able to pull some data on these things via Mattermark. http://mattermark.com/yc-portfolio-stats-mattermark-crunches...

267 companies currently have 2 or more employees

8,164 people are currently employed by a YC company [1]

121 companies have disclosed an exit (no IPOs, all acquisitions so far)

66% of YC companies are based in the Bay Area, followed by New York (7%) and Boston (2%)

76 un-exited companies have raised a venture round of funding (Series A or beyond)

There is a nearly 50/50 split between B2B and B2C startups in the portfolio

The average Series A stage YC company has 26 employees and has raised $10.2M of funding in its lifetime.

[1] The total number is probably much higher, many of these companies do not have LinkedIn pages or employees on LinkedIn, Crunchbase, news, and other sources until they are further along. I think an estimate of 9,000 to 10,000 current jobs created by current YC companies is reasonable.

Yup.

SmartAsset (YC S12) has an awesome calculator you can use to play with various scenarios: https://www.smartasset.com/infographic/startup

I think a big difference might be cash flow - we are getting paid up front for annual contracts. So our ARR doesn't fully represent our cash position. We pay market rate salaries, benefits, etc.

That comment needs to be kept in the context of my blog post -- it is based on the company in January when we went out to raise. We had 14 people on the team at that time, had reached ramen profitability and then decided to spend conservatively to grow. At that point in time, increasing our ARR 3x would absolutely have made us hugely profitable percentage-wise to how much we were spending to generate that income.

I think SaaS companies are massively under-valued because most investors still do not understand how powerful a low churn recurring revenue stream is for a) predictable sales process/outcomes b) self-funding growth c) ability to take risk on new products because you can test and sell to existing customers.

I think there is a very good chance that VCs will miss HUNDREDS of $100M+ SaaS opportunities due to this risk aversion over the next 1-7 years. If I were to start a fund I would focus 100% on this asymmetry.