14 ms·

Mattermark Has Raised $2M in Our Second Seed Round

118 points by dmor 12y ago

mrmch 12y ago
Very few founders will talk so honestly about their fundraising, props to dmor.
tonydiv 12y ago
The amount of dilution here is worth noting: YC: ~10% after conversion 500 Startups: ~10% after conversion Version One, Felicis, etc (Q1 14): $1M+ investment at $5-$7M valuation at most? Another 20% Flybridge, A16Z, Gramercy, etc (Q2 14): $1M investment at $6-$9M valuation at most? Another 20% Between just these 4 groups, they own 60%+ of the company. I'm not accounting for angels. In addition to this, with an option pool, cofounder, COO, and a handful of employees, I wonder how much Danielle owns. On a less pessimistic note, I wonder if there are acquisition routes. If so, who?
- flylib 12y ago
  they have a few competitors (CB Insights, DataFox, Tracxn, Indicate.io), remains to be seen who wins out
- pbiggar 12y ago
  Those numbers multiply, they don't add. Also, some of your numbers are wrong if you look at her post, and others are pretty high: Danielle was a known quantity for VCs from her Twilio days and you can expect she raised her rounds at a premium. I do the numbers as: .93 (YC) * .95 (500S) * .85 (option pool) * 0.83 (seed1) * .92 (seed2) * 0.86 (seed3) = 0.49 This doesn't account for the Referly->mattermark pivot, which may have led to some restructuring.
- jaksmit 12y ago
  generally the math wouldn't look exactly like that. the initial investors (e.g. YC) would also get diluted in the subsequent fund-raises.
- argonaut 12y ago
  The math might not be quite right here. Depending on how earlier investors are diluted by later investors, if at all, the 4 groups could own as little as 49% of the company.
  - tonydiv 12y ago
    "As little as 49%?" Yes, you're right, I didn't account for dilution, but I also didn't account for the 20 other convertible notes they've taken.
- dmor 12y ago
  We have taken nowhere near as much dilution as you are suggesting. I want to clarify this, because I don't want anyone else to think they should take 60% dilution before they take their real first equity round. Without revealing our entire cap table and terms (I'm transparent as I can be, but I think this would upset some of my investors) I can tell you the rule of thumb is to give up no more than 25% dilution on convertible notes before an equity round. Generally you will sell 20% of the company in the Series A (read as: first equity round), 15% in the 2nd (Series B), another 15% in the 3rd (Series C). Our dilution position from these early rounds is still slightly TBD depending on the valuation we get in our next round, but we are sticking pretty close to this rule. Additionally, we maybe we able to hit the milestones required to sell less than 20%... so that optionality is there.
  - tonydiv 12y ago
    Unless your valuation is $10M+ and your notes' caps were $6M+, I don't see how investors won't own ~55%+ after Series A (before accounting for 20% option pool).
    - dmor 12y ago
      Yup. SmartAsset (YC S12) has an awesome calculator you can use to play with various scenarios: https://www.smartasset.com/infographic/startup https://www.smartasset.com/infographic/startup
imkevinxu 12y ago
> I’ll tell you why we took a second seed round — we were going to run out of money and couldn’t raise a traditional Series A on acceptable terms. Money quote, I appreciate hearing the truth
JimEngland 12y ago
This is essentially a Series A, so why call it a "second seed round"? Feels questionable to me.
- theflyingkiwi42 12y ago
  It was raised with convertible debt, so no valuation was given. I think that makes it a seed round instead of a Series A.
- kloncks 12y ago
  No valuation, because of convertible debt No board seats Not a lot of money raised, so not as dilutive as typical Series A No expectation to hit "Series B" type metrics next time they raise
- calvin 12y ago
  Danielle explains this clearly in the article. Mattermark "couldn’t raise a traditional Series A on acceptable terms." "I quickly discovered expectations for a B2B Series A were $1.5M in annual revenue run rate — we were growing fast, but still only 1/3 of the way there at the time." They don't have enough revenue so they went for another seed round instead. It's not questionable; it's logical and helped her to keep the company moving forward.
curiousDog 12y ago
Wait, Mattermark and Matterport were started by the same guy?
- deleted 12y ago
  [deleted]
- cenhyperion 12y ago
  Mattermark wasn't founded by a guy, it was founded by Danielle Morrill, who also founded YC-backed referly
  - aaronbrethorst 12y ago
    Mattermark was a pivot from referly. http://blog.ycombinator.com/referly-yc-s12-becomes-mattermark-the-way-vcs-and-angels-can-prospect-for-the-best-companies-to-invest-in http://blog.ycombinator.com/referly-yc-s12-becomes-mattermar...
AndrewKemendo 12y ago
Did their valuation really rise that much by pivoting that a16z decided to double down or was there a cap on the first round?
ChuckMcM 12y ago
Congratulations, seems like a great way to thread the needle. Perhaps another good metric might be ratio of fund raising to non-fundraising time. In many ways startups are like rockets and that ratio is their mass fraction, money consumed relative to value delivered into stable 'orbit.' :-)
patio11 12y ago
I quickly discovered expectations for a B2B Series A were $1.5M in annual revenue run rate That's a great news-you-can-use for many people on HN, so I thought I'd excerpt it. It feels... I don't know. Markets are made where buyers and sellers feel that the offer is mutually acceptable, so I don't want to say "That is too high." I'd say, as somebody who spends a lot of time in B2B SaaS (though only with a toe dipped in the funded sides of that pond), that if you're waiting for $1.5 million in revenue you lose all standing to whinge about how darned pricey SaaS companies are these days. You're attempting to buy a very different thing than was historically bought in a transaction called Series A.
- berkay 12y ago
  If the requirement for VC investment is $1.5m in AAR and fast growth rate, there does not seem to be much of a "venture" in that. This sounds like what a bank would require to loan you money, an almost certainty that you can pay it back.
  - patio11 12y ago
    Banks will not loan you $5~10+ million on $1.5 million in revenue [+], which is what the Series A will likely be. They'd be happy to offer you $150k to $300k or so, depending on the officer. You can get a higher percentage when you graduate to a more stringent vetting process, which banks will typically start making available after you have $10M+ in revenue, significant hard assets, etc. (Business underwriting is hard and expensive, and there isn't enough money on the table to justify much underwriter attention for a $200k loan or line of credit.) [+] In hindsight: I'm playing fast and loose with the interchangeability of revenue and run rate. They're two very different things. Not terribly relevant to the general thrust of this comment, but if you ever hear someone conflate the two in an investment conversation, make sure you nail down which you're talking about.
    - berkay 12y ago
      Agreed. I was more commenting on the more recent trend of "risk averse VC investment". As the OP states at $1.5 ARR, they would be profitable. It feels like VC investment in B2B space has become highly risk averse, only funding expansions of proven business models (we'll give you money if you can prove that you don't need it). This is a fine investment model but not sure it qualifies as "venture" investment. Can you really expect 10x returns if you're also looking for essentially proven, almost profitable businesses?
alizaki 12y ago
This is a bridge round led by an outside investor. Not uncommon, especially between Series A and B. I don't get much of the hard decision here, seems pretty common. I do appreciate her honesty though.
philip1209 12y ago
We predicted a June 2014 1.5M round at Telegraph Research: http://www.telegraphresearch.com/mattermark/ http://www.telegraphresearch.com/mattermark/
- arfliw 12y ago
  Got really excited about your site and clicked around to every page, only to discover you only have profiles for a handfull of companies! That would be a really useful/neat tool if it covered...like...all of them.
  - philip1209 12y ago
    It would - unfortunately it takes significant time to put one of these reports together. They're normally on the order of 5K words.
bobjordan 12y ago
As a bootstrapper with 100% equity in company that just passed $1M YOY revenue and should hit $2M this year, I read these articles on HN and cringe. To me, it would be a special kind of hell to have 40 investors to answer to, no less in a company under $1M revenue. Seems to work for some founders to get rich quick but for god sakes I don't envy that position.
- arfliw 12y ago
  I think 'answer to' is probably looking at it wrong, at least for good investors. They are there to help you when needed, to give you advice. They are not the hall monitor. However I've never had investors either, so perhaps I'm wrong. Given that she says she communicates with 75% of them at least once a month - that would indeed suck if the relationship was as you described.
  - bobjordan 12y ago
    In any case, would be much better to be answering to 40 paying B2B customers. I'd imagine if founder is not able to get focused on that, there won't be another round.
    - lalwanivikas 12y ago
      Agree! Quality advice can come from good mentors as well.
    - deleted 12y ago
      [deleted]
- jamesfranco 12y ago
  I'll say. Raising money is why many startups fail.
  - MCRed 12y ago
    20 years of experience with startups, investors forcing bad decisions on the startup caused the majority of failures (about %60). Founder conflicts, and market timing caused the rest.
beambot 12y ago
40 investors where "50% are in touch 1x per month, and 25% are in touch 1x per week." That's 60 emails a month (2 a day). Do you find this helpful? Can you keep them all so well-informed? Can you actionably react to all that communication and advice?
- aelaguiz 12y ago
  We have 20 something investors and on a given month there are ~2 that send more than one e-mail, 5 that send 1 e-mail, and basically nothing from all of the rest. I don't feel a burden, tbh. I like it, when I need help I get it - and I have a few really solid mentors in the group. The only pain is at series A when I'm going to have to go get all of them to sign the closing docs. That'll be hard.
  - HistoryInAction 12y ago
    Did you use an (investment) LLC to condense the angel round? That seems to make the paperwork easier for future rounds, I'm told...
    - aelaguiz 12y ago
      We did a syndicate on AL that condensed a $500k round into a single LLC. That was nice. The rest are individuals.
buro9 12y ago
> Fun Fact: 95% of money in the round came from investors who were already paying customers — including VCs, angel investors, family offices, hedge fund managers, founders and executives This is good, as customers who are paying do tend to believe in the product offering and direction. For our startup ( https://microco.sm/ https://microco.sm/ ) we have a similar story, our first £150k of investment came from users of our software, people already using forums and who believe deeply in the story we're telling about where we want to take forums. It was also quick... the first £50k took 15 hours to raise, the £100k follow-on took 180 minutes. Unfortunately for us, our customers aren't VCs and angels. So this is extremely unlikely to continue to scale. Oh well, time to find angels and early-stage investors in London who will help us reach the next set of product and revenue milestones and the ones after.
proexploit 12y ago
If I were looking for a new startup job, I would check out Mattermark first to develop a list of startups I thought looked like they were doing financially well / had strong employee growth etc and could succeed before then looking into which I was interested in the work at. I think Mattermark could have some other uses for their data that could prove valuable (I'd pay for that). Right now if I were in that situation, it looks like I could get a 30 day trial for free but I wouldn't continue it at $499 a month. I wonder what other monetization opportunities there are for the data Mattermark has.
- 650REDHAIR 12y ago
  They have a $99/mo founder price point. It's awesome.
  - proexploit 12y ago
    Yeah, which would be a fair price but as an employee looking for companies to work at you wouldn't qualify.
    - 650REDHAIR 12y ago
      Pretty sure Danielle would be willing to work out a $99/mo deal if you were going to be using it like that. Why not reach out?
rgoksor 12y ago
How much did market size impact fundraising for Mattermark? My sense is a lot. Like Danielle, I see institutional fundraising changing for startups (http://goo.gl/R0zH4M http://goo.gl/R0zH4M), but I still think that the Series A is available to the right team, market, and product. See recent blog post on this by Rob Go @ nextview http://goo.gl/tmWhZB http://goo.gl/tmWhZB. Danielle has got a great team and product, but is the market really multi-billion? How many businesses can she really sell to and at what price point?
davmar 12y ago
In fact, if our run rate had been that high we would have been massively profitable. with mad respect to dmor, this doesn't fit. even at 1.5m ARR, with 21 employees, office space, AWS bills and the 'etc', you aren't "massively profitable". i don't feel the need to go through the math since it's obvious. maybe there'd have been a few bucks to spare, but there are no "massive profits" there.
- dmor 12y ago
  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.
  - davmar 12y ago
    i hear you. however my b2b saas business does 2M+ arr with 12 employees and still i would not consider us "massively profitable". no doubt there's a big difference between our cost structures and the biggest is probably employees. i'm assuming you must be paying below market for your technical employees in exchange for more equity.
    - dmor 12y ago
      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.
      - davmar 12y ago
        Duh. A big difference is that my company is bootstrapped. You have additional monies in the bank from investors. #clearheadaftercoffee
      - davmar 12y ago
lauradhamilton 12y ago
Danielle, really appreciate the honesty. Great post. Although...I don't understand how $1.5M in annual revenue makes a company with 21 employees "massively profitable."

118 points by dmor 12y ago

mrmch 12y ago

Very few founders will talk so honestly about their fundraising, props to dmor.

The amount of dilution here is worth noting: YC: ~10% after conversion 500 Startups: ~10% after conversion Version One, Felicis, etc (Q1 14): $1M+ investment at $5-$7M valuation at most? Another 20% Flybridge, A16Z, Gramercy, etc (Q2 14): $1M investment at $6-$9M valuation at most? Another 20% Between just these 4 groups, they own 60%+ of the company. I'm not accounting for angels. In addition to this, with an option pool, cofounder, COO, and a handful of employees, I wonder how much Danielle owns. On a less pessimistic note, I wonder if there are acquisition routes. If so, who?

flylib 12y ago
they have a few competitors (CB Insights, DataFox, Tracxn, Indicate.io), remains to be seen who wins out
pbiggar 12y ago
Those numbers multiply, they don't add. Also, some of your numbers are wrong if you look at her post, and others are pretty high: Danielle was a known quantity for VCs from her Twilio days and you can expect she raised her rounds at a premium. I do the numbers as: .93 (YC) * .95 (500S) * .85 (option pool) * 0.83 (seed1) * .92 (seed2) * 0.86 (seed3) = 0.49 This doesn't account for the Referly->mattermark pivot, which may have led to some restructuring.
jaksmit 12y ago
generally the math wouldn't look exactly like that. the initial investors (e.g. YC) would also get diluted in the subsequent fund-raises.
argonaut 12y ago
The math might not be quite right here. Depending on how earlier investors are diluted by later investors, if at all, the 4 groups could own as little as 49% of the company.
- tonydiv 12y ago
  "As little as 49%?" Yes, you're right, I didn't account for dilution, but I also didn't account for the 20 other convertible notes they've taken.
dmor 12y ago
We have taken nowhere near as much dilution as you are suggesting. I want to clarify this, because I don't want anyone else to think they should take 60% dilution before they take their real first equity round. Without revealing our entire cap table and terms (I'm transparent as I can be, but I think this would upset some of my investors) I can tell you the rule of thumb is to give up no more than 25% dilution on convertible notes before an equity round. Generally you will sell 20% of the company in the Series A (read as: first equity round), 15% in the 2nd (Series B), another 15% in the 3rd (Series C). Our dilution position from these early rounds is still slightly TBD depending on the valuation we get in our next round, but we are sticking pretty close to this rule. Additionally, we maybe we able to hit the milestones required to sell less than 20%... so that optionality is there.
- tonydiv 12y ago
  Unless your valuation is $10M+ and your notes' caps were $6M+, I don't see how investors won't own ~55%+ after Series A (before accounting for 20% option pool).
  - dmor 12y ago
    Yup. SmartAsset (YC S12) has an awesome calculator you can use to play with various scenarios: https://www.smartasset.com/infographic/startup https://www.smartasset.com/infographic/startup

imkevinxu 12y ago

> I’ll tell you why we took a second seed round — we were going to run out of money and couldn’t raise a traditional Series A on acceptable terms. Money quote, I appreciate hearing the truth

JimEngland 12y ago

This is essentially a Series A, so why call it a "second seed round"? Feels questionable to me.

theflyingkiwi42 12y ago
It was raised with convertible debt, so no valuation was given. I think that makes it a seed round instead of a Series A.
kloncks 12y ago
No valuation, because of convertible debt No board seats Not a lot of money raised, so not as dilutive as typical Series A No expectation to hit "Series B" type metrics next time they raise
calvin 12y ago
Danielle explains this clearly in the article. Mattermark "couldn’t raise a traditional Series A on acceptable terms." "I quickly discovered expectations for a B2B Series A were $1.5M in annual revenue run rate — we were growing fast, but still only 1/3 of the way there at the time." They don't have enough revenue so they went for another seed round instead. It's not questionable; it's logical and helped her to keep the company moving forward.

curiousDog 12y ago

Wait, Mattermark and Matterport were started by the same guy?

deleted 12y ago
[deleted]
cenhyperion 12y ago
Mattermark wasn't founded by a guy, it was founded by Danielle Morrill, who also founded YC-backed referly
- aaronbrethorst 12y ago
  Mattermark was a pivot from referly. http://blog.ycombinator.com/referly-yc-s12-becomes-mattermark-the-way-vcs-and-angels-can-prospect-for-the-best-companies-to-invest-in http://blog.ycombinator.com/referly-yc-s12-becomes-mattermar...

AndrewKemendo 12y ago

Did their valuation really rise that much by pivoting that a16z decided to double down or was there a cap on the first round?

ChuckMcM 12y ago

Congratulations, seems like a great way to thread the needle. Perhaps another good metric might be ratio of fund raising to non-fundraising time. In many ways startups are like rockets and that ratio is their mass fraction, money consumed relative to value delivered into stable 'orbit.' :-)

patio11 12y ago

I quickly discovered expectations for a B2B Series A were $1.5M in annual revenue run rate That's a great news-you-can-use for many people on HN, so I thought I'd excerpt it. It feels... I don't know. Markets are made where buyers and sellers feel that the offer is mutually acceptable, so I don't want to say "That is too high." I'd say, as somebody who spends a lot of time in B2B SaaS (though only with a toe dipped in the funded sides of that pond), that if you're waiting for $1.5 million in revenue you lose all standing to whinge about how darned pricey SaaS companies are these days. You're attempting to buy a very different thing than was historically bought in a transaction called Series A.

berkay 12y ago
If the requirement for VC investment is $1.5m in AAR and fast growth rate, there does not seem to be much of a "venture" in that. This sounds like what a bank would require to loan you money, an almost certainty that you can pay it back.
- patio11 12y ago
  Banks will not loan you $5~10+ million on $1.5 million in revenue [+], which is what the Series A will likely be. They'd be happy to offer you $150k to $300k or so, depending on the officer. You can get a higher percentage when you graduate to a more stringent vetting process, which banks will typically start making available after you have $10M+ in revenue, significant hard assets, etc. (Business underwriting is hard and expensive, and there isn't enough money on the table to justify much underwriter attention for a $200k loan or line of credit.) [+] In hindsight: I'm playing fast and loose with the interchangeability of revenue and run rate. They're two very different things. Not terribly relevant to the general thrust of this comment, but if you ever hear someone conflate the two in an investment conversation, make sure you nail down which you're talking about.
  - berkay 12y ago
    Agreed. I was more commenting on the more recent trend of "risk averse VC investment". As the OP states at $1.5 ARR, they would be profitable. It feels like VC investment in B2B space has become highly risk averse, only funding expansions of proven business models (we'll give you money if you can prove that you don't need it). This is a fine investment model but not sure it qualifies as "venture" investment. Can you really expect 10x returns if you're also looking for essentially proven, almost profitable businesses?

alizaki 12y ago

This is a bridge round led by an outside investor. Not uncommon, especially between Series A and B. I don't get much of the hard decision here, seems pretty common. I do appreciate her honesty though.

philip1209 12y ago

We predicted a June 2014 1.5M round at Telegraph Research: http://www.telegraphresearch.com/mattermark/ http://www.telegraphresearch.com/mattermark/

arfliw 12y ago
Got really excited about your site and clicked around to every page, only to discover you only have profiles for a handfull of companies! That would be a really useful/neat tool if it covered...like...all of them.
- philip1209 12y ago
  It would - unfortunately it takes significant time to put one of these reports together. They're normally on the order of 5K words.

bobjordan 12y ago

As a bootstrapper with 100% equity in company that just passed $1M YOY revenue and should hit $2M this year, I read these articles on HN and cringe. To me, it would be a special kind of hell to have 40 investors to answer to, no less in a company under $1M revenue. Seems to work for some founders to get rich quick but for god sakes I don't envy that position.

arfliw 12y ago
I think 'answer to' is probably looking at it wrong, at least for good investors. They are there to help you when needed, to give you advice. They are not the hall monitor. However I've never had investors either, so perhaps I'm wrong. Given that she says she communicates with 75% of them at least once a month - that would indeed suck if the relationship was as you described.
- bobjordan 12y ago
  In any case, would be much better to be answering to 40 paying B2B customers. I'd imagine if founder is not able to get focused on that, there won't be another round.
  - lalwanivikas 12y ago
    Agree! Quality advice can come from good mentors as well.
  - deleted 12y ago
    [deleted]
jamesfranco 12y ago
I'll say. Raising money is why many startups fail.
- MCRed 12y ago
  20 years of experience with startups, investors forcing bad decisions on the startup caused the majority of failures (about %60). Founder conflicts, and market timing caused the rest.

beambot 12y ago

40 investors where "50% are in touch 1x per month, and 25% are in touch 1x per week." That's 60 emails a month (2 a day). Do you find this helpful? Can you keep them all so well-informed? Can you actionably react to all that communication and advice?

aelaguiz 12y ago
We have 20 something investors and on a given month there are ~2 that send more than one e-mail, 5 that send 1 e-mail, and basically nothing from all of the rest. I don't feel a burden, tbh. I like it, when I need help I get it - and I have a few really solid mentors in the group. The only pain is at series A when I'm going to have to go get all of them to sign the closing docs. That'll be hard.
- HistoryInAction 12y ago
  Did you use an (investment) LLC to condense the angel round? That seems to make the paperwork easier for future rounds, I'm told...
  - aelaguiz 12y ago
    We did a syndicate on AL that condensed a $500k round into a single LLC. That was nice. The rest are individuals.

buro9 12y ago

> Fun Fact: 95% of money in the round came from investors who were already paying customers — including VCs, angel investors, family offices, hedge fund managers, founders and executives This is good, as customers who are paying do tend to believe in the product offering and direction. For our startup ( https://microco.sm/ https://microco.sm/ ) we have a similar story, our first £150k of investment came from users of our software, people already using forums and who believe deeply in the story we're telling about where we want to take forums. It was also quick... the first £50k took 15 hours to raise, the £100k follow-on took 180 minutes. Unfortunately for us, our customers aren't VCs and angels. So this is extremely unlikely to continue to scale. Oh well, time to find angels and early-stage investors in London who will help us reach the next set of product and revenue milestones and the ones after.

proexploit 12y ago

If I were looking for a new startup job, I would check out Mattermark first to develop a list of startups I thought looked like they were doing financially well / had strong employee growth etc and could succeed before then looking into which I was interested in the work at. I think Mattermark could have some other uses for their data that could prove valuable (I'd pay for that). Right now if I were in that situation, it looks like I could get a 30 day trial for free but I wouldn't continue it at $499 a month. I wonder what other monetization opportunities there are for the data Mattermark has.

650REDHAIR 12y ago
They have a $99/mo founder price point. It's awesome.
- proexploit 12y ago
  Yeah, which would be a fair price but as an employee looking for companies to work at you wouldn't qualify.
  - 650REDHAIR 12y ago
    Pretty sure Danielle would be willing to work out a $99/mo deal if you were going to be using it like that. Why not reach out?

rgoksor 12y ago

How much did market size impact fundraising for Mattermark? My sense is a lot. Like Danielle, I see institutional fundraising changing for startups (http://goo.gl/R0zH4M http://goo.gl/R0zH4M), but I still think that the Series A is available to the right team, market, and product. See recent blog post on this by Rob Go @ nextview http://goo.gl/tmWhZB http://goo.gl/tmWhZB. Danielle has got a great team and product, but is the market really multi-billion? How many businesses can she really sell to and at what price point?

davmar 12y ago

In fact, if our run rate had been that high we would have been massively profitable. with mad respect to dmor, this doesn't fit. even at 1.5m ARR, with 21 employees, office space, AWS bills and the 'etc', you aren't "massively profitable". i don't feel the need to go through the math since it's obvious. maybe there'd have been a few bucks to spare, but there are no "massive profits" there.

dmor 12y ago
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.
- davmar 12y ago
  i hear you. however my b2b saas business does 2M+ arr with 12 employees and still i would not consider us "massively profitable". no doubt there's a big difference between our cost structures and the biggest is probably employees. i'm assuming you must be paying below market for your technical employees in exchange for more equity.
  - dmor 12y ago
    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.
    - davmar 12y ago
      Duh. A big difference is that my company is bootstrapped. You have additional monies in the bank from investors. #clearheadaftercoffee
    - davmar 12y ago

lauradhamilton 12y ago

Danielle, really appreciate the honesty. Great post. Although...I don't understand how $1.5M in annual revenue makes a company with 21 employees "massively profitable."