Many private companies are seeing the market and wondering what it means. Here are some thoughts on how to navigate this. Anything useful is based on the experiences of my teammates at Sequoia and the incredible founders who have survived/thrived in all markets:
The best leaders are (both) demanding and supportive.
(As a bonus, I would bet this is the only thing you'll read today that talks about Mike Moritz, my parents, and Game of Thrones)
I wish the NBA had something like a “Distinguished Engineer” position. Feels like Kyrie is more of a senior IC type of guy. (This is very niche content)
Yesterday was a special day for Instacart. There are many emotions. Pride. Joy. Optimism. But most of all, i feel gratitude. Profound and intense gratitude. Thank you, Instacart.
Sometimes athletes have to decide between doing what's best for the team's success or their individual success. This dynamic doesn't exist within startups - the only thing that matters is making sure your team wins.
This is as good as the MJ "And I took that personally" gif. How proud are you if you work at Microsoft right now??
@satyanadella
continues to set a new standard for leadership. Competitive fire is a good thing!
6/ People will look at certain metrics to judge whether your growth is durable: If you’re a SaaS company, three metrics that matter: NNARR / S&M, NNARR / Burn, and Net Dollar Retention. Excellent is 2, 2, and 150%. Good is 1, 1, and 120%.
Hiring is critically important to get right...and so easy to get wrong. I wrote about why aggressive hiring is often counterproductive and what you can do about it. This also includes the single best hiring advice I've ever received.
11/ This is a crucible moment: My friend sent me a note at one of Instacart’s crucible moments. It ended with “You have a chance to become anti-fragile. How lucky you are.” I would echo his sentiments here. This is a painful time. It is also an amazing opportunity. Go get it.
10/ Invest in Product: Product improvements are your way out of this. Focus on i) increasing organic growth (or make it easier to sell without heavy S&M), and ii) increasing user and dollar retention. Unlock spend when you have the right efficiency and payback metrics.
3/ Embrace reality: If you believe the above point does not apply to you, I would encourage you to compare the implied revenue multiple of your proposed valuation to Snowflake’s, who has $1.4bn of revenue, 102% YoY growth and 27% FCF margins.
7/ Metrics that matter for transaction based businesses: Unit economics (positive / improving), 12-month user retention (stable / improving in new cohorts), transactions/user for the retained user (smiling cohorts). Payback periods of <12 months will also help.
Most startups have too many values. Your values don't need to appeal to everyone. Instead, they should serve as a bat signal to like-minded people. (h/t to
@SteveKerr
for the inspiration and
@patrickc
for the guest appearance in this one).
2/ Your valuation is not what you thought it was: This market change may not be your fault, but it is your problem. If you raised in 2021, your company might be worth something like ⅓ of your last valuation.
1/ This is a correction: The MS unprofitable tech index is down ~65% since Dec 21. That is a big drop but it brought multiples to historical averages. No one knows where markets will go but current multiples are much closer to durable reality than what we saw the past two years.
5/ Free Cash Flow is the destination: Ultimately, investors are underwriting your ability to durably produce free cash flow. In order to believe that, they need to see durable growth and improving profitability.
Had a blast talking to my friend
@patrick_oshag
about my favorite saying: “The main thing is to keep the main thing the main thing.” Thanks for having me, Patrick!
My conversation with
@GuptaRK22
Our whole conversation is about focus and the value of keeping the main thing the main thing
This is a business discussion, but also a life discussion, with someone that’s thought a lot about both
Enjoy!
A couple of days with close friends last week left me thinking about friendship and why it's so meaningful. I wrote about it below. Link in the next post.
Recently a leader I admire called to share some bad news. The time it took for them to move from "we have a problem" to "here's how we might fix it" was four minutes. Four minutes!
Resilience is somehow universally seen as important yet still underrated.
4/ You need more runway than you think: Many companies think they have enough runway. They don’t. It takes a long time to triple valuation (if you are targeting a flat round) in a rational market. It might take 4+ years to do this. If that’s true, you need 5+ years of cash.
Thank you so much Fidji! I am so honored and excited to be joining the Board. I'm thrilled to partner more closely with you, the exceptional team, and the rest of the Board as Instacart builds the future of grocery.
Excited that
@sequoia
’s
@GuptaRK22
has joined our Board. Sequoia has been a critical partner that has supported
@Instacart
at every turn. As Instacart’s former CFO and COO, Ravi also has a deep understanding of our business. Welcome, Ravi!
I’m sure I don’t need to recommend this particular episode, but I will anyway. Even if it’s just for
@patrickc
's soliloquy about beauty and craftsmanship and why they matter to Stripe and him…it’s worth it.
“But the thing that we maybe haven't said or touched on as much that
My conversation with
@patrickc
and
@collision
, co-founders of Stripe
We discuss
- what they want Stripe to be
- how they’ve built the business
- businesses they’ve studied
- vision and quality in product
- much more
Enjoy!
We
@sequoia
are delighted to partner with Ramp as they help their customers reimagine their finance function and what it can do. We have been impressed with Ramp’s ambition and execution and couldn’t be more excited to be on the journey with
@eglyman
,
@karimatiyeh
, Will Petrie,
With Ramp’s latest financing, the best investors in the world are betting on what our team already knows: the
@tryramp
team has barely gotten started.
Five years ago, Ramp began as a smart corporate card and we’ve evolved into a one-stop platform for financial operations. What
9/ Efficient growth is what matters: Accept that growth rate will decrease with the efficiency and payback constraints. Everyone has been buying some of their growth with inefficient spend. By extending runway, you buy yourself time to build from a stronger foundation.
Today was “wear your coolest jersey day” at basketball camp for my boys. They all asked for my opinion - we ended up with a Duke jersey, a Sonics KD, and a throwback MJ. I feel like I’m succeeding as a father.
In a market like this, your metrics need to speak for themselves. The best companies will embrace this reality and emerge stronger. Here are some thoughts on how to do it:
The best basketball players in the world (LeBron, Kobe, Durant, etc) sat down before the Olympics and decided it was worth their time to create a set of shared standards that they would live by. Then they signed it.
Prioritize excellence over volume, embrace the things you don't want to do, and build repeatable models for making decisions.
@GuptaRK22
goes deep with
@ShaneAParrish
on the path to success here: 👇
What an incredible joy to talk to my friend
@ShaneBattier
about playing for the front of the jersey, what makes winning teams, why even superstars are role players and so much more. He also tells some amazing stories. Hope you have as much fun listening as we did recording it.
Today,
@GuptaRK22
hosts
@ShaneBattier
for a conversation on drive, data, performance, team, coaching, and more
Michael Lewis called Shane the “no stats all star,” because everywhere Shane went, the team won
Ravi pulls out why that was possible
Enjoy!
Years ago, I joked that the podcast should be called “this is who you are up against”
Today’s episode with
@gradypb
would qualify
If you want to invest in private markets, listen to this and realize the quality of who else is out there trying to win
Fantastic conversation
Love this. Unreasonable responsibility!Find people who can play and then give them more responsibility than they know what to do with. The best always surprise you with their capacity.
The most important competency for a startup is the ability to identify undiscovered talent and to then have the conviction to bet on them with unreasonable responsibility.
I try to coach my kids’ teams whenever I can. One of the coolest things about doing it is that at the end of the season, when the other parents thank you for doing it, you feel like you should be thanking them because of how much fun you had
Often the biggest and best ideas are hidden in plain sight. We
@sequoia
are thrilled to partner with
@meter
as they build WiFi and internet that just works.
@acv
& Sunil are two of the kindest, most curious, and most ambitious founders we have ever met.
The last thing businesses need to think about is their internet, networking, and WiFi. Today, we're excited to share how we've spent the past few years making this easier than it’s ever been.
We recently started talking to our kids about companies / stocks. One of my sons pronounces Microsoft, "Micro-Soft", really emphasizing the "o" in the middle. I think about it every time I hear about the company now and it makes me smile. Kids are the best.
An inspirational truth-teller who built a monster company and wants to share his wisdom. He also brings joy to every room and is the rare legend who can laugh at himself. It is a privilege to work with
@bhalligan
and call him a friend
This was so good - what a mix of insight, curiosity, and humility. Every time I talk to
@modestproposal1
I consciously try to talk as little as possible so I can absorb as much as I can. Thanks
@patrick_oshag
It’s been a few years since I hosted my friend
@modestproposal1
for a conversation
He manages a large pool of capital and is among my favorite market thinkers
He’s both incredibly passionate about markets and a sober thinker about the exciting trends
We had a blast. Enjoy!
This was so so good. Look at Tracy Chapman’s smile at the beginning when she hears the crowd and how genuinely thrilled Luke Combs looks that he gets to perform with her.
Steph talking about his role in solving what Steve Kerr says is the biggest crisis the Warriors have faced together. My favorite part: "My job is to maintain the joy, the perspective, but also the expectation that we can get through it" His leadership is as good as his shooting.
Steph Curry opens up on the scramble to bring the Warriors back together after Draymond's punch “You realize what conversations need to be had & there’s patience involved...There were some hard days. There could be some more coming"
Watch the full convo:
Loved this. 2 reactions:
1) This is another reason that it's important to just spend *a lot* of time with your kids. Increases the surface area for serendipity.
2) Most of the best memories at startups are from random moments too :)
Most of the best memories of my childhood are from random moments, so as a parent I try to make sure there are lots of random moments, and to make them good.
Vanta is such an awesome company.
@christinacaci
combines vision with methodical execution, and intensity with humility. (Plus she is super fun to be around and loves bball.)
Congrats to
@btaylor
and
@claybavor
as they introduce
@SierraPlatform
to the world! Sierra is building the conversational AI platform for business, enabling every company to elevate their customer experience with AI.
Honored to be on the journey with Bret, Clay and
@peterfenton
I'm excited to announce
@ClayBavor
and my new company,
@SierraPlatform
, the conversational AI platform for businesses. With Sierra, every company can elevate their customer experience with AI.
Two of my favorite people discussing what makes one of my favorite companies so special. Proud to be on the journey with
@MaxRhodesOK
and
@faire_wholesale
. Worth the listen.
16 sentences of wisdom from bond trader turned restaurateur, Sean Feeney, that will make you a better person, friend, and leader.
1. The most important ingredient is the one that’s left out.
2. The greatest gift is courage. Give someone the courage to be themselves.
3. Success
Favorites: "We have what it takes to win", "We win together", "We look each other in the eye", "Our value is not measured in playing time", "This is fun", "We have no bad practices", and of course, "We are the best team in the world and we represent the best country in the world"
Claire - I will always be grateful for your generosity and help when I was at Instacart. I am so happy everyone else can benefit from your wisdom too. Buy this book - it's a treasure trove of insights!
Still can't quite believe this is happening. And it's thanks to the many people I have worked with and learned from, more than any of you know. And the folks I interviewed and excerpted who generously shared wisdom. This book was not a 1 person project - thank you is not enough.
“Ramp takes things that people hate to do at work and builds delightful software to make them easier. Now it’s beginning to automate away the things people hate to do altogether.” Well said
@packyM
and congrats to Ramp on the launch of Travel!
@eglyman
@karimatiyeh
"What is it worth to be the company that quite literally makes every company more profitable?"
My FOURTH Deep Dive on Ramp started as a piece on Travel, and turned into my first deep dive on AI.
TL;DR: Ramp might be in the best position of any B2B company to capitalize on AI.
It is so fun to watch a team ship with the speed and quality of
@remote
. Check out Remote Talent - the best way for great companies and great people to find each other. (But I do think
@Luke_Mackey
was onto something when he said it should have been called "Job's Jobs".)
Super proud to announce Remote Talent! Our first (and definitely not last) steps into helping great people and great companies find each other.
We've built this specifically to help you find remote jobs that actually fit you - no more "specific country only" if you're elsewhere.
“For companies, agents represent something profound: the opportunity to distill the very best of your company into every digital interaction with your customers.”
@claybavor
and
@btaylor
on AI agents is required reading.
@SierraPlatform
Just as every company has a website, soon every company will have its own AI agent. What are AI agents and how do they work? For the curious, we wrote The Guide to AI Agents.
Fantastic essay by
@zebriez
. Captured my experience perfectly (despite how painful the 2015 era she cited was, it remains one of my favorite periods at the company too.)
I have a sneaking suspicion that
@FoundersPodcast
will agree with this. Also reminds me of the Zuckerberg quote where he says being a CEO basically consists of getting punched in the stomach every morning and then having to bounce back and be productive anyway
@fidjissimo
@sequoia
@Instacart
Thank you so much Fidji! I am so honored and excited to be joining the Board. I'm thrilled to partner more closely with you, the exceptional team, and the rest of the Board as Instacart builds the future of grocery.
Now you can order ingredients from any meal plan or recipe that ChatGPT recommends, with our new Instacart plugin. I love that generative AI is solving everyday problems like figuring out what to make for dinner!
I enjoyed hanging briefly with arguably the best interlocutor in the podcast biz
@patrick_oshag
on Invest Like the Best!
@ShaneBattier
& I both discussed Stromile Swift on his pod so you know it must be good.
Hope you enjoy:
Congrats to
@faire_wholesale
and
@Shopify
on their global partnership, which will introduce new ways for customers to grow and manage their B2B businesses. Learn more about the future of retail here:
Today marks a step forward in the future of retail:
@faire_wholesale
and
@Shopify
announced a global partnership that unlocks opportunities for small business growth on a much larger scale. Learn more here:
This week I interviewed my good friend
@GuptaRK22
.
Ravi was:
- Previously CFO/COO of
@Instacart
- Currently a General Partner at
@sequoia
Here’s 15 timeless lessons he shared with me on operating + investing in generational companies:
today's Thing On My Brain: identical twins occur in roughly 1-of-250 births but of the 500-ish NBA players, we have 4 sets of identical twins (Brook/Robin Lopez, Marcus/Markieff Morris, Caleb/Cody Martin, Justin/Julian Champagnie) and are about to get a 5th (Amen/Ausar Thompson)