Coinbase and Uniswap are two of the leading crypto exchanges. The market values COIN, Coinbase’s stock, and UNI, Uniswap’s token at about 3x trailing 12-month revenues. But should they be trading at similar multiples?
As the market has corrected, so have the trailing 12-month revenues (TTM)/Market Cap multiples. They move in synchrony with an R^2 of 0.79.
Just how comparable are these businesses?
For web3 startups to thrive, their marketing teams will need to spend marketing dollars to acquire users efficiently. Existing marketing technology won’t work for web3.
Web2 marketing employs the cookie as the primary identifier of a person, not a wallet. There’s no bridge between web2 & web3 data, yet. The behavioral patterns in web3 differ driven by anonymity, communication patterns on discord and telegram, and the consequences of using tokens as user acquisition, as governance votes, and currency.
Yesterday, Office Hours welcomed Lee Kirkpatrick, former CFO at Twilio to share his experiences managing through three different recessions: the dotcom era, the Global Financial Crisis, and today.
Lee headed finance for the company from $15m in ARR to more than $1b. In addition, Lee shared his view on usage-based pricing and defending a startup’s great asset, talent, from poaching during the next recovery.
When Aileen Lee published “Welcome to the Unicorn Club” - the article that coined the word unicorn for a $1b startup - the average public SaaS company commanded a market cap of $1.5b.
I remember thinking a $1b M&A or IPO was so rare an investor might hope to achieve it once or twice in a career. Fewer than 15 SaaS companies traded on public exchanges then. With at least 20 firms and several partners per firm chasing unicorns, upstarts faced stiff odds.
OUCH. It’s been a brutal year for many in the capital markets and certainly for Amazon.com shareholders. As of this writing, our shares are down more than 80 percent from when I wrote you last year.
Jeff Bezos wrote this to start his annual shareholder letter in the year 2000. But he might have written it today. Amazon stock reached an all time high of $5.33 before falling to $0.298.
The round extension is the most popular fundraising round today. You won’t find statistics detailing their rise in PitchBook or Crunchbase, but “reopening the last round” or “raising a round extension” precede pitches Startupland today.
How does an extension impact a company’s cap table on average?
Round dilution from VC dollars has been declining for the past decade. These figures exclude employee stock option (ESOP) dilution.
Suppose a VC gave you, a web3 marketer, $50m to spend to acquire as many users as possible? How would you do it? Conference sponsorships? Cross-DAO messaging in Discord? Sponsored social? It would be a challenge to drive any efficiency.
The past isn’t much help, either. Web2 marketing channels don’t apply because they employ third-party cookies, a technology Google will phase out at the end of 2022. Third-party cookies enable marketers to advertise to users who they haven’t “met” online yet. Third-party cookies encrust information about which sites I’ve visited.
Lee Kirkpatrick is no stranger to downturns. During the dotcom crash in 2001, the Global Financial Crisis of 2008, and the SaaS corrections in 2014, 2016, and 2018, Lee was either COO/CFO or CFO at Twilio, SAY Media, and Ofoto.
In addition to his experience navigating financial markets, Lee oversaw the finance function at one of the most successful usage-based billing companies. Usage-based billing - the practice of charging customers by consumption rather than subscription - has become top of mind for many startups seeking to align their success with customer needs.
The web3 market’s collapse in the last few weeks will reverberate across the ecosystem, especially for marketing teams.
Blind airdrops, multi-million dollar ecosystem funds, sports team sponsorships - predominant marketing techniques redolent of the bull market - won’t last.
A tighter fundraising market and competition will catalyze web3 marketers to adopt a new discipline. Why? Marketing efficiency is a vital competitive advantage.
While this is just as true in web2 as in web3, crypto brings new complexities that create opportunity. Token efficiency accounting isn’t widespread. For example, most web3 companies don’t consider tokens as a cost-of-customer acquisition, but they ought to be. We need to invent new marketing math.
Should a 10% reduction in staff be considered a layoff? In one sense, yes, because on a particular day, a collection of employees no longer work at a startup. But a 10% layoff shouldn’t confer messages of a financially strapped business.
Consider the average annual employee attrition in a startup ranges between 13% and 25%. A 10% reduction-in-force (RIF) is less than the quantum of employees the business would have expected to lose throughout the year.
