Posts

Imagine you have a dollar to invest and you can choose between two options: a public cloud service or a layer 1 blockchain. How do you decide which is more attractive? How does a token differ from equity?

The answer is that tokens can act remarkably like equity if they are structured in the right way. In addition, tokens offer one benefit beyond equity: utility.

Here’s a table that summmarizes the similarities and differences of equity and tokens. They are in fact, very similar.

Amplitude, a leading provider of web analytics, filed their S-1 earlier this week. The company leverages novel storage techniques to scalably collect data on how users engage with mobile apps and web sites. Amplitude counts Cisco, Adidas, PayPal and CapitalOne amongst its customers.

Amplitude offers three key products: analytics for measuring user behavior, experiment for testing new user flows, and recommendation which optimizes content for different user segments.

Amplitude’s revenue growth rate is in the top quartile for modern software companies at 49%.

Should you price your SaaS per seat or per use? That was one of the salient questions Madhavan Ramanujam answered in last week’s Office Hours at Redpoint. Madhavan provided an excellent framework for answering this question, in addition to a multitude of other insights.

The first thing to state is that massive companies have been built using both pricing structures: Salesforce and Adobe bill per seat while Snowflake and Twilio charge per use. Deciding which to use involves considering factors such as customer preference and competition.

Visit any website today and you’ll likely be accosted from the front and mugged from the back.

The first thing you’ll see, aside from the website’s masthead, is ubiquitous and maddening cookie declaration asking you whether you object if the website sells your data. The overt mugging.

Meanwhile, third party data siphoned from your behavior on other sites catalog your preferences, your movements, and your purchases. This information is traded on exchanges around the world. The covert pilfering.

At Redpoint, we believe the 2020s will be the decade of data. Today, we’re announcing our partnership with Preset.io, a company providing the visualization layer for the modern data stack. In addition, Preset.io announces Preset Cloud, a fully hosted cloud service for Apache Superset, is generally available.

Preset provides a managed service of Apache Superset, an open source business intelligence software which Maxime Beauchemin started in at Airbnb. In a few short, Apache Superset has become the leading open source business intelligence layer. With more than 40,000 Github stars and users like Airbnb and Dropbox, Superset enables tens of thousands of teams to collaborate with data.

There’s a simple secret to hiring quickly and building a strong team. Invest in great managers early.

Let’s compare the organizational chart of two different startups. On the left, the startup is flat. There is a single leader, with a handful of individual contributors. On the right, the company structure is a classic hierarchy.

When startups start, they tend to look like the company on the left. There might be a few founders who lead, rather than the one depicted here. But most people are individual contributors. They write code, author blog posts, publish the website, attract customers, with the goal of achieving product-market fit.

Pricing is one of the questions that persist through the evolution of a company. A common topic today in software startup board rooms is: should the company price by seat or by usage?

To answer this question and many others, Redpoint Office Hours will welcome Madhavan Ramanujam, Partner and Board Member at Simon-Kucher on Wednesday, August 25th at 11AM PT.

Madhavan has led more than 200 pricing projects across software companies. He has advised more than 20 unicorns including Uber, Asana, and Stripe. He is the co-author of Monetizing Innovation, which I wrote about in this blog post. It’s the canonical book on modern pricing.

A venture dollar’s velocity has never been faster. The time it takes for a dollar to appear in an LP’s pocket, for the LP to wire it to a VC fund, and for the VC fund to invest can be measured in minutes. Then, hold your breath for the pre-emptive round, and you’ll have 3 term sheets before you pass out.

I’m kidding of course, but the hyperbole illustrates the velocity of money in Startupland. I’ve never seen a dollar move faster.

Let me tell you the story of a lovely business. It’s publicly traded; worth $50b. The company operates at 71% gross margin in a competitive industry in a very big market. Profitable and cash flow break even, this business enjoys a 19x forward revenue multiple.

What sector does this company operate in?

If you guessed a software company, I’m afraid to say I led you astray. It’s an unfair question given how much I write about SaaS companies.

A few years ago, when a startup raised a Series A or Series B, founders would bolster the round with venture debt: a term loan and/or a revolving credit line. However, equity dollars are replacing those debt dollars in the last 18 months in the early stage.

Meanwhile, venture debt dollars have migrated to later stages. Early stage debt origination and round counts peaked in 2019, while later stage debt has increased quite nearly every year. In the later stages, debt is often used to finance acquisitions, and perhaps this is occurring more for venture backed companies.