Tag Archives: Small Business

Shopify’s Tobi Lutke on Layoffs and Building for the Long Term

Few people did better during the pandemic than Tobi Lutke. The Shopify founder signed merchants to his e-commerce platform at a record pace, doubling revenues in 2020.

It was all systems go. Lutke hired like crazy to meet demand and locked up every server he could.

Meanwhile, Shopify’s stock price more than quintipled, putting the company’s valuation at over $200 billion.

In an excellent episode of This Week in Startups, Lutke tells us what it was like to guide his company through these heady times.

Employees were so distracted that Lutke had to make a rule: anyone caught checking the stock price had to buy donuts for everyone. Tim Horton’s, if you please.

But as the pandemic receded and stores reopened, consumers retreated from e-commerce. This left Shopify overbuilt and overextended.

Lutke was in a position he’d never been in throughout Shopify’s heady expansion. He had to do layoffs.

Shopify laid off 10% of the company this summer. For Lutke, the decision was wrenching.

“They were some of our hardest days.”

Tobias Lutke

Because Shopify had expanded ahead of demand. When demand dropped, that left Lutke with no choice but to lay off workers.

However, many of those workers would’ve never had the job in the first place had Lutke not expanded aggressively. And as well-paid tech workers, they’re likely to land on their feet.

Shopify’s tough times show how even large businesses struggle. A company with a $200 billion market cap can see its stock crushed and be forced to do layoffs just months later!

Take heart, early stage founders! The big boys face huge challenges too, just like you.

In all, I think Shopify is well positioned for the long term. It focuses on providing amazing service and doesn’t copy merchants’ products like Amazon.

When your livelihood depends on a platform, you want someone you can trust. Shopify fulfills that role better than Amazon.

I also commend Lutke for building a more honest culture at Shopify than most companies. He calls Shopify a team, not a family.

We all know the “family” rhetoric is nonsense. I have to give Lutke credit for telling it like it is.

I think his employees will too!

What do you think of Lutke’s leadership during the pandemic? Leave a comment at the bottom and let me know!

More on tech:

When Are You Ready to Raise a Seed Round?

How to Avoid Scams, Find Investors, and Lead Like the Best

The Founders: The Story of PayPal

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

When Are You Ready to Raise a Seed Round?

It’s a huge moment in a startup’s life: you shake hands with VC’s and seven figures hit your bank account. But when are you ready to raise a seed round?


Get the blog before anyone else…subscribe!


One of the biggest mistakes I see founders making is trying to raise money before they’re ready. They wind up beating their heads against the wall, simply because they’ve put the cart before the horse.

Here is how you know if you’re ready to raise a seed round:

1) Your product is launched. Believe it or not, companies try to raise seed rounds all the time without even having a product in market.

Sometimes they don’t have anything built at all!

If that’s you, your time would be much better spent finishing your product and launching it. Few people will invest pre-launch.

2) You have real customers and revenue. In addition to being launched, you want signs that you have a real, viable business.

And you can’t have a viable business without paying customers!

Most companies that successfully raise seed rounds have about $3,000 to $25,000 a month in revenue. Less than that, and you may not be ready to raise yet.

Meanwhile, when your annual revenue tops $1 million, you’re getting into Series A territory.

3) You’re growing fast. You want to be growing revenue at least 10% month over month in order to raise a seed round.

I generally look for the most explosive growers, who are scaling at 20% a month or more.

If your revenue is flat, raising capital is tough. People want to be on a rocket ship!

4) You have a strong team. You want around 4-6 people, at least half technical.

If you’re a solo founder or you don’t have anyone technical on the team, you’ll struggle to raise. You’ll also struggle to build a product and iterate on it.

Those two are not unrelated. 🙂

5) Your valuation is reasonable. Seed valuations are around $8-10 million post money these days.

Startups generally raise $1-2 million in their seed round.

6) You’re incorporated properly. I know, I know, I keep harping on this!

But make sure you’re a Delaware C Corp if you want to raise venture capital. More on why here.

I’ve had founders tell me that fundraising is the hardest thing they’ve ever done in their career. One of the biggest reasons for that is companies try to raise money before they’re ready.

You’re better off building your company up a bit first! Then, fundraising becomes way easier.

Show us a company with delighted customers and rapid growth, and we’ll be knocking each other down to get in!

What questions do you have about raising a seed round? Leave a comment at the bottom and let me know!

More on tech:

Why Your Startup Shouldn’t Be an LLC

How to Avoid Scams, Find Investors, and Lead Like the Best

The Startup Metrics That Make Investors Drool

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

How to Avoid Scams, Find Investors, and Lead Like the Best

Happy Monday everyone! I wanted to share an interview I did recently on startups and fundraising with the Finance Videos Network.


Get the blog before anyone else…subscribe!


We cover a lot of great topics, like leadership, finding investors, and red flags founders should look out for.

Here are some interesting points:

2:40: What great leadership looks like in early stage startups.

5:02: How to find investors.

6:30: What if you didn’t go to Harvard or Stanford?

8:18: When is the right time to raise money?

9:30: How to do a first meeting with an investor.

10:26: Signs that an investor is a fraud.

11:48: Should founders move to a tech center?

What do you think of today’s funding environment? What did we miss?

Leave a comment at the bottom and let me know!

More on tech:

The Startup Metrics That Make Investors Drool

How Startup Founders Get Scammed

The Founders: The Story of PayPal

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

The Startup Metrics That Make Investors Drool

Many entrepreneurs can tell an amazing story. But what about the hard numbers you need to back it up?


Get the blog before anyone else…subscribe!


Here are the type of figures that get me salivating:

1) Revenue growth. I like to see startups signing up customers at a rapid clip.

Companies I invest in usually are growing their revenue at least 20% month over month. These represent the cream of the crop of seed stage companies.

As startups mature, that benchmark goes down. For a company at Series A or later, 10% month over month growth is excellent.

You can calculate your growth using a tool like this.

Growth is critical because the best startups tend to catch on fast. Google, YouTube, PayPal and countless others grew at incredible rates shortly after launch.

2) Gross Margin. It’s not hard to grow if you’re selling a dollar for 90 cents. Knowing your Gross Margin makes sure that doesn’t happen.

Here’s how to calculate it: take the money left over from a sale after variable costs (marketing, etc.) and divide it by the revenue from the sale.

A SaaS business should shoot for a Gross Margin of at least 75%.

3) Burn Multiple. Many startups lose money to fund growth. But how do you know if you’re losing too much?

That’s where the Burn Multiple comes in. It measures how much money you burned in the prior month divided by how much new revenue you signed.

Seed stage companies should have a Burn Multiple of 3 or less. More on the burn multiple here and here.

4) Runway. This is how long you have until you run out of cash.

If you’re burning $50,000 a month and you have $300,000 in the bank, you have 6 months of runway.

I want a startup to have a bare minimum of 18 months of runway after the round closes. In today’s down market, I’d prefer to see at least 30 months runway.

This way, you have plenty of time to wait out a difficult market.

And if you’re “default alive” (break even or better), congrats! Burn Multiple and Runway don’t apply to you and you’re in an exceptionally strong position.

Is it hard to hit all these benchmarks? Absolutely!

That’s why I have to look at 150-250 companies to find a single investment. Performance at this level is rare.

But if you can hit these hurdles, you’ll find investors breaking down your door. And I’ll be one of them. 🙂

What key stats do you track as a founder or investor? Leave a comment at the bottom and let me know!

Have a great weekend everyone! 👋

More on tech:

How Startup Founders Get Scammed

The Founders: The Story of PayPal

Midas Speaks: Sequoia’s Don Valentine at Stanford GSB

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Photo: “drool dog” by sashafatcat is licensed under CC BY 2.0.

How Startup Founders Get Scammed

Startup founders sometimes tell me about mysterious “services” they’re thinking of paying for. That’s when I get out my megaphone and shout into their ear “Never pay for that!”


Get the blog before anyone else…subscribe!


Entrepreneurs are hopeful people. They have to be.

But some scammers take advantage of that optimism to make a buck. And sadly, they like to prey on women and minorities.

They know that these folks have a harder time raising money and may be more desperate.

Let’s avoid you getting scammed. Here are some things you should never pay for:

1) Pitching investors. Investors like me listen to pitches all day, every day.

We don’t expect to be paid for it. We get paid when we invest, you grow your company, and go public!

Never pay to go to a pitch event. Ever.

Real investors will never charge you. Anyone who’s charging you is pretending to be a VC and isn’t worth your time.

2) Investment. Some so-called venture funds will charge you mysterious fees to get the investment.

Sometimes it’s a “syndication fee,” whatever that is. Sometimes they choose another name.

It’s like the Nigerian prince who needs $300 so $1 million will be released to him.

Whether it’s a Nigerian prince or a bogus VC fund, you should tell them to talk to the hand.

There are real costs to making investments: SPV incorporation fees, wire fees, etc.

But guess who should be paying those? The investors!

3) “Advice”. Don’t give up cash or precious equity for some amorphous “advice.”

If you want to give advisor shares to someone who has put cash into your company, feel free. Just be sure they’re spending at least several hours a month on your startup.

But if someone doesn’t believe in your company enough to put their own cash on the line, why would they want to be an advisor?

4) Introductions. Some scammers want to charge you for introductions to some magical list of investors.

This is a cousin to #1, the pay to pitch. And you should run away from both, as fast as you can.

Let me tell you how intros really work in venture capital. I invest in a company, then I e-mail my friends at a few funds I regularly co-invest with.

I tell them what I’m investing in and why. And I ask if they want to meet the founder.

How much do I charge the founder for this? Zero!

It’s part of the value I try to add at every company I invest in. It helps me win deals and helps the companies I’ve bet on.

I don’t want to see any of you guys get scammed. So be on the lookout for vultures circling trying to peck at your precious capital.

Real investors are happy to meet with you and help out for free. That’s what they do.

Anyone else is a clown who isn’t worth your time.

What other scams have you seen in startupland? Leave a comment at the bottom and let me know!

More on tech:

The Founders: The Story of PayPal

Why Drone Delivery Will Be an Awesome Business

Giving Investors What They Need to Say Yes

Get the blog before anyone else…subscribe!

Save Money on Stuff I Use:

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Photo: “The scam truck” by jepoirrier is licensed under CC BY-SA 2.0.

Giving Investors What They Need to Say Yes

I see a lot of awesome startup ideas every day, from plant-based salami to rocket fuels. These entrepreneurs know how to build great businesses, but often have no idea how to communicate with investors.


Get the blog before anyone else…subscribe!


Some founders give me tons of details — but none of the facts I actually need! Let’s go through what information investors need in order to give you that “yes”:

1) Explain exactly what your business does, succinctly. If if takes paragraphs to explain, you’re doing it wrong.

You should be able to explain what you do in a single sentence. For example: “Uber makes it easy for you to get a ride anywhere, anytime.”

If an investor can’t understand what you do and why, he isn’t going to invest.

2) Show revenue clearly. You would not believe how many people get this wrong.

Report your revenue month by month. Don’t just tell investors your last month’s revenue, or add all your revenue up and report it as a single number.

Investors want to see a trend. Are you growing fast, or just treading water?

Showing revenue broken down properly allows them to see that trend.

Here’s an example of how it should look. Give investors both a table and a graph, so they can see exact numbers and visualize the trend.

Bonus points if you calculate your monthly growth rate using a tool like this. At that point, you’ve done everything but write the check for them!

That’s what you want to do: make it easy for them to say “yes.”

3) Be clear about terms and legal.

If you have a lead investor, the terms and valuation will already be set. Be sure to communicate those to every investor you speak with, so they know what they’re agreeing to.

If you don’t have a lead, be sure investors know that too. Some investors, like me, do not lead rounds.

Others only lead rounds, so the fact that you don’t have a lead is actually a positive for them!

Also, clearly explain how you’re incorporated. Most investors only want to invest in Delaware C Corporations.

If you can give this basic info on what the company does, how it’s performing, and how the investment will work, you will have answered most questions right off the bat. When a founder has her presentation dialed in like that, I assume she is experienced and highly competent.

Remember, if investors don’t have the info they need, the default decision is always no.

Make sure that doesn’t happen to you! Present the key facts clearly so you’ll have the greatest chance of success.

Where do you find founders struggling to communicate with investors? Leave a comment at the bottom and let me know!

More on tech:

I Pitched a Robot VC

How Wordcab Will Change Business Communication Forever

The Last Fast Food Worker in California

Get the blog before anyone else…subscribe!

Save Money on Stuff I Use:

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Photo: “100 Dollar Bills” by 401(K) 2013 is licensed under CC BY-SA 2.0.

Startups’ Secret Weapon for Recruiting: Their Investors

One of the hardest things for any startup is attracting great employees. But new research from Harvard Business School points to a shortcut:

New research finds that job seekers are two-thirds more likely to apply to a startup if they know it is backed by a top venture capital (VC) investor, according to a new study coauthored by Harvard Business School Professor Shai Bernstein.

To test if the name of a top investor makes a difference in luring applicants, the researchers collaborated with AngelList Talent, an online recruitment platform, to conduct a randomized experiment on the platform.

The researchers found that exposure to information that a startup is backed by top VC investors increased job applications dramatically—by 67 percent.

“The same startup receives significantly more interest from potential employees when it is represented with the top investor badge than when it is not,” they write.

Early stage startups benefited the most. For companies at Series B and later, having top investors had less impact on applicant interest.

This points to a great strategy for startups with top investors: shouting the investors’ names from the rooftops.

If you have Sequoia, Benchmark, or any top firm on your cap table, put it in every job ad. Have your employees mention it when they recruit their friends.

Another great way to land top prospects is press coverage. PayPal got a huge recruiting boost from media reports in its early days.

And unlike capital from top investors, media coverage is available to anyone with a great story to tell.

Founders: how do you recruit top employees? Investors: what recruiting strategies are working well for your portfolio companies?

Leave a comment at the bottom and let me know!

More on tech:

Adam Neumann Was Their Biggest Investor — Now He’s Their Biggest Competitor

John Doerr’s Biggest Mistake

Talking Startup Fundraising with Travis King of Launch Point Labs

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Photo: “Sequoia Capital” by isriya is licensed under CC BY-NC 2.0.

Talking Startup Fundraising with Travis King of Launch Point Labs

How do angels and VC’s choose companies to invest in? Why do some founders struggle in fundraising?


Get the blog before anyone else…subscribe!


I dug into all that and more recently with Travis King, co-founder of Launch Point Labs. Some interesting points:

2:42: How I choose companies to invest in

6:57: How you can work backwards from the customer to the product

8:44: How much help do founders need? And the ways I try to add value for startups.

14:55: Today’s market slowdown and how I’m adapting.

17:16: How angel investors can get burned.

19:27: Lessons from the SaaS OG, Jason Lemkin

23:35: Why some founders have unrealistic expectations about fundraising.

27:26: Why there’s no substitute for traction

28:49: Why I’m being brutally honest with founders in today’s tough market

What questions do you have? What did we miss?

Leave a comment at the bottom and let me know!

Have a great weekend everyone! 👋🥳🎉

More on tech:

Record Funding for Climate Startups in Q2

Angels Flocking to DTC Brands: Mistake or Opportunity?

Will Adam Neumann Change Housing Forever?

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Angels Flocking to DTC Brands: Mistake or Opportunity?

Angel investors are flocking to Direct to Consumer (DTC) brands, even as venture firms have pulled back. From a report out this morning in Business Insider:

A growing class of angel investors is now swooping in to write the early checks fledgling DTC-brand founders need to bring their products to market. While individual angel investors may not offer the large sums of cash or the pedigree and connections a blue-chip Silicon Valley VC can provide, they offer other advantages, DTC founders told Insider. Perhaps most importantly, they are willing to open their checkbooks to untested new brands as VCs analyze them more critically.

“If you think about the early floodgates of VC money going into DTC, it was because they were using a specific playbook,” Eunice Shin, a partner at Prophet, a DTC consultancy, said. “That playbook is broken.”

DTC brands like Peloton, Casper and Blue Apron used to be some of the best known names in tech. Now those companies are struggling and VC’s are wary.

So founders go where they can: to angels. Angels usually ask fewer questions and may be unaware of the headwinds DTC is facing.

Advertising, manufacturing and shipping costs have skyrocketed. Supply chains are a mess.

Things started to go very wrong for DTC last spring. Apple released an iOS update that let users stop ad tracking, and almost all did.

This meant apps like Facebook and Instagram had no idea who saw an ad.

The update was a gut punch for DTC brands. A woman’s underwear startup that only ships in the US could waste its precious ad dollars advertising to men in Germany.

Many startups saw their Customer Acquisition Cost (CAC) triple. What had been a solid business model no longer worked.

And it’s going to get even worse. Google also plans to limit ad tracking next year.

What happens when your advertising, manufacturing, and shipping costs skyrocket? You start bleeding red ink.

VC’s are usually familiar with these problems facing DTC. Unfortunately, many angels are not.

As scary as things may be in DTC land, a few companies have bucked the trend.

Eight Sleep, which produces a heating and cooling cover for mattresses, is one great example. The cooler surface can greatly improve your sleep.

Eight Sleep produces a highly differentiated and expensive product. Its mattress covers start at $1,845, and its mattresses are even more.

This is the kind of consumer product that can still be a great business.

It’s expensive enough to absorb a higher CAC. And it doesn’t have to fight it out with a dozen competitors.

Still, I prefer SaaS. You’re not dependent on online ads, customers tend to stick around, and your product is infinitely scalable without any messy “stuff.”

DTC brands are sexy.

A yummy steak from Blue Apron is a lot more exciting than a SaaS revenue retention product. And it’s a service you could use yourself, unlike most SaaS products.

But if we want to make returns, we have to focus on what’s financially viable, not just what’s exciting.

What do you think about the DTC industry today? Leave a comment at the bottom and let me know!

And now, I’m off to invest in some more boring SaaS companies. 🙂

P.S. There will be no blog tomorrow. I have an appointment. See you Thursday!

More on tech:

Will Adam Neumann Change Housing Forever?

Seed Valuations Are…Up?

$500 Billion in Venture Capital is Sitting on the Sidelines

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor.

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

The Startup Glossary

I had wandered into a foreign land. The people spoke a strange tongue…CAC, LTV, SMB.

How could I join their tribe and learn their ways? I consulted the oracle: Google.


Get the blog before anyone else…subscribe!


The world of startups has a language all its own. When I started angel investing last spring, I found it nearly impenetrable.

Here are some of the terms I hear, and use, the most:

ARR = Annual Recurring Revenue. If you have subscription-based revenue, this is how much revenue you would make from those subscriptions in a year.

Burn Multiple = Measures capital efficiency by comparing how much money you’re losing to how much you’re growing. More here.

CAC = Customer Acquisition Cost. Measures what it costs to get a new customer. If you have 10 customers and spent $1,000 to get them, your CAC is $100. CAC is also measured by channel (Instagram, YouTube, etc.). More here.

Cohort = Customers who signed up at a particular time, usually a calendar month. You look at that group of customers over time and see how many stayed, how many left, etc.

Churn = Customers leaving you. Churn is often measured per cohort to understand which customers are leaving and which ones are staying.

D2C = Direct to Consumer. This is a type of startup that sells a physical product to consumers — think Peloton. It’s a tough business and is avoided by most investors today.

Gross Margin = Your profit margin on each additional sale. You take the revenue and subtract costs like customer support, CAC, etc. This gives you a sense of how much profit you could make as you scale and fixed costs become less of a burden.

Land and Expand = Doing more business with existing customers, like selling them more seats for your software. Closely related to NRR (below).

LTV = Lifetime Value. Measures how much money you can expect to make from a customer. This should usually be 3 times your CAC or more. More on LTV here.

MoM = Month over month. Let’s say you doubled ARR from 2020 to 2021. Your monthly growth would be 6% MoM.

MRR = Monthly Recurring Revenue. The monthly equivalent of ARR.

NRR = Net Revenue Retention. Measures how much new revenue you’re getting from existing customers minus what you lose in churn. Especially relevant for SaaS businesses. Also called Net Dollar Retention (NDR). More here.

PMF = Product Market Fit. Do customers want what you’re selling? If so, you have it.

SMB = Small and Medium Sized Businesses. This usually means businesses with 1,000 employees or less. The term is used to describe potential customers.

SaaS = Software as a Service. Software that customers pay for by subscription. SaaS usually refers to business software, but consumer SaaS is also an important category. These are consumer subscription companies like Calm.

YoY = Year over Year (similar to MoM above).

If you know these terms, life in startupland gets a lot easier! They also provide you with helpful ways to understand a business.

What did I leave out? Leave a comment at the bottom and let me know!

More on tech:

The Top 5 Things I’ve Learned from Angel Investing

Inside the Seed Funding Slowdown

Twilight of the Quick Delivery Startups

Get the blog before anyone else…subscribe!

If you found this post interesting, please share it on Twitter/Reddit/etc. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

Misfits Market

I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor.

I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $15 on your first order. 

Photo by Romain Vignes on Unsplash