00:43:52 · Joubin Mirzadegan, Immad Akhund
[00:43:52] S1: Mhmm. And so I guess the counter argument... Let's take the VC point aside, because obviously, I agree it's self serving. Yeah. But the argument that they would make. Yep. Which in some ways maybe hold some water in my mind is like you limit your paths. For example, okay, let me just take like, okay, if you raise at 1.6 Mhmm. And the business didn't do as well as it has, like, obviously now that decision in hindsight looks great because you took less dilution and you've raised three x that valuation. Yep. But if that wasn't true [00:44:27] S0: Yeah. [00:44:28] S1: And you, let's just say you raised it, I don't know, 800,000,000 instead, and you got acquired for a billion. Mhmm. Because it was, you know, it still made sense for an acquisition. That'd be like one argument. Argument two is the raising at a extremely high price puts in some ways, especially in B2B, like enterprise, like inordinate amount of pressure where there is, especially on go to market, like headcount equals revenue. And if you've signed up for this giant valuation, you're probably signing up for a bigger number than you otherwise would have, which maybe the market may or may not be able to sustain. And now you start doing unnatural things.
00:44:28 · Joubin Mirzadegan, Immad Akhund
[00:44:28] S1: And you, let's just say you raised it, I don't know, 800,000,000 instead, and you got acquired for a billion. Mhmm. Because it was, you know, it still made sense for an acquisition. That'd be like one argument. Argument two is the raising at a extremely high price puts in some ways, especially in B2B, like enterprise, like inordinate amount of pressure where there is, especially on go to market, like headcount equals revenue. And if you've signed up for this giant valuation, you're probably signing up for a bigger number than you otherwise would have, which maybe the market may or may not be able to sustain. And now you start doing unnatural things. [00:45:19] S0: I think it goes back to my previous point that the founder's always gonna take it. So you just have to manage around it. Right? So to me, the M and A point, I don't think it matters too much. I mean, for most PCs, whether they get 1.2 X or one x, which is like the preference stack, it's like basically the same. So, you know, it's like... You're basically in like some sort of failure scenario. I'm not worried about the VC. I'm saying [00:45:41] S1: more from the founder perspective. [00:45:42] S0: Even the founder. It doesn't matter. Like, [00:45:43] S1: it's Yeah. Yeah.
00:45:43 · Joubin Mirzadegan, Immad Akhund
[00:45:43] S1: it's Yeah. Yeah. [00:45:44] S0: Like, again, if you're not spending the money, then like actually, you know, generally speaking, M and As sets a price, and then they add the money on top. If you've got more money in the bank, you've got a higher valuation, really. So I don't think M and A is an issue. I think down rounds are more often an issue, and it is quite hard to do down rounds. In really frothy markets, when the markets turn, people actually... I don't think... At least my experience hasn't been their mind doing down rounds. There was a bunch of down rounds for like actually pretty good companies in '23 and '24, and everyone was like, okay, know, everyone acknowledged '21 was crazy, and that it wasn't really a down round. This was just like the right size round. So I think it's manageable, again, if you're not spending all the money. If you're spending all the money and you've overspend money and you didn't come up with like any productive outcome from it, like, that's always gonna be a problem. And that ties into my last thing. I think you need really good discipline on spending money. So nobody has that. You say... [00:46:39] S1: Like, do you... Like, don't you think you're... [00:46:41] S0: You should. [00:46:41] S1: I just feel like most founders [00:46:43] S0: You know, there's this statement [00:46:44] S1: that's their burn proportionally. I...
00:46:47 · Immad Akhund
[00:46:47] S0: There's a statement that, like, VCs like saying, that, like, founders or CEOs have to be good capital allocators. And, this is just, like, a co part of that. Like, how do you spend money? And, like, let's just take sales and marketing, or let's just take sales, I think it's easier to do that, right? You just have to understand, if you hire five salespeople, how quickly will they pay back their salary? Right? I think that's the math equation, in my opinion. And like, you pick the right target, and to me, if you have product market fit and it's a good target, it should be around one year. So if you are spending money, and you're growing the sales team and they're keeping to that kind of one year target, you're like pretty good. Like, it basically means you, you know, if you spend 10,000,000 on sales, you have 10,000,000 more in revenue. If you spend 50,000,000 sales, you have 50,000,000 in ARR or whatever, which I think is a pretty good math equation. Like, you'll have... I would be shocked if you can't raise a future round, that's your math equation. Now, what happens in these frothy markets is people like go way too heavy in sales and marketing, their payback ends up being three years or five years, and no one's going to fund something with like a three to five year payback on spend. Or like, yeah, whatever. Some negative thing happens there. But like, you just have to have like some discipline about it. It's not like you know, if you have, like, zero salespeople, you don't hire 50 salespeople. You hire two people, and then you hire five, and then you, like, make sure you're managing against that payback. But, yeah, it's not... And again, if you went to any investor and any board meeting and you're like, hey, this is how we're thinking about sales. This is the payback we're targeting. This is how we're gonna ramp up, and we're gonna measure the payback every month, and we're report that to you. You know, no one's gonna be like, are you crazy? Why aren't you spending all this money? Like, I just don't understand the situation where, like, someone's just like, I raise more, therefore, I burn more. Like, I don't know. Like, what are they doing? Like, that's not the job. Like, the job is like going, like, every dollar you spend, you should be getting ROI from it. And if you can't justify ROI, don't spend the money. Yeah. I just...
00:48:50 · Immad Akhund, Joubin Mirzadegan
I think whether you raise more or less, you're gonna have to have a math equation that makes sense. Whether it's sales, performance marketing, partnerships, whatever. On the GTM side, you're gonna have to have a math equation that makes sense. And then on the engineering side, I think we've proven over time that more engineers does not mean more productivity. Right? Like, think that's... AI helps even more with that. But but, yeah, it's... I don't think it's ever been the case that, you know, 10 x more engineers means 10 x more productivity. [00:49:19] S1: What was your... Maybe can you do a year by year roughly head count from founding to year one, year two? [00:49:27] S0: We had like one year where it was three x, but most of the time it's been about 40% more. So it's like, you know, we started with eight... We launched with nine employees actually in 2019, and then when COVID happened, we were about 30 ish. [00:49:39] S1: So a year from nine to 30?
00:49:39 · Joubin Mirzadegan, Immad Akhund
[00:49:39] S1: So a year from nine to 30? [00:49:41] S0: Nine to 30. I wanna say like maybe 60, and then one forty. That was like a big year, like 2021. We also grew more than four x. And then after that, I think it was about 40% every year. We're about 1,300 now. We actually found that that year where we went like three x or four x was like one of the worst years in terms of like, just like a very painful year in terms of scaling. And actually, you know, when you grow that fast, you don't actually get much more productive because, like, all your good people are like spending all their time on engineering, hiring or or training, and obviously you make some mishires and that kind of stuff. But 40% is what we've grown at fairly consistently, I think, for the last three, four years. And that's a fairly sustainable pace of headcount growth, at least. [00:50:29] S1: Yeah. That feels good to you. Yeah. When founders come to you, like you said, you've done 300 plus investments and all your friends are founders and you spend a lot of time with people in the in the trenches. What are they generally worried about, struggling with? What are the things that you're like, dad, that they wanna pick your brain on?