Former 3x CFO turned Cube CEO & Co-founder Christina Ross joined Mayfield Partner Rajeev Batra at TechCrunch Disrupt 2022 for a candid conversation on what startups need to survive today, and how financial planning can help them emerge stronger on the other side. Here are some key takeaways.
Engage potential customers to iterate your way to success:
It’s essential your product is a painkiller not a vitamin. For Christina, this meant figuring out who her ideal user was and building trust and rapport with them. Through consistent conversations with potential customers Christina was able to gather meaningful feedback on her product. Rajeev reflected on Cube’s journey by remembering that even when Christina had confirmation bias she continued to test her idea. This became a key part of setting herself up for a great Series A funding round despite the fact the pandemic was in full swing. Eventually Christina began to ask her potential customers if they would consider paying for Cube’s spreadsheet-native FP&A software. When she started receiving consistent yeses, she knew it was time to launch. As Rajeev says, a product that people won’t pay for is not a product, it’s just technology.
Manage your capital to your goals:
In recessionary environments there tends to be pressure to immediately cut costs because, as Christina has said, cash is king and runway is queen. However Rajeev warns that you cannot cut your way to success, you have to manage your way to building a great company. You should think of capital as something to be managed to a goal. When managing for growth, it’s useful to keep the rule of 40 in mind: your revenue growth rate plus profit margin should be equal to or more than 40%. During challenging financial times, Christina advises finance leaders and founders to take a look at their strategic priorities and focus on one or two only, then manage your capital to these milestones, as many startups die of indigestion, not starvation.
Build a zone of trust with your investors:
At Mayfield we invest in long-term relationships with founders on their company-building journeys from inception to iconic. Spending time to build trusting relationships with your investors ensures that as a founder you have someone to lean on for advice, which is especially important when times get tough. The path of an entrepreneur can be a lonely one, so set yourself up for success by building strong relationships that can withstand the ups and downs of the company building journey.