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Planning for Series A Success:
- Detailed execution plans can prevent overwhelm. Raul shares a framework for prioritizing tasks: focus on two key items at a time while de-prioritizing others.
- Start with foundational tasks like defining your Ideal Customer Profile (ICP) before scaling processes like CRM systems or advanced forecasting.
Saying No vs. Scaling Gradually:
- Toni and Raul discuss why outright rejection of ideas isn’t always feasible. Instead, adopt a level-based approach to progress incrementally while maintaining focus on the core.
Revenue Engine and Predictability:
- VCs value predictability in growth. Toni explains the importance of demonstrating a clear input-output relationship for scaling revenue efficiently from $2M to $10M ARR.
- Transparency around risks and uncertainties can foster better investor relationships and help control the narrative during funding discussions.
Execution and Performance:
- Experimentation is crucial, but commitment matters. Raul warns against superficial efforts (e.g., half-hearted PLG attempts) and advocates for thorough exploration of growth channels.
- The value of learning what works—and what doesn’t—on the path to Series A.
Creators and Guests
What is Revenue Brothers?
What happens when a VC and a CEO come together?
– They nerd out about all things revenue. And they don’t always agree.
Raul Porojan of Project A Ventures and Toni Hohlbein of Growblocks are the Super Revenue Brothers. In every episode they dissect and debate current issues in B2B SaaS, and offer solutions on how to solve them
No matter if you’re an early-stage startup or a scaling unicorn – you’ll always learn something new.
Introduction
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Raul: ~Um, ~[00:00:00] I see even junior investment managers who've never been in an [00:00:03] operational role, starting to understand. The revenue [00:00:06] formula, starting to understand how to look at a CRM dashboard, [00:00:09] starting to understand what a, what an SDR is and [00:00:12] isn't. , if you're sitting in front of a VC as a [00:00:15] commercial founder or a CRO, you can't be the least [00:00:18] educated person about that kind of thing in the room.
Raul: That's probably [00:00:21] not going to turn out well for you.
Toni: So, [00:00:24] um, I think what we want to talk about [00:00:27] today is pretty much how to raise a [00:00:30] series a in 2025.
Raul: Let's do it.
Toni: ~Um, ~
Current Market Trends and Insights
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Toni: so, ~and ~I think before [00:00:33] we jump into, ~um, this ~specific points that [00:00:36] operation probably need to be in place for you to have a [00:00:39] successful round, just wanted to kind of maybe give some [00:00:42] background information, some ecosystem, ~uh, ~information here. I had a [00:00:45] chat with Peter Walker yesterday. He's, ~um, ~the [00:00:48] analytics guy from Carta, ~the, ~the cap table tool.
Toni: You've probably seen [00:00:51] his comment as a post on LinkedIn, ~uh, ~previously, [00:00:54] and I think they have like 45, 000 [00:00:57] companies that they're servicing, and this is what they're [00:01:00] using to come up with those numbers that I'm going to ~kind of ~recite right now, or trends for [00:01:03] that. So number one. Good. All of them are actually [00:01:06] good trends.
Toni: Number one, ~um, ~we're probably going to see more [00:01:09] unicorns being minted in 24 than in 23. So [00:01:12] we're on an upwards trajectory. We're not back in crazy [00:01:15] 21 land, but we're kind of on an upwards trajectory and he [00:01:18] expects that to grow in 25. We are [00:01:21] expecting a bunch more tech IPOs to happen in [00:01:24] 25. ~Um, ~there's like, I think a thousand companies are backed [00:01:27] up.
Toni: Some of them will probably have ~like ~died in terms of being an [00:01:30] IPO potential, but the rest will actually ~kind of, uh, ~be able to [00:01:33] go public in 2025, which is ~kind of ~pretty good news. [00:01:36] We are seeing that while, ~um, ~pre seed [00:01:39] seed series a. Was kind of insulated [00:01:42] from this market meltdown to a ~large degree or ~larger degree [00:01:45] than, ~than you might, you know, then ~the latest stage rounds.
Toni: What we are now seeing is that [00:01:48] all of them are starting to come up again. Right. The [00:01:51] especially, ~uh, ~b, c, D rounds are bouncing back [00:01:54] a lot more and we're seeing them actually coming back quite [00:01:57] nicely while, ~um, ~pre-seed, seed and, and you know, [00:02:00] series A is kind of in the middle. It's kind of a mixed message there.
Toni: [00:02:03] It's kind of starting to bounce actually up again. Right. ~One, ~one thing [00:02:06] that was a little bit negative was like the [00:02:09] previously, the idea was always that every 18 to 24 [00:02:12] month, ~um, ~company would. You know, raise another round and then [00:02:15] kind of do another letter in the alphabet. ~Um, ~that is not true [00:02:18] anymore.
Toni: It's not 18 to 24 months. We're now looking more [00:02:21] into like, ~uh, ~you know, he said a thousand days. ~Uh, it's a bit almost three years. ~This is what we're [00:02:24] looking now as an average between rounds, right? And this is [00:02:27] just something people need to, ~um, uh, just ~plan for, right? If you [00:02:30] raise 10 million, suddenly those 10 million to be stretched in three years and not in [00:02:33] two years, so that will impact your ability to deploy and ~kind of, uh, ~[00:02:36] rack up those revenues and so forth, right?
Toni: I think this [00:02:39] is just a little bit in terms of like background, what to know [00:02:42] about, ~um, ~the ecosystem that's going on right now. But Raul, ~um, ~[00:02:45] I think what we wanted to jump into next is like, okay, cool. They have [00:02:48] a couple of positive signs in the market themselves, [00:02:51] but what do I need to do in order to be a Series A [00:02:54] candidate, ~um, you know, ~in 2025?
Framework for Series A Success
---
Raul: I have a, [00:02:57] we should catchphrase that I have a framework for that. [00:03:00] And, ~uh, ~I have one that actually has [00:03:03] helped quite a couple of founders and that I've worked with this [00:03:06] year in kind of executing [00:03:09] a road to series a and, ~uh, ~it's kind of a, [00:03:12] I'm with three companies right now working on exactly that road to [00:03:15] series eight and what does that encompass?
Raul: It's kind of a framework we're [00:03:18] using. It's called the five piece and, ~um, ~they're kind of [00:03:21] sequential, but they're also go in when should you start? What? [00:03:24]
Understanding Business Physics
---
Raul: And, ~uh, ~P number one is [00:03:27] physics. You know, I like that one. And [00:03:30] I actually think that this is the most important one in the beginning. It [00:03:33] alludes to a couple of things, and there's quite a bit of work to be done.
Raul: [00:03:36] But you have to start out by understanding what business are you actually building, [00:03:39] and it could be that you're just have [00:03:42] a rudimentary understanding of kind of the revenue model and the business [00:03:45] model and the go to market model and what that actually is, but kind of [00:03:48] understand ~the, ~the laws of nature.
Raul: ~Of what you're doing there, right? ~Is it an [00:03:51] AI play right now? Is it ~a, ~an AI with a PLG motion right now? Is [00:03:54] it a SAS, but kind of a traditional SAS with a sales [00:03:57] motion? Are you combining different things together? Understand these things [00:04:00] and educate yourself if you [00:04:03] haven't yet and ~uh, ~apply them to your company.
Raul: Right. ~Um, ~these are [00:04:06] also going to be very important later in step five, because you have to explain [00:04:09] them to a. ~Uh, ~we see quite well as well. And so [00:04:12] part of the journey of wherever you're at, let's say you have 12, 18 [00:04:15] months left to runway is understanding these physics [00:04:18] very well, and then following that up with [00:04:21] the next steps.
Toni: ~Why, ~why is it so important to understand the [00:04:24] physics kind of, why is it important to understand that I'm a PLG company [00:04:27] versus a sales led company versus [00:04:30] whatever.
Raul: ~Uh, ~I don't think necessarily you have to lock yourself in as a PLG or [00:04:33] a sales led motion company. That's actually contrary to what I think, [00:04:36] but I think it's good to understand what these mean [00:04:39] and to be. fluent [00:04:42] in that language and to be able to communicate that to a VC. [00:04:45] And part of that, ~uh, ~is because HAPBCs have just [00:04:48] stepped up their game tremendously in the last years when it comes [00:04:51] to their understanding of that.
Raul: ~Um, ~I see even junior [00:04:54] investment managers who've never been in an operational role, starting to [00:04:57] understand. The revenue formula, starting to understand how to [00:05:00] look at a CRM dashboard, starting to understand what a, [00:05:03] what an SDR is and isn't. ~And, um, ~you just have to step up your game a [00:05:06] little bit. Like you can't be, if you're sitting in front of a [00:05:09] VC as a commercial founder or a CRO, [00:05:12] you can't be the least educated person about that [00:05:15] kind of thing in the room.
Raul: That's probably not going to turn out well for you. I've [00:05:18] seen this situation. ~Um, ~but also because they apply to the next [00:05:21] steps.
Strategic Planning for Series A
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Raul: And so step number two is plan. [00:05:24] That's the second P right? So physics and plan. ~And, um, obviously, right. It's just, ~you have to [00:05:27] plan what's going to happen for the next 18, 12 to 24 [00:05:30] months.
Raul: But there's more to that. I actually have three [00:05:33] levels of planning. I go through with the people. ~Um, and ~plan number one is more of a [00:05:36] strategic plan. So let's figure this out and [00:05:39] kind of reverse engineer it. What kind of serious [00:05:42] aid could we be getting? What scenarios do we have? How would that look? This [00:05:45] is.
Raul: Based quite strongly off the business plan, but then [00:05:48] there's some assumptions on how this could look like, right? So this is quite [00:05:51] basic. And then number two, which is also still quite basic is [00:05:54] let's reverse engineer that to, what does [00:05:57] that mean for kind of the funnel and how to, how would that evolve over [00:06:00] the markets are financial [00:06:03] indicators.
Raul: ~Um, ~and then also, what does that mean for, when do we need a [00:06:06] salesperson? How many opportunities do we need? At which time do we just [00:06:09] close a big enterprise account? Would that be enough? And how does, [00:06:12] how's it going to evolve over time?
Toni: would you? I mean, I'm not sure what's kind [00:06:15] of the rest with the four five piece. I'm [00:06:18] just as excited as everyone else ~to you ~to kind of finish [00:06:21] this. But you know, when you talk about planning, there's [00:06:24] also kind of the idea of having a target, right? ~Kind of where, ~where do you actually [00:06:27] need to end in terms of revenue?
Toni: And, ~um, You~ where do you think [00:06:30] that is these days for a series? A kind of, where do you need to be an [00:06:33] ARR in order to raise a series a, ~um, ~in 2025
Raul: [00:06:36] Yeah. I think there's actually two answers for that. And so number [00:06:39] one is with AI and answer number two is without [00:06:42] AI. ~Um, ~because the guideposts are significantly different without [00:06:45] AI. You kind of have a product. You kind of have anyone interested [00:06:48] in that. Even if it's friends and family, you probably can raise [00:06:51] money right now.
Raul: Let's see if that still continues. [00:06:54] Without it, I do strongly think that you have to [00:06:57] at least get to, I mean, it depends on [00:07:00] what kind of series A you're looking for, but ~let's, ~let's assume just like a [00:07:03] SaaS, ~uh, ~company, I would be looking at at [00:07:06] least maybe 2 million to, if you can, [00:07:09] five. ~But that's quite, quite a,~
Toni: ~is crazy. ~Five is crazy high, ~but, ~but I think ~the, ~the [00:07:12] idea of like 1 million, I think that's [00:07:15] outdated. ~I think that's out there. ~I think people, yeah, I mean, ~can you raise a, ~can you raise an A with 1 million? [00:07:18] Is it possible? Yes, it's possible. Is it probable? [00:07:21] I'm not so sure. I think people are looking for 2 to [00:07:24] 3 million in a series A these days.
Toni: ~Um, ~and ~that's, ~that's I think [00:07:27] the goalpost. ~Um, ~and then you have kind of those two [00:07:30] items, right? You have the goalpost of let's just say 2 million or [00:07:33] 3 million or whatever ~you, ~you choose. You want to kind of go where you think you can go. [00:07:36] And the money is still left. And then those are the two [00:07:39] goalposts you need to land in between in order ~to, you know, to use, ~to do your planning, your [00:07:42] reverse planning, ~basically ~to today, and then what you need to do ~from, ~from there on.
Toni: ~Right. That's, ~that's why I'm [00:07:45] kind of just bringing it in there because the end [00:07:48] result of the plan ~is, is, ~is going to be a revenue number. And it's just really important to [00:07:51] kind of have a bit of a feel of where ~I think, or ~we think you [00:07:54] need
Raul: ~yeah. ~And not just a revenue number, but also we have in that [00:07:57] plan, we have the rule of 40. When will that achieved? If [00:08:00] ever, ~uh, ~we have the magic, ~uh, ~SAS number. ~Uh, if you know that one, ~when will that ~achieve ~[00:08:03] be achieved if ever NRR GRR. So [00:08:06] it's not that you have to satisfy all these numbers 200%, but [00:08:09] it's just a good idea of how could that evolve over [00:08:12] time?
Raul: ~Um, ~Obviously when you start raising is not when you're going to get the [00:08:15] money. So when is that point in time? How long do you think you're going to [00:08:18] need for raising that money, which leads us to the third [00:08:21] level of the plan, which is, and that actually takes the [00:08:24] longest, ~uh, ~is the execution plan. And, ~um, ~this is kind of an [00:08:27] exercise I've actually done with a couple of companies this year, ~by the way, if you're interested, hit me up.~
Raul: ~Um, ~it's quite ~a, ~an interesting [00:08:30] workshop, ~uh, ~where we get to kind of plan out the [00:08:33] next 12, 18, 24 months. And. [00:08:36] Write down everything that needs to happen. And obviously that [00:08:39] plan will change over time, but really we put it into simple terms, like [00:08:42] in November, these are the three things you're going to work on [00:08:45] in December.
Raul: You're going to continue with these three things and see if they're finished. ~Maybe you're going to add a fourth or not. ~[00:08:48] And one thing that I've seen be hugely beneficial to companies is [00:08:51] there's so much to be done. And if you listen to these podcasts [00:08:54] and advisors, there's always 30 things that [00:08:57] they tell you that you need to do.
Raul: On top of the 300 things you [00:09:00] already have to do. ~And ~one thing ~that ~that plan does and ~I, that ~I like to do with people [00:09:03] is just say, no, no, no, ~let's, ~let's just do two right now. And [00:09:06] then the two next ones and then the two next ones. [00:09:09] And here is a sensible order for that, that will actually work out if [00:09:12] you just execute these things.
Raul: And I find that that makes [00:09:15] people so happy. ~It's, ~it's crazy, like, ~uh, ~just not being [00:09:18] overwhelmed anymore and just having kind of a, okay, we [00:09:21] know that CRM is not going to be the first thing we need to fix. We first need to [00:09:24] maybe understand the ICP. Let's do that for a month or two. If [00:09:27] we're really fast, we do it in two weeks.
Raul: If we're really slow, we do it in two months. [00:09:30] But we know that if we do that, that is the first [00:09:33] domino. And then that is the next domino. And then there's the next one and the next [00:09:36] one and the next one. Obviously, [00:09:39] Nothing ever happens exactly according to plan. But what I find [00:09:42] is that it frees people up to actually be really fast in [00:09:45] execution as well, which is one of the wonderful side effects of [00:09:48] kind of saying no to 28 of these things and saying [00:09:51] yes to two things at a certain time.
Raul: So that's kind of the power ~of the, ~[00:09:54] of the plan, right? Number one, ~uh, ~highest level down to the [00:09:57] lowest level, which is the execution plan.
Toni: so ~I think. ~I think people have heard [00:10:00] this now. Like, oh, saying no is the most difficult thing. Most important thing. [00:10:03] How do you have some tips and tricks? How [00:10:06] people can weed out things?
Raul: Yes. [00:10:09] So I actually, ~I, I ~quite simplified it. There is [00:10:12] more to it, but we're trying to make a quick one here. ~Um, ~I [00:10:15] actually don't think it should be yes or no. ~I actually, ~I'm trying to [00:10:18] think in levels and let's say, for [00:10:21] example, ICP, you can do like a [00:10:24] fully fledged out design workshop with an agency and [00:10:27] like an expert for five days or two days or whatever, and [00:10:30] then go through the whole shebang.
Raul: Or you can just pick up a [00:10:33] quick framework and just apply that in two hours and [00:10:36] you have your first ICP and there's probably levels [00:10:39] to it. I actually have for a lot of these things mapped it out from level one to [00:10:42] level four or even five. ~And. ~What I think is important [00:10:45] is to just understand, okay, what is kind of the levels that you [00:10:48] need to be at for the next thing to make sense.
Raul: Um, [00:10:51] so just as a quick example, uh, you probably don't need to [00:10:54] focus very early on on super sophisticated [00:10:57] reporting and dashboarding. ~Um, ~you can probably just try to stay at level one. [00:11:00] Forecasting can probably stay quite, ~uh, ~lower sophistication [00:11:03] early on, but they need to be very accurate. And for them to be [00:11:06] very accurate, you have to be level two already.
Raul: Maybe you In [00:11:09] data accuracy, for example, or you have to be level two already [00:11:12] in your process. So, which is something that people don't [00:11:15] really try to do early on very often. So I think just [00:11:18] thinking in levels makes things more executionally driven [00:11:21] and makes things more realistic. ~Um, ~and just saying no is not [00:11:24] actually close to what the truth is because you can't really say [00:11:27] no.
Raul: ~Uh, ~a hundred percent to anything at a certain time, you just [00:11:30] have to understand, okay, either later or to a lower extent [00:11:33] and to a lower kind of satisfaction right now. And this is [00:11:36] what the execution plan is like. We actually write down, Hey, by the end [00:11:39] of Q4, your data will look like this. ~And ~by [00:11:42] the end of Q4, you should have understood this and this about the [00:11:45] ICP half a year later, we'll reach level two with ICP [00:11:48] and it's going to add this and this on top.
Toni: ~Nice. ~What's the [00:11:51] third P?
Raul: Power. [00:11:54] And, ~uh, ~obviously this is not this cause I need an alteration.
Revenue Engine and Predictability
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Raul: So [00:11:57] it's a P, ~um, ~but also basically what this alludes to [00:12:00] is the revenue engine, as I like to call it, [00:12:03] or revenue factory, as you like to call it. ~Um, ~which is [00:12:06] have a first rudimentary understanding of what that kind of [00:12:09] consists of. ~And, um, ~the reason is that I strongly believe [00:12:12] that more so than in the last years before, and I would actually like your [00:12:15] opinion on that as well ~is, um, ~You do have quite early [00:12:18] on already to show that [00:12:21] you can become a company that can grow [00:12:24] efficiently and that is going away from growth at all [00:12:27] costs and deliver to that we've talked about that in the last [00:12:30] episode is actually kind of having the engine in place [00:12:33] and showcasing that to a VC, not just showcasing it, but also [00:12:36] doing it, what do you think?
Raul: How important is that early on? ~Uh, ~[00:12:39] at least on a level of one basis.
Toni: So I think when we're [00:12:42] talking series a, ~um, ~and I think this is where it starts to [00:12:45] switch, ~uh, ~right. It kind of earlier on, it's less important, [00:12:48] but for me, you know, revenue engine, that's like, what is it [00:12:51] like exactly? I think ~in a, in a VC and ~in a series a context, [00:12:54] what this is for me is predictable [00:12:57] growth, predictability, predictable revenue or something like that.
Toni: [00:13:00] Right. And really what they're looking for is I give [00:13:03] you 10 million. How long is it going to take you [00:13:06] to convert this into a 10 million AR? Like that's really kind of [00:13:09] the question that they're having. And the more convincing you can [00:13:12] be on your ability to predict kind of [00:13:15] input output, I think the better it's [00:13:18] going to be for you to build this case.
Toni: Now, ~um, ~I also [00:13:21] think, ~you know, ~however you got to the 2 million will probably not be how you're going [00:13:24] to get to the 10 million, right? There's going to be a change [00:13:27] there. And I think having the foresight and being clear with [00:13:30] a VC that there will be some things that. Like you don't get [00:13:33] no, and it's a little bit like talking to a pre seed or [00:13:36] seed investor and being like, no, we know exactly how to get the product.[00:13:39]
Toni: I think that's bullshit. Like, you know what they know it. ~And ~I [00:13:42] think the same also goes for your predictable revenue engine, right? [00:13:45] Just that you're using those words and that you want to build it. [00:13:48] And that this is kind of the path forward. I think that's [00:13:51] going to earn you a lot of points, but it's going to also earn you a lot of [00:13:54] credibility and say like, Hey, those one or [00:13:57] two things are not clear yet to us, will we [00:14:00] be able to achieve that?
Toni: Will we be able to achieve [00:14:03] those win rates? Kind of, we'll be able to be hiring that kind of [00:14:06] talent at this rate and so forth. Right. You can point [00:14:09] out a couple of risky pieces, ~um, ~[00:14:12] that you think will, ~you know, ~need additional attention over the next coming [00:14:15] years. ~Um, ~but ultimately you want to build towards that [00:14:18] predictable revenue engine.
Raul: And I think that's what a good discussion with [00:14:21] the VC looks like. If you can tell if you see, Hey, look, these are [00:14:24] the risks we see based on understanding of [00:14:27] the, our engine. ~Um, ~this is what we have as a [00:14:30] contingency plan, right? This is what we do. If this doesn't work out, this is [00:14:33] kind of how it could work out in a scenario for that, this [00:14:36] is a well educated discussion.
Raul: And also one [00:14:39] that VCs maybe wouldn't have been able to have in [00:14:42] 2020.
Toni: ~kind of, and this is maybe a little bit more personal. ~I'm also starting to like the way of [00:14:45] engaging with VCs in a way you would almost sell them [00:14:48] like a stock. Like, I mean, that's also [00:14:51] what they're doing, but really ~kind of, you know, ~put yourself into the position of [00:14:54] being, I don't know, not Nvidia, but some other, some of the big, ~you know, ~[00:14:57] known company out there.
Toni: And you're selling some investors that [00:15:00] stock, right? And what you need to do is both like, Hey, [00:15:03] here are the upsides. Here's the cool thing that can happen. But here's [00:15:06] a list of risks and things that we don't know yet kind of what's going to [00:15:09] happen with that, ~right? And ~because ultimately this is what an investor will need to do.
Toni: [00:15:12] There's never only an upside There's always [00:15:15] also some kind of risk And if you don't give them [00:15:18] the risks what they will do is they will start looking for those [00:15:21] risks ~And ~and it might actually be in your favor to help them to [00:15:24] find the risk that you know You want them to find [00:15:27] instead of them coming up with some random stuff, right?
Toni: So if you're [00:15:30] talking about the revenue engine and the predictability of that ~Uh, ~[00:15:33] point out where you believe the weaknesses are, and yes, it's going [00:15:36] to be a great conversation, but also it's going to, ~you know, ~keep the investment [00:15:39] manager from ~digging and ~digging and digging and trying to come [00:15:42] up with something ~that, ~that might really be hurtful actually.[00:15:45]
Raul: That leads [00:15:48] to, by the way, ~um, ~this is where you use the things [00:15:51] you've learned in the first step, which is physics, right? If you understand those really well, [00:15:54] you can leverage them throughout the whole other piece.
Execution and Performance
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Raul: [00:15:57] The fourth one is perform, which is where you [00:16:00] actually start doing things. And there's also kind of a plan and an [00:16:03] idea of how that would look like.
Raul: ~Um, and I, ~I am a strong [00:16:06] believer in even early on. [00:16:09] Not necessarily going for the highest efficiency, because [00:16:12] I do think you also have to experiment with things, but [00:16:15] understanding what works and what doesn't is, to me, the [00:16:18] essence of a journey to a Series A. And, ~um, ~if [00:16:21] you're at a Series A without a proper understanding of [00:16:24] some channels you've tried, and if you were really lucky the [00:16:27] first thing you tried just worked out great, awesome, ~um, ~or some you [00:16:30] didn't try, Then you're probably going to have a hard time.
Raul: And, ~uh, ~what's also [00:16:33] really important to me is properly trying. [00:16:36] So I also see some companies who kind of, ~uh, ~half [00:16:39] assed, ~uh, ~try a half ass PLG approach, and then they're [00:16:42] like, Oh, PLG is not for us. Right? ~Uh, ~well, maybe it is, or maybe it is part [00:16:45] of what they're doing. ~that look like if you were setting it up properly.~
Raul: ~Um, ~and so that's what the, that performance part is about. It's kind of a, [00:16:48] the experimentation and what should we try to achieve [00:16:51] and how do we work against the plan there? ~Uh, ~and it's also really [00:16:54] a lot about, ~uh, ~just basic [00:16:57] groundwork. So, ~uh, ~just as an, as an example, one of the companies I [00:17:00] work with right now is actually not stuck in performance, but it's [00:17:03] focusing very strongly on this right now.
Raul: We're just helping the [00:17:06] founders very strongly become better salespeople. So they're, [00:17:09] they're really trying to build up their founder, [00:17:12] founder, let's sorry, founder sales, the [00:17:15] founder, let's sales. And, um, they [00:17:18] have to become better at that. They have to become better at kind of like [00:17:21] operationalizing and explaining to people [00:17:24] and their first sales hires.
Raul: Well, what is it that I actually [00:17:27] did there and why does this work? And why does it not work and also become better [00:17:30] examples for the people?
Toni: I think one really important [00:17:33] thing here is. ~Um, ~differentiating between [00:17:36] exploration and exploitation. Like it's, and [00:17:39] really seeing this ~as, ~as a layered approach. ~Um, ~and if you do something, [00:17:42] you have to experiment with something, ~um, ~that ~has a different, I mean, obviously this ~has a different [00:17:45] efficiency to it than some of the other stuff.
Toni: ~Um, and I mean, ~you might [00:17:48] be at a million or two or three or somewhere on the way [00:17:51] there, ~uh, ~you might be operating in different markets. You might have already [00:17:54] different motions going on. And I think what's really important ~for, um, ~[00:17:57] for your VC case is especially if your [00:18:00] overall pay break number is bad, which could totally happen [00:18:03] because ~you see, you know, ~You're still not at the point I think where the CAG payback [00:18:06] number is really, really important.
Toni: ~I don't, ~I don't believe that if you're like a [00:18:09] million or two, it's not the most important thing you need to hunt kind of [00:18:12] getting that CAG payback number down. ~Um, ~but [00:18:15] they will ask for it. Like they totally will. And you know, maybe [00:18:18] it's a shitty number. Maybe it's a number that's really not good for [00:18:21] you.
Toni: Like maybe it's a 20 or something like this. ~Right. ~And what you [00:18:24] then want to do is actually want to be able to, ~um, ~[00:18:27] peel this number apart and be like, Hey, listen. ~Uh, ~[00:18:30] most of our money actually comes from this thing over here. And [00:18:33] we had like 13, 14, 15 territory, which is maybe [00:18:36] okay, like maybe okay for right now.
Toni: And you [00:18:39] see some ways to improve it. But then we had a couple of [00:18:42] experiments going and ~you know what, ~they actually didn't result in any revenue. And that's [00:18:45] why, that's why overall, if you put everything into one basket, [00:18:48] it's landing in a shitty number, but actually the core [00:18:51] of what we've been building actually is working kind of okay already.
Toni: ~Right. And again, ~[00:18:54] right. When you, especially it's years and later. [00:18:57] And it will be more and more numbers game, you know, yes, you will [00:19:00] have you know The general partner that you're talking to that maybe was a [00:19:03] previous entrepreneur and kind of knows how this thing works [00:19:06] But the person you're going to be interacting with most of the time has got to [00:19:09] be this I don't know this investment manager [00:19:12] associate that, you know, came from LSE and has never seen the company [00:19:15] from the inside, right.
Toni: And they're going to be drilling you on the numbers. [00:19:18] And if you then have an approach like, yes, this kick paper [00:19:21] number is shit, but, you know, peeling the onion, you know, ~uh, ~[00:19:24] peeling the onion here, you can actually see that there's one layer [00:19:27] is really working well. There's other layers dragging us down.
Toni: [00:19:30] Right. ~And, ~and think about these kinds of things in your [00:19:33] performance. both on how you explain it to the VC, [00:19:36] but also where you focus ~your focus, your, ~your efforts, you know, where you really kind of [00:19:39] execute on the performance point here that, that, ~uh, ~[00:19:42] role brought up.
Raul: And I [00:19:45] agree wonderfully with exactly what you just said before. I want to pick up on [00:19:48] that, ~um, ~exploitation versus exploration. [00:19:51] not necessarily a problem for a C or C if your cock doesn't [00:19:54] look great, or if it's, if the period is too long or the number [00:19:57] is too high, it's not, it's not necessarily the problem. [00:20:00] What is helpful. And a tremendously [00:20:03] good discussion with this VC is why is it that way? [00:20:06] What contributed to that? What led us this way? And how do we see a [00:20:09] way to a company that can achieve a good cut? That's [00:20:12] what a VC cares about. People are too interested in what is [00:20:15] happening on right now. A VC is always forward looking.
Raul: They are [00:20:18] not going to invest in you if you're not a possible unicorn and they [00:20:21] want to know what that road there would look like. And the more you can [00:20:24] show them that you have kind of an idea for that, ~um, ~The [00:20:27] more they will hope that that's going to happen with you. ~And then the more I believe in that, and ~this is where the [00:20:30] last part comes in.
Raul: So we talked about physics, [00:20:33] plan, power presentation. And I find that [00:20:36] as high level as these things sound, they are actually things [00:20:39] that people execute on, right? So you have to understand the [00:20:42] physics, read, learn, talk to people, go to [00:20:45] networks, understand ~what, ~what your business actually is and what it isn't.
Raul: You [00:20:48] have to make a plan and then start following that and saying no [00:20:51] to things Thinking about things in levels [00:20:54] and orchestrating them in the right way. You have to power the [00:20:57] engine, which is understanding like, what is it that you're actually building? [00:21:00] And then put like a kind of layer about, about, ~uh, ~beyond [00:21:03] that.
Raul: ~Um, ~
Crafting a Compelling Presentation
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Raul: and then you have to start about, uh, working on and [00:21:06] working on performing, but actually also showcasing their performance.~ And ~[00:21:09] the last part is present, which is where all of this comes [00:21:12] together. So it's not just about the presentation. [00:21:15] As in just a slide deck, even though that is an important [00:21:18] tool, it's also a lot about the language [00:21:21] and what you focus on when you do talk to a [00:21:24] VC, because There is [00:21:27] always obviously a very short time for a pitch.
Raul: There [00:21:30] is a things you can focus on, things you can focus on less. [00:21:33] And this is where it all comes together in trying to [00:21:36] steer the discussion and have more, uh, kind of [00:21:39] agency over how that would look like. So all these four [00:21:42] things before you've executed them. Now you show [00:21:45] them and bundle them all up in the presentation part.
Raul: When [00:21:48] you do that, you show the VC that you [00:21:51] understand the physics of your business. They're going to be impressed because a lot of people [00:21:54] don't. You show them that you have a plan on how you got here, [00:21:57] retrospectively, and that you have a plan looking forward, which also [00:22:00] again will be quite impressive. You show them that you [00:22:03] kind of understand the power or the engine, and that [00:22:06] you have a track record, which is the performance, and you also have an idea of [00:22:09] how you got there and how you will keep expanding that.
Raul: [00:22:12] That is a very successful pitch if you present it in the right way.
Toni: [00:22:15] Yeah. ~I think. ~Whenever I ~kind of ~read presentation, I always think also [00:22:18] story, there always needs to be kind of a cool story, [00:22:21] honestly. Like, ~um, ~if you're able to tell a story about, ~you know, ~[00:22:24] how this happened and ~you know, ~how you got here and how this is going [00:22:27] to, ~um, you know, ~evolve in the future, I think that's going to be helpful.
Toni: And, [00:22:30] you know, we're kind of very much focused obviously ~on the, ~on the commercial [00:22:33] part. ~Um, ~every successful series A, series B [00:22:36] pitch usually also has a. ~Um, ~I [00:22:39] don't want to say an updated vision or something like this, but like, [00:22:42] Hey, what's the end game? ~What's, ~what's the, ~you know, ~not only the 10 [00:22:45] million thing, but how can this become a hundred million thing?
Toni: 150, [00:22:48] 200 million thing. And I think, ~um, for, ~for those, for [00:22:51] those, you know, I don't want to say vision [00:22:54] necessarily, but for those more strategic pieces, ~um, ~I don't think you need to [00:22:57] necessarily have like ~a, ~an Excel based plan that cannot get you there. I think [00:23:00] that's ridiculous. But ~you want to, ~you want to tell the story, you want to [00:23:03] tell the story how this was just, ~you know, ~a chapter one of a pretty [00:23:06] long book, ~um, ~and it's only going to get more interesting ~as, as, as further ~as you read [00:23:09] into it.
Toni: I think that's also really important thing here, right? [00:23:12] And what you have been doing so far and the planning and [00:23:15] all that good stuff, I think it's going to make [00:23:18] this vision that you're presenting just so much more believable. ~Right. ~[00:23:21] It's kind of really the, the things that you're leading up to, like ~I've done this, ~[00:23:24] I've done this, I've done this, this works, here's some risk, here's some [00:23:27] watch outs, but you know, we achieved this stuff.
Toni: And really [00:23:30] where we want to go is this thing over here, ~kind of, ~that's ~really kind of ~[00:23:33] building up, ~um, to, um, to this, you know, to, ~to the end piece where people ~that, you know, ~sometimes get really excited about [00:23:36] it. Right. So we didn't want to make sure that it's not only about the [00:23:39] numbers and you know, this stuff is also about getting the other [00:23:42] side excited with, ~you know, the You know, ~the story of where this thing might be [00:23:45] going.
Raul: ~And, ~and the story, the [00:23:48] building blocks of that story partly are these five piece. [00:23:51] So if you sit in front of ABC, you tell them that story, the, the [00:23:54] five piece in themselves, ~they're not a, ~you don't do them just for the sake of the piece to [00:23:57] satisfy Raul, right? ~Um, ~you do that because this is the [00:24:00] backbone ~of, ~of what you're presenting.
Raul: And it's also the [00:24:03] evidence of that future vision. So if [00:24:06] the VC is looking for, Hey, I have this Tony guy in front of me. I [00:24:09] don't know him. I heard some good things about him and this company has been getting [00:24:12] correction, but can he do that? ~I, ~it will be much more [00:24:15] believable if he shows me that he kind of had a plan on how to get here, [00:24:18] right?
Raul: It will be much more believable if he also kind of has a vision [00:24:21] of how that plan will continue in the future, rather than. [00:24:24] He doesn't really know, right? If I ask him, if he can actually [00:24:27] show me the plan and be like, okay, this is actually quite impressive. It's [00:24:30] actually much more believable if I know that he understands the business [00:24:33] and what he tried and what he didn't try and what is kind of, ~uh, ~[00:24:36] exploration and exploitation mode and all these things.
Raul: [00:24:39] Are just the evidence for me to believe in the future [00:24:42] of what you're doing.~ Um, ~at the end of the day, and I really want to [00:24:45] stress that point. I said this in another podcast as well. ~The, ~
Conclusion
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Raul: the point [00:24:48] of this whole exercise is to build a great company, like screw [00:24:51] what the VC's things, if you build a great company, they will come [00:24:54] right.
Raul: It is just that. [00:24:57] Luckily, these things, ~um, ~contribute to building a great company. [00:25:00] So if you do that correctly and you present it in the right way, you [00:25:03] do them kind of ~in a, ~in a good way. And then you showcase that with [00:25:06] the right language, with the right VCs, with the right story, [00:25:09] boom, you've done both.
Raul: You've built a great [00:25:12] company and people know about that.
Toni: [00:25:15] Easy peasy. ~Um, so ~if you like this stuff, hit subscribe and follow if you haven't [00:25:18] already. It's for free, by the way. It's really not that hard. Um, [00:25:21] and also, um, you know, if you have some [00:25:24] founder friends or CEOs or VCs, send this stuff to them, I think they might [00:25:27] learn a thing or two. Thank you so much for listening.
Toni: Thanks [00:25:30] Raul for, ~uh, ~spending this time exploring kind of a fine [00:25:33] piece here and ~uh, ~have a really great day, everyone. Bye.