MV #022: An impressive monkey and how 90% of IPOs are kind of failures.
Software is eating the world faster than ever and yet most recent IPOs almost all failed when you look at value creation.
This bi-weekly newsletter is made for leaders to get smarter on startups, growth & sales. Want to get top industry news, useful learnings, and interesting observations to your inbox, subscribe here:
☀️ Things I saw that will blow your mind
Kind of crazy that everyone can get a ticket to experience the next big tech revolution for just $20/month.
GPT-4 and generative AI will change everything. It’s evident based on everything I’m reading. Every industry will be affected by it too.
In B2B SaaS and thinking it doesn’t apply to you?
Of course it does, because the companies that your software offering most likely is trying to transform will be disrupted by generative AI within just a few years. If you company is not thinking about how to use the underlying technologies that power ChatGPT then you’re in danger.
I won’t go into what ChatGPT is, how it works, because it doesn’t event matter that much. It’s happening. Understand what it does and how it works for your use cases and you will get much farther than you think.
A few basics to help you navigate the flurry of information. ChatGPT was created by a company called OpenAI. The underlying technology is artificial intelligence (AI) based on large language models (LLM). Many companies now use LLMs to create amazing things using AI. Hence you’ll hear the term Generative AI.
Ok, AI, LLM, ChatGPT, GPT, generative AI, AI….just put it all in one bucket and check out these amazing tweets and articles.
If you read this and still believe it’s just a hype, please let me know, I want to understand your point of view.
First, be impressed by this monkey
Everything here was created with a few, easily accessible tools. If developers can create this with just a few hours of effort today. This will get drastically easier over the next 12-24 months. Imagine what a 14-year-old anywhere in the world could do in minutes just by using their phone?
Mind. Blowing.
Most automatable jobs by GPT
Creating new applications with ease
Creating a full app by telling ChatGPT what to do. This is no-code on steroids.
GPT saves over 99%
What will this mean for near- and off-shoring of simple IT services?
Repetitive tasks
Repetitive tasks were always susceptible to automation. The difference with GPT and other similar technologies is that even seemingly difficult tasks are becoming much easier to automate or part-automate.
From the founder of OpenAI - Sam Altman
Want to go deeper? Check out this wonderful conversation with Sam Altman. He’s the person behind Open AI.
🧠 2 learnings I shared
💵 First learning: from a CRO (post here)
I spoke to a CRO of a $100m+ ARR business who shared his current top 4 priorities. This is what is top of mind for him now in this market.
This is what he said:
1. Risk mitigation
👉 My take: every bit of pipeline that you have needs to be executed perfectly. If you can de-risk it through some extra effort by a team, do it!
2. Rep productivity
👉 My take: efficiency is the name of the game. You'll never get in a good spot on the rule of 40 if you don't focus on productivity.
3. Pipeline health
👉 My take: building and monitoring pipeline is critical. The best startups have systems in place to keep close track of how they run their go-to-market (shameless plug for Clari)
4. Forecast accuracy
👉 My take: This company might not IPO in a downturn. But that doesn't mean forecasting isn't important. Good forecasting now means you're ready for public markets when the time comes.
🔥 Second learning: When to hire your first SE? (post here)
When should you hire your first Sales Engineer? Here’s my take by startup stage:
Pre-Seed
- Too early. It’s all about founder-led sales.
Seed
- Too early still, focus is on founder-led sales.
Series A
- Too early, move from founder-led to sales leader.
- Hire AEs who are builders and have a broad skill set.
- AEs handle the commercial and technical parts of sales.
Series B
- Good timing, hire your first SE.
- First SE has to be a builder and strong sales partner.
Series C+
- Good timing, hire first SE and/or scale team.
- Promote your first SE, and build a small SWAT team.
- Focus on SEs who are company builders to help build.
- Start hiring AEs that lean stronger on sales skills.
This is a generic take and will vary by company. There are many factors like product, industry and market that will move the scale on this. But as general guidance, it is true.
📌 1 thing you might have missed in B2B tech
Great analysis by CB Insights showing how little value creation was done by the class of companies that did their IPO in 2020. In fact, CEO Anand Sanwal points out that ”90% of largest tech IPOs since 2020 (18/20) are below their IPO valuation”. (here)
👉 My take: It’s crazy to see how little value was created for shareholders. Especially employees. Most employees have lockup periods when a company goes public. If you have to hold the bag for a full year, then I imagine that most employees did not make much at all from an IPO in 2020/2021/2022.
I also believe this affects late-stage companies too. While it might not be a public offering, if you went from a series D to a series E, you would probably have to cut your valuation similarly to a public company.
That will lead to some tough conversations on the board and with employees.
👋 Parting thoughts
What’s a CEOs job?
Farewell to one of the greatest
Moore was one of the Intel founders and most well-known for Moore’s law. Moore's Law predicted that transistor count would double every 2 years due to shrinking transistor dimensions and other improvements.
He was a Silicon Valley icon and foresaw the digital transformation we all would experience over the last decades.
The FT (here) pointed out that: “One of Intel’s latest chips has more than 100bn transistors, around 43mn times as many as the company’s first processor, developed in 1971.”
May he rest in peace.
🙏 That’s it. Have a great Sunday!
🤓 Subscribe if you enjoyed this
Enjoyed reading this? Subscribe and share this edition with your friends.
Thank you so much. I’m Semir Jahic, and I hope to see you again for the next edition in two weeks.