Todd Jackson: evaluation

Transcript context

…Let's talk about level four. What does that look like? What are some problems people run into there? So first of all, congrats. If you get to level four, you have a valuable company. You are probably already a unicorn, and you're starting to think about, "Can I become a decacorn?" And so you've reached the highest levels of satisfaction, demand, and efficiency. And so the benchmarks at level four are like, "Okay, now your team is probably bigger than 100 people, you're Series C, Series D or beyond. You've got more than 100 customers and you're starting to figure out, 'How do I get to 200, 300, eventually 1,000 customers?'" You're beyond 25 million in ARR, so 25 million and up, I think in ARR, it qualifies as level four. And your other metrics are looking really good too. Your sales conversion first call to close one is probably better than 15%, your magic number is greater than one, your tax payback is less than 12 months. All these things are super awesome. And finally, now you've got your gross margin above 80%. Your burn multiple's ideally less than one at this point, you've got less than 10% churn. You've got greater than 120% NRR. And so now the whole thing is like, "Well, how do I keep growing?" This thing's gotten pretty big. And this is generally when we get to 100 million, especially and beyond, the stage that founders are thinking about, "How do I keep growing by expanding TAM, by expanding total addressable market?" And to expand TAM, I can usually take my product and bring it into new markets, or I start to think about multiple products as a way to expand TAM. And so this is where you see all the truly great companies, the legendary companies are all able to do that. Vanta has begun to do this. They have the Vanta trust management platform, they've got security questionnaires, they've got vendor risk management. So they're starting to do this. You think of Verkada, who I mentioned before. They started with cloud security cameras, now they do alarms, now they do smoke detectors, now they do badge readers. Stripe has classic Stripe, but they've got Stripe Radar, Stripe Atlas. Square has the Square Stand, Cash App, Square Checking, Square Loans. All the companies that are tens of billions of dollars of value have figured out a way to do this. And it's like the never-ending journey that you said before, Lenny. Like, "Congrats, you got to level four." But there's just this endless thirst for continued growth. And the interesting thing about that is that it requires finding product-market fit over and over again. Just because you got to level four on your main product doesn't mean product-market fit is free on all these new products. And you've been inside Airbnb and I've been inside Dropbox and Twitter. Getting new products to be successful is hard and it requires this mindset of like, "Yeah, we've got a little bit of advantage because people know who we are, and we have a customer set that hopefully we can layer on new products to. But it's not easy." requires this mindset of like, "Yeah, we've got a little bit of advantage because people know who we are, and we have a customer set that hopefully we can layer on new products to. But it's not easy." You have to get into this mindset of product-market fit is never easy, and if we want to continue to grow, we got to find it again and again and maintain that mindset.…

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