CJ Gustafson
@cjgustafson222
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I tweet about financial metrics and business models | Startup CFO | Opinions are my own, not investment advice
Boston, MA
Joined December 2017
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Pinned Tweet
What's the difference between Venture Capital and Private Equity?
A lot...
Read on:
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GymShark is beating Nike, Adidas, and LuLu Lemon at their own game...
And they're doing it by way of Accounting.
It's called the cash conversion cycle. Here's how it works:
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The median CFO salary in the United States is $393,377.
There are multiple paths you can take to this powerful position.
If you're in finance, here's what you should know about becoming a CFO:
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Financial metrics reveal a company's story
Here are 8 threads on financial metrics
That EVERY business owner and investor should read:
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The median CFO salary in the United States is $393,377.
There are multiple paths you can take to this powerful position.
If you're in finance, here's what you should know about becoming a CFO:
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What's the difference between Venture Capital and Private Equity?
A lot...
Read on:
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The median COO salary in the United States is $464,033.
There are multiple paths you can take to this powerful position.
If you are in business, here's what you should know about becoming a COO:
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According to the Boston Consulting Group, there was more than $1.7 Trillion in M&A deal activity in just the first half of 2022.
Here are the 9 most common M&A Strategies, all on one page, with real life examples.
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Wait, Expensify has 138 employees and does $170,000,000 in revenue per year???
That is NUTS!!!!
That's more than $1 million per employee...
Can anyone think of a more efficient company on a per head basis?
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Stop wasting your time with vanity metrics.
Start tracking these 15 proven business metrics.
(They all come from real startups).
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GymShark is beating Nike, Adidas, and LuLu Lemon at their own game...
And they're doing it by way of Accounting.
It's called the cash conversion cycle. Here's how it works:
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If I had to explain the SVB Bank run to my 93 year old grandmother (who keeps her money at Dedham Community Savings Bank), here's what I'd say:
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Less than 4% of stock pickers beat the market.
Many have gone dead broke trying.
A select few have made billions.
Here are the ways it's been done:
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Most people assume I became a startup CFO by staying up late to study balance sheets and build DCFs.
False.
I just copied what these CFOs said on FinTwit:
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What's the difference between a marketplace, an aggregator, and a platform?
A lot...
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So what does a VC Term Sheet actually look like?
Let's break down the key elements of a basic term sheet:
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Financial metrics reveal a company's story
Here are 10 threads on financial metrics
That EVERY business owner and investor should read:
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So what does a VC Term Sheet actually look like?
Let's break down the key elements of a basic term sheet:
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Airbnb, PayPal, and Uber.
All built billion dollar empires using network effects.
These are the metrics they track (and you should too):
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Financial metrics reveal a company's story
Here are 8 threads on financial metrics
That EVERY business owner and investor should read:
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What's the difference between a platform, a marketplace, and an aggregator?
A lot...
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Not all cfos who use a MacBook go to jail, but all cfos who went to jail were using a MacBook
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This is a Net Present Value of money crime my dude
The Dodgers’ payouts to Shohei Ohtani for the next 20 years:
2024:$2M
2025: $2M
2026: $2M
2027: $2M
2028: $2M
2029: $2M
2030: $2M
2031: $2M
2032: $2M
2033: $2M
2034: $68M
2035: $68M
2036: $68M
2037: $68M
2038: $68M
2039: $68M
2040: $68M
2041: $68M
2042: $68M
2043: $68M
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How do you differentiate between "High Tech" vs "Tech Enabled" companies?
Read on:
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I've used this pitch deck formula to raise over $700,000,000.
You can steal it.
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What's the difference between Venture Capital and Private Equity?
A lot...
Read on:
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Financial metrics are the lifeblood of any business...
But these 9 mistakes can destroy a company:
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I think this is the best chart CB Insights has put out in a while
Crazy to think some of these companies have been growing revenue 50%, even 75% or more y/y since ipo…
But their valuations are going in the other direction
Very indicative of the loco times we were in
H/T…
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I've spent half of my career trying to nail one formula:
LTV to CAC
(that's lifetime value to customer acquisition cost)
The following threads will allow you to harness the powers of LTV to CAC:
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Stop wasting your time with vanity metrics.
Start tracking these 15 proven business metrics.
(They all come from real startups).
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Secrets of the business world I wish someone let me in on sooner:
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How does the Finance department's structure evolve at a startup over time?
I've been exploring this first-hand as a CFO.
Read on:
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I lost $209,640 of my own money trying to start a business.
Writing about failure sucks.
But here's the real story:
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The median cash compensation for an account executive selling software is $235,000 to $250,000 per year.
ICONIQ dropped a BANGER of a report, with all the key facts and figures on sales rep comp.
Here are the best takeaways:
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AI startup Tome rumored to be raising at a $600m valuation on $2m of revenue.
…300x current ARR
If so… we are SO back
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It's here - the 2022 SaaS Fundraising Napkin
What did you need to raise money this past year?
We've summarized Seed to IPO, all on one page:
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10 mistakes you're making with financial metrics (and how to fix them):
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Excited to announce that Mostly metrics has added a talented female, Cameryn Gustafson, to the writer’s room! 👧🍼🐣
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What's the difference between a marketplace, a platform and an aggregator?
More than you think.
Read on:
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How do tech companies talk about their Cost of Revenue?
Well, it depends...
I’ll admit it - I probably talked about Cost of Revenue in hand wavy, theoretical kinda way for the first five years of my career (OK, first six).
I kinda sorta understood what was shoved up there from…
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Airbnb, PayPal, and Uber.
All built billion dollar empires using network effects.
These are the metrics they track (and you should too):
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How do vertical SaaS companies make money?
It's called the Layer Cake Strategy
(and it generates $ billions):
Most vertical SaaS companies start by solving one specific use case for one industry persona, and then expand their offerings to cover other aspects of their day to…
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Dilution is one of the most misunderstood concepts in startup land.
But many employees are afraid to ask for a simple explanation.
Here’s how it works:
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How do you calculate Net Dollar Retention Rate? Here's how 25 top tech companies do it. You can copy these real life examples:
(find the full breakdowns at )
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Stop wasting your time with vanity metrics.
Start tracking these 15 proven business metrics.
(They all come from real startups).
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Whether you’re a VC or founder, understanding Term Sheet terminology is CRITICAL.
Here are 12 terms you MUST know:
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The median CEO salary in the United States is $798,373.
There are multiple paths you can take to this powerful position.
If you're in business, here's what you should know about becoming a CEO:
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How do marketplaces make money?
It’s called a take rate
If you’re talking the lingo, other common names for this type of middleman compensation include:
•Commission
•Vig
•Rake
I studied the economics of 35 marketplaces 🤑
Get full report
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An estimated 327,000 people applied to work in private equity last year.
Less than 3% got a job.
Here's what you should know about the industry if you're looking to break in:
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According to Bloomberg Law, there was $559 Billion in M&A activity in Q1 2023.
Here are the 9 most common M&A Strategies, all on one page, with real life examples.
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At the risk of pissing off all the financial analysts...
I think Discounted Cash Flow models are stupid.
Six reasons why DCFs suck:
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“Beware of all green dashboards.”
This is one of my favorite stories about both the power and danger of metrics.
Metrics can be a proxy for truth, but only if you measure them correctly.
Don’t lose sight of the anecdotes.
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Trying to hit it big at the next company you work at?
Understanding how employee stock options work is your key to long-term wealth:
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Bold claim (screw it, wish me luck!) - I’m pioneering a new category - Operator Equity Research. 👇
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According to the Boston Consulting Group, there was more than $1.7 Trillion in M&A deal activity in just the first half of 2023.
Here are the 9 most common M&A Strategies, all on one page, with real life examples.
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How much equity do CEOs own when their company goes public?
It's less than you think...
(source: Harvard Business School)
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How do vertical SaaS companies like Toast and Shopify make money?
It's called the Layer Cake Strategy (and it generates billions of dollars):
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I knew an entrepreneur who used to put all his checks to suppliers in the microwave
Here's the crazy story, and what it taught me about the cash conversion cycle
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Ex-Salesforce CFO's advice to his younger self: 5 key lessons for finance leaders in startups.
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To go one level deeper, we can categorize private market investors by stage:
1/ Angel: Individuals
2/ Seed: 1st institutional check
3/ Growth: Series A - C
4/ Late Stage / Crossover: C through IPO
5/ Buyout: Majority control, Debt
Note: There IS OVERLAP
Let's dig into each
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If I could only choose one metric to evaluate a company...
I'd chooose revenue per employee
Why?
It cuts through all the noise.
And there's no hiding.
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What's the difference between Renewal Rate and Retention Rate?
A lot...
Read on:
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WTF is a DCF model?
I lived inside of Discounted Cash Flow models for years.
And will explain them SIMPLY:
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When a Billion Dollar Outcome Isn’t Enough:
Venture fund returns typically follow a power law (e.g., 80% of the returns are generated by 20% of the investments).
As a rule of thumb, investors will often want to see a scenario where any given company could theoretically return…
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How do vertical SaaS companies make money?
It's called the Layer Cake Strategy (and it generates billions of dollars):
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What I wish I knew as a first year CFO
5 timeless lessons from Mark Hawkins, former CFO of Salesforce
1. Know your business cold
You must know how your biz makes money, and what your biz spends money on, better than anyone else. Full stop.
Although you may not “own” the…
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The State of the CFO Tech Stack as we enter 2024:
TL;DR:
3 observations:
I. The proliferation of FP&A tools
II. NetSuite never dies
III. A new Big 3 in expense management
2 opinions:
IV. How stuff gets bought has changed
V. How stuff gets trialed still needs to change
1…
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The leading cause of death
For businesses in the US
Is poor cash flow management...
8 threads so you can avoid going broke:
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First, it's important to know what a CFO's day-to-day responsibilities are.
They can be split into three buckets.
1. Financial Strategy,
2. Reporting, and
3. Book Keeping
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COO's can be split into six types:
1. The Executor
2. The Change Agent
3. The Mentor
4. The Systems Wizard
5. The CFO as COO
6. The Sales and Marketing Genius
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I’ve examined a lot of term sheets in my career.
So I decided to break down the key components
As well as the red flags that could hurt you
It’s all in todays mostly metrics issue
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How does dilution impact you as a startup employee?
Let's go through a (lucrative) example:
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How does a CFO think about software spend?
If you are looking to sell to a CFO,
Or if you are looking to get budget buy in from your CFO, read on:
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Deadly mistakes first-time FP&A managers make
(A brain dump, based on 10,000 hours of budgeting):
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First, it's important to know what a CFO's day-to-day responsibilities are.
They can be split into three buckets.
1. Financial Strategy,
2. Reporting, and
3. Book Keeping
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The finance software stacks of top start-ups we've interviewed on Run the Numbers so far:
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Vertical SaaS is everywhere - you just don’t realize it.
Let's uncover examples of vertical SaaS impacting your everyday life in major ways:
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Yesterday my newsletter hit 5,000 subscribers.
I went from hopelessly screaming into the abyss to riding rocket ship.
This graphic sums up the journey.
Some humble tips for those who want to build an audience:
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Reporting includes:
-3 statement modeling (Income statement, Balance sheet, Cash Flows)
-Analysis of budget to actuals
-Budget re-forecsating
-Board reporting
-Earnings releases
cc:
@10kdiver
1/
Get a cup of coffee.
In this thread, I'll show you how to read and understand a company's Balance Sheet.
As investors, we should be able to judge businesses by looking at their financial statements.
And the Balance Sheet, of course, is 1 of 3 key financial statements:
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Yesterday my newsletter hit 10,000 subscribers.
I went from hopelessly screaming into the abyss to riding rocket ship.
This graphic sums up the journey.
Some humble tips for those who want to build an audience:
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I have a degree in finance.
But I wish I learned these 7 tactical skills before taking my first job.
You can learn them here on twitter:
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Private Equity and Venture Capital are often used synonymously.
Both invest in private companies whose shares are not publicly traded on exchanges.
However, VCs generally invest earlier in a company's lifecycle than PE.
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My goal is to create the best valuation and performance benchmarks specifically for tech operators.
If you are in Finance, Strategy, or Ops, this will help you translate what the outside world values to your target operating model.
Here are this week’s multiples:
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Security unicorn Lacework is reportedly being acquired by rival Wiz for $150M to $200M, significantly less than the $8.3B it was previously valued at, and the $1.8B in capital it raised.
If that's the case, Wiz will acquire them for ~2x NTM Revenue.
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How does the "middleman" make money?
It's something called a "Take Rate".
And getting your Take Rate right can make or break your biz...
Here's a crash course:
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As a “finance” person I’m begrudgingly realizing:
-the CEO’s job is sales
-the law firm partner’s job is sales
-the investment banking MD’s job is sales
-the big four tax consultant’s job is sales
It’s not enough to just be an expert in your domain, you have to know how to sell
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How top tech companies calculate ARR 👇
Annual recurring revenue isn't as straight forward as you'd think... I analyzed how 20 companies define and calculate their annual recurring revenue.
Regardless of whatever you think about ARR as a "good" measure of business success, or…
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STOP thinking as an employee.
START thinking as an investor.
Asking these questions before taking a job could mean life changing money:
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Dilution is one of the most misunderstood concepts in startup land.
But many employees are afraid to ask for a simple explanation.
Here’s how it works:
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FP&A paved my road to CFO.
But this doesn’t mean the journey wasn’t full of its share of screw ups.
Here are 10 COSTLY boobytraps you'll encounter when budgeting for your startup:
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Most people assume I became a startup CFO by staying up late to study balance sheets and build DCFs.
False.
I just copied what these CFOs said on FinTwit:
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