C2V November Notes From The Trenches
Welcome friends! A very Happy Thanksgiving to all! In the spirit of the season, some things we’re feeling thankful for this week:
Our LPs – We obviously wouldn’t be here without you, and your continued belief and support means the world to us (the checks don’t hurt either)
Our founders – Regardless of what Chris would have you believe, you’re the real heroes here. Hang in there, all that hard work will pay off in the end. Well, at least for 1/3rd of you, it will… you know, statistically speaking… (insert winking emoji?)… let’s just move on…
Whoever invented stretchy denim – Nothing says “America” quite like a holiday focused on massively overeating before collapsing on the couch. Those of us who’ve been at this awhile can tell you this wasn’t nearly as pleasant an experience with yesteryear’s less cooperative pants.
The Detroit Lions – You never fail to deliver a performance that lulls us into that much-needed early afternoon nap every year. Keep up the good work, fellas.
The crazy uncle/cousin who provides the unhinged rants at the dinner table – We sincerely appreciate you delaying for one more year the day that Chris and Matt realize we’ve become that crazy uncle/cousin (it isn’t far off)
Last (but certainly not least), you, our loyal readers – Our special brand of commentary (somehow both juvenile and dated at the same time) isn’t for everyone, our spouses and children possibly included, so we sincerely appreciate you tuning in every month.
To the newsletter!
We have a new company to introduce and a bunch of other exciting odds and ends, but before we get to that, we’re going to hop on our soapbox and talk financial modeling.
“Plans are worthless, but planning is everything” – Dwight D. Eisenhower
In our view, detailed financial projections are an integral part of startup planning from the beginning, but there seems to be some debate as to whether they’re useful at these very early stages. Those who view them as more or less a waste of time will note that:
1) For Seed stage companies, there’s so little historical data to work with that many (if not most) of the inputs will require some loosely educated guesswork; and
2) Everything from pricing models to customer profiles to product development and hiring plans can and likely will change.
On the one hand, that’s all true. On the other hand, it is precisely because it’s true that we believe financial models are indispensable (and the earlier, the better).
There are a few critical reasons for this:
You need to know what you need to know.
You need to understand which of these unknowns matter a little and which matter a lot.
This is about identifying and prioritizing your highest-leverage inputs. In financial analysis, the risk is a function of variance and magnitude. So, identifying your highest impact metrics (e.g., sales cycle time, lead gen per head, conversion rates, onboarding/customer support engineering needs, etc.) and which of these have the highest potential variance are critical to understanding where your biggest execution risks lie and how to best prioritize your early time and attention.
To quickly and effectively address those inevitable points when results are missing expectations, it is critical that you can quickly identify the root cause(s) of that underperformance.
This is where Eisenhower comes into a chat about tech startups (you were starting to wonder, we know). The quote above is from a 1957 speech the former General and President gave on the topic of how leaders react when a carefully crafted plan faces its first test in the infinitely more chaotic and unpredictable real world and what are those first months after a startup’s commercial launch (when founders go from designing and building to selling, deploying, and supporting their products), if not a chaotic and unpredictable test of carefully considered plans.
Eisenhower goes on to explain that when faced with those initial moments where results have gone entirely off script:
“The first thing you do is to take all the plans off the top shelf and throw them out the window and start once more. But if you haven't been planning you can't start to work, intelligently at least. That is the reason it is so important to plan, to keep yourselves steeped in the character of the problem that you may one day be called upon to solve--or to help to solve”.
In startup terms, this is the point at which growth is far behind the plan, burn is far ahead of plan, or likely both. Obviously, something needs to change, but understanding what needs to change requires identifying where the link between planned spend and assumed growth has broken down. If you model these links in detail ahead of time, you already know where the disconnect lies and can begin working on the solution. If not, you’re starting from scratch when you cannot afford a prolonged review or an underinformed, knee-jerk reaction.
Bottom line, would you rather spend the time identifying and modeling your key assumptions in your early planning stages, without a deadline, or amid a commercial launch with the clock ticking? It’s as simple as that (in our view, anyway).
New Investment
While it’s hard to call Matt’s favorite kid (pictured below) dirty, dull, or dangerous, the $50 billion pet health industry is a massive, old economy sector rife with inefficiencies for the startup world to address.
Enter Otis, a condition-based online clinic for pets. Telehealth for human patients has been growing at a double-digit pace for a decade but has yet to make significant inroads into the veterinary industry.
If anything, there is more value to add on the patient side, given the underwhelming pet insurance coverage options, particularly for non-emergency visits, and a structural inertia that keeps an unnecessary floor on medication costs.
While chronic conditions are significant issues that will still require in-person visits, Otis estimates these make up only 20-30% of current vet visits. The company aims to reduce costs for the remainder while also materially increasing the number of patients vets can see through online consultations, subscription offerings for preventative medications, and broader access to generic medications.
MarketWatch Feature
Venture capital investors see an ‘R’ word coming for tech — and it isn’t just recession.
Tens of thousands of software engineers and other tech employees have lost their jobs this year, but VCs see silver linings in economic downturns: the potential for a rise in people starting their own companies.
A familiar utterance among the VCs is the “R” word: reset, not just recession.
“There is a resetting happening, which is absolutely necessary,” said Chris Cunningham, founding partner at C2 Ventures, based in Connecticut. “Companies without a solid business were overvalued way too high, and with too much venture capital.”
C2V By The Numbers
Portfolio News
Phalanx Protects Data in the New Era of Remote, Hybrid Work
“We founded Phalanx in response to one of the major issues in cybersecurity during the shift towards remote and hybrid work, which was the spike in data breaches that resulted from the antiquated approach of perimeter-based security.” Said Ian Garrett, Co-founder, and CEO of Phalanx.
The definition of a cyber perimeter is increasingly unclear with remote workers, SaaS application integrations, and external vendors/services accessing assets. The best way to ensure data is protected is by taking a data-centric approach to security.
New Credit Card Option Just For Truckers
Koffie Financial has launched a first-of-its-kind credit card explicitly built for trucking fleets. The Koffie Card is available through a partnership with Power, a credit card issuance platform focused on the commercial space.
“The trucking industry is responsible for transporting 80% of goods in the US and generates over $700B in annual revenue yet continues to be wholly underserved in the credit market today,” said Mike Dorfman, co-founder and COO of Koffie.
A Fitbit For Your Driving
Rashid Galadanci is the Co-founder and CEO of Driver Technologies, a mobile app that turns your phone into an AI-powered dash cam to help you stay safe and save money. In this episode, Rashid discusses how Driver uses computer vision to see the world using your just phone and deliver the next generation of mobility safety. He highlights new premium services and features, including real-time safety alerts, gas discounts, and roadside assistance, so you’re covered from the minute you get into your car.
Digital Transformation in the Morgage Industry
The Digital Transformation of the Mortgage Industry is probably five or ten years behind other Industries. A major initiative for the mortgage industry as a whole is catching up.
So many different pieces of technology and components are part of any organization's digital transformation process. It’s not just one massive ERP system that will handle everything. As PRMI evaluates these solutions and moves toward a more digital process for their customers, the biggest challenge is choosing the right vendors to work together in their existing tech stack.
Job Opportunities
Armilla AI: Sales or Business Development Rep, Marketing lead.
Medmo: Is hiring across all departments. Visit this link to search for specific job opportunities.
Noteworthy: Engineering, Customer Success.
Tarform: COO.