We’re also fortunate to have a community of leaders and executives like Bruce who have also experienced previous downturns. GGV itself was founded in 2000 so we’ve supported founding teams through various market cycles. ![]() While experience can’t prevent any of us from making mistakes, anticipating common hurdles can pave the way for better decision-making. Frontline intelligence: “What are your reps hearing? Have annual payments become quarterly? For deal cycles, what is the customer saying? What terms are they asking for?” To get an accurate picture of an account’s status, levers like activity, usage, and unused licenses can provide helpful insights.Our product marketing people (instead of just sales) need to be on top of this to figure that out.” Product-market fit: Do you have a framework to help your team decide what to build? Will you lose renewals because you don’t release a feature? Based on his experience of selling to enterprise companies, Bruce offers some cautionary advice: “Just because a customer bought your product does not mean that you have PMF … It could be that your sales team has done a good job selling but the customer isn’t using the product fully, making renewals and additional sales difficult.Sales rep productivity: How many reps do you have? How ramped are they? What do you know about their tenure and expected performance versus actual?.Pipeline creation: Is your company’s marketing funnel still healthy?.“That’s like a non-renewal of a smaller customer.” For forecasting, Bruce recommends taking off 5 points as a “good starting assumption-then test the heck out of it.” For example, if you’ve been producing 90% gross renewal in past years, expect 85% this year. ![]() Gross renewal rate: Are you talking to customers at least six months ahead of the renewal date? Are you paying close attention to downsells? “If a $50K customer now wants to renew at $47K, that matters a lot in this environment,” Bruce says.“Scenario Y is how we’re going to manage expenses.” This spreadsheet of multiple scenarios analyzes what’s going on in the business and “gets the whole management team on the same page to make rapid-fire decisions, which is really what you need to do in this environment.” Monitor other KPIsĭuring times of volatility, founders and CEOs will need to learn how to sift through a lot of “noisy data and non-patterns,” Bruce says. “Scenario X is what we’re going for,” Bruce explains. If actual results begin to diverge from the base plan, the company can quickly shift to another scenario without missing a beat. Execute around a base plan: Just as a football team may have 50 plays that it plans to run going into a game, Bruce rallies the whole management team around a base plan with many scenarios.Consistently share critical info: From what investors are saying to what analysts are writing, proactively keep your key stakeholders updated about the macro environment.Here are two ways to secure buy-in from the rest of your leadership team, according to Bruce: Grow as much as you can, but the constraint is that cash burn number.” Rally stakeholders around one metric “Pick a number that you can live with, that your board can live with, that derisks the future where you don’t need to get more financing-that’s the holy grail. “Committing to this operating margin under any condition means if the top line gets softer, we’d have to cut expenses more,” Bruce says. We can adjust it every day if we need to.”Īs an experienced operator who sits on both public and private boards and who also invests in venture funds, Bruce is currently modeling about 10 different scenarios for Domo with one constant: keeping the company’s operating margin positive. Rethink your annual plan: Bruce relies on “a live model” that allows “making a call as often as we need to.Aim to have at least 18 months of cash in the bank-ideally 24 months if you can make it work-and a fully funded business plan. ![]() “Investors will understand that you made the trade-off to protect cash,” Bruce says.įor small businesses with limited cash, cash flow matters the most for bigger businesses with more resources, Bruce says, it’s all about operating margin. If you aren’t already doing this, it’s time to pivot from planning around growth to planning around cash preservation.
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