Is it possible to cut costs in an extream way to make sure you're burning 0 per month? it is okay to let growth slow down or perhaps you may even lose some percent of your current revenue. It seems to be better than the alternative options. Perhaps get rid of the COO and other high fixed costs and hire later when you're in a better financial position
There is absolutely a way to do this but the new money coming in wants to keep as much revenue as possible to "preserve" valuation. We have already significantly cut revenue (~30%) last year in order to scale back costs. And the other concern is the more revenue you cut the more of a hole you have to climb out of to eclipse your preference stack. And cutting revenue while you are also trying to sell the company is going impact valuation.
> And cutting revenue while you are also trying to sell the company is going impact valuation.
In all cases, you have to sit on your losses. What you need to think about is how much you're still wanting to risk for future profit.
I guess the point of the parent comment, is that one way to make sure you end with something is bring the business to profitability by cutting expenses right now to almost zero, and see how much revenue remains.
That profitable business would be:
1. making money for YOU,
2. and give you a much better view of how much you can sell it for.
In a world where money is no longer cheap and available, that may be a good idea to consider this option.
Losing control of the board and getting fired means you put that business in the hands of people who may not care about losing it all (and yours with it).
To you personally what's more beneficial?, also which sounds better?
- Cutting costs so you're burning 0 per month AND keep the 27%+ of the stock?
- Accepting 30M and all strings attached?
> And cutting revenue while you are also trying to sell the company is going impact valuation.
For you personally, which is worse?, the valuation drop or the stock dilution from extra money?, negotiate from there with everyone else, it's really not your company, you're a shareholder and employee, you should make sure you're properly compensated as well both as employee and as shareholder.
Also, it seems like even with the extra money, you're still going to need to address costs at some point?, but from a weaker position?
> There is absolutely a way to do this but the new money coming in wants to keep as much revenue as possible to "preserve" valuation.
The new money only has a say if you take it, and if you can get your burn rate to zero, then you may survive without new money.
So you might be able to choose what’s better for you and/or the existing investors: take the new money on its terms or make unpleasant cuts and keep going without new money. (And, of course, you personally can exit if that’s best for you.)
> We have already significantly cut revenue (~30%) last year in order to scale back costs
Something is wrong here. If your gross margin is positive this is a bad move, surely? Are you losing money on sales somehow or not including customer acquisition in that margin?
why do you have to cut revenue? you can't continue your current ARR while cutting costs? trimming people/infra? maintenance mode for a while until you can ring better operational efficiencies out?
Would you still need more financing if you cut costs enough? Are you able to cut costs enough to become profitable, cashflow positive and still grow revenues?
