We were running out of cash. Fast. Just a few months away from cash death.
And I was slowly starting to realize that the company I spent the last three and half years building wasn’t going to survive.
What I didn’t realize in those early moments, but soon came to learn, is that I still had control over my business. I only had to convince myself it was possible. I once heard an old saying “the amount of cash you have is not a measurement of the value of your company, but actually an indicator of your cash flow management.” He was right of course, but it certainly felt like my startup was diminishing.
Here’s how we survived a near (cash) death experience, transitioned from the mindset of needing to survive to thrive, and how to prepare for hyper-growth.
Surviving a near (cash) death experience
One thing I learned was that cash is something you can go get. But you have to be willing to make hard, defensive decisions. No one is going to be excited about those decisions either.
The first thing I did was go back to the board and say, “Hey, the goal I came up with at the beginning of the year, forget it, it's not going to happen.”
And I was able to negotiate about two-thirds of that original goal, and the board agreed.
The second one was the most painful one. Layoffs.
We ended up reducing our workforce by one-third. Some of those were low performers, but many were high-performing individuals that we really simply could not afford anymore.
We also did something amazing that I still can’t believe happened. All of the AEs converted between 50-100% of their commissions into common options. That got them more invested in the business and got us about $1 million back in cash. We also took a pay cut across the board (we ended up paying it back with dividends when we were back on track).
We even did something a bit sketchy. We stopped paying for anything that was not essential. For example, $800 per month rent. Essential. Digital Ocean cloud computing? Essential. Company credit cards? Not essential.
Even though my credit score dropped to 500 because of it, that was okay because I still had my business.
The reason we were able to do all this is because we didn’t panic. We also did not wait for things to happen but rather were proactive.
If there is one concept that got burnt into my mind during this period, it’s to never make decisions out of fear.
That also meant saying no to multiple draconian term sheets by both shark VCs and potential acquirers. It was hard to reject those offers but we definitely dodged a bullet. We would have given up control of our company to investors only interested in the outcome, not the journey or longevity of the company.
This is our mantra at Metadata, and it is something I strongly believe in both my personal and professional life. The worst decisions are made from fear, the best ones come from a place of love, courage, and opportunity.
Marketing hacks we used to get back on track
1. Deploying BOFU conversational ads
Our regular digital spend of about $40,000/month got cut back to about $17,000/month thanks to tightened budgets. And as soon as we understood our budget reduction, we went into brainstorming mode.
Jason, our VP of Marketing, had mostly big company experience and didn’t really know how to manage this deep of a cut. But he was up for the challenge. He came up with a plan to use LinkedIn Conversation Ads where you can send a single message to a targeted inbox. This helped us drive 230% more demos in a month with 60% less budget.
2. Hire international employees
International employees are an amazing hack. Why? Because they're very hungry. You can give them an opportunity that doesn't exist in their local environment.
The world is so much more connected than ever before. And when you bring those people from other countries, they bring in the hustle, culture, and hunger that doesn't exist in a place of comfort.
At Metadata, our workforce comes from 22 different countries. And it has made an amazing impact both culturally and economically.
3. Hire teams who have worked together before
This is kind of the opposite of the last point. But instead of bringing diversity from everywhere, you can bring in a group that has already worked together before and proven themselves.
We brought in five AEs who all worked directly together. They already knew how to work with one another. And so, they were able to help ramp each other up. Such dynamics are invaluable.
They were all super knowledgeable and all of them crushed their numbers because they already knew how to work together toward a common goal.
How to transition from surviving to thriving
After months of hard work, we were able to end the year at around $5 million in revenue.
Which got us thinking: “Okay, now what?”
We had gone from the brink of disaster to growing quarter after quarter. Now was the time to move mindsets from needing to survive, to focusing on how to thrive.
This is when you want to invest in growth and forget about the previous stage that you were in. But don't forget the muscle, and don't worry all the time about being defensive– now is the time to go into offensive mode.
So, this is what we did. First of all, we invested heavily in sales and marketing. We gave teams their budgets back after slashing them the year before. And we were able to hire more people to help grow the company.
And it worked. So well, in fact, that we actually went back to the team and increased the goal three times that year. We were able to keep pushing ourselves a little bit further and kept growing.
And by the end of 2021, we grew our revenue by roughly 2.5x to $12 million.
It wasn’t always easy, but survival mode made our team much closer, built our cash flow muscle, and made me a better, humbler CEO.
Preparing for hypergrowth
Prior to our Series B round, we had $9 million in the bank, and we were only burning $200K a month. That gave us years and years of runway. During this time, we got our fourth and fifth patents, were continuously in touch with different VCs, and actually got term sheets. But we didn’t get desperate and were able to find the right partner to work with because we didn’t need the money.
Eventually, we were able to raise $40 million in a Series B, but in a very healthy way.
Not everything is perfect. And we still have areas we are working on. But nothing makes me prouder than building this company with this team. I can’t wait to see what the next few years bring.
Written by Gil Alouche, CEO of Metadata.io