Capital Chronicles #8

Hello there! Welcome to Capital Chronicles, saving you hours every week with ~2-3 minute summarised insights from the best venture builders, investors and capital allocators out there. This week: getting ready to be a public company with a16z, demystifying the ERG ratio with Dave Kellogg, and lessons on startups, VC and life with Keith Rabois.

As subscriber #TBD, each web link below takes you to:

• A link to the original article (read time: varies)

• Summary / insights / implications per article (read time: 2-3 minutes)

Now, read on for the latest…

🛠️ On venture building…

Are you ready to be a public company? by David George (a16z General Partner). David walks readers through the critical factors to consider and benchmarks to hit before a company goes public.

• Why you should read it: whether you plan to go public or not, thinking like a public company can help you make decisions today knowing what ‘good’ looks like in the future. David’s article is short and punchy and outlines a great framework for companies considering the eventual IPO.

🧭 On venture investing…

Demystifying the ERG ratio, with Dave Kellogg. This ratio is a growth-adjusted version of the traditional EV/R multiple, helping to determine whether a company is undervalued or overvalued by comparing its enterprise value to its revenue and growth rate.

• Why you should read it: another solid post from Dave about metrics that truly matter when evaluating company performance and valuation. The ERG ratio is a modern adaptation of the PEG ratio, tailored for SaaS companies, and it helps simplify the evaluation of companies by adjusting the EV/R multiple for growth rates.

📖 Learning resource…

Lessons from Keith Rabois, a resource compiled by Mo Golshan. Mo distills the wisdom and experiences of Keith Rabois, a prominent venture capitalist and entrepreneur, covering his insights on building and investing in successful companies.

• Why you should read it: this one is cool. Keith is an incredibly successful startup operator, VC, and independent thinker (if not a tad controversial), and Mo has gone and synthesised his perspectives across problem-solving and critical thinking, company building, raising capital, leadership, time management, hiring, finding PMF, early-stage investing and VC, life lessons and more. Given the amount of material available, and I suggest skim-reading to find topics / quotes that resonate with you.

📊 Market insight…

3 marketing budgeting and strategy trends for 2024, from Insight Partners. The top three trends and recommendations based on the analysis of marketing spend and performance data from the Insight Partners portfolio of 500+ B2B software companies.

• Why you should read it: a sample size of 500+ portfolio companies should provide some pretty good signal! The article identifies the key trends that emerged in 2023: a slowdown in new business growth and increasing cost to acquire, more measured marketing spend and reprioritization, and high performers finding a path to outsized, efficient growth, and then offers advice on what to do about it.

🎲Lucky dip essential reads…

• Playing to win with the OG

• What is a “Moat” and why does it matter?

• Ranking GenAI enterprise and consumer apps (see also the original)

Before you go…

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Have a great week!

Josh