Decode Startup Finance: Metrics, Board Decks & AI Efficiency | CJ Gustafson | Glasp Talk #48
This is the forty-eighth session of Glasp Talk!
Glasp Talk delves deep into intimate interviews with luminaries from various fields, unraveling their genuine emotions, experiences, and the stories behind them.
Today’s guest is CJ Gustafson, finance thought-leader, creator of the wildly popular Mostly Metrics newsletter, and co-host of the Run the Numbers podcast. With a career that’s taken him from PwC to senior FP&A roles, through stints at Snyk and Veeam Software, and ultimately to CFO at PartsTech (where he steered the company to a successful exit), CJ now splits his time between writing, podcasting, angel investing, and advising fast-growing startups from his base in Naples, Florida.
In this wide-ranging conversation, CJ unpacks:
- The origin of Mostly Metrics – how “stealing” his ideas and writing online for an audience of 400 snowballed into a 65,000-strong community and a top-tier podcast.
- Playbooks, not theory – why every great CFO develops a repeatable mental model for pricing, monetization, and resource allocation, and how founders can start crafting theirs today.
- Board-meeting mastery – CJ’s four-part framework for decks that tell a story with numbers, impress investors, and drive decisions.
- Metrics that move the needle – net-dollar-retention, CAC payback, RPO, CARR vs. ARR, and the sneaky ways companies “dress up” revenue (and how savvy investors see through it).
- AI’s real super-power – less about 10× coding myths, more about 20 % efficiency gains across finance, support, and GTM teams that let startups raise fewer rounds and keep more equity.
- Finding (and keeping) product-market-fit – why today’s winners must stack multiple S-curves earlier than ever, and how benchmarking against the right comparables keeps you honest.
- Career wisdom for future CFOs – brokering risk, being the “goalie in net,” and deciding when a startup needs a full-time finance chief.
- Legacy & curiosity – CJ’s mission to tear down the gatekeeping around finance and leave a trail of resources that make business fun, accessible, and endlessly learnable.
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Glasp
Transcripts
Glasp: Hi everyone, welcome back to another episode of Glasp Talk. Today, we are excited to have CJ Gustafson with us. CJ is the sharp mind behind the Mostly metrics newsletter and the Run the Numbers podcast where he breaks down business models, metrics, and the nuances of monetization with clarity and wit. Currently based in Naples, Florida, CJ brings a wealth of experience from the finance and tech world. He most recently served as CFO at Part where he led strategic initiatives and played a key role in the company's successful exit. With a rich background spanning roles at Snyk, Veeam Software, and PwC, CJ has built a career at the intersection of strategy, operations, and financial insight. Today we will dive into CJ's journey, his approach to simplifying complex financial topics, and how he's building community through content. Thank you for joining us today CJ.
CJ: Thanks for having me on. This is going to be a blast.
Glasp: Thank you. First of all, we are really huge fans of your content, like your newsletter and podcast. But we want to know what got you interested in finance and business metrics.
CJ: I was learning so much at a startup and I was afraid I was going to forget everything. I realized pretty quickly that everybody who was at the position that I wanted to be in, which is a CFO or a CEO, had what you call a playbook. So it's basically how do I hire the right people to sell the product at a rate that's really fast to grow a company? And there are a lot of playbooks in the world of technology. If you're running a marketplace you may do certain things to get the product off the ground. If you're running a security company that's focusing on, say, developers, you may do something different. And I was really intrigued by how you price something, how you monetize it, and then how you allocate resources within a company. And about 70% of the costs of any company are usually people, and so getting that part right was critical. And so I was kind of always the guy behind the guy who was doing the budgeting. And for those out there it's a position called FP&A, financial planning and analysis. And that's kind of where I got my feet wet with learning how to allocate resources, how to build what you call an operating model and basically figure out like how much can we spend and how much do we expect to return. And so along that journey I started writing online. And to make things a bit more confusing in the background, because I can't sit still, I was also trying to start my own company on nights and weekends. And so me and my wife were doing that. And so basically I was at this time where I just wanted to write stuff down. And honestly, I think you don't really own a topic, you just kind of rent it until you can teach somebody else. So being able to teach other people what I was learning was energizing for me.
Glasp: And then you've been running a really great newsletter, Mostly metrics, for about four and a half years now, I think. It's been a while. But yeah, what inspired you to start the Mostly metrics newsletter and the podcast, if you can share.
CJ: I've been writing online for like four and a half years, but it's funny because like nobody listened to me at all for the first two. I was basically writing for I think 400 people. And like on the podcast that started two years later, and at first I couldn't get a warm body to come on. So just all those people out there who are thinking about starting something, if you're afraid to just like begin, don't be. There's like no angry person who's like waiting for you to fail. In fact, you have to jump up and down and scream and beg people to listen or to read it, which is what I ran into. But like consistency paid off over time. I call it compound effort. I call it like the eighth wonder of the world. I forget how many wonders of the world there are. But compound effort. And so back to your question, I started it while I was trying to memorialize these playbooks I was learning. And I think like all newsletters either die a newsletter or live long enough to become a podcast. And when the newsletter started to take off I got the chance to talk to really, really smart people. I think like the internet's the last democracy in that sense that you can write yourself into any room and I was kind of like, "Ah, holy crap, I can't believe this person wants to talk to me. I wish I like recorded that." And so I started to record some of those conversations in the form of interviews kind of like you're doing now. And what's really cool about that is there's a network effect where at first I was like, "What if I run out of things to write about?" But now I know I won't because I bring smart people on to talk about stuff and then I can write about it after.
Glasp: That's a mystery, like our profession. You mentioned that nobody read your newsletter for the first two years, right? But what was the motivation to keep doing it? Also, what was the trigger that your newsletter improved?
CJ: I think I'm just a psychopath. I don't know why I kept just screaming into the void. But I think it took me a while to find audience market fit. So what not many people know is Mostly metrics actually started out as a different newsletter. It was called Steal My Idea. And so if you go back far enough, I was making up these crazy business ideas, like a monthly box of vintage concert T-shirts that you could get like a subscription thing, or like a new way to keep track and organize of your home videos. And like nobody cared about my stupid ideas. What they did like was how I was talking about metrics and how I was explaining concepts like total addressable market. How I was calculating things like CAC payback period or net dollar retention. And that's what Mostly metrics became. So, like, nobody cared about my business ideas, but they liked the way that I had fun talking about business and stuff that was very academic. So you could Google, "How do you calculate CAC payback period?" but it's a lot more fun if somebody's doing it through a stupid idea around vintage concert t-shirts. And so that that's what led me to shift the subject matter that I talked about, and that's when it started to take off. But I still had to market it out there. I don't know if you want me to go into that of how I got that part off the ground.
Glasp: I see. So meaning so did Substack recommend your newsletter then it went viral, or like someone picked out your newsletter and shared on social?
CJ: So there was there was never one viral moment, honestly. I think it was having this base of knowledge that people could turn to over time. Like I think for anybody to subscribe to your newsletter you need at least like five really kick-ass posts on there. Because it's kind of like if you wanted to binge a series on Netflix and you watch one episode, there's not another one there, you may forget about it later. And so you have to create like this home base for people to come to, to serve them whatever that job to be done is. And for me it was to create this on-ramp for talking about metrics and business models and having fun with it. And so it took me a while to build up that home base, to have enough stuff to make someone stick around and keep coming back. So there was never a viral moment, but I think there was a moment where it went from me pushing to the market pulling. And that's when I started I noticed that like I was every day I was getting at least 50 new subscribers. It was like I could predict what the engine was and it was no longer like, "Oh, a spike of 20 subscribers from like this Twitter thread that I did," whereas before you could trace it back to events in like the social media ecosystem or somebody sharing a blog post.
Glasp: I see. And I'm curious, I enjoy reading your content, and you showed this is the best feed, you know, like about ARR, net retention, revenue retention and so on. But what's the most popular topics in your newsletter?
CJ: Yeah, most popular topics are on board meetings, how to prepare for board meetings, how to make your materials for them, and how to talk to your audience.
Glasp: Actually interesting. Could you share a bit about, I'm also interested in how we should prepare for board meetings.
CJ: Yeah, so the majority of my audience works for either venture-backed or private equity-backed company. And as a part of that you have to prepare materials that summarize the last period's performance for your investors. And that's a nerve-wracking experience for a lot of founders and for a lot of CFOs, because you're kind of being judged by your boss, for lack of a better term. And you want to come across as smart and you want to be able to tell a story with the numbers, not just report on them, but be dynamic in the way that you explain it and get your point across in a way that is meaningful so they can help you make decisions. And so I created a guide. I think it's a three or four-part guide for the paid audience on how to basically ace your board meeting, everything from how to create the sections of what you should talk about to how to templatize your slides so it's less of a lift internally. Like, honestly, I feel like 50% or more of my career was surround was like in service of board meetings. How do we make sure we look good for the board? How do we make sure we have good results for the board? And so it was kind of like I was dumping out 20,000 hours of experience in that onto paper.
Glasp: But since we are like more like a startup founder side, and then we don't have like a formal, formal board meeting, and I'm currently, I actually when I read your content about ARR retention revenue, that was eye-opening because I, because we are building product for consumers, not B2B, I've never, I didn't know the concept of CAR, like contracted ARR. But you mentioned that it's a way to trick investors. And that was really interesting concept. Could you share a little bit about ARR and also CAR?
CJ: Yeah, so there, like, I guess to start off, there are all different flavors of revenue. So there's one-time revenue. Like, I don't know, I need a plumber to come over and fix the sink and I pay him once and he does that job. Then there's recurring revenue, which is like a Wall Street Journal subscription or your Calendly subscription where they charge you every month. What happens in the B2B world with larger enterprise deals they call them, which is like if you're selling to a bank and you have a security product, many times it's a multi-year contract and they pay upfront for it. And so let's say it's a three-year contract, many times it increases over time to scale with their headcount. They say, "Hey, we have a thousand people working here today, in a year it'll be 1,200 and the third year it'll be 1,500." And so they get a discount for signing up for three years with increasing amount of licenses so everybody on board can use it. And so one of the most common ways to trick investors, and I say trick because it, it is, I don't know, it depends if you are actually trying to trick them or if you're just reporting it. And I've been complicit in this many times, is you can state the third year, which is the largest amount. So you look at their ARR and you go, "Oh wow, it's, it's a $120,000 deal, or there the AR is worth 120,000, but it's really only 90,000 in this year." And so there are all sorts of different ways that you can skew the numbers and make them dance to look good. And a lot of times it's the finance team that's behind that, working with the CEO or CFO. And then they have to tell the story on why it's true.
Glasp: Interesting. Yeah, so in that sense, when you talk to startup founders or companies doing, like, financial things, do you ask, "Oh, what's this ARR means?" or do you care about definition now?
CJ: Oh yeah, 100%. I did this piece on Mostly metrics where I pulled the definition for 25 of the top tech companies out there of how they defined ARR. And it was crazy how different the definitions were. Like some took it at the end of a period, some did looking back. What was the average spend over 12 months? There's all sorts of deviations. And I think it tells you a lot about what they value at the company in terms of how the business works and the money they expect to get from it. But like when I talk to founders, I also just ask for like metrics around how much cash they've collected too. Like you can, you can blow a lot of smoke up, you know what I'm trying to say. Basically you can change the goalposts a lot, but at the end of the day you need cash to live. And if your revenue isn't tying out to what you're actually invoicing and what you're collecting, then no bueno.
Glasp: Yep. I see. And also you shared about RPO, like remaining performance obligation, and you use example from like Snowflake in your, in your popular content. And that was, since I don't have finance background, financial background, that was kind of eye-opening moment to me. Damn, you went deep, dude.
CJ: Yeah, I love that. So that's basically how much revenue remaining performance obligation like you have left to serve your customer. So investors can get confidence in companies like Snowflake because the customers have signed up for these huge deals. And so down the road they're going to pay them back. Like that company Coreweave that just went public, they made big headlines. They had a huge RPO bounce. So their customers are saying, "Listen, we're going to buy this down the road. We've signed up for it. They, we may not have given them money yet." And so it's a way to de-risk the future, because if there's one thing investors hate, it's uncertainty.
Glasp: And but it won't be shown in the GAAP financing, right?
CJ: Exactly, it's not in there because it's, what will be shown is deferred revenue. Deferred revenue is the amount that's left, the balance on the contract left over the next 12 months. But if it's a multi-year deal, that's not going to be there. So think about it's like an iceberg where you have this deal, but only like the top of the iceberg is seen on the financials. So it's like, "Well, what other data can I get to be more comfortable around this company's performance?" RPO is a metric that is like, I think, incredible for, for doing that. And that's also why I like writing about this stuff because it's like a metric that helps you understand a business, feel more confident in it. But like they may not teach that in like a basic accounting course. So there are all these different signals you can get from a company if you go outside of just the profit and loss statement or the balance sheet.
Glasp: I see. And would you recommend, like, a CFO, let's say for startup founders, CFO at startups, like learn from how public companies showing the numbers, like, let's say using RPO, like convince some investors when they are raising money, or would you recommend that using…
CJ: But it has to be specific to your business model. So everybody wanted to say use the metric Snowflake used for like two years because they had the highest valuation multiple. Basically they were valued the highest for how much revenue they were bringing in. But like if you're a marketplace, like maybe you should be looking at Airbnb or eBay instead. So I think that's a mistake that I've made in the past too, just having like a bad comp set. And I tell everybody, and I track this every Sunday and Mostly metrics, like, "Here are the key metrics for security companies, for infrastructure companies, for marketplaces, for vertical software." Like if you're serving a car dealership, it's going to be very different than what Adobe is reporting on for their metrics for like a marcom product. So I think it's very important to figure out where you play, how you monetize, and who else looks like you, because you want to see what great looks like but relative to your company.
Glasp: Totally makes sense. At the same, at the same time we have so many metrics, right? In finance, like CAC, CAC payback period, and also net retention revenue. And you mentioned like if you have, like, 140% retention revenue, but with 18, less than 18 months CAC payback, and you should invest more on… How should we see the metrics around this? So for, let's say, the audience is startup founders or early stage founders.
CJ: So I'll start off by saying that the best customer to have is the one that you already have, rather than having to go out and get a new one. So you have to spend money, which is called customer acquisition cost, on salespeople to call them, marketing people to run ads in order to get a customer, right? Then you want to basically pay that down over time using that customer's revenue. So if a customer is giving you $100,000 and you spent $120,000 to get them, it's going to be a little over a year until you get the money back, right? And so CAC payback period is a measure of how fast you get to pay down that cost. And then net dollar retention rate is like one of my favorite metrics. It's basically how much does your current customer base expand or contract in a given year. So you take all the customers on board as of one date, and then you see how much they've paid you at the end of another period. And so usually it's measured on a trailing 12-month basis. So if you have a net dollar retention of 140%, that means, like, hypothetically, I'm saying this somewhat in jest, but you could go on vacation for a whole year and your business would still grow 40% from those same customers. Like that's power, that's leverage in your model. And so if you know that, then you can be willing to pay more in customer acquisition cost to go out and get them, because you're like, "Whoa, this customer is just going to keep paying me this annuity stream, and it's going to get bigger over time. Therefore, I'm more comfortable in getting over my skis a little bit, leaning in more to that customer acquisition cost." So it's like squaring two things in your mind to try to find this balance. And that's why I get excited about it, because it's not just science. It's, there's some art in it too.
Glasp: Yeah, I get it. Yeah, like it. Yes, thank you. And so there are many financial metrics or like measurements, right? So where do you find those like information? So I mean like where do you catch up those information or see those metrics?
CJ: Well, I learned most of the metrics because I had investors myself. And I woke up one day and like the spreadsheet or dashboard I was tracking in Excel had 140 of them. And I was like, "This is like way too many. First of all, like which ones are important here?" I remember I had 14 different cuts of retention, which is just a measurement of keeping your customers around. And it's like, "These can't all be equally important." And so that, like, put me more down the rabbit hole of like, "Okay, if I could only pick two, what would it be?" Okay, it would probably be net dollar retention on a trailing 12-month basis, and it'll probably be gross account retention, keeping the customer around regardless of what they spend on a monthly basis. And so like, I think that's where my curiosity came from. And since then I've had all these metrics in my head. Now it's like when I look at the news, it's just kind of like a lens that I digest things through. It's not necessarily me out there searching for stuff on metrics. It's like I hear a piece of news and my head just naturally either calculates directionally what I think it means, or like I take it and I do a mental bookmark to come back and write about it later.
Glasp: Interesting. And if you give advice for startup founders who has no background in finance, what should founders start reading or collecting information? Of course, Mostly metrics, but any other recommendation? Like someone on X or someone on LinkedIn or like government report.
CJ: So one of the funny growth hacks that I don't even know if it's a hack, it was more just hard work that I started out with, is like I tried to own basically 20 terms on Twitter that were very specific to finance. Things like net dollar retention, things like employee stock options. So if you ran in, if you searched it, you're going to run into me. That's how I got to my first 10,000 subscribers by like maniacally trying to post content under those terms. So you would find me. And so if you're a startup founder, what I would encourage you to do is research about 20 terms that you think are relevant to you, and then go and search those keywords on Twitter and just like get as smart as you can about them. I think people get overwhelmed with how many different metrics there are, how many different business concepts there are. But like if, like I said, a marketplace model, you probably want to know about things like liquidity, which is a measurement of like how many suppliers do you have versus how many customers. So like figure out 20 terms to start with that are relevant to the business that you're in and then go after it from there. And like if you're in a B2B model, you're selling security software, it's going to be very different than like if you're B2C like Strava running app. Maybe you should study things that are concepts or metrics specific to those. And what I find is if you get your arms around like just enough that feel manageable, you'll eventually go down these rabbit holes and you'll find repositories of information. And that's what I was trying to design Mostly metrics to be, like a place you would land on and be like, "Whoa, I found like this gold mine of stuff and it's relevant to what I was trying to research, and I can go deeper on it."
Glasp: That's interesting to start. Yeah, thanks for that. And I'm curious, like, about CFO's career transition. You mentioned that metrics using at Snowflake is different from Airbnb and eBay, for example. So if you are working at Airbnb as a CFO, you can switch job to like Snowflake as a CFO, for example, it would be hard to do that, I think because you, like…
CJ: Listen, CFOs are smart. I'm sure they could figure it out on the fly. But companies are usually looking for someone to come in, like I said, with a playbook. And so it's not to be said that like, "Oh, I work in auto tech, I have to work in auto tech for my whole life," but that's a pretty drastic swing from like a marketplace to an enterprise sales company with like multi-year contracts. So I think it comes down to like curiosity, playbooks, and like speed of learning. And usually the people that are at these companies have something in common with those three that they've taken from somewhere else, usually in the same domain or similar domain.
Glasp: So as a CFO or like financial person?
CJ: Yeah. Yeah. I mean like if you look at CFO Mike Scarpelli, who was at Snowflake, before that he was at ServiceNow, and before that he was at Data Domain. They all have longer enterprise sales cycles with highly paid field reps, and they're critical infrastructure to a company and somewhat of a similar buyer. And so they're definitely threads. And it's not to be said that, you know, like I said, you got to stay in the same industry, but you do want things to lean on. Like, "Oh, I've seen around that corner before."
Glasp: I see, to totally makes sense. And it reminds me a story that we interviewed a designer at Snowflake before and he was talking the same thing. So a designer at Snowflake or data industry should be working in data industry again, so not in a different way. So interesting.
CJ: Yeah. And I think like subject matter expertise in a lot of these is important even if you're working with databases. Like what type of database is this company work versus this one? It's similar to like a coder. Like are they really going to learn PHP overnight? I'm sure they could, because they're smart people. But if they're being hired for Java, it's probably because they did that at a previous company.
Glasp: I see. And I had a question, they got into CFO, too. So in the company, I think for startups, we need a CFO after, I think, series A or B, I guess. I'm curious what kind of goal set CFO should set and also how can we know CFO is working better or not at a company.
CJ: Yeah, that's lifetime question. Yeah, I'll work from the first kind of question there. And I think you really need a CFO when your business model becomes complex enough to need it. So some companies need a CFO at $5 million in revenue because, let's say, it's like a healthcare software app with co-pays and there's all sort of sorts of like complicated stuff within the industry. Like healthcare is notoriously complex. But like a $50 million enterprise SAS business with, I don't know, a couple hundred customers, that could be pretty straightforward and maybe they outsource a lot of it and have a VP of finance. So I think it all depends on the complexity of the business more so than the stage. Like, yeah, most companies probably get a CFO around Series B, C, and they usually bring in some, some of finance or accounting around Series A and build up from there. But like, there are different ways to skin the cat there in terms of like what good looks like. In my opinion, the CFO should be the person who's always pushing the pace of the org, right? They're always advancing the org's objectives by giving financial support to the things that are most needed. Because I look at CFOs kind of like an investor in the sense that they're making portfolio allocations, but the portfolio is their company. It's, "How do I get the best return out of the money I spend throughout the org?" So CFO can't do a ton in terms of like making the product great. But conceptually, if the product is serving the customers that it should and it's priced the right way, the company overall should have success. So a lot of ways to measure, I think the CFO's position end up coming out and how fast the org is moving and if they're hitting their goals, even if the CFO can't directly impact some of it. And that's probably why you're seeing a lot of responsibilities between what you traditionally call the COO, chief operating officer, and chief financial officer merged together.
Glasp: See, interest. When things are going well, as you mentioned, it's easier to see. I mean, it's easy to see. Yeah, because it's, things are going well. It's maybe it could be the contribution of CFO, CEO, but if things are not going well, how can we know if this is because of the CEO or CFO? Because of the COO or what, or product is not working? Or now, how should we, how say, I don't know how to say, allocate the responsibility?
CJ: Yeah. How do you figure out in bad times if the CFO, if it's their fault? Well, you actually probably need a CFO even more in bad times because then you have to make tough decisions around where to cut. And if 70% of the costs walk on two legs, that's like the beauty and the horror of tech businesses that at the end of each night, your most valuable assets go home for the, for the night. And so you do need a CFO there to help with reallocating resources. Like maybe the plan wasn't correct, maybe the market moved. And so I think the best way to figure out if the CFO is working in bad times is how, how confident do the leaders around that CFO feel in how well the plan has been communicated and do they trust that the person has the company's best interests in mind and shareholders' best interests in mind, which is like harder to measure on paper. But a lot of it does come down to, "Is this the person I trust to make sure that like there's a goalie in net that's helping to make sure nothing gets by us and I can sleep better at night?" And a lot of that will come down to the founder's relationship or CEO's relationship with the CFO.
Glasp: I see, that makes a lot of sense. Yes, thank you. So switching topic to AI. So since now AI is crazy and some people say, "Oh, we have AI tools for coding," and some people say, "Oh, we can make revenue AI, we can make money, startup can make money easier so that they get profitable earlier and soon." So, but how do you see the impact of AI in financing or even business metrics?
CJ: There's so much written out there around how to make more revenue using AI, like new chatbots to add new product features. What's not talked about enough, though, is how to get more efficiency out of your organization using AI. And I think there are two real levers that companies can turn to internally, no matter how big or small you are. So the first is identifying things where you can deploy an AI agent across a task that is very rote, it's very defined, it's very repeatable. So like customer support is the example people always use because like, "Hey, I forgot my password," that's pretty simple to write something there, and you don't need as many people because traditionally customer support scaled linearly with revenue. Another spot could be potentially in finance of scanning the receipts that come in and matching them to things that occurred. Then there's like the more nebulous area, which is efficiency gain. So instead of cutting people, it's getting more out of the existing people you have. And we hear all the time like the 10x coder. Like, I hope that's out there, I haven't seen one yet. But I think it's more like, "How do you get incrementally 15, 20, 25% better or more out of people each year?" "How do you move faster within defined roles that exist?" And that's not something that you can like deploy an agent on to do someone's job, but it can speed them up and say closing the books faster to get to like accounting outcomes, or to take huge datasets that would have taken a while to tag for the BI team and getting those tagged using AI, or to help with outbound emails that BDRs are going to use so there aren't like spelling errors in them. Like you probably still need the same number of BDRs to a certain extent, or like, "How do you help a salesperson prepare for a meeting so they could take four in a day instead of three?" Those are the real efficiency gains where I think people lose the forest through the trees because they're like, "Oh, there's a 10x engineer out there." It's like, "Well, 10, 20% year over year compounds pretty awesome over time too."
Glasp: Yes, totally. And let's say startup leverage AI and 10x holder and and so on. Then so the revenue increase then they get profitable in that case, as a startup or series A company, should they stop fundraising or would you recommend fundraising?
CJ: Totally. I mean like I think the biggest outcome from AI is companies hopefully are more efficient, which means they don't have to take on as much capital. It's kind of a perverse incentive to take on more money just because like we're conditioned to think that that's like the sexy cool thing to do. First of all, there are a ton of companies that should never take on funding. Like I don't know, like a newsletter, like is that going to return a venture outcome? Probably not, but it can be an amazing lifestyle business, which is like a bastardized term. We forget like that the goal in any company is to make money. So if you're making money, which is the goal in and of itself, because value is predicated on the forecasted future cash flows from your business, then you're doing great. Then it's like, "Can I make this go faster to an extent that would outweigh the dilution I would take?" And so I'm excited about AI in the sense that it can help founders skip fundraising rounds altogether. Maybe you only need seed and series A, and then you don't need more, which means that you get to keep more of the company and decision-making power and economics.
Glasp: I see. Yeah. And this is also another like my long-term question I had. Because in startup finance, usually nowadays, thanks to, or because of AI, like company, the valuation gets super high, like 100x or more ARR. But in the PE market or public market, usually it's like 5 to 10x. It depends on the business model, but it's 5 to 10x ARR, right? But eventually the private company matches with the public companies' kind of financing valuation system. And how do you see, or what's your thoughts on this? Like a gap between private market…
CJ: It's an amazing question. Yeah, so right now, in late April, the top 10 companies are trading at a median forward revenue value of 13x, 13 to 14x. Which basically means if they're going to do, if they're forecasted to do a billion dollars in revenue next year, the market's saying you're worth between 13 and 14 billion. And historically, anything over 10x is looked at as a premium because you're basically pulling forward 10 years worth of revenue, not even profits, revenue, which uses the shorthand for measurement because not all companies are profitable in the public markets. And then in the private markets, we're seeing a bit of dislocation where some of these like really fast growing companies, like a Cursor, or I don't know, there are a million crazy tools that have raised at these meteoric valuations. I mean, it could be 60x forward to revenue, 100x. And so then what you're basically signing up for is an outcome that puts you on par with like, I don't know, like a five or six billion minimum valuation. Which means you'd have to be like basically doing a billion dollars or more in revenue, considering that the median company, not the top 10, is trading at like 5x forward revenue. So it's all to say that if you take on a massive valuation, you're signing up for a deal where you have to basically be perfect in the future. You have to hit revenue targets and grow to become a scale that is rarely seen. You basically have to go public, is what I'm trying to say. And you have to be a decent, really decent public company if you sign up for like a 100 forward, forward revenue, which we saw a lot of those valuations in COVID. And a lot of companies didn't make it out. Some did, but even then it's like the investor probably only returned three to five x and they wanted 10x. So everyone's sitting there saying, "Why did we sign up for that deal?"
Glasp: I recently saw a tweet, ex-post, that that was a couple of years ago. But this post recently, then like a guy joined Dropbox in 2008. And at the time, they raised series C or something. Then valued at 10 billion, 20 billion. I forgot. Sorry, I forgot the number. But then 10 years later, then eventually public market reached 10 billion, or same valuation then...
CJ: Yeah. Isn't that crazy to think that you may work at a place and... Well, like even we were talking about Snowflake earlier. Snowflake is still trading below their IPO price right now, and they have like, I think, 8x revenue since then. So that just puts into perspective how wild the market was valuing companies.
Glasp: Wow, interesting. So but, oh, so then that reminded me of another question regarding IPO offering, like offering the price, initial price. And I remember Steve Jobs once tried to hit higher, like IPO the initial value at the beginning. But, and I know some companies, most of the company try to hit, how to say, price higher when they go public. But if the price goes down, and I was always curious, why don't they put the lower price the beginning so that they go up, right?
CJ: It's a great question. So people forget that an IPO is a fundraising event. It's just done publicly, not with private market investors. So the amount that a stock goes up afterwards, the company itself does not benefit from that in terms of getting to put money on their balance sheet. So you want to price it at a not too hot, not too cold level where you closely try to maximize how much money that you sell the shares for. Because what you're doing in an initial public offering is you're creating more shares in the company and offering them to the public, and the public gives you money that you put in the bank and can use to run your operations. So if you IPO for a share price of $20, you get $20 times every share to put, put away. And then if it goes to 25, that $5 goes to the shareholders who are holding it outside of the company, right? Who sell theirs. It's, those that $5 per share doesn't benefit the company in any way, but it does make the, the shareholders who maybe will buy more shares and help your company stock price go over time pretty happy. And so you just have to think like, "Who's the one who's benefiting from holding the share at that point?" And you also don't want to shoot yourself in the foot and overprice yourself and then there isn't enough demand for it. So that's where like the art and science meet around market dynamics and supply and demand.
Glasp: Thank you for answering many questions. That was a good one. And at the same time, also this is a question I was thinking always, but for early stage startup, let's say angel round, pre-seed round, seed round, they usually have higher x ARR. Because, let's say, the company just started, then in three months, "Oh, we are making 100k ARR, but we are raising 10 million or 20 million valuation." And then it's 100x or 200x. But is that common in early days x?
CJ: I mean, that's the law of small numbers. And then the revenue multiples will never make sense. In fact, that's why the idea of a SAFE came out of Y Combinator, the simple agreement for future equity. Which is basically like, "Listen, I don't know what this is worth, you don't really know what it's worth. Instead of arguing over price, let's kick the can down the road." And so earlier on, startups will raise to build the product. But like once you hit, say, series A, you should have decent product market fit. Once you hit series B, you should definitely have solid product market fit and real metrics. And then at that point, I think it becomes a lot more indicative of what the valuation is and you can start to use those multiples. But earlier on, like the math will never truly make sense.
Glasp: And since you mentioned like product market fit, and this morning I received a newsletter about product market fit, and so I haven't checked the content, but like, but product market fit is not the goal, right? It's, the startup keep improving to meet product market fit. And could you share about your thoughts on, like, a product market fit?
CJ: Yeah. And not all these ideas are my own. Like Harry Stebbings did a really great podcast on it. I'm a fan of 20 Minute VC. And what him and Jason Lemkin were discussing is basically, if you found product market fit, which is like people pulling the product out of your hands, wanting to pay for it, it solves a problem. If you had like a really decent team, you had a five-year run where you could just continue to make money and sell it. But now I think companies are falling out of product market fit a lot faster. Where like the market will shift, like a new AI product will come and it just does whatever your thing did a lot better. And it's because innovation cycles have been cut down and it's kind of changed the game in terms of how companies think about incubating their second act. And I think any billion-dollar company out there has had more than one good product. It's really hard to get to a billion dollars in revenue with just one product. And so what you have to do is continue to jump S-curves, they call it. So if you think about the shape of an S, it's basically a company grinding it out until they find product market fit, then you have the hockey stick growth, then eventually the market gets saturated and competitors come in and channels of distribution like Google Ads dry up. And then you have to create another S-curve to stack on top of it to keep going. And so I think companies are having to stack S-curves earlier than they would have in their lifecycle, or they risk getting beat out by other competitors out there.
Glasp: I see. So in that sense, when should the founder of a startup prepare for the next innovation? Like is that during the S-curve, or when they see, "Oh, it's, I think, getting saturated, so I think we should innovate again?" Or…
CJ: Usually like historically you would start to launch a new product around, say, year three of having sold the original product. But there's no real like hard and fast rule of when it should be. I think you should be highly attuned though to what your customer needs are and then where the expansion areas are. So like a good expansion area is to sell a new product to the same customers, right? You already have them. That's the net dollar retention rate that'll expand over time and you don't have a customer acquisition cost because you already have them. Or you can make a new product and sell it to new customers, which is like playing on hard mode because you have to go and find new customers and you have to prove that you can technically create something. Or you can go into a new geography. So maybe you haven't sold in Europe yet. You can sell the existing product, but now you have the risk around creating distribution there. And so there are different ways to go about it, but it's like, how do I, how do I make it easier for myself? Like to either distribute this or to build something else? Like if you're going to build it, do I have a codebase that I can build upon where I don't have to recreate the whole thing? And all of these are different ways to create different S-curves. So different ways to sell to the same customer, different products to sell to the same customer, different geographies over time. So a lot of people think that jumping S-curves or incubating a new engine for growth is like, "I have to, I was a marketplace, I have to come up with a security product." Like that's not what it is. It's, you have to think of something tangential that expands your total addressable market.
Glasp: Yeah, thank you. That's great tips. And this is kind of a question because you have so much knowledge and that's really useful and valuable. So do startup founders reach out to you, "Hey CJ, can you be our advisor or investor?" and so on?
CJ: Yeah, I get a good number of requests, especially if it's a tool that's used in finance or back office or productivity, or just CFO type stuff, all the time. Which is interesting because it keeps me fresh with thinking through that, the problems that they're going through.
Glasp: But you don't take, like, CFO jobs, do you? Do you help them, like, on the spot or how?
CJ: Yeah. I haven't taken a CFO job just off of that because I enjoy being the CEO of my own company now that I've gone full-time, which is interesting. CFO became a CEO. But at the same time, I do try to invest in a handful of companies every year with a small check and then just try to give advice on what I'm seeing or try to help them promote their own product to, to my audience. Which is the real distribution benefit there, because like, I look at it, all investors provide a couple of things. First thing is they provide money, second thing they can provide is introductions to employees to help you work, and then the third thing they can do is provide customers. For me, I can help usually with that third one because I have an audience. And so that's kind of my advantage of trying to help out companies, advise or invest.
Glasp: I see. I think sort of founders have you as investor or advisor are happy. At the same time they feel pressure because when they share monthly report and and metrics and you know the numbers, like, "Oh, don't you know trick me." And but then I can help too because I can understand it quickly.
CJ: Look, I'm pretty reasonable when it comes to that stuff because I've seen what good looks like and what bad looks like. And I understand that nothing's perfect. Like starting a company is really hard, getting people to put down a credit card and give you money. Like that can't be understated how hard that is. Like selling something is the hardest thing in the world. So I get it, I've been through it too. Like I've had my failures along the way. I mean, I've had companies that I've started that didn't work at all. So there's something to be said about developing empathy for founders.
Glasp: Yeah. It's a different question, but when you hire CFO, what is the definition of great CFO? And what kind of experience or what kind of things do you see in the candidate?
CJ: So there are certain table stakes. Like you understand financial statements, you know how to report on the results and you know the metrics. The best CFOs, though, know how to broker risk within the company. Because you have a startup founder that's got to that point because they're very aggressive, they have this idea. Like it's a disagreeable thing, as Mike Maples of Floodgate would say, to start a company to begin with. You have to be somewhat crazy. So of course you're going to want to do crazy stuff. How do you broker risk along that frontier to make both the investor happy and to achieve their vision, and to break down barriers for them and pave the road with, like, coming up with a plan that can be achievable, while also being like a good steward of capital? Because the CFO does report to the CEO, that is their boss, but you're also what they call a fiduciary to shareholders. It's your responsibility to look out for the money in the bank and for how the company invests, and to make sure that you're doing things honestly. So I would say that the best CFOs have a good view on how to, how to lean into risk or how to pull away at the right times. And they're very honest and can say things to people that, in a nice way, that they may not want to hear. Sometimes you do have to call the baby ugly when you're building something that's just not working.
Glasp: I see. And I saw this tweet or post on X sometime, but the guy was saying that, "Oh, hey, startup founders, your mission, vision don't matter unless that your product solves the pro customer's problem. And when they pay money to your product, it means solving your, solving the problem." And in that sense, as, as a startup founder, I care about mission and vision. At the same time, as a business, we should care about revenue, right? To make business sustainable. How should we balance the revenue and mission vision? Because startup, a company start, usually founders start a company with their mission, vision. And but at the same time, revenue matters.
CJ: I mean, I think you need a great mission and vision to create a product that people want. Like the two things go hand in hand. That being said, like there's nothing wrong with working for a charity or not taking on venture money. But it's hard to say you don't really care about the revenue, you only care about mission and vision if you took money from an investor who expects a risk-adjusted return on it. It's all like the game that you sign up to play. There's no wrong game, but if you play a stupid game from a stupid strategy perspective, you win a stupid prize.
Glasp: I see. Yeah, I think so. What I was curious, what you are currently focusing on, like what's your current focus and interest in, like what are you going to write? Do you have some ideas you want to write on next?
CJ: And so I'm putting out a benchmarking report in the coming days on what good looks like across different private company stages. So if you're under $5 million in revenue, if you're between 5 million and 25, if you're between, you know, 50 and 100 million, what should your net dollar retention be? Like what should your CAC payback period look like? And how does that translate to what we're seeing in the public markets? So I, I'm really excited about creating what I call like an operator benchmarking report for people running companies. There are a lot of reports out there for investors vetting companies, but like I'm trying to create the report that I would have wanted five years ago when I was trying to make decisions based on my business model and company size. So that's what I'm going to be putting out on Mostly metrics.
Glasp: Oh, that's interesting. But if it's private companies, so how do you see those companies' metrics? They don't publicly announce, or sometimes they have announced, like, "We have 5 million ARR," for example. But usually it's not public.
CJ: Yeah, exactly. And that's the benefit of having an audience. And now it's over 65,000 readers. And so even the paid readership is big enough now, statistically, to survey. And so it's something where I couldn't have ever done this if I didn't write hundreds and hundreds of pieces and gain an audience. So it's like me evolving my own business model on the fly, which is most fun to me. I think you get these different opportunities because you do something else well.
Glasp: No, I still have to make the main thing the main thing and put out great content. I also get other opportunities to do things like survey smart people like yourselves and business owners and what their metrics are. And if I give them something back that's more valuable than the time that they gave me to fill it out, then I did my job. And I think they'll do it again. That's kind of the, the unspoken deal.
CJ: So I see, interesting. Do, do, by the way, do you have a role model in your career? Like is that Warren Buffett, Charlie Munger? Do you have, or do you have any future vision, plan of what, can you say it one more time? Sorry.
Glasp: Role model, your role model.
CJ: Oh, like what's my mental model around stuff?
Glasp: Mental model for investor, or where do you want to see yourself in 10 years, 30 years, for example?
CJ: I don't know. I'm, if you told me even three years ago that I could make enough money to support myself writing online, I'd be like, "You're crazy, dude." So I don't know. I think I just want to be able to create a place that helps other people do their jobs better and makes finance and business stuff fun. Like I always thought it was cool to be a fan of business, not a critic of it, but a fan. And to enjoy it, and to have fun along the way, and to learn something. And I want to try to create a place that people can do that. And in the process make some money too. So it's been fun so far. But like I don't know. Like I've always had the vision of like this benchmarking report, but I didn't know if I'd ever have enough people to survey to do it. So who knows? In a year, we'll have to check back.
Glasp: Yeah, we can rewatch this Glasp Talk again.
CJ: Yeah, exactly. Yeah, thanks.
Glasp: Yeah. So since, you know, it's been almost one hour, so two things. And one is advice. Do you have any advice to, let's say, startup founders or content creators or newsletter writers?
CJ: Yeah. I think general life advice is usually generally pretty bad, so I'll try to hone in on like newsletter and content creators. And this is just what I've experienced, and it's, you want to write really selfishly and then give away generously. And what I mean by that is, you want to create content that is interesting to you and specific and serves a need that you would have needed or need now. Because if you don't do that and you try to write for some like fictional smart person that you think or hope is out there, it's never going to land. That's what I tried to do for the first couple years. I thought there was this smart person that was interested in these smart business ideas, and that wasn't true. And so when I started to turn inward and say, "What would benefit me the most?" and then I gave it away for free. And eventually you can charge for it if you give enough of value away. But like, that's how you find true what I call audience market fit. That's what I've experienced.
Glasp: Yeah, I like the, the concept of audience market fit. Yeah, thank you.
CJ: It's kind of like investor way. Yeah. And I think there's also like a hierarchy of content too that people and brands, like for sponsorships, because I monetize through sponsorships too, are willing to pay for. And like the north star is, if it ends up in a financial model for someone to make a decision, that they're willing to pay a lot for it. But if it's just something that's going to make them laugh or they're going to read in passing, like it's probably not as useful to helping them make more money or be better at their jobs or improve their lives. So you got to think like, where on the hierarchy of content does this land?
Glasp: Nice, thank you. Also, do you have advice to those who, let's say, have higher net retention revenue, like 140%, and then lesser, like cash, CAC payback period?
CJ: Keep investing in your business. That's the market saying that we want more of it. So like those are the signals that you look for to say, "Hey, I feel comfortable taking the risk," like I said, "to spend more on the company." And that's what a good CFO will help you make that choice. I remember the company that I joined to be CFO, when I had them send me their profit and loss statement, just to check before I joined, I was like, "I think they made a mistake." And I emailed them back, I was like, "Hey, you forgot to put in the marketing spend." And they're like, "Oh no, we've never spent money on marketing." I was like, "Sold, that's, that's, I want to work there because like I know that this product is just being pulled off the shelf, and you can pull more gasoline on the fire." So you want to like see if the market is telling you that it wants more and if you should invest.
Glasp: I think we need you because we don't spend money on marketing now. Well, congrats on all the success because I've seen the name everywhere, and you've got quite the following. That's impressive.
CJ: Yeah, thanks.
Glasp: I think we need an aggressive CFO at some point. But anyway, this is the last question, and it's a big one. Since Glasp is a platform where people share what they are reading and learning as a digital legacy, we want to ask this question to you. What legacy or impact do you want to leave behind for future generations?
CJ: I think it would be continuous self-improvement and curiosity, and to have fun while doing it. There are a lot of areas, finance included, where people try to put up walls to say, "I'm so smart," and almost keep people out. I would want to leave a legacy that I help bring down walls to let people understand something, have fun, improve their business, improve their life in a way that they couldn't have got to before. So making it more accessible and enjoyable in the process to engage in any sort of business.
Glasp: Thank you. Yeah, really beautiful. Thank you again for joining today's talk.
CJ: Thank you. Thanks for thinking of me. And this was a blast. Excellent questions. And like, I'm blown away and flattered by the research you did on my stuff. So thanks for reading it.
Glasp: Thank you for writing it, and you're learning a lot.
CJ: I'll keep it going. Thank you.
Glasp: Thank you.
