Selling SaaS to developers, cracking YC after 13 tries, all about Expensify – TechCrunch
Before Twilio had a market cap approaching $56 billion and more than 200,000 customers, the cloud-communications platform developed a secret sauce to fuel its growth: a developer-focused model that dispensed with traditional marketing rules.
Software companies that sell directly to end users share a simple framework for managing growth that leverages discoverability, desirability and do-ability â the âaha!â moment where a consumer is able to incorporate a new product into their workflow.
Data show that traditional marketing doesnât work on developers, and itâs not because theyâre impervious to a sales pitch. Builders just want reliable tools that are easy to use.
As a result, companies that are looking to create and sell software to developers at scale must toss their B2B playbooks and meet their customers where they are.
Attorney Sophie Alcorn, our in-house immigration law expert, submitted two columns: On Monday, she analyzed a decision by the U.S. Department of Homeland Security not to cancel the International Entrepreneur Parole program, which potentially allows founders from other countries to stay in the U.S. for as long as 60 months.
On Wednesday, she responded to a question from an entrepreneur who asked whether it made sense to sponsor visas for workers who are working remotely inside the U.S.
Thanks very much for reading Extra Crunch this week, and have a great weekend.
Senior Editor, TechCrunch
4 lessons I learned about getting into Y Combinator (after 13 applications)
Can you imagine making 13 attempts at something before attaining a successful outcome?
Alex Circei, CEO and co-founder of Git analytics tool Waydev, applied 13 times to Y Combinator before his team was accepted. Each year, the accelerator admits only about 5% of the startups that seek to join.
âCompetition may be fierce, but itâs not impossible,â says Circei. âJumping through some hoops is not only worth the potential payoff but is ultimately a valuable learning curve for any startup.â
In an exclusive exposÃ© for TechCrunch, he shares four key lessons he learned while steering his startup through YCâs stringent selection process.
The first? âPut your business value before your personal vanity.â
The Expensify EC-1
In March, TechCrunch Daily Reporter Anna Heim was interviewing executives at Expensify to learn more about the companyâs history and operations when they unexpectedly made themselves less available.
Our suspicions about their change of heart were confirmed on May 3 when the expense report management company confidentially filed to go public.
With a founding team comprised mainly of P2P hackers, itâs perhaps inevitable that Expensify doesnât look and feel like something an MBA might envision.
âWe hire in a super different way. We have a very unusual internal management structure,â said founder and CEO David Barrett. âOur business model itself is very unusual. We donât have any salespeople, for example.â
Similar to the way companies must file a Form S-1 that describes their operations and how they plan to spend capital, TechCrunch EC-1s are part origin story, part X-ray. We published the first article in a series on Expensify on Monday:
Weâll publish the remainder of Annaâs series on Expensify in the coming weeks, so stay tuned.
As Procore looks to nearly double its private valuation, the IPO market shows signs of life
Construction tech unicorn Procore Technologies this week set a price range for its impending public offering. The news comes after the company initially filed to go public in February of 2020, a move delayed by the pandemic.
In March 2021, Procore filed again for a public offering, but its second shot ran into a cooling IPO market. The company filed another S-1/A in April, and then another in early May. This weekâs filing is the first that sets a price for the Carpinteria, California-based software upstart.
But Procore is not the only company that filed and later put on hold an IPO to get back to work on floating. Kaltura, a software company focused on video distribution, also recently got its IPO back on track. Are we seeing a reacceleration of the IPO market? Perhaps.
3 golden rules for health tech entrepreneurs
Family physician Bobbie Kumar lays out the golden rules to ensure your healthcare product, service or innovation is on the right track.
Rule 1: âItâs not enough to develop a ânew toolâ to use in a health setting,â Dr. Kumar writes. âMaybe it has a purpose, but does it meaningfully address a need, or solve a problem, in a way that measurably improves outcomes? In other words: Does it have value?â
Dear Sophie: How does the International Entrepreneur Parole program work?
Iâm the founder of an early-stage, two-year-old fintech startup. We really want to move to San Francisco to be near our lead investor.
I heard International Entrepreneur Parole is back. What is it, and how can I apply?
â Joyous in Johannesburg
Digging into digital mortgage lender Better.comâs huge SPAC
If you have heard of Better.com but really had no idea what it does before this moment, welcome to the club. Mortgage tech is like pre-kindergarten applications â it applies to a very specific set of folks at a very particular moment. And they care a lot about it. But the rest of us arenât really aware of its existence.
Better.com, a venture-backed digital mortgage lender, announced this week that it will combine with a SPAC, taking itself public in the second half of 2021. The unicornâs news comes as the American IPO market is showing signs of fresh life after a modest April.
As tech offices begin to reopen, the workplace could look very different
The pandemic forced many employees to begin working from home, and, in doing so, may have changed the way we think about work. While some businesses have slowly returned to the office, depending on where you live and what you do, many information workers remain at home.
That could change in the coming months as more people get vaccinated and the infection rate begins to drop in the U.S.
Many companies have discovered that their employees work just fine at home. And some workers donât want to waste time stuck on congested highways or public transportation now that theyâve learned to work remotely. But other employees suffered in small spaces or with constant interruptions from family. Those folks may long to go back to the office.
On balance, it seems clear that whatever happens, for many companies, we probably arenât going back whole-cloth to the prior model of commuting into the office five days a week.
For unicorns, how much does the route to going public really matter?
On a recent episode of TechCrunchâs Equity podcast, hosts Natasha Mascarenhas and Alex Wilhelm invited Yext CFO Steve Cakebread and Latch CFO Garth Mitchell on to discuss when companies should go public, the costs and benefits of the process and when a SPAC can make sense. Yext pursued a traditional IPO a few years back; Latch is now going public via a blank-check company combination.
The chat was more than illustrative, as we got to hear two CFOs share their views on delayed public offerings and when different types of debuts can make the most sense. While the TechCrunch crew has, at times, made light of certain SPAC-led deals, the pair argued that the transactions can make good sense.
Undergirding the conversation was Cakebreadâs recent IPO-focused book, which not only posited that companies going public earlier rather than later is good for their internal operations but also because it can provide the public with a chance to participate in a companyâs success.
In todayâs hypercharged private markets and frothy public domain, his argument is worth considering.
The truth about SDK integrations and their impact on developers
Ken Harlan, the founder and CEO of Mobile Fuse, writes about the perks and pitfalls of software development kits.
âThe digital media industry often talks about how much influence, dominance and power entities like Google and Facebook have,â Harlan writes. âGenerally, the focus is on the vast troves of data and audience reach these companies tout. However, thereâs more beneath the surface that strengthens the grip these companies have on both app developers and publishers alike.
âIn reality, SDK integrations are a critical component of why these monolith companies have such a prominent presence.â
Donât hate on low-code and no-code
The Exchange caught up with Appian CEO Matt Calkins after his enterprise app software company reported its first-quarter performance to discuss the low-code market and what heâs hearing in customer meetings. To round out our general thesis â and shore up our somewhat bratty headline â weâve compiled a list of recent low-code and no-code venture capital rounds, of which there are many.
As weâll show, the pace at which venture capitalists are putting funds into companies that fall into our two categories is pretty damn rapid, which implies that they are doing well as a cohort. We can infer as much because it has become clear in recent quarters that while todayâs private capital market is stupendous for some startups, itâs harder than youâd think for others.
Birdâs SPAC filing shows scooter-nomics just donât fly
Historically â and based on what weâre seeing in this fantastical filing â Bird proved to be a simply awful business. Its results from 2019 and 2020 describe a company with a huge cost structure and unprofitable revenue, per filings. After posting negative gross profit in both of the most recent full-year periods, Birdâs initial model appears to have been defeated by the market.
What drove the companyâs hugely unprofitable revenues and resulting net losses? Unit economics that were nearly comically destructive.
Dear Sophie: Does it make sense to sponsor immigrant talent to work remotely?
My startup is in big-time hiring mode. All of our employees are currently working remotely and will likely continue to do so for the foreseeable future â even after the pandemic ends. We are considering individuals who are living outside of the U.S. for a few of the positions we are looking to fill.
Does it make sense to sponsor them for a visa to work remotely from somewhere in the United States?
â Selective in Silicon Valley
The hamburger model is a winning go-to-market strategy
âToday, we live in a world of product-led growth, where engineers (and the software they have built) are the biggest differentiator,â says Coatue Management general partner Caryn Marooney and investor David Cahn. âIf your customers love what youâre building, youâre headed in the right direction. If they donât, youâre not.
âHowever, even the most successful product-led growth companies will reach a tipping point, because no matter how good their product is, theyâll need to figure out how to expand their customer base and grow from a startup into a $1 billion+ revenue enterprise.
âThe answer is the hamburger model. Why call it that? Because the best go-to-market (GTM) strategies for startups are like hamburgers:
- The bottom bun:Â Bottom-up GTM.
- The burger: Your product.
- The top bun: Enterprise sales.â
Software subscriptions are eating the world: Solving billing and cash flow woes simultaneously
Krish Subramanian, the co-founder and CEO of Chargebee, writes that while subscription business models are attractive, there are two major pitfalls: First, payment.
âRegardless of company size, thereâs an ongoing need to convince customers to sign up long term,â Subramanian writes. âThe second issue: How do businesses cover the funding gap between when customers sign up and when they pay?â
Is there a creed in venture capital?
Scott Lenet, the president of Touchdown Ventures, asks how deal-makers should think about how to handle themselves when counter-parties attempt to change an agreement. âWhen is it OK to modify terms, and when should deal-makers stand firm?â he asks.
âEntrepreneurs and investors should recognize that contracts are worth very little without the ongoing relationship management that keeps all parties aligned. Enforcement is so unusual in the world of startups that I consider it a mostly dead-end path. In my experience, good communication is the only reliable remedy. This is the way.â
Even startups on tight budgets can maximize their marketing impact
âSearch engine optimization, PR, paid marketing, emails, social â marketing and communications is crowded with techniques, channels, solutions and acronyms,â writes Dominik Angerer, CEO and co-founder of Storyblok, which provides best practice guidance for startups on how to build a sustainable approach to marketing their content. âItâs little wonder that many startups strapped for time and money find defining and executing a sustainable marketing campaign a daunting prospect.
âThe sheer number of options makes it difficult to determine an effective approach, and my view is that this complexity often obscures the obvious answer: A startupâs best marketing asset is its story.â