Sierra chose financing partners over the highest valuation

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 48:17

   highest valuation so you can have the least amount of dilution? Like, I'm curious, like, you know the let's take the market correction example like let's imagine that it happens this year and it happens meaningfully the counter argument to raising whatever a hundred at 10 billion is i'm just making up numbers but just for the story's sake um you you just have a proverbial gun to your head of a really big target that you have to hit at a valuation that was quite frothy at that given moment. So like, I'm more just like philosophically curious about how you think about it. We definitely don't choose the highest valuation. In fact, in all three of our rounds, we had higher valuations available that we didn't take. So factually, we definitely don't do that. We have a dilution that we care about, but within that range, we're choosing a partner

2. 49:12

   and that's how we think about it. But it is a generous valuation. The way I think about it is actually quite simple, um, which is how much capital do we need to grow, uh, into the next milestone, which, you know, might end in, in entering the public markets, but between that, it would be to have a revenue scale and growth rate to justify, to capitalize the business in the next round in a way that all of the existing cap tables happy, uh, with that outcome. And so the way I think about it is, you know, if you take the $10 billion valuation scale, what does it mean to sort of fill in that valuation what revenue scale and growth rate how much capital do we need to achieve that that's all it is and i think the uh so we're very much focused on like our business plan which is like how are we going to invest in uh you know the products and uh you know our go

3. 50:05

   to market teams to grow uh grow our revenue and it's a sort of a spreadsheet to be honest with That's how we think about it. And the unknowns, uh, but we just put a lot of, you know, air bands around it are, you know, the demand environment and competition. Um, though, you know, when you're a company like ours, you just assume you're going to, you know, remain the best product on the market, uh, which is not something you're entitled to, but like, that's why you exist. Um, and then similar things like there's a lot of unknowns around we've talked about, like, well, how many software engineers will we need to reach? I don't know. I have no idea. Um, but with usually what these things is you try to plan somewhat conservatively because the last thing you want to do is under capitalize your business and then be in an environment where you have to raise

4. 50:48

   money on terms that aren't favorable which has you know happened a lot but you don't want that to happen to you so we tend to sort of you know you put a bunch of padding in on different assumptions and run some contingency plans and all those other things and just make sure that you have enough capital to get to where you want to go to and by the way the reason why you know 100 it does sound but most companies aren't going 50 quarter over quarter either you know so that's the that's the dynamic and so i'm not sure it's right or wrong but i just mean like i i would