Hey Reader,

Altitude Weekly Edition 003 is hot off the press from Cirrus Capital Partners 📰

Once weekly, we give you a bird's eye 🦅 view of the most exciting news and insights around...

• Successful Companies and Founding Teams
• VC, PE, M&A, and Credit Transactions
• Growth Metrics, Benchmarks, Charts & Data
• New and Emergent Technologies
• Productivity Hacks

Created for founders, bootstrappers, VCs, angel investors, marketers, technologists, executives, and operators—everywhere.

Let’s get into it:

​Y Combinator Requests for Startups​

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Among Y-Combinator's wishlist of startup ideas, AI is one of the most commonly mentioned technologies. Advancements in AI are spurring ideas on how processes in every industry could be expedited to save millions—and Y-Combinator has its eyes on companies looking to put those ideas into action. Some of these ideas include…

→ New Defense Tech: With global conflicts escalating, there’s an opportunity for startups to outperform traditional defense contractors, much like SpaceX did in the space industry.

→ Reviving American Manufacturing: Robotics and AI can help bring manufacturing back to the U.S., a critical component of the country’s wealth and security.

→ AI Simulating the World: Imagine using AI to predict weather or design rockets without supercomputers. There is a demand for startups that can simulate complex systems quickly and cheaply using AI.

→ Automating Back Office Work: Language models can automate many manual processes in large, old companies, saving time and money.

→ AI for Biological Systems: AI can revolutionize healthcare and science by predicting outcomes based on vast data, speeding up innovation.

Don’t let the demand for AI discourage you; there are bold ideas in every arena, and they want to hear about them.

Top Cities for Funding SAFEs (Simple Agreement for Future Equity)

Speaking of $$...

Looking to get your ideas funded? These cities might have more luck of the draws. Unsurprisingly, the Bay Area is in the lead, but despite having the most money promised, New York has more individual agreements or friends willing to fund ideas.

​Building a world-class sales org​

When you secure your first 10 customers and spend 20% of your time on sales—start looking for your first salesperson.

Jason Lemkin, a seasoned venture capitalist and founder of SaaStr (the world’s largest community for B2B/SaaS founders), is coming in hot with how to build a rockstar sales team for your B2B/SaaS startup on Lenny’s Podcast. Here are his takeaways:

→ Always hire salespeople in pairs to ensure competitiveness and to have a backup in case one doesn't work out.

→ In the beginning, allow sales reps to keep 100% of their initial sales for the first three months to gauge performance without financial pressure.

→ Wait until you have a repeatable sales process and your initial sales reps consistently hit their quotas. Your VP of Sales should be eager to sell, not just manage.

→ Follow the "rule of eights" for scaling: 8 sales reps need a manager, 8 account executives need a director, and a VP should have up to 8 senior reports.

→ Foster a strong relationship between sales and product teams by involving sales in product development and holding regular meetings between the VP of Sales and VP of Product to align priorities.

→ Focus on advancing the deal at every meeting rather than expecting to close immediately. Establish clear next steps and gradually move the deal forward.

Jason has incredible experience that’s rooted in extensive experience. If you’re a founder, this podcast is an invaluable listen. It’s an excellent compass for establishing a world-class sales team.

​Your "TAM" is Why I Have Trust Issues​

Total Addressable Market (TAM) analyses are a staple in startup pitch decks. They are the shiny thing that shows investors potential revenue opportunities large enough to return their funds.

The credibility of these analyses, however, is questionable.

Why? Well…because the calculations lack analytical rigor, leading to unrealistic numbers. Startups also tend to inflate their TAM by using broad market figures without identifying their specific market segment or associating with adjacent markets they aren’t competing with.

So, when calculating your TAM, here’s what you need to think critically about:

→ Initial Insertion Point: Where the product initially fits into the market and its potential for expansion.

→ Competition Level: The market's competitive landscape, using tools like the Herfindahl Hirschman Index to assess market concentration.

→ Market Maturity and Availability: The market's current stage, contractual availability, and the realistic timeframe for capturing a significant market share.

TAM is crucial in startup evaluation.

But founders and investors have to approach it with skepticism and rigor.

​Reddit's US IPO filing reveals $90.8 million in losses and 21% revenue growth in 2023​

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Many Ls have already been taken this year, and Reddit might be adding to it. 😵‍💫

An IPO filing revealed a net loss of $90.8 million and a revenue increase of approximately 21% in 2023. Despite a vast user base, Reddit faces challenges in monetizing its platform as effectively as Meta and X (still getting used to saying these tbh).

As of December 2023, Reddit has 267.5 million weekly active users—but has yet to achieve profitability. Think about that.

Subscription models and ads be damned, but a high user engagement doesn’t mean much to the market if it can’t be monetized.

Still the best place to find memes, though…

​Building a Culture of Excellence at Netflix with Elizabeth Stone​

Lenny’s Podcast interviewed Elizabeth Stone, CTO of Netflix, about the high-performance culture at the office and how it's a direct result of intentional leadership and transparency. There are some hidden gems here, especially for startup owners interested in fostering this positive, performance-driven culture.

→ The Keeper Test: Netflix employs this method to assess employee value, asking leaders if they would fight to keep an employee. A negative response triggers a candid discussion about performance and expectations, underlining the importance of real-time feedback.

→ Continuous Feedback Over Formal Reviews: Unlike traditional performance review systems, Netflix prioritizes ongoing dialogue and an annual 360 feedback process focused on improvement rather than ratings.

→ Talent Density: For Netflix's bottom-up culture to thrive, the company insists on hiring individuals who exceed standards.

→ Transparency and Open Communication: Netflix leaders practice openness by sharing meeting notes organization-wide, addressing challenges, and outlining problem-solving strategies. This kind of transparency fosters a strong community.

→ Centralized Data and Insights Teams: By keeping these teams centralized, Netflix ensures effective collaboration, maintains expertise, and delivers unbiased insights across various problem spaces, supporting the organization's decision-making processes.

There’s a high bar for excellence, but it only happens through intentional practices, open communication, and a relentless focus on talent density. Think about how you can foster these qualities in your team or company.

​Tyler Perry Puts $800M Studio Expansion on Hold After Seeing OpenAI’s Sora: “Jobs Are Going to Be Lost”​

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It’s happening…

The ramifications of Sora, OpenAi’s text-to-video feature, have stopped an $800M expansion of an Atlanta studio that would have added 12 soundstages.

After almost a year of union strikes from writers and actors, we’re seeing some of the fears come to fruition. After seeing OpenAI’s Sora’s capabilities, especially in generating cinematic video outputs from text, Perry expressed concern about this technology eliminating the need for location shoots or set constructions.

This revelation led him to reconsider the expansion plans that would have added 12 soundstages to his studio.

As you read from Y-Combinator, there’s a spike in demand for AI-driven startup ideas—a demand certainly prevalent in entertainment. But not without a hemorrhaging of jobs.

There’s a sense of urgency around AI’s implications stretching across entertainment to manufacturing, which calls into question what jobs require a coordinated response from legislative action and what human-centric values we need to maintain in the face of technological advancements.

As for myself, I can handle an AI set for, say, Dune, but an AI Timothee Chalamet? Not so sure about that…

​Maximize Your Business Potential: The Ultimate Guide to Financial Projections​

🔖 Save this one for later!

Financial projections are a cornerstone of business strategy.

But these projections, encompassing revenue, costs, and cash flow, are more than numbers—they embody a company's aspirations. For investors, well-crafted financial projections signal a company's profitability and growth potential. It’s a crude comparison, but think of it as all the signals of a good dating app profile: full of potential for a match made in heaven, with plentiful returns.

Accurate and realistic financial projections demand a deep understanding of internal operations and the external market environment. So, we curated an in-depth guide for startup owners and founders to simplify the process and get the essential components and strategies to ensure accuracy and realism.

Financial projections are indispensable for guiding a business toward operational efficiency. When companies understand how to use them, they can navigate the complexities of financial forecasting and unlock their full potential.

Until our next flight,

Ryan Ridgway & your friends at Cirrus

​cirruscap.com

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