Casaretti: Accelerating SaaS growth requires accepting deeper initial cash flow deficits
Preeti Casaretti · a16z Podcast | Valuing Today's Fast-Growing Software Companies · Jan 2, 2019 · at 10:06
Preethi Kasireddy, partner at Andreessen Horowitz (a16z), explains why board members often incorrectly advise SaaS startups to slow down growth when cash flow turns negative.
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“But when they actually accelerate that growth, they'll go into an even deeper negative cash flow, and then when they come back up to reach profitability, they'll start growing faster, and that's that, like, that balance that a lot of investors and sort of board partners don't understand, and right when you're about to press the accelerator, a lot of people will tell you to stop, no, slow down growth, but that's in fact not the case for SaaS, and SaaS, it's more of a sort of a land grab kind of market where you have to acquire a lot of customers early on and become the market leader, and that's what investors are paying up for”
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