Shedden: Startups under $20K monthly revenue should never exceed five employees
Miles Shedden · Myles Shedden, Founder of Chroma | How to NOT Find Product Market Fit · PMF Show · Sep 12, 2023 · at 16:14
Miles Shedden, former founder of Chroma and VC, shares guidelines on startup headcount before reaching product-market fit.
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“If you're Call it, I don't know, pre-ten grand or 20 grand a month. If you have like more than five people, I don't know what you're doing.”
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“You know, that, that business model works, I think, only when capital is cheap, available, and rates are low.”
Shedden: Chroma botched discovery by asking leading questions to confirm its solution
“We sort of came up with the solution before we knew the problem. And so we just, you know, just like, oh, we're going to intuit our way to a platform that solves all these problems. And so when we started to have those conversations with landlords, small and b…”
Shedden: Chroma scaled to 17 employees before generating any meaningful revenue
“People spending part of their days on chroma was like 17.”
Shedden: Chroma secured a $50M credit facility contingent on $3M equity
“We had been approved for a fifty million dollar line of credit at, for credit committee from a major bank contingent on a three million dollar equity raise.”
Shedden: Chroma returned capital after failing three internal business viability tests
“The three questions we asked were, do we think this business model is rock solid? Do we think that we could actually, you know, we go through a downturn for 18, 24 months, 36, whatever it ends up being, and is Chroma a place that A players still want to work? …”