John Luttig on SaaS Pitch Decks

[00:00:00] Joe Garafalo: If you are a good finance person, you don’t have to go out there and spend hours figuring out your gross margin and making the right allocations to gross margin.

[00:00:08] You can actually have a self-serve platform that shows your gross margin over time. 

John Luttig Introduction

[00:00:36] Joe Michalowski: Hello and welcome to another episode of The Roll Forward podcast. My name is Joe Michalowski. And this episode is brought to you by Mosaic, a Strategic Finance Platform that transforms the way business gets done. Today, I’m joined again by our Co-Founder COO, Joe Garafalo. And our guest today is John Luttig, a Principal at Founders Fund, one of the biggest VC firms in the world, uh, with a portfolio that includes companies like Stripe, Airbnb, SpaceX, Spotify, you know all the names.

[00:01:03] John, thank you so much for joining us today. 

[00:01:06] John Luttig: Thanks for having me. 

[00:01:07] Joe Michalowski: Cool. So you know the usual spiel to kick something like this off, before we dive into real topic. Can you just give us a background on yourself, how you ended up at Founders Fund, and some of the work you’ve done over there?

[00:01:17] John Luttig: Yeah. Quick background on me. I’m a computer scientist at Stanford by training. I’ve been at Founders Fund for five years, focused mostly on early stage B2B investing here. So, you know, anything as early as see it to up to series B, as a fund, you know, we’re a lot more stage and sector agnostic. And then in terms of some of the companies that I’ve worked with, you know, including Scale, Rippling, Flock Safety, Figma and I guess, you’ll be soon to learn that Mosaic is part of that, as well. 

[00:01:43] Very happy to join the heavy hitters of names there. It’s pretty amazing list, the whole portfolio, really. And so, yeah. Like that’s kind of the elephant in the room here. I wanted to normally give a frame of why someone’s on the pod and for you, it’s because we just raised the series B from Founders Fund.

[00:01:59] Joe Michalowski: So one, like really happy to have you as part of, kind of the Mosaic family. And I know, I’ve heard from Joe and from Bijan how much they’ve learned already from the strategic guidance that Founders Fund gives. And that’s really why you’re here. We want to give that to the people that listen to this podcast.

[00:02:14] And so, before we kind of get into main topic, can you just give us a rundown on, you know, what made you want to invest in, you know, Mosaic, in strategic finance software as a space? Like, why was this so interesting to you?

[00:02:26] John Luttig: Yeah. If you look at our thesis, it really starts with our name, which is Founders Fund. It’s a fund by founders and for founders. And so, we’re heavily founder-driven in our vetting process and there’s kind of two dimensions to that. One is just general founder quality. But I think one specific that we focus on is founder market fit.

[00:02:43] And so what that means is why this founder or this team is uniquely well-suited to solve this problem. And in the context of Mosaic, we knew that they hit the general founder quality bar, are giving their history as operators at Palantir, which is another portfolio company. But I think what was particularly unusual or rare about Mosaic is the founder market fit, given bid to solve this specific problems, a specific set of problems multiple times

[00:03:11] and, in other contexts, both at Palantir and other early-stage companies. And so, if that’s one thing that got us about Mosaic. We’re not, you know, top-down thesis-driven, but given the founder market fit here, we saw a big opportunity for what they’re building.

[00:03:26] Joe Michalowski: Yeah, I really, that’s something that I like in all the work that I do for Mosaic. I try to lean on as much as possible. Like I think it’s really cool that we have three founders that have solved the problem before. And so, Joe had asked you, like you know, part of the investment piece is like, they need to see that there is a market for this.

[00:03:43] Like it’s not just like, “Hey, like there, it’s great to see that the founders have solved the problem.” And so, you know, from your end, Joe, like what’s changed maybe since like our series A in the market? Like, what have you seen are things blowing up in the space around us? Like, what what’s changed now versus maybe a couple of years ago, when you guys started?

[00:04:00] Joe Garafalo: Yeah, I think much more adoption. I mean, we’re helping hundreds of customers today and we are ready to throw more fuel onto the fire and give what they’re asking for, which is, you know, more efficient planning, more data connections, the ability to forecast things in new ways. We’re really well positioned to give the customers what they need now that we have Founders Funds backing.

[00:04:18] Joe Michalowski: Yeah. Love it. So, this isn’t just going to be like a lovefest for Mosaic, as much as you know, I’d love to just sit here and chat about all the work we do. But, you know, bring someone like John on gives us an opportunity to talk about something that’s really important to our customers, something that they ask about a lot. They say they use, you know, Mosaic to build their pitch decks and their board decks and things like that.

[00:04:36] And John is somebody that, you know, is in that space all day, every day, looking at pitch decks, looking at board decks, things like that. You know, that’s really what, you know, I wanted to focus on is kind of get your insight into what works about this and what doesn’t. And so what I want to start with is just really basic.

[00:04:52] Like, what do you think are the really basic building blocks a great SaaS pitch deck? 

Building Blocks of a SaaS Pitch Deck

[00:04:59] John Luttig: There’s a lot of templates out there, you know, including one by Mosaic, which you should check out. And so I don’t want to regurgitate the slide by slide breakdown. But you know, to the extent, you’re, you are including historical metrics. I think having things around, go to market efficiency, which could be things like, you know, your sales rep ramps, your win rates, your sales efficiency, your cohort-based potential metrics.

[00:05:21] I think those are all table stakes for a great SaaS stack, particularly at the mid-stage and growth stage. And those are all things that are, you know, hard to pull together for the first time. But, you know, Mosaic as a product maker does metrics a lot easier to pull together and track over time.

[00:05:36] And so hopefully, you’re not going to be, you’re acting as reactively if you’re using their product. Because those are metrics that you might track on a day-to-day basis. And then I think, you know, two conceptual things that are helpful to see, particularly in a mid-stage, deck is, you know, one is just a painting a really clear story of what this company becomes if things go right.

[00:05:53] And so it shouldn’t just be a backward-looking, you know, report on, on the business. One of my colleagues often says that venture investing is,your price is a discount on the future, not a multiple on the present. You want a sense of, if things go right, what does this company look like in five to ten years from now?

[00:06:07] I think the corollary of that is being really clear about your plan for the capital you’re raising. It’s funny, oftentimes we ask founders what they plan to do with the money they’re raising. And, usually, their answer is how that they wanted to raise that much because they wanted a certain valuation. Yeah.

[00:06:22] John Luttig: That’s like a misunderstanding of, of their customer. For us, we want to understand where that capital gets them as a company, and why that business, you know, assuming things do go right, it’s going to look a lot better in 18, 24 months from now. Those are a few building blocks that I would think through, in addition to, you know, some of the standard, pitch deck templates stuff. 

[00:06:41] Joe Michalowski: Gotcha. You mentioned, not wanting to like regurgitate what some of those templates to tell you. I’m going to be honest. I kind of want to go back and do some of that because there’s a reason why there are so many pitch decks. Like what, can you give me, like an understanding of like what the A to Z of a pitch deck is?

[00:06:58] I’m sure, like you have a thought on like, some people start off here and like, maybe they shouldn’t or, you know, maybe you don’t, maybe it doesn’t really really matter. I’m just kind of curious, like, is there a standard we expect ABC and in this order or, you know, do you see that a whole gambit of different approaches that work?

[00:07:14] John Luttig: I think it is fairly idiosyncratic. And one reason it’s hard to make a unified template across company types and industries and stages is that every company is different. And so, you know, the levers for marketplace are going to be a lot different than the levers for a horizontal SaaS business, which might be very distinct from a vertical SaaS business.

[00:07:33] And all of those companies are going to vary a lot by stage as well. And so, I don’t think there is a one size fits all and the right metrics tend to be fairly idiosyncratic depending on the company and stage. Sometimes I find it helpful to, to address the what you expect to be the

[00:07:49] investors’ biggest concerns and frame the metrics around that. And so, you know, if the investors might be concerned around, around margin structure, then maybe you, you have some sort of charts around gross margin over time. Whereas if you’re a pure SaaS business with no customer support burden, maybe that that piece is less relevant.

[00:08:05] Or if you’re a marketplace you want to show like liquidity of the demand and supply side over time. There might be like set of charts to show for that type of business. Or if you’re a heavily sales in marketing oriented company, you know, you’re gonna want to show the trajectory of your sales team over time and how the efficiency has trended.

[00:08:21] John Luttig: And so, I think you, you want to start with what are the most risky pieces of my business, and then craft a narrative around,and kind of quantitative case for why those risks are so overblown or will be de-risked over the next few quarters.

[00:08:35] Joe Michalowski: Yeah, like that. And that, kind of gets me around wanting to do it for a follow-up for Joe is, you know, what do you think, Joe? How does this align with how you and Bijan and Brian as our co-founders approach your fundraising rounds? Like when you go into tell the story about Mosaic, does this sort of resonate with you or is there a different approach you’ve taken to telling Mosaic story, that might help other companies?

[00:08:58] Joe Garafalo: Yeah, I think to John’s point about every pitch deck being idiosyncratic, I think that’s definitely the case for Mosaic. In our case, we actually didn’t even make a pitch deck. We showed every metric that we needed to show investors in the product, which was kind of a quasi demo and also due diligence at the same time. So, if you can get away with things like that, you should make the experience unique that way.You kind of stand out from the crowd because folks like John are, are probably doing dozens of these a dayand making your mark is important. The other thing I’d like to talk about too is just like, as a founder, you should always be thinking of the narrative in your head.

[00:09:31] And it’s like, almost like a movie script and it’s, you know, if we do these things this quarter, it makes the story that much better. And you have to do everything in your power to continue crafting this really good story. And the story all leads to what is this company going to be in five years if we continue on this trajectory and really painting that idea for the future, because the metrics that are happening today, they matter for sure.

[00:09:55] But what really matters is, are you on the path to meet the goals that you said out in the next three or five years, and how are you going to use that capital to grow the business and make those things come true. I would say in a good pitch deck, you always want to have your projections, right?

[00:10:08] You want to have your executive summary and those metrics, probably some version of the product roadmap as well, but really knowing the projections and building the assumptions so that they’re battle tested.

[00:10:16] Joe Michalowski: Gotcha. That’s so, it’s great. I mean, it’s nice to hear that you guys are on the same page on sort of telling that story. And, you know, inevitably metrics come up so much, like finance people love their metrics, and it’s a critical part of telling that story. Nobody would get funding if there weren’t any numbers to back anything up.

[00:10:33] And so I have some questions I want to get to about which metrics attract specifically at certain stages. But before I get there, like now that we’re still kind of big picture talking about narrative. John, I’m curious, if there are any pitch decks that you’ve seen in the past or ones that maybe you look to as examples online, like who should companies be learning from?

[00:10:52] Are there any public ones that, that you could talk about that are like, “Wow, like they really nailed it. Like, this is how everybody should really try to approach this?”

Examples of Great SaaS Pitch Decks

[00:10:59] John Luttig: So what investors were most skeptical of, you know, at 2019 with rise of Figma is, one, how big the designer team was? And two, how horizontal the Figma product was? And so Figma crafted the deck around those specific concerns. And so, you know, they added an interesting slide that showed that they weren’t just one part of the designer workflow.

[00:11:22] But they showed how Figma own the entire designer tool chain from their prototype to designing, to building. And then one interesting kind of metric style slide they had was showing how Figma expanded within accounts over time. And so, yeah, they showed like a company level cohort. And so you can see, you know, within X company, starts at one user and then expands to 5 then 20, and then ultimately, across the entire team.

[00:11:48] John Luttig: And it wasn’t just designers, but also, you know, engineers,product managers, founders, et cetera. And so I think that was a particularly compelling way to disarm the investor concerns around market size and horizontal appeal. The other one would be the, the Rippling series B summer 2020.

[00:12:04] And they just laid out a really strong pieces around the advantages that they’re building, which is rare in software. And this one actually is a memo that they’ve published publicly, so you can read it online 

[00:12:16] and learn from that by yourself.

[00:12:18] Joe Michalowski: Gotcha. Cool. 

[00:12:19] Joe Garafalo: One thing I’d add to that Joe is and John mentioned this a couple of times is being prepared with the metrics that you need for these decks. So maybe it’s land and expand, but you need to be able to track how big the opportunity gets customer by customer. And a lot of companies might wait till it’s too late to start tracking those things.

[00:12:37] And then they get the diligence request during the fundraise and finance teams scramble for, you know, a week 24 hours a day, trying to pull this data together, clean up historicals. So having the infrastructure in place as early as possible to start tracking the things that you know you’re going to need when it comes time to fundraise is such an advantage.

[00:12:56] Joe Michalowski: I think it’s a great point that kind of leads to what I mentioned before, which is this bigger conversation about metrics and you guys have both rattled off like a whole bunch of different metrics that you should be looking at at certain stages. And I hear you on the idiosyncrasy and like every situation is unique, but there’s gotta be like a sort of standard, like we’re talking about series B fundraise.

[00:13:17] So like, you know, we’ll start there as that context. Like John, there, there’s gotta be like a standard sort of, these are the metrics we expect to see at this stage as compared to maybe when you were at series A, or is it really like free for all? Like, there’s gotta be some expectation there, right? 

[00:13:33] John Luttig: No, definitely, not a free for all. That, you know, there are some, some standards. It is, you know, it is hard to provide one size fits all template because the companies are idiosyncratic. And so, but, but I think there are a lot of table stakes and then you can emphasize various or do kind of double clicks or deep dives into various pieces that you think the audience is going to care the most about.

[00:13:52] And so, you know, sometimes it might be around, around market size and, you know, a way to de-risk that is showing cross-functional use cases. You know, it might be around how easily you can expand the product, and so you’ll want to show your net dollar retention, which you could cut by, you know, by market segment or by cohort.

[00:14:08] And then sometimes it’ll be around, you know, how easily you can scale the go to market. I think scaleability to go to market is probably a fairly universal one that every series B company is going to need to answer. And so you might show sales and marketing efficiency over and you get pretty granular with the sales and marketing piece.

[00:14:25] You know, it might be, it might be doing things like the magic ratio. It could be sales rep performance by quarter. It could be like CAC Payback Period over time and how those have trended. And so there’s, there’s a lot of granularity you can provide.

[00:14:38] John Luttig: You know, which specific subset of metrics you choose on the go to market efficiency piece might be idiosyncratic, but that is probably one of the most important categories to really drill into for the B. Because between the B and C, you know, that’s whenyou’re expected to start having a black box of, of dollars in dollars out.

[00:14:53] And so having more control over the levers of that black box are,is what investors want to see.

[00:14:58] Joe Michalowski: Yeah. So to that end, likelet’s fast forward to series C. So, you know, selfishly maybe give some Joe vision and Brian really know what they’re doing already. I don’t think they need the insight, but let’s say they didn’t, then we’re heading into series C at some point in the future, what changes then?

[00:15:12] Like, what are some of the things we’re going to add to that list that’s like, “Okay, like now these are our standards. You know, we still want to see the series B stuff, but you’ve reached the stage how do you track that black box dollars in dollars out at that point?” 

[00:15:23] John Luttig: Yeah, was it, you know, there’s all the standard go-to-market efficiency things that I mentioned, that would be applicable to a series B company, if those remain true. You know, ones that may be popular at the later stages, I think the company level efficiency matters more. You know, specifically around how much net new air are you’re adding per dollar burn.

[00:15:40] I think that’s one that’s helpful,breaking in and breaking that out by function. So showing, you know, how much your sales and marketing spend is contributing to growth, and then how much of a G&A of a G&A burden there is to overall P&L is parparticularly helpful.Probably better understanding the customer support burden. I think it’s hard to do at series B, but series C and beyond there’s significance, so you can assess whether there’s a large ongoing costs to certain customers. And I think can lead to a structurally different turn of a margin profile.

[00:16:11] What else? You know, I think a popular one is the rule of 40. So you don’t add on your growth rate and your, I think it’s free cashflow margin, maybe EBITDA. 

[00:16:19] John Luttig: I’m sure that Mosaic has the KPI and their products, so you can find out there. But that’s one that becomes more relevant at the growth stage as well.

[00:16:26] Joe Michalowski: Yeah. I wanted to a task, Joe, like a following question here and, you know, you mentioned Mosaic sort of automating this, not going to go into the whole, the whole sales pitch, but there’s a reality where if you can automate sort of the data collection and finance doesn’t have to spend so much time collecting all this information to put numbers together, that there are like more complicated metrics that you can track to tell your story that maybe you wouldn’t have had time or, you know, the ability to figure out without that kind of system where you’re just doing everything in spreadsheets.

Complex Metrics to Think About in Your Pitch Decks

[00:16:55] So Joe is there a metric that, you know, has had a big impact on investors for you all that maybe when you were at like Palantir it was like, we spent weeks trying to come up with this number and like finally, like we can just do it pretty quickly? Like, is there anything that stands out for you there?

[00:17:08] Joe Garafalo: From the Palantir days, are we really touched a lot on the land and expand metrics. So when we signed a customer within three years, you know, that customer was 100 X, 10 X larger than it was when we first signed and being able to track the products that we were selling and how we were expanding was a hard day to clean up.

[00:17:25] But once we got it right, that was a big metric that made investors really excited.Think the other piece kind of similar, more similar towards Mosaic’s now is like, if you are a good finance person, you don’t have to go out there and spend hours figuring out your gross margin and making the right allocations to gross margin.

[00:17:43] You can actually have a self-serve platform that shows your gross margin over time. And if you don’t have to spend hours tracking what your gross margin is, you can actually go out to the support team and understand, “Hey, what are the blockers to making the CS process more automated, or how do we improve these margins?”

[00:18:00] You can actually go out there and affect change versus just sitting in the back office and pulling together these spreadsheets that are important, but like that’s not where the real value comes, comes from. The value comes from actually going out there and improving them and telling the business where and how they can improve.

[00:18:14] Joe Michalowski: Yeah, no doubt. You know, a huge selling point for not just our platform, but really automated piece of finance software in the space. You need that time to really affect change in your organization. So I have one more metrics related question and it’s for John. And I don’t know if you remember this, John, but I, part of my job here is to really run our blog and like the topics that we write about and things like that.

[00:18:37] And one time, I think it was months ago, this is like October that you emailed Joe and you were like, “You guys should do an article on CAC Payback Periods because everyone has a different way to calculate them.” And, I think you had mentioned another investors. Like I know they calculate it this way and we think about it this way.

[00:18:54] And so there was no way I was going to not drop this in here because I never got to talk to you about what your thoughts were on CAC Payback Periods. So I’m curious, you mentioned it in maybe the series B onto series C list of metrics. Is there a unique perspective you have on looking at CAC Payback Period that maybe other investors think about differently?

[00:19:17] John Luttig: I think it’s a particularly important metric, just because it’s a key driver of your return on, on invested capital and how quickly and you can deploy incremental dollars. And so, I don’t need to describe the calculation here. I’m sure you can read the Mosaic blog for that, butI think, you know, a few common

[00:19:34] mistakes people make. One is, they don’t fully burden the CAC with all attributes of customer acquisition costs. And so, you know, it could be,you know, not including the full sales, sales and marketing team head counts. It’s not just your ad spend. You know, I think this is also tricky if there’s non sales and marketing org sellers within your company. Like if your CEO is doing the sales, they should be included in the CAC because, you know, to the extent you’re scaling the foundersthat’s gonna require incremental costs to acquire your customers. And then another one is just on the, you know, there’s like, that’s the CAC side of things,

[00:20:06] and then on the payback side of things. You know, you need to adjust for, for gross margins. That could mean burdening with customer support costs, it could be making, you know, ensuring you have a really good handle on your gross margin structure. And sometimes it’s helpful to another way you can,

[00:20:20] you know, I think that gets you to like a, a pretty good understanding of a CAC Payback. And you want an A plus on the test, so you can break it out by segment or, you know, by industry or company size that you’re targeting, just to really granularly understand how efficiently you can go after different segments, you know, whether it’s like SMB versus mid-market versus versus enterprise. 

[00:20:41] Gold stars for everybody, if they use Mosaic to automate these things and really push that a little bit forward. So, A plus is gold stars, all the grades succeeding on your pitch deck and board deck. I know we’re coming up on, on time. There’re some hard stops here. And so the last thing I want to ask you, John, and thank you just so much for, for giving all the insight about pitch decks, but we’re going to zoom way out a little bit.

Career Advice from John Luttig

[00:21:01] Joe Michalowski: And we ask everyone that comes on, it’s, what’s something you know now that maybe you wish you knew at the start of your career when you were just getting ready to start at Founders Fund or something?

[00:21:12] Let’s see. One good one is to lean into your strengths and try not to compensate for your weaknesses. I think when you’re preparing your life around a college admissions, you might focus on being well-rounded and good in a lot of different dimensions, but in the context of your career, you really want to lean into your strengths.

[00:21:31] You know, whether it’s writing or selling or just finding your superpower and, and honing that over time versus trying to compensate for what everybody else is good at. I think is probably the number one thing that I always conceptually understood, but I think understanding it more intuitively and on a deeper level is something I’ve come around to recently. 

[00:21:50] Joe Michalowski: It’s pretty well aligned with, now what you were talking about Founders Fund’s mission being about, you know, you guys look for that founder market fit, and that is kind of the epitome of leaning into strengths. It’s like, “Well, I’ve solved this problem 15 times before, and I’m going to go do it again,

[00:22:02] and then we’re just gonna build a business around it.” So, it makes sense that that is a lesson you would take away from all the work that you do at Founders Fund. But yeah, so I just want to say thanks again. I think we’re coming up on time and I just wanna say thanks so much for, for being here.

[00:22:15] I want to give you kind of the stage here, where should people go to learn more about you, to connect with you, to learn more about Founders Fund or really any of the companies that you all are working with?

[00:22:26] John Luttig: Yeah, let’s see. Well, Founders Funds are easy to find where, yeah, we just foundersfund.com. As far as myself, I’m on twitter or Snapchat. But, I’m, but yeah, I’m john@foundersfund so I’m pretty easy to, easy to find. So, yeah. Come, ask any questions you want.

[00:22:37] Well, Joe, thank you, as always for adding the actual finance experience to these conversations. Always learn a lot from everything you have to say. And John, just thanks so much. Great to have you as part of the Mosaic family. Can’t wait to learn more about how you guys

[00:22:50] Joe Michalowski: are gonna help us grow.

[00:22:51] Thanks so much for being on The Role Forward and hopefully we’ll do it 

[00:22:54] again. 

[00:22:54] John Luttig: Thanks, guys. 

[00:22:54] Joe Garafalo: All right. Thanks a lot, Joe. 

[00:22:55] Joe Michalowski: All right, bye all.