Ather faced three successive valuation cuts (40%, 50%, 65%) that would kill most startups. They retained their team by being radically transparent about finances, asking for voluntary pay cuts, and building trust by later rewarding those sacrifices with bonuses and equity at the lower valuations.
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ElevenLabs raised a $100M round entirely for employee secondaries. The CEO's rationale is that by allowing early team members to de-risk and realize financial gains, it solidifies their commitment to the company's multi-year mission rather than creating pressure for a quick exit.
After nearly failing, OpenGov adopted a frugal culture and discovered it grew faster. Less spending reduces system noise and inefficiency. A leaner, more focused sales team, for instance, can become more motivated and effective, leading to better results.
To conserve cash, especially in a downturn, founders can pay key employees 10-30% below market rate in salary. The key is to compensate for this deficit by offering double or triple the industry standard in equity. This strategy attracts top talent aligned with long-term success while keeping the company's cash burn rate low.
When faced with an existential cost crisis, Ather's founder explored two pivots: a cheaper product and a software platform model. Both were dead ends. The ultimate solution was to resist the distraction of pivoting, stay the course, correct pricing, and fix the core operational issues of the original product.
Long, detailed board decks allow founders to hide problems in complexity. A single-page monthly summary forces radical clarity. By constraining the format to cash/runway, budget variance, and key risks, it demands truth and provides a clear, digestible snapshot for the board, the team, and yourself.
Founder failure is often attributed to running out of money, but the real issue is a lack of financial awareness. They don't track cash flow closely enough to see the impending crisis. Financial discipline is as critical as product, team, and market, a lesson learned from WeWork's high-profile collapse despite raising billions.
The public example of X operating with 85% fewer staff created a powerful meta-narrative influencing founders to build leaner. As a result, the median Series A company team size has dropped from 25 employees in 2021 to a projected 15, a significant shift toward capital efficiency over hiring.
When COVID decimated ride-hailing, Bolt rejected mass layoffs common among competitors. They opted for a universal 20% salary cut, with leadership taking more. This preserved their team's talent and morale, allowing them to aggressively pivot to food delivery and capture significant market share from paralyzed rivals when the market recovered.
The founder advises against always pursuing the highest valuation, noting it can lead to immense pressure and difficulties in subsequent rounds if the market normalizes. Prioritizing investor chemistry and a fair, responsible valuation is a more sustainable long-term strategy.
After a premature growth spurt failed, Nexla's founders reset by taking no salaries and implementing a strict rule: new team members were only added when new customer revenue could justify the cost. This forced discipline led them to become cash-flow positive with multi-seven-figure revenue before their Series A.
