C-Suiters at startups often wear multiple hats, juggling myriad duties. Josh Epstein is not typical. He manages both the finance and revenue-generation functions at Austin, Texas-based startup Coder, provider of cloud development environments and open-source tools.
Coder raised $35 million in Series B2 funding in June, but like most venture-funded outfits, it needs to monitor spending closely. As CFO and chief revenue officer, Epstein has an advantage of a sort: an integrated view of whether the organization’s capital deployment choices result in landing not just new customers but the right customers.
We spoke with Epstein about how Coder approaches generating revenue, controlling expenses and carefully building the customer base.
How do you mesh the priorities of revenue generation and aim for profitability while keeping a lid on overhead?
As a growing startup, we need to invest strategically in the kinds of activities, tools and talent in our customers’ best interests. That includes attending or creating events and relationship-building opportunities that educate our prospects or introduce them to new approaches to solving strategic challenges. We do this while focusing on being face-to-face and one-to-one to build a foundation of trust between individuals and Coder.
People and relationships are the heart of revenue generation. So, we invest upfront in hiring people with industry relationships within our ideal customer base. They will build a higher level of trust with our prospects, creating a higher ROI as we build the business.
How do you prioritize where you apply investment and resources in the early stages of a business?
Startups usually focus on finding and confirming product-market fit; they don’t spend money on sales until sure of the opportunity. Once you have confirmed an opportunity to grow, investments may shift to marketing, then sales, and then back to product and engineering to stay ahead of the market and new competitors.
Investments and priorities should shift based on what is important to the company and early customers at that specific time. I recommend understanding where you are on that journey, concentrating on the most essential investments—both in time and money—and ensuring the entire organization is educated and aligned on where to direct energy.
Can you share your strategy for selecting the target customer base to drive the most value?
The first step is deciding who your ideal customers are. You have to sit down, define them, understand who they are and what they care about. Then, you have to learn to say no to customers that don’t fit the criteria. Contrary to what many may think, more customers are not always better. That is the biggest mistake I see companies make. They spend the same time and money on those customers that are not a fit and will not give you the ROI needed to justify the upfront costs.
Remember that the ideal customer may change over time, as the product and the market evolve. At Coder, we’ve been focused on large, compliance-heavy global 2,000 customers that will get the most out of the product, but as the product evolves, we also see market value for smaller companies. You have to be aware of what changes are coming and what will contribute to the company’s growth, or you may miss opportunities.
GenAI’s use in finance is under much discussion. Do you have any advice on how finance professionals can make the most of the technology?
GenAI will help finance professionals differently, depending on their experience. For example, the analytical and mathematical skills of tools like ChatGPT have grown by leaps and bounds. A junior finance professional can perform analysis in a natural language format without knowing complex tools, modeling and Excel formulas.
Someone further along in finance may need to communicate often with stakeholders and peers. Here, GenAI can help create effective and clear reports, emails and presentations. Senior finance professionals can use GenAI as a “sparring partner.” For example, they could provide financial data to a tool like ChatGPT and ask it to think of 10 questions an investor may ask based on the results—allowing them to prepare for earnings calls.
The use cases are endless, but I cannot caution people enough on two fronts: First, GenAI only gets you to about 80 percent. You still need to review, refine and polish the work. Second, the CFO must understand the IP protection and indemnification offered by specific tools. Many paid versions provide this, whereas the free consumer versions do not.