Brick by Brick

Brick by Brick is a newsletter focused on the intricacies of building and scaling startups, emphasizing technology and product implementation. It examines strategies like learning from sales losses, software purchase behaviors, resource optimization, startup compensation, using trade-shows effectively, and the significance of tiered SaaS pricing. It also covers cost management, product planning mistakes, and the role of writing in engineering leadership.

Startup Building and Scaling Technology Implementation Product Development Sales Strategy and Learning Resource Optimization and Management Team Building and Compensation Marketing and Trade-Shows SaaS Pricing Strategies Cost Management Product Planning Engineering Leadership Research and Development Cloud Cost Optimization Competitive Strategy Software Development

The hottest Substack posts of Brick by Brick

And their main takeaways

Startup stock options: Liquidity options

18 implied HN points • 26 Feb 24
💰 Finance Startup Investment Stocks
  1. Common shares vs Preferred shares: Know the differences. Common shareholders may face challenges like Right of First Refusal (ROFR) when transacting with their shares.
  2. Liquidity avenues for startup common shares include IPOs (least likely), M&A, tender offers, private share sales, and equity financing. Each option comes with its own set of complexities and approvals.
  3. Preferred shareholder rights like Liquidation Preference and Participation Right can significantly impact common shareholders during exits, potentially wiping out their earnings completely. Understanding these rights is crucial in startup shareholder dynamics.

How can R&D impact CAC, LTV & profitability

9 implied HN points • 18 Mar 24
💼 Business Finance Technology Marketing Management Strategy
  1. Understanding unit economics is crucial for businesses to determine profitability and optimize operations.
  2. Customer Acquisition Cost (CAC) is a key metric in evaluating marketing and sales efficiency, while Lifetime Value (LTV) predicts the profit from a customer's entire relationship with the company.
  3. R&D can significantly impact profitability by lowering CAC and increasing LTV through delivering superior products, enhancing user experiences, and attracting customers organically.

Understanding startup stock options: Part 1

18 implied HN points • 19 Feb 24
💰 Finance Stock Options Taxation Valuation Liquidity
  1. Stock options are a key part of startup employee compensation, involving vesting schedules and the opportunity to buy company shares at a set price.
  2. 409A valuations determine the fair market value of a company's stock, influencing employee stock option prices and taxation.
  3. The 90-day window after leaving a company requires employees to decide whether to exercise their vested stock options or lose them, potentially facing significant financial implications.

The Iceberg that sank the Snowflake?

9 implied HN points • 01 Mar 24
🕹 Technology Data Warehousing Open Source Computing
  1. Snowflake's stock dropped significantly after the announcement of CEO Frank Slootman's retirement, with a key concern being the impact of Apache Iceberg on moving data out of Snowflake.
  2. Apache Iceberg is a powerful technology that allows for the efficient migration of data out of Snowflake to other systems for processing, causing revenue loss in both storage and compute for Snowflake.
  3. The paradigm shift towards technologies like Iceberg takes time in enterprise settings but can have a significant impact, highlighting the importance of capturing the compute dollars in data processing.
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Does Github CoPilot increase developer productivity?

9 implied HN points • 07 Feb 24
🕹 Technology AI Software Engineering Developer Tools Productivity Data Analysis
  1. Microsoft reported significant growth with GitHub CoPilot, reflecting high adoption and productivity among developers
  2. An experiment showed developers using CoPilot completed tasks 55.8% faster, raising questions about generalizability
  3. Assessing the true impact of CoPilot on productivity requires rigorous experiments tailored to individual engineering organizations

Losing always sucks. Even writing this sucks

45 implied HN points • 05 Jul 23
💼 Business Sales Engineering Value Execution Customer Insights
  1. Losing sales opportunities can be a great learning opportunity for both sales and engineering teams.
  2. Sales losses can occur due to reasons like lack of alignment with customer needs, inadequate value proposition, and price constraints.
  3. To learn from sales losses, it's important to assess gaps in perceived value, interview customers for insights, and continually review reasons for lost deals.

SaaS tiered pricing: why do it & its implications to engineering

27 implied HN points • 21 Aug 23
💼 Business SaaS Pricing Engineering Features
  1. SaaS companies often use tiered pricing with free, middle, and high tiers to attract different customer segments.
  2. Each tier serves a purpose: free for lead generation, middle as the anchor attracting most customers, and high for generating the most revenue.
  3. Assigning features to pricing tiers has implications on product development, requiring deliberate assignment, modular implementation, and robust analytics.

5 common mistakes in product planning

27 implied HN points • 17 Jul 23
💼 Business Customer Feedback
  1. Having a clear product vision is crucial for successful product planning and execution.
  2. Cost and value estimates in product planning are often inaccurate, leading to unexpected outcomes.
  3. Predicting the future in product planning is challenging due to human limitations and unforeseen events.

Competing against incumbents: Flank them

18 implied HN points • 06 Sep 23
💼 Business Competition Strategy Marketing Entrepreneurship Innovation
  1. Having competitors in the market can actually benefit your business by establishing a need for your product and setting a budget.
  2. Providing a better customer experience and transparent pricing are common tactics, but they may not be effective strategies against incumbents.
  3. To compete successfully against larger competitors, consider flanking them by offering unique attributes and advantages that they cannot provide.

Cut, cut, cut: A framework to navigate which costs to cut and why

27 implied HN points • 06 Feb 23
  1. Cutting costs is a balancing act - too much or too little can harm the business.
  2. When making cuts, prioritize areas that offer high impact with low pain.
  3. Key cost areas to focus on are infrastructure, headcount, and miscellaneous costs like T&E.

What's the ROI of R&D?

18 implied HN points • 13 Feb 23
💼 Business Finance Technology Product Management Investments Startups
  1. Establish concrete business outcomes for R&D investments before making them
  2. R&D organizations should be able to articulate investments and outcomes in terms of business metrics like net new ARR and sales efficiency
  3. Maximizing R&D pre and post PMF involves investing strategically in product features that align with market needs and drive incremental value

Would you want 10 Lionel Messis on your football team?

0 implied HN points • 12 Feb 24
🎾 Sports Football Team Building Leadership
  1. Balance in a team is crucial - having 10 Lionel Messis on a football team might be entertaining but won't lead to success. Complementary skills are necessary for overall team success.
  2. Building a software engineering team should focus on common foundational capabilities, aligning talent with challenges, and fostering growth and camaraderie among team members.
  3. The key to a high-performance team lies in developing engineers at all levels, fostering a sense of collective growth, and optimizing for the team as a whole rather than individual prodigious talents.

Startup stock options: Opportunities for improvement

0 implied HN points • 04 Mar 24
💼 Business Startups Stock Options Ownership
  1. Potential issues with traditional startup stock option programs include tax liabilities, limited exercise windows upon leaving the company, and company restrictions on selling shares.
  2. Considerations for improvement include early exercise options to benefit from a lower strike price, longer exercise windows beyond the default 90 days, and facilitating share transactions for employees on secondary markets.
  3. Encouraging long-term ownership of company shares aligns with investor and founder interests, while acknowledging the flexibility needed by employees for major life events or financial needs.

What SaaS metrics should a head of engineering track?

0 implied HN points • 11 Mar 24
💼 Business Metrics Revenue Profitability Efficiency Startups
  1. Key SaaS metrics vital for an engineering leader: Focus on ARR, ACV, and TCV to gauge revenue streams effectively.
  2. Profitability metrics: Look at gross and operating margins, and free cash flow for late-stage companies to evaluate success.
  3. Efficiency tracking for startup growth: Monitor Cash Burn to Net New ARR, operational expenses per department relative to sales, to assess resource effectiveness.

What's a distributed system?

0 implied HN points • 05 Mar 24
🕹 Technology Distributed Systems Consistency Fault Tolerance Concurrency
  1. A distributed system is a collection of components on multiple computers that appear as a single, unified system to users. They are commonly used in database and file systems.
  2. Key characteristics of distributed systems include concurrency, scalability, fault tolerance, and decentralization, enabling efficient operation across multiple machines.
  3. In distributed systems, concepts like fault tolerance, recovery & durability, the CAP theorem, and quorums & consensus are crucial for maintaining reliability, consistency, and coordination among nodes.