Fwd: Stellic and the 2022 Economics Downturn
How an EdTech startup's scrappiness is helping it to navigate the downturn
Sabih Bin Wasi, Rukhsar Neyaz and Musab Popatia are co-founders of Stellic, a degree-planning tool for post-secondary students
I want to forward you an email from Sabih Bin Wasi, CEO of Stellic, an ed-tech startup that is modernizing the matriculation pathway for universities.
As one of the earliest backers, I am incredibly proud of what they have accomplished.
Sharing Sabih's assessment, I think Stellic's success is indeed attributed to its sustainable, thoughtful approach to building the company.
With very humble roots ( yes, I invested in these guys when they were moving to the trailer park in Mountain View ), they have maintained their scrappiness throughout all these years. And this is why they are in such a great shape ( 100+ months runway, large contract sizes, and 100% renewals )
Sabih's note is a great reminder that we should never lose sight of our mission.
Whether you are in an enviable position like Stellic’s or you are struggling to raise the next round of capital, I hope that this email can provide some form of guidance and encouragement during these challenging times.
---------- Forwarded message ---------
From: Sabih Bin Wasi <firstname.lastname@example.org>
Date: Sat, May 28, 2022 at 1:09 PM
Subject: Stellic and the 2022 Economics Downturn
To: Stellic Team <email@example.com>
Everyone is talking about the economic downturn. I’ve received emails and texts from half a dozen advisors flagging the (potential) seriousness of the situation for tech companies, particularly startups. YC sent an email. Sequoia Capital put together a slide deck. Here is the tldr: raising money is infinitely harder, valuations are down, nobody knows how long this period will last, and companies have to take drastic measures to cut expenses and extend their “runway”. They say you must have at least 30 months of runway.
So I thought I should share my perspective on all this and whether you should be concerned (spoiler alert: you shouldn’t).
First of all, Stellic has 100+ months of runway based on our current burn rate. We are incredibly, incredibly fortunate to raise a healthy round of $11M right before the dip. Thanks to our BIG contract sizes and 100% renewals, the revenue stream has been steady. Plus, our sales pipeline has never looked this good so the revenue will multiply in the coming months. All that to say, unlike most startups, our survival does not depend on investor money. Even if we never raise additional capital, we can not only survive but continue to thrive and invest. Therefore, our growth plans for the foreseeable future remain intact.
This is also a moment to reflect on why we are in this fortunate position. Pure luck is part of it. Our 110% effort is part of it. The continued support of our university partners and advisors is part of it. More importantly, in my opinion, is our sustainable, thoughtful approach to building the company. It’s our focus on unit economics, optimization, and maximizing ROI. This becomes 10x more important in today’s environment - where outside capital may not come to the rescue. This becomes 100x more important in higher ed - where tech adoption takes a while and you have to play the long game. Of course, once you become the “credible thing” in higher ed, the world is your oyster and you define the future. (Exhibit A: Handshake, Slate, Canvas). But, we have to sustain ourselves to get there. Therefore, I cannot emphasize enough the importance of being “unbelievable scrappy”. The success of our mission depends on it.
Now, it won’t be smart to “wait out” this period either. Quite the contrary. It’s time to double down on (justifiable) investments. As you all know, building the team (especially the leadership layer) is our #1 challenge at our stage. We have been given a perfect moment for it. In the midst of hiring freezes, we can hire the best (culturally aligned) talent. Similarly, in the midst of marketing budget cuts, we can stand out by smartly promoting all the outcomes/stories we’ve been hearing from our university partners. There’ll be less noise out there. If you have other (again, justifiable) investment areas, I would love to hear them. Let’s put the $$ to action.
Some of the best, category-defining companies were built during economic downturns. (Exhibit B: Google, Amazon, Salesforce, Airbnb, Paypal.) I can’t say for sure if Stellic will be one of those. But I have a feeling - if we keep putting our best work forward if we embrace our 'unbelievable scrappiness' if we invest smartly in the right areas - we might.
Speaking from a very fortunate position,
Sabih Bin Wasi
Founder & CEO, Stellic Inc.
San Francisco, CA