Intro/Kim’s Background

Kim grew up in Silicon Valley and has seen it grow from sleepy orchards to a thriving high-tech capital of the world. For over two decades, Kim has helped nearly 100 startups and emerging growth companies and has personally been involved in nine unicorns! So, as Kim likes to say, “I’ve seen it all!”

Kim’s specialties are recommending and implementing accounting and finance processes and systems, helping companies get funded through comprehensive financial models, and being an overall trusted advisor for companies of all sizes and industries.

Questions

Question 1: Hi Kim, tell me about yourself.

Kim Lain: Well, I grew up nearby in Santa Clara. I had a normal childhood, I loved school, got pretty good grades, and even graduated valedictorian of my class! One interesting thing is that I was accepted to Stanford, but unfortunately my parents couldn’t afford to pay for me to go there. So my dream of becoming a doctor had to wait until my daughter Taylor achieved that goal just a couple of years ago.

I found my way into finance and soon realized that it’s sort of like being a doctor, where I have to be a bit of a detective and solve problems—just not life or death ones—but I have enjoyed it.

Question 2: Where do you work now?

Kim Lain: I’ve been working for Deborah Kranz for nearly a decade. She hired me over at Kranz Consulting and now I am with her at her latest venture, Launch Finance. We specialize in startups, especially emerging technologies like SaaS, biotech/health sciences, and other, similar tech.

Question 3: What gives you a sort of “street cred” with startups?

Kim Lain: So I don’t know the exact number, but I estimate that I’ve worked with nearly one hundred startups – nine of which have become unicorns, i.e., over $1 billion in valuation. The most recent were AppDynamics, and then Lime Bike, you know the green rent-a-bikes that you see everywhere. In fact, I helped them get an additional $500 million in funding to help them expand their bike network.

Question 4: What advice do you have for startups?

Kim Lain: First, as I’ve written in several of my LinkedIn and blog posts, including Cash is Elvis (“cash is king,”) cashflow the single-most important thing for a startup. I’ve seen it happen too many times where founders will squander their funds on, for example, a C-level executive hire, like a CFO, thinking that they need someone of that caliber to get funding, when all they really need is an accountant and an interim CFO to achieve the same thing (but at a much lower cost).

I recently read about an early-stage company that spent a TON of money on a high-powered CFO. Probably close to half-a million annually, all-in. It nearly bankrupted the startup. True story. They had to lay off people just to stay afloat – which they did, barely. Thankfully.

BTW, this can apply to any C-level exec, not just the CFO.

And don’t just depend on VCs for funding. There are all kinds of creative ways like crowdfunding (my client Knightscope robotics raised $3 million that way and they now are a multi-million company). Crazy idea – sell your products and live off of the revenues!

Second, meet your milestones!

When a VC or other investor gives funds to a startup, they want to make sure that their money is well-spent. A way that they ensure this is to establish pre-agreed upon milestones. These include, for example, proof of concept (PC), completion of prototype, market testing, etc. BTW, for a really good list, I recommend the following Harvard Business Review article Milestones for Successful Venture Planning (hbr.org).

As a founder, you might think that it’s okay to miss a milestone by a bit, here or there.

Here’s a hint: Do NOT miss a deadline. Ever.

Investors take milestones very seriously and use them as an indicator of how serious the founders are as leaders, and ultimately gauge the success of the startup on them as well.

Question 5: Speaking of technologies, what tech do you recommend for startups?

Kim Lain: The answer is, of course, it depends. It depends on the stage of the startup, how much funding they have, etc. However, for early-stage startups, I recommend several systems:

• a basic bookkeeping software such as QuickBooks Online,
• for banking and money transfers, I recommend bill.com,
• for expenses – and all companies have expenses, even if they don’t have revenues – I recommend Expensify,
• others include Avalara for taxes, Carta for tracking equity, and an HR/payroll app like Gusto.

As the startup grows in people and investments, the latter at, say, $20 million, I recommend that they upgrade their accounting system to NetSuite for their ERP (back-office) system. If they grow to over $100 million, I’d probably suggest SAP, depending on what industry they are in.

Question 6: Tell me an interesting story where a startup did the right thing or things, and how it all worked out.

Kim Lain: I have several favorites. I love how Knightscope did crowdfunding, as I had said before, and then how they’ve been very judicious with their money, always putting profits back into the company to make better robots.

And I love how Lime Bike (now Lime Micromobility), wanted to revolutionize the way that we get around town, by creating a network of bikes, scooters, and electric vehicles, but they just needed a few dollars… like half-a-billion. Which I helped them get. And now they are ubiquitous – you see them everywhere.

I could tell other examples from the nine unicorns that I’ve worked with – and non-unicorns as well.

Question 7: Tell me an interesting story where a startup did the wrong thing or things and how it all worked out.

Kim Lain: The example that first comes to mind is Clinkle. Clinkle was a startup that was founded by a just-graduated-from Stanford computer science major Lucas Duplan. Lucas was given $30 million by his father and several of his dad’s friends, like Richard Branson, Andreessen Horowitz, and other well-known investors.

I was brought in as a consultant, at the VP of Finance level, to help them manage their finances. I won’t say how well or not that they managed their finances, but let’s just say that those guys threw AMAZING parties at their posh downtown San Francisco office.

I will also quote a tech writer who said, “this is an example of why you don’t give a 20-something-year-old kid $30 million dollars.” https://en.wikipedia.org/wiki/Clinkle

Question 8: What book or books would you recommend that founders read?

Kim Lain: Whew. There are so many. But probably the top three are Unicorn Tears, The Lean Startup, and Built to Last. I love Unicorn Tears. In fact, I even did a book review of it in a LinkedIn post – my review is about a five-minute read vs the 200-page book. I read it and summarized it for founders; you are welcome!

Here’s the article link: https://www.linkedin.com/pulse/book-review-unicorn-tears-why-startups-fail-how-avoid-kimberly-lain

To be honest, when I picked up the book, I thought the term “unicorn tears” was like crocodile tears, which are false or disingenuous tears. I mean, so a rich kid from Stanford gets $30 million and his company fails. Boo-hoo, right?

The book is about the total opposite.

Unicorn Tears describes the personal toll that happens when a startup fails. Burned out founders, failed relationships, addictions of all sorts; it can get really ugly. So the author goes to great lengths to show founders how to avoid the “Tears,” by telling them how to pace themselves and avoid burnout, how to be mentally fit, and finally, how to run their startup so that they don’t fail in the first place.

BTW, notice the subtitle is “Why Startups Fail and How to Avoid It.” Do you know that 92% of startups fail? Unicorn Tears is basically a step-by-step recipe book on how not to fail even though the odds are very stacked against you.

Question 9: What questions should a founder be able to answer with regard to their company’s potential?

Kim Lain: I suggest that founders know the answers to these key questions:

1. How much has the company raised and what is its runway?
2. Who are your investors and why did you choose them?
3. Who are the founders and what are their qualifications to run a startup?
4. What is the board structure?
5. Who are the early employees and what are their backgrounds?
6. What milestones has the company achieved?
7. Ask yourself: Do I believe in the startup’s idea?

Question 10: What final advice do you have?

Kim Lain: Remember that “cash is king,” and that technology, especially automation and AI, is critical to scaling your company.

Get a good advisory board.

Get some sleep. (Read “Unicorn Tears;” you’ll see).