"You may have heard ""grow at all costs"" echoed across Silicon Valley. Many companies were richly rewarded for that path, forsaking profits all the way to IPO and beyond."

"Profitability runs counter to conventional Silicon Valley wisdom because it typically sacrifices growth. But at Slab, our product's purpose is to steward our customers' knowledge long-term, so we need to be built for and remain enduring for the long term."

"While prioritizing growth has its merits, reaching profitability early is a path more startups should consider. So little is shared publicly about profitable startups that many founders are not even aware if and how it is an option."

"Half of the profitability equation is revenue, so you'll need a pricing model and the prices themselves for your product."

"Survey your competitors' and adjacent products' plans in your space and construct a simplified version2. This approach ensures your prospect will be familiar with what is being charged for."

"Our plans now include a premium plan, named ""Business"" to contrast our standard ""Startup"" plan. The main functional benefit of Business is integration with Okta."

"As time went on, we learned many customers simply want the best version of Slab, even if they will not immediately make use of functional benefits."

"Regardless of the motivation, you should let such prospects self-select into a higher-tier plan by offering one. You do not need functional feature differences; it is enough to offer priority support and/or an SLA as initial benefits."

"for your first plan, unless a core value of your offering is being cheaper, price the same or ~20% higher than your direct competitors. Then experiment and iterate for the rest of your company's life."

"People complain far less about price decreases than increases, and an initial 20% difference is palatable to most prospects."

"As it becomes less negative, your runway multiplies, until eventually, it gets to zero, and you will have an infinite runway and infinite time to reach profitability — as long as you keep cash flow at least zero!"

"Offer a discounted annual plan with an upfront payment to increase cash flow while reducing churn."

"On the same coin, don't pay vendors upfront for annual plans, despite their savings. As a startup, change is the only constant and you'll want the flexibility to switch vendors as soon as your needs change."

"Hire contractors before employees"

"Salaries are almost always the biggest cost for a company."

"Contracting allows you to work with top talent while being able to afford them."

"If needs do grow, the contractor to full-time employee path is a well-trodden win-win as you'll know each other far better than from any interview."

"Slab embraced remote work in our earliest days simply because we wanted to work with the best and did not believe that every talented person lived in my home city of San Francisco."

"Hiring in lower cost-of-living geographies creates a win-win for employers, who can offer more competitive salaries at lower costs, while employees can command greater purchasing power with those salaries."

"Because of management, more people and salaries lead to even more people and salaries. One way to slow this is by hiring senior individual contributors, who can get more done, even relative to their higher salaries."

"Some of this preference can be directed outwards through blogging or open source but ultimately you want senior individual contributors who mostly want to build, not mostly want to influence."

"For most vendors, it will not be worth the effort to find savings, but one exception is infrastructure."

"You will likely not use all these credits, saving time in your early years from optimizing infrastructure efficiency and costs."

"These credits are so substantial that at Slab, we deliberately started with our 2 choice cloud provider and switched to our 1 when credits expired."

"Payroll tax in the United States is 7.65%, and all companies pay this through their payroll provider (Gusto, Justworks, etc). But as of 2016, you can get this refunded by filing additional tax paperwork for R&D tax credits."

"Instead of growth at all costs, the growth needs to be much more deliberate and sustainable, typically over a longer period of time"

"To quote Jeff Bezos, ""If you're willing to invest on a seven-year time horizon, you're now competing against a fraction of [the competition], because very few companies are willing to do that."""

"Most Silicon Valley startups think in 18-month time horizons, the average time between funding rounds."

"The best way to price is accurately identifying the true value of your product and features, often segmenting across different customers."

"It is interesting to speculate on how much a company values cash by the size of its discounts. For example, ClickUp offers 45% while Cloudflare only offered us 2% at our last enterprise contract renewal. ^"