Meeting Title: Brainforge Budget Review Date: 2026-02-18 Meeting participants: Megan’s Notetaker, megan, Rico Rejoso, Elizah Joy, Uttam Kumaran
WEBVTT
1 00:01:14.120 ⇒ 00:01:15.380 megan: Hey, Rico!
2 00:01:16.950 ⇒ 00:01:18.579 Rico Rejoso: Hey, Megan, how are you?
3 00:01:19.690 ⇒ 00:01:22.039 megan: I’m good. How are you?
4 00:01:22.400 ⇒ 00:01:23.770 Rico Rejoso: Great, great, I’m good.
5 00:01:24.970 ⇒ 00:01:28.749 megan: I sent you some follow-up questions on Demi.
6 00:01:29.820 ⇒ 00:01:38.259 megan: Just need a little bit more info on, like… it just… what he needs it for kind of impacts which direction we need to go.
7 00:01:38.590 ⇒ 00:01:41.330 megan: Or both, yeah.
8 00:01:41.690 ⇒ 00:01:42.750 megan: Just because we were…
9 00:01:42.750 ⇒ 00:01:43.699 Rico Rejoso: Turned out with him.
10 00:01:44.080 ⇒ 00:01:44.950 megan: What’s up?
11 00:01:45.470 ⇒ 00:01:47.250 Rico Rejoso: Let me confirm that with Demi.
12 00:01:47.550 ⇒ 00:01:58.490 megan: Okay, yeah, that sounds good. Once I hear from you, I mean, and probably… I’ve got an off-site all afternoon, so, it won’t be until later in the week, but I can at least
13 00:01:58.720 ⇒ 00:02:01.320 megan: Give me which direction we need to go.
14 00:02:03.690 ⇒ 00:02:06.800 Rico Rejoso: True. Let me confirm and follow up with you regarding that.
15 00:02:08.780 ⇒ 00:02:11.109 megan: Cool. Sounds good. Just let me know.
16 00:02:16.130 ⇒ 00:02:18.330 megan: What’s keeping you busy these days?
17 00:02:20.120 ⇒ 00:02:20.910 Rico Rejoso: Yeah.
18 00:02:22.330 ⇒ 00:02:24.340 Rico Rejoso: Yeah, we have a whole lot of restructuring.
19 00:02:25.660 ⇒ 00:02:27.969 megan: Yeah, yeah, it seems like it.
20 00:02:29.490 ⇒ 00:02:30.750 megan: Hey, Eliza.
21 00:02:31.220 ⇒ 00:02:33.319 Elizah Joy: Hi, Megan, how are you?
22 00:02:33.610 ⇒ 00:02:34.880 megan: Ed, how are you?
23 00:02:35.530 ⇒ 00:02:36.770 Elizah Joy: I am good, too.
24 00:02:42.470 ⇒ 00:02:45.159 megan: Good. We’re just waiting for Utam.
25 00:02:55.100 ⇒ 00:02:59.559 Rico Rejoso: Then we said it’s for a Spanish digital nomad visa.
26 00:03:02.260 ⇒ 00:03:04.650 megan: Oh, wow, okay.
27 00:03:04.820 ⇒ 00:03:07.180 megan: Because he’s in Nigeria, right?
28 00:03:07.540 ⇒ 00:03:08.810 Uttam Kumaran: He’s in Malta.
29 00:03:09.480 ⇒ 00:03:10.660 megan: Malta.
30 00:03:10.840 ⇒ 00:03:13.569 megan: We’ve got it in ramp as Nigeria.
31 00:03:17.550 ⇒ 00:03:22.860 Uttam Kumaran: I think that’s probably where his bank account is, because he moved from Nigeria, like, I don’t know, at some point.
32 00:03:24.970 ⇒ 00:03:28.300 megan: It’s for a Spanish visa… visa.
33 00:03:28.880 ⇒ 00:03:30.740 megan: He’s a contractor, so…
34 00:03:30.740 ⇒ 00:03:38.109 Uttam Kumaran: Rico, can we… can we… I just… I don’t have, like, a ton of time. Rico, do you want to handle this offline? I just want to make sure we… we spend time on the budget thing.
35 00:03:38.110 ⇒ 00:03:38.970 Rico Rejoso: Definitely.
36 00:03:39.130 ⇒ 00:03:40.029 Uttam Kumaran: Okay, thanks.
37 00:03:40.550 ⇒ 00:03:45.560 megan: Yep, yep. So, okay, cool. So,
38 00:03:46.000 ⇒ 00:03:49.039 megan: I went through the financials, as you saw, and.
39 00:03:49.040 ⇒ 00:03:49.620 Uttam Kumaran: Yes.
40 00:03:49.620 ⇒ 00:03:59.910 megan: recap. So, maybe just want to start there, if you have any questions on… did you have a chance to review, or…
41 00:03:59.910 ⇒ 00:04:11.530 Uttam Kumaran: Hey, I reviewed the email. I haven’t got a chance to look at the actual Excel sheets yet, but that’s sort of gonna be sort of based on this conversation today. I’m gonna be on a flight later, so I’ll review that.
42 00:04:11.540 ⇒ 00:04:21.910 Uttam Kumaran: I think we actually also, you know, me and Robert spent a little bit of time talking about it, and I mean, one, I think I’m glad to see us guiding better on margin. I think part of that is…
43 00:04:21.930 ⇒ 00:04:28.270 Uttam Kumaran: Really based on just, like, yeah, we’re… I mean, me and him are taking on work, and we’re just sort of starting to ramp up.
44 00:04:28.300 ⇒ 00:04:38.790 Uttam Kumaran: So in terms of, like, to give you, Megan, like, a sense of, like, on the business side, like, one, we are… we… the… the rise in internal OPEX that you’re seeing is really…
45 00:04:39.150 ⇒ 00:04:52.640 Uttam Kumaran: what’s gonna allow us to go get the next, like, $150K in MRR? And, like, we need, sort of, these, like, internal roles to go service that. So, I’m not… from the business side, I’m not…
46 00:04:52.940 ⇒ 00:04:55.830 Uttam Kumaran: Too worried, because we’re seeing it work.
47 00:04:56.140 ⇒ 00:05:06.429 Uttam Kumaran: And so there’s kind of two things that we did, I think, on the… on the delivery side also, is, one, yeah, we ramped up some of these internal roles, and we’re sort of…
48 00:05:06.500 ⇒ 00:05:18.350 Uttam Kumaran: I hope kind of at the… at the end of that, like, we had Luke join, we’re having, Kayla join, Shayshu’s sort of ramping out, and I believe that should sort of cap, like, any other…
49 00:05:18.650 ⇒ 00:05:25.860 Uttam Kumaran: Sort of, like… non-delivery internal roles that we sort of have scoped right now.
50 00:05:25.960 ⇒ 00:05:42.839 Uttam Kumaran: Additionally, on the delivery side, we actually have just, like, we don’t have any project managers, so we’re actually able to run these projects at a lot higher margin, and that’s sort of, like, what you’re seeing. And then, in addition, we’re actually… we’re basically kind of, like, at a 90% renewal rate for the most part.
51 00:05:43.290 ⇒ 00:05:54.330 Uttam Kumaran: So I feel like, looking at the next 3 months, we’re guiding towards all of our existing contracts either continuing to expand, or at least stay stable. Like, I don’t foresee any, like, significant churn.
52 00:05:54.680 ⇒ 00:06:00.800 Uttam Kumaran: I do expect that, yes, there’s gonna be some, like, increase in expense. Basically.
53 00:06:00.950 ⇒ 00:06:06.309 Uttam Kumaran: in order to do two things. One is, like, continue to capture, like, and drive demand.
54 00:06:06.420 ⇒ 00:06:12.800 Uttam Kumaran: And then second is to service the revenue. I sort of split both of those out, because to service the revenue piece.
55 00:06:12.870 ⇒ 00:06:19.869 Uttam Kumaran: I’m trying to guide towards, like, at least 40% margin, if not more, right? Like, that’s sort of, like, what I think…
56 00:06:19.880 ⇒ 00:06:36.599 Uttam Kumaran: would put us in a good category, so I sort of split that up, and like, okay, we are going to spend for the revenue that’s coming in, right? At least that amount. On the sales and marketing and OpEx side, that’s where I feel like your pressure on keeping that low is totally fair.
57 00:06:36.780 ⇒ 00:06:53.539 Uttam Kumaran: I… the way I would like to think about it, though, is, like, as a percent of revenue. Because that way, if I can forecast revenue based on the sales pipeline, then I think we can be on the same page on, like, okay, are we… is the number going up, and is that… are we, like, comfortable with that, is really, like, what I want to get the conversation to.
58 00:06:53.670 ⇒ 00:07:00.790 Uttam Kumaran: Because the numbers are all going up right now, like, all the numbers are way bigger, so it’s… for me, it’s overwhelming to be like.
59 00:07:01.030 ⇒ 00:07:09.269 Uttam Kumaran: we… we’re sort of switching to now we have to spend strategically in order to get the demand and service the revenue. It’s, like, sort of the net…
60 00:07:09.630 ⇒ 00:07:19.399 Uttam Kumaran: where I want to kind of stage this from my side, but yeah, curious on your feedback. And then, yeah, like, I would love to drive towards having a budget conversation
61 00:07:19.510 ⇒ 00:07:24.609 Uttam Kumaran: So I can see the business in sort of, like, a percent of revenue type manner as we’re starting to grow.
62 00:07:26.140 ⇒ 00:07:31.219 megan: Yeah, totally. So, you’re reading my mind on percent of,
63 00:07:31.620 ⇒ 00:07:50.119 megan: yeah, percent of revenue and forecasting, so let me share my screen, and I’ll go through a couple things with you. I’ll show you kind of where we’re going, and then we’ll back into it, kind of, based where we’re at, but I’ve got this set up in the forecast so that we can ultimately get to
64 00:07:50.120 ⇒ 00:08:02.710 megan: You know, where do we, as a percentage of revenue, so exactly what you said here, you know, that 30% expense would keep us trending. We’ve actually been around, like, a 60% gross margin, which is awesome.
65 00:08:03.210 ⇒ 00:08:05.690 Uttam Kumaran: I’m very hard. Yeah. Very hard.
66 00:08:05.690 ⇒ 00:08:13.910 megan: Yeah, so that’s kind of really been the, the primary… and I totally hear you on you need to invest in future growth to get the sales. It’s a chicken and egg.
67 00:08:13.910 ⇒ 00:08:16.160 Uttam Kumaran: I also want you to be aware of that, that we’re, like.
68 00:08:16.160 ⇒ 00:08:16.540 megan: Yeah.
69 00:08:16.540 ⇒ 00:08:22.979 Uttam Kumaran: Because ultimately, you’re gonna see the expense come in, but you may not… but, like, we’re not doing a good job at showing you
70 00:08:23.230 ⇒ 00:08:25.190 Uttam Kumaran: How the revenue is trending.
71 00:08:25.330 ⇒ 00:08:33.689 Uttam Kumaran: because I have a clear sight into, like, which customers are going to expand, which are going to renew, and then also, like.
72 00:08:33.789 ⇒ 00:08:48.499 Uttam Kumaran: we now have pretty clear visibility into deals and pipeline, and so I can share that with you, like, okay, we are… what is our goal, and then what are we trending to? So that way, when you see the expense come in, it’s like, okay, we expected to do this.
73 00:08:48.560 ⇒ 00:09:06.099 Uttam Kumaran: It’s like… and I think for the next quarter especially, it would be great for us to not only forecast revenue, which we did, but also forecast expense, and then we have, like, truly, like, okay, everybody’s on the same page, so at any moment, if that’s off, we… that’s when it’s like, okay, what is going on, you know?
74 00:09:06.630 ⇒ 00:09:19.200 megan: And that’s where we’ll get to, but I do want to come back to the, so, like, ultimately, we’ll be checking… until we can get out of this liquidity churn, we’re watching this cash-on-hand forecast pretty tightly.
75 00:09:19.200 ⇒ 00:09:24.389 megan: So, we’ll… we’ll come back around to that, but I want to back up to, like, kind of
76 00:09:24.390 ⇒ 00:09:40.499 megan: what’s driving that? Because some of this is exactly what you said. December, we had record sales, $199. We anticipated and expected that that was going to go down. I think some of that was just due to, like, downtime over the holidays. People aren’t really thinking about it.
77 00:09:41.000 ⇒ 00:09:46.569 Uttam Kumaran: Yeah, I mean, we also transitioned all of our energy to delivering revenue, like, we couldn’t…
78 00:09:46.740 ⇒ 00:09:51.609 Uttam Kumaran: do anything more on the sales side. Like, I was… yeah, we were all, like, just jammed.
79 00:09:51.890 ⇒ 00:09:53.740 megan: Yep, yep, exactly.
80 00:09:53.860 ⇒ 00:10:08.230 megan: So gross… what’s not on here is the gross margin. I think this was, like, 63%, and this was 61, but anyway, on a margin perspective, we were relatively flat there. So we kind of go based on the,
81 00:10:08.460 ⇒ 00:10:14.039 megan: You know, the percentage change, and really kind of just, like, looking at the big numbers, so, like.
82 00:10:14.150 ⇒ 00:10:28.529 megan: our overall, our G&A was up, but this is where, since we didn’t have, all of the tracking, there’s, like, all of these team expenses down here, which we didn’t have sorted, so, like.
83 00:10:28.530 ⇒ 00:10:29.350 Uttam Kumaran: Yeah, yeah.
84 00:10:29.350 ⇒ 00:10:39.899 megan: forward, you know, we’ll have more data. Yes. But obviously, overall, like, where we saw some meaningful increase was on the software side.
85 00:10:39.900 ⇒ 00:10:40.850 Uttam Kumaran: Yes.
86 00:10:40.850 ⇒ 00:10:51.969 megan: and the team spend side, and software… I called some of these out. There was, like, some new subscriptions, and some… also some increase in things like Cursor.
87 00:10:51.970 ⇒ 00:10:52.640 Uttam Kumaran: Yes.
88 00:10:52.640 ⇒ 00:10:54.609 megan: and others, so…
89 00:10:54.610 ⇒ 00:10:58.609 Uttam Kumaran: That’s where I think, on the software side, I can say that the ops team has a good…
90 00:10:58.770 ⇒ 00:11:15.499 Uttam Kumaran: overview on that. On once a month, we were reviewing every single software and every single license count. We did a cut, like, we cut Loom, so that should save, like, a couple hundred a month. We are… we went through, of course, and curtailed as much, like.
91 00:11:15.750 ⇒ 00:11:26.990 Uttam Kumaran: people that have left and things like that. It wasn’t as dramatic as I… I thought we were gonna open it and be like, cool, we’re gonna find, like, a bunch. We were doing a pretty good job at, like, making sure that
92 00:11:28.200 ⇒ 00:11:28.570 megan: green.
93 00:11:29.350 ⇒ 00:11:40.260 Uttam Kumaran: Yeah, like, we were doing a pretty good job already, so part of this is, like, on a monthly basis, until we can do this more frequently, we will be reviewing every single software, and that is something we did going into February.
94 00:11:40.820 ⇒ 00:11:51.350 megan: Gotcha. Yeah, that’s… that’s really good, discipline. A lot of companies only do that once a year if they do it on any sort of basis, so I think… Okay.
95 00:11:51.350 ⇒ 00:11:52.780 Uttam Kumaran: Cool.
96 00:11:52.780 ⇒ 00:11:53.769 megan: Yeah, so it keeps.
97 00:11:53.770 ⇒ 00:12:12.580 Uttam Kumaran: Crazy, because we would be screwed right now if we just let all that go. I’m constantly thinking, because I’m still, like, who I was last year, right? So I’m like, why are we spending $600 on something? But we can also do a better job of helping you categorize. Like, cursor is actually, I would say.
98 00:12:12.830 ⇒ 00:12:16.770 Uttam Kumaran: Like, 90% of it is actually cost of goods.
99 00:12:17.020 ⇒ 00:12:21.000 Uttam Kumaran: Because it’s an AI tool that’s helping us deliver for clients.
100 00:12:21.160 ⇒ 00:12:29.420 Uttam Kumaran: So, in that sense, our ROI is, like, okay, and this is sort of what, Bryle is coming on to help with, which is just, like.
101 00:12:29.560 ⇒ 00:12:33.369 Uttam Kumaran: are we seeing that, like, ROI there? Just like any software, right? Like.
102 00:12:33.600 ⇒ 00:12:39.800 Uttam Kumaran: we are paying, so, like, there’s some return. So that’s the cursor piece, and that’s really what’s ramped.
103 00:12:40.040 ⇒ 00:12:45.880 Uttam Kumaran: But, like, again, I think it’s… it’s for us to give… I think operations team can maybe give you clarity on, like.
104 00:12:46.140 ⇒ 00:12:50.870 Uttam Kumaran: Are these costs of goods, are these internal? And so we can bucket it appropriately?
105 00:12:51.740 ⇒ 00:12:55.180 megan: Yeah, was that this? Yes.
106 00:12:55.350 ⇒ 00:12:59.940 megan: And I know we talked about that. We actually added in,
107 00:13:00.270 ⇒ 00:13:07.390 megan: like, we have a COGS software line item on the P&L. There’s nothing in it yet, because we kind of would be guessing.
108 00:13:07.610 ⇒ 00:13:11.009 megan: But, yeah, especially, like.
109 00:13:11.210 ⇒ 00:13:22.419 megan: it’s… it’s harder to break out partial vendors, but we can. But, like, yeah, if there’s things that are exclusively used, like cursor and.
110 00:13:22.420 ⇒ 00:13:23.160 Uttam Kumaran: Yeah.
111 00:13:23.780 ⇒ 00:13:36.690 megan: like, if I can get that list, then we can start tracking that for January, we can go back and update it, because that’s… it’s a significant, and when I go back up to, like, percent of revenue on the P&L,
112 00:13:36.960 ⇒ 00:13:54.679 megan: So this is for January, and that’s where we’re seeing that, like, 63% gross margin, which is awesome. You can kind of see, like, going down, you know, 20%, we talked about that, but then when you get to the software, so keep in mind, this has gone up, like, a thousand bucks from.
113 00:13:54.680 ⇒ 00:13:55.170 Uttam Kumaran: Yes.
114 00:13:55.170 ⇒ 00:14:01.629 megan: And it’s still 6%. So, yeah, we can keep this as, like, the, you know.
115 00:14:01.630 ⇒ 00:14:06.829 Uttam Kumaran: That’s exactly, like, what I’m hoping for, because, yeah, like, for me to know, because I also am, like.
116 00:14:07.030 ⇒ 00:14:12.809 Uttam Kumaran: still, like, okay, this number’s big, but what is it as a percent, and are we just in the right place we need to be?
117 00:14:13.090 ⇒ 00:14:28.759 megan: Exactly, and once we break it out, like, a lot of the… once we put it in the COGS, then I would expect that over month… month over month, that the team software would become pretty fixed, you know, absent of, like, any major…
118 00:14:28.760 ⇒ 00:14:38.879 Uttam Kumaran: basically all license creation, right? So, that’s not linear to our revenue, unless we’re, like, upgrading it, or it’s, like, becomes usage-based. Cursor, unfortunately, is usage-based.
119 00:14:38.880 ⇒ 00:14:41.689 megan: Right. But a lot of it is… a lot of it is seat-based.
120 00:14:41.730 ⇒ 00:14:49.220 Uttam Kumaran: So… And as much as possible, we’re trying to, like, consolidate, you know, like… So, I hear you, yeah.
121 00:14:49.220 ⇒ 00:14:56.480 megan: Yeah. Well, in a perfect world, too, like, if cursor’s doing its job correctly, it should be keeping cogs lower.
122 00:14:56.480 ⇒ 00:14:57.210 Uttam Kumaran: Yes.
123 00:14:57.210 ⇒ 00:14:57.590 megan: So…
124 00:14:57.590 ⇒ 00:15:04.949 Uttam Kumaran: Or at least, like, yeah, trending… that’s what we’re hoping for, is like… because the other thing is Kirscher, people on our sales team are using Kirscher.
125 00:15:05.130 ⇒ 00:15:13.409 Uttam Kumaran: So one thing we can provide, and Brile can provide this, is, like, we can actually go look at the cursor usage and give you a split on, like.
126 00:15:13.570 ⇒ 00:15:22.619 Uttam Kumaran: how much is going to sales and marketing versus how much is going to delivery, because it’s also helping the sales team speed things up. The problem is, it’s just not, like, I can’t…
127 00:15:22.970 ⇒ 00:15:34.759 Uttam Kumaran: it’s… it’s like using ChatGPT. It’s like, I can’t trace exactly, like, how did this help, like, a deal go faster, but you’re right in that my goal is that for us to get to, like, 60% margin.
128 00:15:34.880 ⇒ 00:15:38.729 Uttam Kumaran: These are the small things that are, like, gonna allow us to do that.
129 00:15:40.760 ⇒ 00:15:41.190 megan: Yeah.
130 00:15:41.190 ⇒ 00:15:42.839 Uttam Kumaran: You know, as a services company.
131 00:15:43.120 ⇒ 00:15:52.210 megan: As any of these expenses, like, on a per-vendor basis, start to get, like, over a thousand, which it looks like we’re about there in February.
132 00:15:52.710 ⇒ 00:15:53.260 Uttam Kumaran: Yeah.
133 00:15:53.260 ⇒ 00:15:59.510 megan: Then, yeah, it would be good to kind of be able to break out, how much of it is…
134 00:15:59.860 ⇒ 00:16:17.119 megan: like, might be variable. Whether we put that on the P&L or just track it as, like, kind of a quarterly review, is… is, you know, up for date. So, because, like, some of these, like, these smaller ones are probably the seats, and then the bigger ones are probably the usage would be much…
135 00:16:17.120 ⇒ 00:16:29.049 Uttam Kumaran: It’s also good for us to consider, okay, is this big enough to move to an annual contract? So that’s the next February thing, is we have some marked for, like, okay, if liquidity is good, we should consider moving this.
136 00:16:29.440 ⇒ 00:16:35.069 Uttam Kumaran: we just will get, like, some gains, like, 20%, probably. So, like, for Google, for Slack…
137 00:16:35.220 ⇒ 00:16:42.400 Uttam Kumaran: for, like, whatever we can, like, that’s the… probably the next optimization. But, okay, heard you on that, yeah.
138 00:16:42.590 ⇒ 00:16:49.120 megan: Yeah, I’d really love to see, this liquidity number get…
139 00:16:49.830 ⇒ 00:16:53.820 megan: Over 1 before we start doing that, so our current rate.
140 00:16:53.820 ⇒ 00:16:55.340 Uttam Kumaran: Yeah, yeah, okay, okay.
141 00:16:55.490 ⇒ 00:17:03.150 megan: We… we did see some improvement, that .5 up to 0.7. I mean, that was really driven by sales growth.
142 00:17:03.150 ⇒ 00:17:04.430 Uttam Kumaran: Yes, yeah.
143 00:17:04.430 ⇒ 00:17:09.780 megan: But until… until we’re, like, really caught up on, like, we’re still not out of the, like, oh.
144 00:17:09.780 ⇒ 00:17:10.260 Uttam Kumaran: Yeah.
145 00:17:10.260 ⇒ 00:17:17.059 megan: in February, we really, like, when… we’ll continue feeling the burn until we can get to, like, middle of the month and are only out.
146 00:17:17.060 ⇒ 00:17:17.710 Uttam Kumaran: Yes.
147 00:17:17.710 ⇒ 00:17:20.200 megan: tables are last month’s, you know? Yes.
148 00:17:20.200 ⇒ 00:17:22.900 Uttam Kumaran: Yes, yes, yes, yes. I mean, we’re close.
149 00:17:22.900 ⇒ 00:17:23.589 megan: This one?
150 00:17:23.919 ⇒ 00:17:24.829 megan: Closer.
151 00:17:24.829 ⇒ 00:17:25.739 Uttam Kumaran: I looked.
152 00:17:25.740 ⇒ 00:17:26.839 megan: closer…
153 00:17:27.089 ⇒ 00:17:27.549 Uttam Kumaran: Closer.
154 00:17:27.900 ⇒ 00:17:35.360 megan: It’s, the revenue dependency is what makes it kind of tricky, because all it takes is, like, one of those big renewals to push a month.
155 00:17:35.360 ⇒ 00:17:37.210 Uttam Kumaran: I know, it’s a delay, I know, yeah.
156 00:17:37.210 ⇒ 00:17:42.539 megan: It’s, it’s like, yeah, it’s just a lot of, like, wait and see. Yeah.
157 00:17:42.720 ⇒ 00:17:53.529 megan: But yeah, okay, so we covered software, and then the rest of this will kind of get filled in. But yeah, so we’ve got the reports on that sort of basis.
158 00:17:53.750 ⇒ 00:18:11.160 megan: That’s… and then pretty much, like, the bottom line impact with where we’re at, net income of, like, 13%. A lot of that is driven by the investment you were talking about in the future sales cycle, and kind of building the top of the funnel so that we can
159 00:18:11.160 ⇒ 00:18:14.059 megan: see that kind of materialize out, so…
160 00:18:15.110 ⇒ 00:18:27.309 Uttam Kumaran: And so even seeing that, like, okay, if… and of course, like, we have to pay partly before to get the revenue, right? So it’s like, okay, but as long as we’re, like, if we’re forecasting to try to get to, like, $250K,
161 00:18:27.660 ⇒ 00:18:33.130 Uttam Kumaran: And whatever, if we’re guiding towards, like, 20% of that should be… like…
162 00:18:33.260 ⇒ 00:18:41.839 Uttam Kumaran: sales and marketing, then, okay, I can… I can go ahead and make sure that we adhere to that budget, or we, like, slow roll it as much as we can, right? Like…
163 00:18:42.020 ⇒ 00:18:50.919 Uttam Kumaran: Hiring a person is tough, because the expense starts hitting, but, like, okay, if we can delay it, and we’re doing, you know, we’re saying all that internally, so…
164 00:18:51.740 ⇒ 00:19:00.889 megan: Yeah, exactly, and like, and candidly, too, a lot of this, like, a lot of this is Demi, which I know we’ve talked about.
165 00:19:00.890 ⇒ 00:19:01.400 Uttam Kumaran: Yes.
166 00:19:01.400 ⇒ 00:19:02.559 megan: Just, like, hate.
167 00:19:02.560 ⇒ 00:19:03.180 Uttam Kumaran: Yes.
168 00:19:03.180 ⇒ 00:19:13.859 megan: Okify, that’s its own thing. Yes. So we did have, like, an extra payment for him in there, and… and just a disproportion of his time gets allocated there.
169 00:19:14.050 ⇒ 00:19:15.130 Uttam Kumaran: Yeah, yeah.
170 00:19:15.130 ⇒ 00:19:24.429 megan: just the circumstances. There was also about 5K of Greg rolling up in here, I think. Is he on the go-to-market teams?
171 00:19:24.430 ⇒ 00:19:31.670 Uttam Kumaran: No, he’s on delivery, but he is spending some time with that team, building case studies and doing marketing activities.
172 00:19:32.100 ⇒ 00:19:33.110 Uttam Kumaran: Yeah.
173 00:19:33.210 ⇒ 00:19:34.960 Uttam Kumaran: So again, this is where, like.
174 00:19:35.780 ⇒ 00:19:47.029 Uttam Kumaran: I think, like, we came into the year with a budget on marketing, but I don’t think we really… because, for example, if sales needs to, like, push out a case study, they call someone on the delivery side.
175 00:19:47.400 ⇒ 00:19:58.069 Uttam Kumaran: And that person bills. So, kind of, some of the things that we’re thinking about on the people side is, like, as much as I can guide, people towards, like, fixed
176 00:19:59.760 ⇒ 00:20:06.270 Uttam Kumaran: you know, like, fixed contracts with us, I am trying to do that. Like, Greg, we actually negotiated down in terms of rate.
177 00:20:06.410 ⇒ 00:20:17.640 Uttam Kumaran: And so, like, people… we have now, like, bans for… for our, like, the rates that we offer folks. So, on net, we shouldn’t see people exceed, like.
178 00:20:17.780 ⇒ 00:20:25.030 Uttam Kumaran: 90 an hour, for the most part. And our average billable rate is now typically around
179 00:20:25.200 ⇒ 00:20:37.430 Uttam Kumaran: 200, you know, we’re pushing 150 is what we’re trying. So that’s where I’m, like, on the delivery side, I’m like, okay, if I could just keep everyone’s costs on the hourly side, but you’re right, like, if they build towards sales and marketing, then it’s something we have to track.
180 00:20:38.280 ⇒ 00:20:51.120 megan: Yeah, and we’ll… we’ll figure out the right, like, mix kind of going forward, too. The other thing I sent around, too, was this, like, detail that shows you exactly, like.
181 00:20:51.230 ⇒ 00:20:56.280 megan: you know, that whole… that $33K for the contractor OpEx?
182 00:20:56.280 ⇒ 00:20:56.810 Uttam Kumaran: Get it?
183 00:20:57.230 ⇒ 00:20:57.940 megan: Sorry?
184 00:20:58.460 ⇒ 00:20:59.240 Uttam Kumaran: Sorry, go ahead.
185 00:21:00.260 ⇒ 00:21:12.109 megan: So, so you can… so if you did have a question on, like, like, whoa, that feels high, or, you know, on… maybe on, like, internal engineering, maybe that feels low, you can kind of.
186 00:21:12.110 ⇒ 00:21:12.560 Uttam Kumaran: Yeah.
187 00:21:12.560 ⇒ 00:21:29.399 megan: like, what’s driving it in each of those. I think, like, as we’ve got more discipline now going forward, or if we need to, like, restructure some of these, like, maybe we decide learning and development is really more of a people ops function.
188 00:21:29.400 ⇒ 00:21:30.120 Uttam Kumaran: Yes.
189 00:21:30.120 ⇒ 00:21:42.889 megan: We can kind of, like, adjust the logic, too, so I did just want you to be aware of that. Anytime you’ve got, like, a new, structure like this, you kind of want to, like, fact-check it a little bit.
190 00:21:42.890 ⇒ 00:21:53.690 megan: Yeah. You know, we kind of assume that those things are where they are, but, like, it might evolve as you start to manage the business, you know, more in that way.
191 00:21:53.870 ⇒ 00:22:02.979 megan: Okay. But that’s just kind of an FYI. And then the, yeah, KPI analysis, this is where it will really…
192 00:22:03.130 ⇒ 00:22:18.219 megan: like, the ones we’re hyper-focused on are these liquidity ratios, so… Okay. We’re really trying to get these over 1, and then we did see an increase, which is good, but yeah, until… until these are hitting 1.
193 00:22:18.650 ⇒ 00:22:19.110 Uttam Kumaran: Yeah.
194 00:22:19.110 ⇒ 00:22:22.330 megan: As the ratio, we’re still gonna be feeling that, like.
195 00:22:22.330 ⇒ 00:22:23.159 Uttam Kumaran: Yeah, yeah.
196 00:22:23.160 ⇒ 00:22:24.360 megan: So.
197 00:22:24.360 ⇒ 00:22:24.950 Uttam Kumaran: Okay.
198 00:22:25.980 ⇒ 00:22:30.680 megan: Any other questions there? Otherwise, I’ve got forecasts for you.
199 00:22:30.680 ⇒ 00:22:32.220 Uttam Kumaran: No, I think that makes sense.
200 00:22:32.950 ⇒ 00:22:33.830 megan: Cool.
201 00:22:34.390 ⇒ 00:22:40.729 megan: So, let me see, let me just double check these. So, I’ve got…
202 00:22:41.230 ⇒ 00:22:51.429 megan: So the way I did the forecast was, looks like, I think we added some things since I did this maybe 2 days ago.
203 00:22:51.430 ⇒ 00:23:03.879 megan: But I kind of used, like, a more conservative number here for February, because it looked like, at the time, there were some things that we weren’t really sure where they were at. So revenue-wise,
204 00:23:03.880 ⇒ 00:23:11.679 megan: One question, Kelly and I were talking about this the other day, the AI automation, data analytics, data engineering.
205 00:23:11.680 ⇒ 00:23:21.430 megan: You know, the terminology doesn’t really match up, like, exactly with how we’re referring things into client contracts.
206 00:23:21.430 ⇒ 00:23:33.429 megan: So… which… which is one thing, but I guess, like, I would just want to know a little bit more strategically, like, what really are the revenue drivers? Because it seems like we might have
207 00:23:33.570 ⇒ 00:23:47.479 megan: some, engagements that really kind of become more, like, specific project-focused, and maybe it’s kind of anticipated to be, like, a start and an end, and then we don’t really know what the renewal versus
208 00:23:47.590 ⇒ 00:24:00.560 megan: Something that, like, feels more longer-term, or maybe we’re kind of operating more like an outsourced development team for the partner, as opposed to, like, fixing a project for them, or a workflow.
209 00:24:00.650 ⇒ 00:24:13.690 megan: So I guess, like, I just kind of share that as, like, those are the types of ways we do start to look at revenue to really understand, like, what’s true recurring versus more one-off or project revenue. Okay.
210 00:24:14.270 ⇒ 00:24:32.999 megan: So just to give you something to think about, I know you said you got a flight and you’re going to be looking at financials. I don’t need an answer today. We tend to just kind of park most things under data analytics, but I know that Kelly had a question recently, and so then we just started talking, like, more philosophically about, like.
211 00:24:33.450 ⇒ 00:24:44.729 Uttam Kumaran: Yeah, and internally, we’re starting to get better, like, hey, what did we sell to this client? Like, service, subservice? And ideally, all of that should line up.
212 00:24:44.730 ⇒ 00:24:45.220 megan: Yeah.
213 00:24:45.220 ⇒ 00:24:54.530 Uttam Kumaran: And we actually have clarity on the internal side on, like, what services each client is buying. I think, again, I think we just want to make sure that floats up to y’all so that
214 00:24:54.970 ⇒ 00:25:13.120 Uttam Kumaran: eventually, right, each service line is gonna have revenue, and we want to just make sure that they’re getting booked appropriately. I feel like there’s probably still some issues with, like, people are probably just booking it to a client and not a specific client and a service we’re rendering to them.
215 00:25:13.640 ⇒ 00:25:17.140 Uttam Kumaran: It may be something we have to go back and fix.
216 00:25:17.410 ⇒ 00:25:26.919 Uttam Kumaran: For example, some people are like, I work for this client, I’m gonna book the hours to the client, versus, like, the specific cost center, right? This is sort of how I remember people… people doing it, so…
217 00:25:27.160 ⇒ 00:25:45.570 megan: Yeah. Well, and I’m less concerned about that unless we start to get… I think we have one contract where, like, the rate varies based on the person, but, like, I’m less concerned about that because, like, for the most part, it is just, like, like you said, billable hour is 200, there were 10 hours, you know.
218 00:25:45.570 ⇒ 00:25:46.260 Uttam Kumaran: Yeah.
219 00:25:46.260 ⇒ 00:26:04.169 megan: So I’m less concerned about that, but, like, we… we can have multiple revenue line items per client, like, if we want to track, like, revenue more specifically, but I think that would be more of a function of, maybe…
220 00:26:04.170 ⇒ 00:26:17.909 Uttam Kumaran: I guess less on the client side, but we have, like, a client like Eden, where we are doing strategy work for, and some AI work, and I’m like, okay, is that getting broken out? I don’t know at this point. Yeah. Right, like…
221 00:26:18.010 ⇒ 00:26:29.239 Uttam Kumaran: I guess I’m… for operationally, I think we should have those separate work streams, but ideally, the revenue should get booked to the right revenue category, and I’m not even thinking, like, just the highest level.
222 00:26:29.370 ⇒ 00:26:44.240 Uttam Kumaran: we sort of have three services. We have our, like, we have, like, a data engineering, data modeling, we have strategy and analytics, and then we have our AI, and that’s how we operationally are sort of split into those three, so I wonder how… how relevant it is for the P&L to also reflect that.
223 00:26:45.070 ⇒ 00:26:50.379 megan: Yeah, it’s, I mean… I, I would say…
224 00:26:50.570 ⇒ 00:27:03.580 megan: You know, let’s get clear on, like, how you want to think about strategically, and what would be meaningful, and then we can kind of, like, back into, like, where does the reporting need to roll up?
225 00:27:03.700 ⇒ 00:27:20.529 megan: Because, like, as long as we’re, you know, we’re getting the revenue in total, like, that’s kind of what we care about right now. But, you know, more, like, I like what you just said, like, strategy versus more, kind of operational workflow.
226 00:27:20.680 ⇒ 00:27:27.950 megan: You know, starts to kind of feel like, well, the more you can lean into strategy, then the more… the deeper the relationship is gonna be.
227 00:27:27.950 ⇒ 00:27:41.109 Uttam Kumaran: Yes, exactly. So we want to see a… we want to see… internally, we want to see a lot of our stuff. If it starts with no strategy, strategy is the thing that we expand into, and often the other way, too. If we start with strategy, we tack on the engineering work.
228 00:27:41.110 ⇒ 00:27:49.070 Uttam Kumaran: And that’s how we think about it, in terms of, like, cross-selling services. On the AI side, it’s very, very… it’s very similar.
229 00:27:49.620 ⇒ 00:27:51.870 megan: Yeah, yeah, yeah.
230 00:27:52.440 ⇒ 00:28:10.980 megan: So, yeah, whether that’s, like, kind of a revenue reporting, change, or, like, research in Clockify, I think then it would, like… well, how would that get tracked in Clockify? And then we could kind of make a determination on, like, whether that… well…
231 00:28:11.400 ⇒ 00:28:20.350 megan: I mean, yeah, ultimately, if we’re wanting to see that in the P&L, then we should be able to track it and clockify based on that, and book it accordingly.
232 00:28:20.530 ⇒ 00:28:22.769 megan: So that could be a change we could make.
233 00:28:23.050 ⇒ 00:28:26.640 megan: But, yeah, so…
234 00:28:27.170 ⇒ 00:28:44.929 megan: So, anyway, as you can see here, total revenue, we had a little bit of uptick from January, but then I pretty much just used our current forecast now. That 183 is around there, is what we’re forecasting. I used that as kind of like the fixed rate going forward.
235 00:28:44.930 ⇒ 00:28:52.389 megan: From a revenue side, We do have some of these, like, catch-up payables that, you know.
236 00:28:52.390 ⇒ 00:28:53.040 Uttam Kumaran: Yeah.
237 00:28:53.040 ⇒ 00:28:54.710 megan: clear eventually.
238 00:28:54.710 ⇒ 00:28:55.710 Uttam Kumaran: Yeah, yeah.
239 00:28:55.790 ⇒ 00:28:58.369 megan: So those are all kind of like…
240 00:28:58.500 ⇒ 00:29:01.770 megan: I can show you, like, kind of got them prioritized.
241 00:29:01.770 ⇒ 00:29:06.660 Uttam Kumaran: I wonder if, yeah, if you also have that as, like, a total number, that way I’m just, like.
242 00:29:06.930 ⇒ 00:29:11.870 Uttam Kumaran: Can I dedicate, like, 10K a month, and, like, we see we’re gonna get out of it by X?
243 00:29:12.050 ⇒ 00:29:15.479 Uttam Kumaran: You know, and like, something like that. I mean, I’m whittling it down as I…
244 00:29:15.780 ⇒ 00:29:18.030 Uttam Kumaran: as basically as I can.
245 00:29:18.430 ⇒ 00:29:25.340 Uttam Kumaran: But, of course, the primary goal is, like, pay our folks on time, and then pay our, like, our vendors on time.
246 00:29:26.310 ⇒ 00:29:30.610 megan: Exactly, so… We’ve got,
247 00:29:30.910 ⇒ 00:29:48.549 megan: So, like, yes, I pretty much have it, like, funneled out based on, you know, how much is past due. They’re smaller amounts, and then the more recent one, I kind of broke out into, like, a first half is paid, so this would be, like, the…
248 00:29:48.610 ⇒ 00:29:59.569 megan: past due from December. So it’s not quite, like, a perfect balance, it just had, like, the total balance, I broke it out into,
249 00:29:59.730 ⇒ 00:30:05.949 megan: you know, paid this month in February, and then push the rest to March.
250 00:30:05.980 ⇒ 00:30:22.530 megan: which is a… it kind of creates, like, a downstream funnel, because the way that this is all rolling up now, it’s… this logic also assumes that, you know, we’re also paying everything from January in February.
251 00:30:22.550 ⇒ 00:30:33.740 megan: So that’s why you see kind of, like, a little bit of a downstream bottleneck here, because, like, realistically, we probably would be paying some of the January and February and…
252 00:30:33.860 ⇒ 00:30:38.059 megan: It just, like, it’s all on here, it’s just a matter of timing, but…
253 00:30:38.060 ⇒ 00:30:38.710 Uttam Kumaran: Yeah, yeah.
254 00:30:38.710 ⇒ 00:30:51.540 megan: pretty much what this says is if we pay… if we paid off all of the past due amounts, 50% of what’s still owed from December, and everything in,
255 00:30:51.540 ⇒ 00:30:59.420 megan: in this month, then, like, we’re kind of running into that operational crunch again in March.
256 00:30:59.940 ⇒ 00:31:00.710 Uttam Kumaran: Okay.
257 00:31:00.710 ⇒ 00:31:20.200 megan: Oh, and then we’ve got the expense drivers, so I’ll spend some time just… oh, sorry, I know we’re at the top, but just, like, here’s where I kind of started, like… like, I brought down that G&A we were looking at, which was 20. I brought that down to 15, and then, percent of revenue.
258 00:31:20.620 ⇒ 00:31:36.580 megan: kept this consistent with the, the 40. And then the others, you know, I didn’t really have enough information to know if, like, those should increase or decrease, but I kept sales and marketing and ops at 5%.
259 00:31:37.610 ⇒ 00:31:44.620 Uttam Kumaran: Okay. So that’s kind of the levers we can adjust, but I did… I did bring this G&A one down.
260 00:31:44.750 ⇒ 00:31:47.480 megan: Really just to try and, like.
261 00:31:47.630 ⇒ 00:31:50.060 megan: Hit the numbers in a little bit.
262 00:31:50.060 ⇒ 00:31:50.870 Uttam Kumaran: Yeah.
263 00:31:50.870 ⇒ 00:31:51.960 megan: way.
264 00:31:52.170 ⇒ 00:31:54.910 Uttam Kumaran: Yeah, like, just get to 100%, and then, yeah.
265 00:31:54.910 ⇒ 00:32:05.110 megan: Yeah, exactly. And then you can see that, like, we start to kind of climb out of the woods by, you know, like, really the June timeframe.
266 00:32:05.270 ⇒ 00:32:06.020 Uttam Kumaran: Okay.
267 00:32:06.020 ⇒ 00:32:08.429 megan: Kind of, like, smooth sailing from there.
268 00:32:08.770 ⇒ 00:32:09.440 Uttam Kumaran: Okay.
269 00:32:09.440 ⇒ 00:32:13.749 megan: It’s, of course it’s all dependent on revenue being delivered, so if there’.
270 00:32:13.750 ⇒ 00:32:14.480 Uttam Kumaran: Yes.
271 00:32:14.480 ⇒ 00:32:16.610 megan: Up, then we pull this.
272 00:32:16.610 ⇒ 00:32:17.770 Uttam Kumaran: Forward, yeah.
273 00:32:17.770 ⇒ 00:32:20.960 megan: forward, and the other way, obviously, so…
274 00:32:21.090 ⇒ 00:32:21.700 Uttam Kumaran: Okay.
275 00:32:22.910 ⇒ 00:32:33.729 megan: But that’s kind of where we’re at. Any, like, immediate next steps, or are there any, like, assumption drivers? Maybe that’s something that I could ask you to give me some.
276 00:32:33.730 ⇒ 00:32:34.490 Uttam Kumaran: I’m inserted.
277 00:32:36.250 ⇒ 00:32:38.979 Uttam Kumaran: I think that’s it, I think I’ll take a look at it.
278 00:32:39.270 ⇒ 00:32:45.440 Uttam Kumaran: when I’m on the flight, and I can sort of… I have some guiding goals on the categories, actually, so I can do that.
279 00:32:47.160 ⇒ 00:32:48.510 megan: Okay.
280 00:32:49.010 ⇒ 00:32:49.949 megan: It sounds good.
281 00:32:50.270 ⇒ 00:32:57.290 Uttam Kumaran: Perfect. Thank you, Megan, this is super helpful. And then, yeah, if I can make sure that me and Robert have an invite to Fathom.
282 00:32:57.710 ⇒ 00:33:00.439 Uttam Kumaran: Or, yeah, for… that would be great, too.
283 00:33:00.930 ⇒ 00:33:05.499 megan: Yeah, let me see if he’s on there, too. But, okay, sure.
284 00:33:06.160 ⇒ 00:33:09.789 Uttam Kumaran: Okay. Thank you so much, appreciate it. I’ll be in touch over Slack.
285 00:33:10.000 ⇒ 00:33:11.920 megan: Yeah, safe travels!
286 00:33:12.160 ⇒ 00:33:13.060 Uttam Kumaran: Thank you!
287 00:33:13.060 ⇒ 00:33:14.190 megan: Okay, bye.