The Funding

Toad Makes Big Plans

On Toad’s birthday Frog closed their Series B funding.

Toad was delighted. “Happy birthday,” said Frog. Toad looked at the money in their bank account. Dollar signs filled his eyes.

“I am sorry,” said Frog, “this valuation is much too big for you. I should have raised a smaller amount.”

“No,” said Toad, “this money is your present to me. I like it. I will spend it the way our investors want us to.”

Frog and Toad sat down and tried to make plans for how they would grow their company at a rate that would reflect the ambitious amount of money they had raised. Toad covered his head with his hands and cried. He banged his head against his desk. He kicked chairs around the conference room.

“Frog,” said Toad, “I can’t see how this go-to-market plan will support the desired year-to-year revenue growth which will justify the beautiful present our investors have given us. This is a sad birthday for me.”

Frog and Toad were sad for a while. Then Frog said, “Toad, here is what you must do. Tonight when you go to bed, you must think some very big thoughts. Those big thoughts will make our addressable market sound bigger and better and more important, and our growth projections will sound more realistic. In the morning those projections may fit our new plans.”

“What a good idea,” said Toad.

That night when Toad went to bed he thought the biggest thoughts he could think. Toad thought about selling software to every single person in China. He thought about bringing free internet to countries like India, so that he could show ads to billions of people. He thought about organizing all the world’s data and about remaking transportation and housing and the very regulatory contract governing the relationships between employers and employees in every country around the world.

Then Toad fell asleep. Frog secretly met with the company’s investors, while Toad slept.

Frog showed the investors the plans that Toad had made, that would be required to justify the growth rates they had projected. He poured cold water over their hopes and dreams of a unicorn. The investors’ expectations began to shrink. They grew smaller and smaller.

Frog went to Toad’s studio apartment. Toad was still fast asleep. Frog put the revised spreadsheet of growth projections and expected revenue back on Toad’s laptop where he had found it.

When Toad woke up in the morning, he remembered his plans and his market-size calculations, and then he squinted at the growth projections in the cold light of morning.

They were just the right size.

Toad ran to Frog’s house. “Frog, Frog!” he cried. “All those big thoughts have made our plans fit our growth projections much better! Now I can really justify our valuation and the corresponding dilution of our employees’ equity!”

Frog and Toad sat down for another ideation session. Toad didn’t cry into his hands, or bang his head against the desk, or kick many chairs.

It turned out to be a very pleasant day after Toad’s birthday.