Skip to resource content
Founder conversationBuilder <$5m

The Tenfold Turnaround Story: From $5m ARR, Flat, Burning $1m per Month to 100% YoY Growth

What drove $1M a month of burn, how Tenfold got closer to breakeven in 12 months, and what the buyer valued at exit

Jeff Cotten · Tenfold

Published September 1, 2022
About this resource

Jeff Cotten, CEO of Tenfold, shares insights from their journey to an exit:

- Deadly burn: silly reasons we were burning $1m/mo

- How we added $50k+ enterprise deals during COVID

- Key metrics the buyer cared about when we exited

Explore the lesson. Sign in to access the slide download.

What you’ll learn

Jeff Cotten describes Tenfold’s turnaround through focus, a more efficient demand-generation model, and better coordination between sales and product. He connects operational discipline to the Rule of 40 and acquisition readiness.

Read the source passages

Key moments

Find the ideas you need and go straight to the source.

Avoid distracting initiatives

“understands how to run a business and and what to focus on because focus is key the investors can really give you a boost but if not it can be problematic so Andresen Horowitz LED and Ted folds series a the company had completed a b just before I joined which was led by next Coast Ventures here in Austin and those are the two primary investors The company took on a lot of seed Capital uh prior to the a by a lot of folks all throughout Texas the company was actually headquartered and based here in”
Watch at 02:04

Improve demand generation

“were and actually many of those people actually were paid in our exit ultimately which was which was really critical the other thing I would tell you is unfortunately the company did have to do a reduction before I joined and I had to do one more but rest assured when I did mine it was the last one when you do these you've got to go as deep as you possibly can so the company was about 200 people before I joined I took it to 29 and that was at 5 million in Revenue we went down to 29”
Watch at 07:20

Align sales and product

“kind of general sales culture and I think in a startup you really have to be all over this you can't let people go a year I now run a 350 million dollar company and we let people go well over a year and that's not good practice but in a startup you got to do it I think every six months and if someone's not able to perform build Pipeline and show that they can produce you got to get new people in the last thing then that I want to just spend one more second on because I've said a lot about it but know the the demand generation model”
Watch at 12:39

Use the Rule of 40

“ownership in that with my board and a couple of other advisors where we would quarterly have a a strategic planning session to sort of look at the metrics of the business what we thought valuation really really was not just what some math model is telling you what's going on in the market who are the potential exits uh Etc so that we were just constantly keeping an eye on that now in our business maybe very different than some of what you all are dealing with but because we went with a”
Watch at 17:29

Prepare for acquisition

“upside so I asked our board uh maybe more like demanded our board and they supported a complete recap of the company so that would be something that if you're facing that type of a situation I would absolutely make sure that you're thinking about how can you recap all of your employees which are really important so that everyone can win and look we we also were successful at getting fifty percent of the company back in the hands of the employees you can imagine raising three rounds of capital now with the types of valuations”
Watch at 22:42

The silly reasons we were burning $1m/mo

“The silly reasons we were burning $1m/mo”
Read slide 2

How to fire without pissing them off…

“How to fire without pissing them off…”
Read slide 6

Average Deal Size Growth

“If sales reps don’t hit targets after 6 months, release them.”
Read slide 9

How We Thought About Exiting

“How We Thought About Exiting”
Read slide 15

$2b+ Credibility: Founders respected that I had

“$2b+ Credibility: Founders respected that I had helped run Rackspace”
Read slide 19

Preview slides

Open slide preview in Google Slides

Resource files

  • Video

    Watch video

  • The Tenfold Turnaround Story: From $5m ARR, Flat, Burning $1m per Month to 100% YoY Growth - Slide Deck

About the speaker
Jeff Cotten

Jeff Cotten

CEO · Tenfold

LinkedIn

Jeff is the founder of Alvaria, world leader in enterprise-scale customer experience and workforce engagement management. Previously, Jeff served 3 years as CEO of a venture capital-backed SaaS company in the CX space called Tenfold after spending 10 years at Rackspace in a variety of roles and most recently as President and CRO. A native of Dallas, Jeff began his career at EDS where he managed the company's relationship with one of its 50 largest clients for more than 10 years.

Company revenue
$940K
Team size
200

More founder interviews

Slide by slide

Each slide with a short explanation of what it shows. Open the slide text for its exact wording.

20 passages

Tenfold’s turnaround

  1. Slide 1Open deck
    Slide text

    Jeff Cotten CEO of Tenfold Founder500, Sept 2022 100% YoY and an exit where everyone won … From $5m ARR, Burning $1m per Month

  2. Slide 2Open deck

    Turnaround, growth, and exit agenda

    The talk follows Tenfold’s path through reducing burn, growing enterprise deals, and completing an exit. It previews operating changes, 2021 goals, buyer metrics, and how the deal affected employees and investors.

    Slide text

    Over the next 20 minutes: The silly reasons we were burning $1m/mo I’m going to show you DEADLY BURN GROWTH THE EXIT How to fire people without pissing them off How we got closer to breakeven within 12 months How we added $50k+ enterprise deals during COVID OKR targets we set for 2021 How we thought about exiting Key metrics the buyer cared about How we negotiated a deal where everyone made money How the initial founders viewed me coming in

Diagnosing and reducing burn

  1. Slide 3Open deck

    The deadly burn section

    This section examines the decisions behind Tenfold’s cash burn and the changes made to bring expenses under control.

    Slide text

    Deadly Burn Section

  2. Slide 4Open deck

    Quarterly cash burn declined

    Tenfold’s quarterly cash burn fell from -$1.7m in Q1 2018 to -$200k in Q4 2019, with several reversals along the way. The chart tracks each quarter, showing a broad move toward zero rather than a steady decline.

    Slide text

    TenFold Cash Burn Post- Jeff

  3. Slide 5Open deck

    Spending lacked focus and controls

    Tenfold’s monthly operating expenses averaged $1.5M against $450K in monthly revenue. The slide attributes the gap to spending outside the core business, sales expense at twice revenue, and investment decisions without success-based KPIs.

    Slide text

    TenFold Cash Burn Silly Reasons We Were Burning $1.5m/mo Why? 2018 Monthly operating expense avg of $1.5M vs $450K monthly revenue No focus on core product and business…we were b2b contact center and spending on crypto projects and features that were too future leaning Monthly sales expense was 2x revenue No success based KPIs to release incremental investment

  4. Slide 6Open deck

    Make one clear team reduction

    Cotten recommends explaining why a layoff is necessary, having the CEO own it, and rebuilding toward a future state. The slide favors one decisive reduction over repeated cuts and shows team size moving from 200 people to 29.

    Slide text

    How to fire without pissing them off… Tell people why: You’re equity won’t be worth anything if we don’t do this. CEO must own the layoff, paint picture for future. Re-build brick by brick. Do not layoff multiple times, 1 big time better than several small cuts. Team size 200 people 29 people

  5. Slide 7Open deck

    Know the burn-to-revenue ratio

    A burn rate of -100% means monthly expenses are twice monthly recurring revenue, so the slide calls this level a warning. The quarterly line rises sharply from 2018 toward zero, then stays much closer to breakeven through 2021.

    Slide text

    Burn as % of Revenue -100% means Expenses are 2x MRR Don’t do this. Example: $1m in total expenses in a month vs. $500k in total MRR.

Growing deal size and operating discipline

  1. Slide 8Open deck

    Average deal size increased

    The chart shows average contract value rising from its 2018 baseline to 265% by Q4 2021. A callout says ACV reached $50k, including during COVID.

    Slide text

    Average Deal Size Growth ACV’s Hit $50k … even during COVID

  2. Slide 9Open deck

    Align sales capacity with revenue

    The slide pairs sales investment with operating discipline: align product spending to revenue, expand existing customers, control vendors, and plan targets ahead. Its comparison shows inside sales at $200k against a $1M quota and outside sales at $300k against a $4M quota.

    Slide text

    Average Deal Size Growth $1M Quota $200k $4M Quota Inside Sales Rep Outside Sales Rep $300k If sales reps don’t hit targets after 6 months, release them. Build financial operating targets 1 quarter in advance. Know demand model. We pivoted to partners like Nice InContact Align product investment with revenue Expand existing customers obsessively. Low CAC. Cut down vendor spend. Spreadsheets work most of the time.

Company goals

  1. Slide 10Open deck

    The growth section

    This section turns from cost reduction to the sales and operating choices that supported Tenfold’s growth.

    Slide text

    Growth Section

  2. Slide 11Open deck

    Average contract value reached $50k

    Average contract value grew over the period shown, ending at 265% of its Q1 2018 baseline in Q4 2021. The callout emphasizes that ACV reached $50k even during COVID.

    Slide text

    Average Deal Size Growth ACV’s Hit $50k … even during COVID

  3. Slide 12Open deck

    Company goals tracked through OKRs

    Tenfold’s company-level OKRs connect customer outcomes, product delivery, partner growth, and financial targets with metrics, status markers, and comments. The slide frames the snapshot as goals set in 2021 for the company’s fiscal year.

    Slide text

    FY 2022 Tenfold Company Goals OKR Here is a snapshot of our actual company level OKRs in 2021 (our fiscal year was Feb-Jan so we were always a year ahead!!)

  4. Slide 13Open deck

    Four goals link metrics to status

    The OKR table links customer activity, product delivery, partner growth, and financial targets to measurable outcomes and status indicators. For example, it pairs a goal of more than 50% year-over-year partner growth with partner ARR and license targets, while the comments report progress against customer and financial goals.

    Slide text

    FY 2022 Tenfold Company Goals

Planning an exit

  1. Slide 14Open deck

    The exit section

    This section covers how Tenfold approached a potential sale, which buyers became interested, and how the final transaction was negotiated.

    Slide text

    The Exit Section

  2. Slide 15Open deck

    Build for sustainability before an exit

    Cotten says Tenfold focused on sustainability rather than discussing an exit with the team. Strategic buyers became interested as the company emphasized the Rule of 40, culminating in an unsolicited offer.

    Slide text

    How We Thought About Exiting Never discussed exit w/ team. Focused on sustainability. Our Strategic Exit Council OEM’s were perfect buyers Hyper focus on Rule of 40 OEM’s started to ask about buying LivePerson gave us an unsolicited offer “Companies are bought not sold”!

  3. Slide 16Open deck

    Rule of 40 improved over time

    The chart combines EBITDA percentage and revenue growth percentage, moving from negative results in 2018 toward positive territory by late 2019. It reaches its high point in late 2020, then falls and partially recovers through 2021.

    Slide text

    Rule of 40 EBITDA %+Rev Growth %

  4. Slide 17Open deck

    Acquisition news documents the exit

    An article headline reports that LivePerson acquired VoiceBase and Tenfold for its conversational AI platform. The screenshot serves as a public record of the transaction discussed in the exit section.

  5. Slide 18Open deck

    The deal returned value broadly

    The slide says Tenfold had raised $34.5m to reach more than $10m in ARR and returned more than twice the capital raised. It credits a market-leading revenue multiple with 2-5X investor returns and says employees held just shy of 50% of the company’s equity.

    Slide text

    $34.5m in VC: We had raised a lot to hit $10m+ in ARR Returned more than 2x what we raised: Got market leading revenue multiple exit and 2-5X multiple of invested capital (MOICs) for investors Down Round: I got board support to reset all FTE’s equity in down round. Very important. Employees Win: They had just shy of 50% of the company at equity. Negotiating a Deal for Everyone to Make Money

  6. Slide 19Open deck

    Give founders a seat in the process

    Cotten says he built credibility with the founders while making clear that the company remained theirs. He included them in strategic discussions and gave them a seat at the table.

    Slide text

    $2b+ Credibility: Founders respected that I had helped run Rackspace Still Their Company: I made sure the founders knew I knew this was THEIR company and I always referred to it as that publicly, company town halls, etc. Seat at table: I made sure they were included in any and all strategic discussions so they had a seat at the table. I was an “Outside CEO”, how original Founders Viewed Me

  7. Slide 20Open deck

    Closing thanks from Jeff Cotten

    Cotten closes by thanking the audience, with his role at Tenfold and the company’s identity alongside the closing message.

    Slide text

    Sept 2022 Jeff Cotten CEO of TenFold