$1M ARR with Carta’s growth hacks
How Forecastr plagiarized Carta’s growth playbook
Steven is the CEO and co-founder of Forecastr, the online software that helps founders who hate Excel to forecast revenue, predict runway, understand their numbers & get funded.
The company launched in 2018 and has raised $3.4M from VCs, including Techstars. In this episode of Founder Secrets, Steven provides an inside look into his startup journey—from his mistakes building FantasyHub to how he has stolen Carta’s growth playbook and implemented it at Forecastr to achieve $1M ARR.
Prior to co-founding Forecastr, Steven founded FantasyHub, a platform that allowed professional athletes to use online fantasy sports games to raise money for non-profits. The platform was launched in 2014, entered Techstars Austin a year later, and received over $1M in seed capital. But after three years, the company failed.
In hindsight, Steven believes his biggest mistake was not being close enough to his customers, or understanding the market. He admits, "I started right away without doing any customer discovery or gaining any domain expertise. I just jumped right into the market. I didn’t know what we were doing. I felt like we were just getting slapped around.”
In last week’s episode of Founder Secrets, the founder of Zencastr (Josh Nielsen) said he made the same mistake when he failed with his first startup Soundkeep. Josh didn't have any domain expertise in music production, didn't talk to users before building the product, and assumed that musicians wanted to collaborate just like programmers do on GitHub. This was a valuable learning experience that paved the way for his later success at Zencastr.
It’s a marathon (and a sprint)
A lack of customer discovery is not the only regret Steven has about his time building FantasyHub. "I deprioritized everything else in my life for FantasyHub. I was a complete workaholic. I didn't take care of my physical health, and I neglected my mental health. I let my relationship with my girlfriend, Emily, completely deteriorate to the point where she almost left me. That company failed, and I learned a really hard lesson: you can work yourself to the bone and still lose.”
He has taken a different approach at Forecastr. "When I decided to start Forecastr, I wanted to focus more on my mental and physical health. I was able to save my relationship with Emily, and we're now engaged. I love her to death. Building a company is a marathon. A professional marathon where you are sprinting the whole time. But it's still a marathon, and protecting yourself from burnout is critical.”
Steven believes that this mental shift has not only improved the well-being of himself and his team, but also played a significant role in the success of Forecastr. "We have a culture of balance. We respect time outside of work and avoid being always on. I think this has paid off really big for us.”
Steven’s unfair advantage
In his essay "Startups in 13 Sentences," Paul Graham explains that the wealth created by a startup can be envisioned as a rectangle, where one side represents the number of users and the other side represents how much you improve their lives. The better you understand them the better the odds of doing that. This is why it's crucial for founders to have deep domain expertise.
That wasn't the case when Steven built FantasyHub, but it certainly was the case with Forecastr. "Before Forecastr, I spent four years building financial models for early-stage companies. I was familiar with the space, the domain, and what the market wanted." Additionally, Steven interviewed dozens of founders to gain a comprehensive understanding of their experiences with financial models. "This allowed us to take a more direct path to achieving product-market fit.”
Good artists copy, great artists steal (from Carta)
In developing a growth playbook for Forecastr, Steven has drawn inspiration from similar companies that have already identified sustainable growth channels. "Innovation is crucial when building a startup. However, many founders, including myself in my first business, take it too far," he noted.
You don't need to reinvent the wheel for everything. As Steven suggests, find companies that have succeeded in a similar business in an adjacent market. He explains, “What did they do to win, and how can you apply that strategy? In our case, that company is Carta. They productized a complicated financial function, just like us.”
That’s why Steven reached out to Carta's head of growth via LinkedIn and, after a call with him, discovered the exact strategies that made Carta a multi-billion dollar company.
The Partner Ship
A key growth strategy for Forecastr is to get “authoritative communities” in the startup world to recommend their product. According to Steven, there are two types of partnerships: those where both sides provide distribution, and those where one side provides distribution in exchange for some real value.
Forecastr's real value lies in their expertise in financial modeling for early-stage startups. "We offer webinars, workshops, off-the-shelf templates, and evergreen resources. We package that up into a plug-and-play financial modeling curriculum and exchange it for distribution," he says. This way, accelerators, and VCs can provide their portfolio companies with the financial expertise they need, while Forecastr gets distribution for free.
Designing growth loops
During his call with Carta's head of growth, Steven also learned that a significant portion of their growth was coming from a viral loop. Founders add their investors to their cap table, investors realize how valuable Carta is, and they recommend it to all their portfolio companies.
Steven explains, "We have a flywheel that is very similar. We help founders report their financials to investors, so you can see a similar viral loop." As he says, "your customer has a customer," and the key is to design growth loops that can get your product distributed for free.
Once again, there is a parallel here with Zencastr’s growth. With Zencastr, podcast hosts would use Zencastr to record the episode, and guests would come on, enjoy the platform, and then sign up with Zencastr for their own podcasts.
The fundraising hamster wheel
Another important lesson that Steven learned the hard way at FantasyHub is the importance of having enough runway. "I ran FantasyHub for three years and never had more than six months of runway in the bank. We were constantly on a hamster wheel of raising money and running out of money.”
Steven recalls, “I was stressed out, I was constantly failing. It was really difficult to bring our best selves to work under those circumstances." However, he learned from this experience and did things differently at Forecastr. He flipped the script, and has made sure they always have sufficient runway.