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The Role Forward

Mapping the Path to Profitability with Kristian Marquez, CEO of FinStrat Management

In this episode of The Role Forward, Kristian Marquez, President and CEO of FinStrat Management, discusses challenges and advice for startups on the path to profitability.

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Episode Summary

In the latest episode of The Role Forward podcast, host Joe Michalowski sits down with Kristian Marquez, founder of FinStrat Management. Kristian shares his diverse journey in the finance sector, highlighting his experiences from being part of a billion-dollar IPO to the challenges faced in a telemedicine startup.

The duo dives deep into the evolving landscape of startup profitability, especially for VC-backed ventures. They discuss the shifting paradigms from a growth-centric mindset to a more balanced approach that emphasizes cash preservation. Kristian introduces the “Rule of 40,” a pivotal metric combining growth percentage with EBITDA margin, suggesting its significance in today’s startup world.

Towards the end, the conversation shifts to the potential of artificial intelligence. Kristian draws parallels between the dot-com era and the current AI wave, emphasizing its transformative power in boosting productivity and redefining the future of businesses.

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Featured Guest

Kristian Marquez

President and CEO, FinStrat Management

Kristian Marquez, CFA has worked in the finance industry since 2004. Kristian began their career at Inovalon, Inc. as a General Manager and Vice President. In 2014, they moved on to MDAgree Inc. where they served as President & CEO and CFO. In 2016, they joined FinStrat Management, Inc. as President & CEO and CFO, and also became Managing Director of Global HealthTech Partners LLC. In 2018, they were appointed Executive Director of Health Care Cloud Coalition (HC3).

Key Themes from the Episode
  • Kristian Marquez introduces the "Rule of 40" as a pivotal metric for startups, especially those backed by venture capital. This rule combines a company's growth percentage with its EBITDA margin, suggesting that their sum should ideally be equal to or exceed 40%.
  • Drawing a parallel between the dot-com boom and the current enthusiasm around artificial intelligence, Kristian emphasizes the transformative power of AI. While many companies during the dot-com era went bust, they left behind a robust telecom infrastructure that spurred further innovation and wealth creation.
  • The conversation touches upon the influence of external elements, like interest rates and the VC market's state, on startup profitability. Kristian points out that while interest rates have been artificially low in the past, leading to a growth-centric mindset, the current scenario demands more discipline and a focus on profitability.

Episode Highlights from Kristian Marquez

2:30 — Changing Profitability Expectations for VC-backed Startups

Joe and Kristian discuss the evolving expectations for profitability, especially for VC-backed startups. They touch upon the pre-2022 mindset of prioritizing growth and the recent shift towards cash preservation and profitability.

“I would say that for a while there, everyone had turned their attention exclusively to becoming profitable. And I do not think that continues to be the case.”

7:14 — The Impact of External Economic Factors

The conversation shifts to the influence of external economic factors, such as interest rates, on startups. Kristian highlights the consequences of artificially low interest rates and the resultant inflation, emphasizing the need for businesses to be more disciplined in such scenarios.

“Yeah, the answer is today. I don’t know if it’s for better or worse. I would say it’s for the better. My sense is that interest rates were artificially low.”

Full Transcript