Oakmarrow — Developer Platform Exercise
An 8-hour Venture Investment Exercise case study with a complete model answer
Modeled After
Greenoaks
The open exercise format Greenoaks is reported to set, applied to a bottom-up developer platform: long-term margin structure, what the company does to its industry, and a valuation from scratch — with the free tier treated as a cost of the funnel rather than a marketing line.
Structure and exercise format are modeled after Greenoaks — the take-home exercise format the firm is reported to use. The company, the usage data and every figure in this case are entirely our own.
The Situation
Oakmarrow Labs, Inc. maintains an open-source data engine and sells a managed cloud built on top of it.
Oakmarrow Labs, Inc.
- Sector
- Developer infrastructure / data platforms — an open-source engine with a usage-billed commercial cloud on top of it, sold bottom-up to developers rather than top-down to a buying committee
- Size
- Geography
- Global and remote-first, with a community of roughly 412,000 monthly active open-source deployments and no field presence in most of the countries the product runs in
- Ownership
- Situation
The Prompt
You are a candidate for an investment role at a fund that holds positions for years rather than quarters. The exercise arrives by email on a Friday afternoon with a short note:
"Oakmarrow.
Supporting Materials
What you are handed at the start of the case, in the format a real process would use.
Blank modeling template (template.xlsx)
The open-source telemetry extract (given in the template)
Community and third-party data (given in the template)
What You Have to Produce
The deliverables, in the order the committee will read them. The exercise runs 480 minutes.
PART 1
Build the per-unit economics bridge, and find both plugs
PART 2
Decide where the free tier belongs, and print both answers
PART 3
Do not assume an eighty percent gross margin
PART 4
Build the top line from a funnel, not from a market size
PART 5
Make net revenue retention two-sided, and then break it
PART 6
Separate the two motions and say what mix shift is doing
PART 7
Value it, and decide how many explicit years it needs
PART 8
Sensitize on business drivers, and check your axes are independent
Attempt It First
Blank modelling template
The answer model with every produced cell cleared — the shell you build your attempt in. Work it in Excel against the clock, then check yourself against the model answer below.
How to Approach It
The order a strong candidate works in, and why. This is the shape of the answer — the finished memo and Excel model are in the solution set below.
- 0:00 – 0:45
read everything, and decide about the telemetry early
- 0:45 – 2:00
the per-unit bridge
- 2:00 – 3:30
the funnel and retention
- 3:30 – 4:30
the margin ramp and the free tier
- 4:30 – 5:30
the discounted cash flow
- 5:30 – 6:30
the scenario and the grids
- 6:30 – 8:00
write it
Key Concepts
The ideas this case is built on. Know these cold and the case becomes a question of execution rather than knowledge.
Bottom-up adoption
A revenue motion that starts with an individual developer rather than a buying committee: adopt the open-source project, sign up on a free tier, cross a usage threshold, and start paying. It is why the top line here is a funnel rather than a market share, and why the free tier is a cost of goods rather than a marketing line.
The free tier as cost of revenue
A free account consumes compute and storage that somebody invoices for. Classifying that invoice as marketing rather than as cost of revenue lifts the reported gross margin without changing a dollar of cash, which is why the classification has to be stated and both margins printed. It also makes the free tier measurable as an acquisition channel, against the channel it competes with.
Net revenue retention, decomposed
Retention on usage-based revenue is one plus gross expansion, less optimization contraction, less churn. Expansion is workloads growing; optimization is the same customer choosing to spend less on the same workload. A single retention number that never dips hides the second term entirely, and the second term is the risk.
Optimization wave
The period in which a customer base collectively decides to tune its spend — a cheaper storage tier, a compression default, an engineer hired to shrink the bill. Retention recovers afterward but on a smaller base, which is why a temporary drag and a permanent one are different underwrites and have to be modeled as such.
Price-cost scissors
The pair of trajectories that decides an infrastructure platform's margin: what happens to price per unit of usage, and what has to happen to cost per unit. Both fall. All that matters is which one falls faster, and for how long, and a margin forecast that does not show the pair is assuming the answer.
Gross margin ceiling
The margin a usage-billed platform would earn charging nothing for its free tier and nothing for support — that is, the level at which the third-party infrastructure bill alone binds. It is well below a seat-based software margin, and naming it is what stops a reader importing the wrong industry's expectations.
Method validation
Setting a series you derived against an independent series you did not, and reading the agreement as evidence about your METHOD rather than about your number. Agreement in both directions is a check; agreement in one direction is a bias.
The plug
The line in a bridge that is not assumed but falls out of the others as a residual. Whichever line is the plug is the claim the write-up has to defend, and an exhibit that does not name its plug is presenting an assumption as an output.
What Makes It Hard
The specific traps in this case — the places candidates lose the assessment without noticing.
Check Your Answer
Type the figures you produced and find out how many are right before you open the worked answer. You get a verdict and, where you are off, a pointer to the part of the build to re-check — never the number itself. Everything you type stays on this device.
How to type a figure. Digits, with an optional unit: 1,234.5, $1,234.5, 2.6x, 21.4%. For a negative use (20.0) or -20.0. Enter as many decimals as you carried — precision is never penalised.
What the Case Asked For
The arithmetic is only half of it. Tick off what you actually produced — this half is yours to score, because nothing can grade a written recommendation from a checkbox.
The Model Answer
The worked answer in full: memo and Excel model, built the way a banker would actually build them. It is a reference, not a submission — a strong answer under the clock is far shorter.
What the Solution Covers
- —Open-source to commercial conversion
- —Usage-based revenue and consumption cohorts
- —Self-serve versus enterprise motion
- —Competitive moat against a hyperscaler
- —Long-term margin structure
- —Scratch valuation
Memo
The written recommendation and how it was reached
Upgrade to Diamond
Sign up and upgrade to Diamond to unlock the memo, the Excel model and the audio walkthrough.
Get StartedThe Excel Model
The model is linked and tied out end to end — every schedule, every formula and every check, in the file itself.
Downloads are available to Diamond members
Excel Model and Memo (PDF) — yours to open, edit and rebuild
Walkthrough
A conversational walkthrough of how to approach the case under time pressure — where to start, what to cut, and how the recommendation gets defended.
Audio Walkthrough
How to approach Oakmarrow — Developer Platform Exercise
60-second preview — upgrade to Diamond for the full walkthrough
Frequently Asked Questions
Is this a margin exercise or a valuation exercise?
Both, and they are the same exercise. The per-unit work sets the steady-state margins; the cash flow model walks today's reported actual to those margins and prices the result. If your terminal margin is not identical to your bridge, you have built two models rather than one, and a reader will find the seam.
Where does the free tier belong — cost of revenue or sales and marketing?
You need to decide and to say so either way, and then print the margin on both classifications wherever the conclusion could flip. A free account consumes compute somebody invoices for, so putting it in marketing lifts the reported gross margin without changing a dollar of cash. The more useful consequence of charging it to cost of revenue is that it becomes measurable: you can price it as an acquisition channel against the field team.
Can I just assume an eighty percent gross margin like other software?
No, and that assumption is the fastest way to get this wrong in kind rather than in detail. Infrastructure cost scales with usage here, so there is a ceiling set by a third-party bill. Work out where it sits, say it out loud, and build the margin as a scissors between price per unit and cost per unit rather than as a number you picked.
What do I do with the telemetry extract?
Work it up, decide which of its three disagreeing views a cloud signup could plausibly come out of, and then use it for exactly one bounded purpose and refuse it the others. It is opt-out data, which means it undercounts the very population that converts, so it cannot tell you a conversion rate no matter how much you would like it to.
How should I model net revenue retention?
As at least three separate terms, in each motion, in every year: gross expansion, optimization contraction and churn. A single blended number cannot be stressed in a way that means anything, and the scenario that actually threatens this underwrite — customers collectively tuning their spend — is only expressible if the contraction term exists on its own.
Is there a leveraged buyout or a priced round in this case?
Neither, and importing either is the most common way to get this exercise wrong in kind. There is no sponsor, no acquisition debt, no cash sweep, no exit multiple and no returns bridge; the company carries no debt at all. And nothing is being issued, so there is no cap table, no preference waterfall and no ownership calculation. The tender offer is a reference price to measure your answer against.
Is this format still used?
Yes, and it is the most transferable of the long-only and growth formats because it is closest to the actual work. A firm sends three open questions and one imperfect file, and wants to see how you decide what is worth knowing, where you stop, and what you are willing to put your name to.
About This Venture Investment Exercise Case Study
Venture Investment Exercise case study for venture & growth interviews. 480-minute format covering open-source to commercial conversion, usage-based revenue and consumption cohorts, self-serve versus enterprise motion. Includes the full prompt, a written memo, a tied-out Excel model and an audio walkthrough.
This case study sits in Venture & Growth, under Investment Exercises. Every case ships with the full prompt, the supporting materials, a complete model answer and an audio walkthrough of the judgment behind the recommendation.
480-Minute Format
The time limit a real assessment would give you
Memo
Included in the model answer
Excel Model
Included in the model answer
Audio Walkthrough
How to approach the case under time pressure
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