Steve Blank

SEPTEMBER 5, 2018

He just hired Meg Whitman. Tech IPO prices exploded and subsequent trading prices rose to dizzying heights as the stock prices became disconnected from the traditional metrics of revenue and profits. Startups wrote business plans, generated expansive 5-year forecasts and executed (hired, spent and built) to the plan.

Lean 335

Lean Burn Rate Startup IPO 335

Startup Professionals Musings

SEPTEMBER 29, 2018

Deferred payments start with stretching the payables period but, more importantly, include giving employee equity in lieu of a higher salaries and negotiating vendor deferred payments out of future revenues. That should equate to an adequate valuation for a $2 million follow-on Series-A round, without giving away all the equity.

Burn Rate 223

Burn Rate Hockey Stick Startup Salary 223

SoCal CTO

SEPTEMBER 27, 2011

For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula. For example, suppose you're just two founders and you want to hire an additional hacker who's so good you feel he'll increase the average outcome of the whole company by 20%. n = (1.2 - 1)/1.2 =.167. and we have 11.1%

Early Stage 391

Early Stage Equity CTO Hire Sweat Equity 391

Steve Blank

OCTOBER 24, 2017

— Unremarked and unheralded, the balance of power between startup CEOs and their investors has radically changed: IPOs/M&A without a profit (or at times revenue) have become the norm. Typically, this caliber of bankers wouldn’t talk to you unless your company had five profitable quarters of increasing revenue.

Founder 245

Founder Technical Review CTO Hire IPO 245

VC Cafe

AUGUST 2, 2022

billion valuation) to invest in the Metaverse and build the future of digital entertainment Epic owns Fortnite, one of the most popular multiplayer games, enabling users to interact with each other online in an immersive way to play, socialise, attend to virtual concerts. billion revenue in 2021 for Epic Games and was played by 83.3

IP 206

IP Cofounder Valuation Acquisition 206

Both Sides of the Table

NOVEMBER 14, 2017

As a startup in this phase you often raise capital, get press, hire staff and everything feels possible. I always push companies to hire “an operationally focused CFO” during this phase because in order to systematize you need somebody who brings economic rigor to decision making. As an early-stage VC I love this phase.

Operations 286

Operations New York City Technical Review Startup 286

Steve Blank

APRIL 1, 2020

Your revenue plans are no longer valid. What’s your monthly cash burn at your new low revenue level? The CEO should dial through as many of the largest existing customers to get a firsthand understanding of the magnitude of any revenue shortfall. Others are cutting their valuations. How many months of cash do you have?

South Korea 333

South Korea Salary Business Model China 333

Startup Professionals Musings

OCTOBER 5, 2014

Deferred payments start with stretching the payables period but, more importantly, include giving employee equity in lieu of a higher salaries and negotiating vendor deferred payments out of future revenues. That should equate to an adequate valuation for a $2 million follow-on Series-A round, without giving away all the equity.

Burn Rate 262

Burn Rate Hockey Stick Entrepreneur Salary 262

Startup Professionals Musings

APRIL 17, 2023

For example, if you have a proven product, real revenue, a big potential market, and are ready to scale up the business, every investor will be interested. On the other hand, if you are a new entrepreneur, still in the idea stage, professional investors will only tell you to come back later when you have traction (customers and revenue).

Angel Investor 313

Angel Investor Intellectual Property Investment Bankers Private Equity 313

Both Sides of the Table

SEPTEMBER 22, 2012

After all, growth equals high valuations and loads of venture capital! Instant growth = huge valuation from follow-on investors = big VC mark-up on our quarterly reports = LP interest. In revenue terms our first two years of sales were $2.1 Startups will continue to be aggressive in spamming us in our Facebook timeline.

Silicon Valley 390

Silicon Valley Venture Capital Startup Technical Review 390

Steve Blank

APRIL 23, 2014

buy out an entire company for its revenue and profits. In response, venture capital firms like Sequoia and Andreessen/Horowitz are hiring new partners just to work with their portfolio companies and match them to corporations. The founding team is testing for the right combination of product, market, revenue, costs, etc.

Acquisition 332

Acquisition Intellectual Property Silicon Valley Startup 332

ReadWriteStart

OCTOBER 7, 2010

As a thumb rule, try to get enough validation so that you can get to at least a $2 million pre-money valuation before raising equity capital. That is debt financing that converts into equity at the Series A valuation once the price for that is set. (I Sub-$2 million pre-money, it is better to bootstrap. Igor did not have an answer.

Valuation 119

Valuation Silicon Valley Pre-Money Valuation Bootstrapping 119

A Smart Bear: Startups and Marketing for Geeks

JUNE 20, 2011

They’ve heard rules of thumb like “A growing software company is worth 5 times their trailing 12-months revenue.&# Even narrowing the field as much as feasible, revenue multiples varied between 1.2x The “Multiples&# argument does work well in industries where company’s growth and revenue is highly predictable.

Sales 260

Sales Channel Cofounder Valuation 260

Startup Professionals Musings

FEBRUARY 21, 2012

Pay people with equity or future revenue. Another one to avoid cash burn for software development is a contract for percent of future revenue. This will equate to 2 working founders (taking no salary), hiring a 5-person development team for a year. That will position the startup to raise a venture round at a favorable valuation.

Burn Rate 232

Burn Rate Startup Salary Equity 232

Startup Professionals Musings

FEBRUARY 15, 2023

Most new teams are geographically dispersed these days anyway, so paying rent for an office should be differed to later stages when revenue is plentiful. With the unlimited access to “how-to” videos and detailed instructions on the Internet, you shouldn’t need to hire experts for most things.

Equity 349

Equity Hockey Stick Bootstrapping Sweat Equity 349

Both Sides of the Table

JUNE 5, 2011

2: As expected at least one person accused me of writing this post because I want to see lower valuations. As the risks below get eliminated the higher the valuation investors are prepared to pay. So rounds tend to be “range bound&# where the top end of the valuation spectrum often being done in boom markets (i.e.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

YoungUpstarts

JUNE 29, 2020

estimates in their recent report that medical products will have a very high global market valuation, crossing 30 billion US dollars by 2026. Being able to offer such products, along with using remote hosted desktops , can provide enormous revenue during this pandemic crisis. Assistive Devices : Global Market Insights, Inc.

Demand 173

Demand Product Artificial Inteligence Software Review 173

ReadWriteStart

MAY 30, 2022

Hire a bunch of new staff? . Will your market-driven valuation still achieve your exit goals once everyone (including the taxman) takes home their slice? If you’re in a rush to sell, will your investors allow you to accept less than your valuation? . One in particular from a famous VC in Silicon Valley. I turned them down.

Bootstrapping 147

Bootstrapping Startup Equity Silicon Valley 147

Hunter Walker

DECEMBER 13, 2020

If things are going great, you still may get a lower valuation or smaller round. A hire or two that you should have been able to close won’t join. It doesn’t matter what industry, what product, what revenue model, what stage of development. You may end up decreasing the quality of outcomes by a standard deviation or more.

Technical Cofounder 144

Technical Cofounder Cofounder Startup Matching 144

Startup Professionals Musings

JANUARY 28, 2011

Pay people with equity or future revenue. Another one to avoid cash burn for software development is a contract for percent of future revenue. This will equate to 2 working founders (taking no salary), hiring a 5-person development team for a year. That will position the startup to raise a venture round at a favorable valuation.

Burn Rate 231

Burn Rate Startup Salary Equity 231

Startup Professionals Musings

SEPTEMBER 14, 2016

Deferred payments start with stretching the payables period but, more importantly, include giving employee equity in lieu of a higher salaries and negotiating vendor deferred payments out of future revenues. That should equate to an adequate valuation for a $2 million follow-on Series-A round, without giving away all the equity.

Burn Rate 120

Burn Rate Hockey Stick Startup Salary 120

Steve Blank

FEBRUARY 26, 2020

There are two reasons to raise money: You have a killer idea that is only partially validated, that you think can get to $50M+ of revenue in 5 years with 80%+ gross margins (if margins are lower, you need a lot more revenue)and you need money to get to product-market fit, or. Revenue per customer? Revenue, Gross Margin?

Cofounder 429

Cofounder Seed Stage Valuation Metrics 429

Startup Professionals Musings

JULY 22, 2020

For example, if you have a proven product, real revenue, a big potential market, and are ready to scale up the business, every investor will be interested. On the other hand, if you are a new entrepreneur, still in the idea stage, professional investors will only tell you to come back later when you have traction (customers and revenue).

Angel Investor 370

Angel Investor Intellectual Property Investment Bankers Private Equity 370

Both Sides of the Table

JUNE 22, 2011

Ah, but today’s Internet companies have real revenue! In addition to FOMO it is partly driven by massive increase in valuations for earlier-stage companies who raised money at bit seed prices but who still have product risk. And for some that means that despite waiting they may see worse valuations in the future than now.

Saudi Arabia 309

Saudi Arabia Valuation IPO Technical Review 309

Steve Blank

MARCH 17, 2020

Next, take a look at your actual revenue each month – not forecast, but real revenue coming in each month. Subtract your monthly gross burn rate from your monthly revenue to get your net burn rate. All your assumptions about customers, sales cycle and most importantly, revenue, burn rate and runway are no longer true.

Burn Rate 436

Burn Rate Startup Valuation Sales Cycle 436

Both Sides of the Table

JULY 6, 2016

You also ran the risk that if you hired employees quickly and then demand wasn’t as strong as expected it was incredibility hard to fire people. In France in some ways it was worse because if you failed as a startup founder you shouldered personal liabilities that don’t exist in the US under our bankruptcy laws.

South Korea 261

South Korea Silicon Valley Los Angeles Japan 261

Startup Professionals Musings

MAY 18, 2020

Most new teams are geographically dispersed these days anyway, so paying rent for an office should be differed to later stages when revenue is plentiful. With the unlimited access to “how-to” videos and detailed instructions on the Internet, you shouldn’t need to hire experts for most things.

Hockey Stick 423

Hockey Stick Bootstrapping Sweat Equity Intellectual Property 423

Steve Blank

MAY 19, 2015

I had lunch last week with Tom, the CEO of a startup that was quickly becoming a large company – last year’s revenue was $40M, this year likely to be $80M maybe even $100 million in ad revenue. to drive traffic to their site, which they then turned into ad revenue. Next write your new hire job description.

Technical Review 120

Technical Review Salary Early Stage Software Review 120

YoungUpstarts

OCTOBER 28, 2020

It’s not just about revenue. While revenue is taken into consideration, there are more components involved in valuing a business. . The only way to get an accurate value estimation is to hire a business broker to perform a business valuation. This detailed information will be important to potential buyers.

eCommerce 264

eCommerce Database Social Media Valuation 264

YoungUpstarts

MARCH 11, 2015

With the daily demands of running a business along with the financial pressures and challenges inherent in early-stage companies, a business valuation may not be the first thing an entrepreneur thinks of when he awakes each morning. When does a startup company need a business valuation? The timing will vary depending on the purpose.

Valuation 100

Valuation Stock Options CPA Merger 100

Both Sides of the Table

APRIL 26, 2016

In SaaS (or any recurring revenue business) this is also a very difficult task. One big, beginners mistake people make in LTV is to measure revenue. If your economic case is built on increasing LTV over time or on retaining recurring revenue streams please remember to layer on “re-marketing or retention” costs into your equation.

Metrics 150

Metrics Cost Acquisition Startup 150

Transformify

MARCH 4, 2020

For those not familiar with the terminology, ‘’roundtripping’’ is used to describe transactions designed to inflate revenues and profit as one party is sending money to the other party involved in the transaction. billion valuation. Although the valuation of $5.5 Although the valuation of $5.5

Technical Review 78

Technical Review Valuation Stock Acquisition 78

Startup Professionals Musings

MARCH 13, 2020

Find some credible opportunity statistics that can support your own revenue expectations of between $20 million and $100 million in the fifth year. No matter what the potential, every business is constrained in growth by the time and effort required to hire people, spread the message, and deliver and support solutions.

Liquidity Event 308

Liquidity Event Forecast Exit Strategy Bootstrapping 308

VC Cafe

MAY 29, 2022

Layoffs and hiring freezes have started. Big tech (Google, Meta, Microsoft, Amazon, Apple) have implemented a temporary hiring freeze. Snap’s stock plunged 40% last week after Evan Spigel announced the company will miss revenue targets, which raises questions about other ‘advertising powered’ social networks.

Venture Capital 183

Venture Capital Early Stage Valuation Startup 183

Up and Running

SEPTEMBER 19, 2017

They allow you to hire more people, purchase new technology, and establish new business connections, among many other benefits. That’s because obtaining a pre-money valuation for a concept level technology company in excess of $1 million is difficult, particularly for a startup founder without a proven track record.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Startup Professionals Musings

FEBRUARY 5, 2010

Pay people with equity or future revenue. Another one to avoid cash burn for software development is a contract for percent of future revenue. This will equate to 2 working founders (taking no salary), hiring a 5-person development team for a year. That will position the startup to raise a venture round at a favorable valuation.

Burn Rate 120

Burn Rate Startup Salary Equity 120

YoungUpstarts

SEPTEMBER 27, 2013

Quoting an inflated valuation. . When your valuation is too high, investors think you are either greedy or you don’t know what you are doing. In both cases, a high valuation can end a conversation. If you’ve accomplished very little and are still a few years away from revenue, VCs aren’t going to invest in your deal.

Venture Capital 180

Venture Capital Technical Cofounder Milwaukee Valuation 180