Startup Lessons Learned

DECEMBER 23, 2009

Lessons Learned by Eric Ries Wednesday, December 23, 2009 Why vanity metrics are dangerous In a previous post, I defined two kinds of metrics: vanity metrics and actionable metrics. In this post, Id like to talk about the perils of vanity metrics. My personal favorite vanity metrics is "hits."

Metrics 167

Metrics San Francisco Lean Continuous Deployment 167

Feld Thoughts

JULY 9, 2019

This was before the IPO Summer of 2019 when all conventional valuation metrics have entered the land of “suspension of disbelief” which is short-term good and long-term well-we-will-see-…-eventually. We ended up talking about using Gross Profit, instead of Revenue, to do valuation analysis.

Revenue 179

Revenue Valuation .Net IPO 179

Steve Blank

JANUARY 22, 2014

They failed due to: the dearth of deals in the region that have IPO potential and. Today it’s dominated by capital efficient software, web and mobile startups whereas 10 years ago it was dominated by semiconductor and hardware startups that consumed huge amounts of capital before their first dollar in revenue. The Bend Experience.

Early Stage 286

Early Stage Silicon Valley Oregon Technical Review 286

Both Sides of the Table

DECEMBER 27, 2011

I find it amusing when a journalist writes an article about a prominent startup (either privately held or preparing for an IPO) and decries that, “They’re not even profitable!” They have have raised $2-3 million, built a product that has some amount of market traction and got to annualized revenues of around $1 million.

Startup 418

Startup Revenue Technical Review Flash 418

YoungUpstarts

JANUARY 10, 2018

You’ll find exceptions to this rule, like Snapchat, which was operating at a loss at its IPO, when it experienced high initial trading prices due to its huge popularity and untapped monetization capabilities. Another important metric is churn. This the first and foremost way to begin evaluating the sellability of your company.

Valuation 145

Valuation Technical Review Exit Strategy Metrics 145

David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. Flexible VC 101: Equity Meets Revenue Share. By tying payments to actual revenues, founders and investors remain aligned around the company’s real-time performance, good or bad. “Too Of the Inc. 5000 companies, only 6.5% raised from angels.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Steve Blank

SEPTEMBER 14, 2009

Five Quarters of Profitability During the 1980’s and through the mid 1990’s startups going public had to do something that most companies today never heard of – they had to show a track record of increasing revenue and consistent profitability. There was now a public market for companies with no revenue, no profit and big claims.

Silicon Valley 217

Silicon Valley IPO Technical Review Venture Capital 217

Both Sides of the Table

JUNE 5, 2011

Early-stage investors in technology startups are only looking for growth-oriented companies that can achieve an “exit&# someday – either via selling your company to a larger company or via an IPO. million post-money valuation with no revenue. The former is much more likely than the latter. I raised my A round at a $31.5

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

BeyondVC

APRIL 4, 2018

Look at the Dropbox IPO which priced above its initial value and came out white hot at the end of one of the worst weeks in stock market performance. Couple that with Mulesoft being bought for 21x TTM revenue ( see Tomasz Tunguz analysis ) at $6.5 Their growth to over $509mm of revenue from $281mm 2 years ago is a case in point.

Cloud 60

Cloud Agile Architecture Azure 60

NZ Entrepreneur

SEPTEMBER 29, 2021

Addressing real world problems, they thrive in uncertainty, generating new jobs and new revenue streams in new markets. Generating liquidity usually entails either selling the venture or an IPO. Agenda items will focus on key metrics illustrating value creation, particularly in software as a service companies. change the CEO.

Technical Review 88

Technical Review Software Review New Zealand Due Diligence 88

ReadWriteStart

JULY 18, 2011

Kedrosky: "In the 90's I was an analyst through all this [tech investment and IPO] madness. You want to build your own IPO and exit. Every company has a forecast for how it will get to an arbitrary $100 million in revenue and they all hit it on year five. For 10 years there have been no gazelles to take down.

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

Startup Lessons Learned

SEPTEMBER 22, 2008

Master of 500 Hats: Startup Metrics for Pirates (SeedCamp 2008, London) This presentation should be required reading for anyone creating a startup with an online service component. He also has a discussion of how your choice of business model determines which of these metric areas you want to focus on.

San Francisco 167

San Francisco CPA SEM CTO Hire 167

A Smart Bear: Startups and Marketing for Geeks

JULY 23, 2013

Marketo filed for IPO with impressive 80% year-over-year growth in 2012, with almost $60m in revenue. of revenue, force-feeding sales pipelines with an unprofitable product. SaaS companies earn their revenue over time. time to earn back the revenue to cover all your customer acquisition expenses) 75% annual retention.

Business Model 335

Business Model .Net Revenue IPO 335

Gust

JANUARY 31, 2013

Before the commercial Internet, the primary tools of disclosure included: Prospectus and related registration statement (“S-1″) for an IPO. Public companies have dealt with financial disclosure in ways that evolved over time with markets and technologies. Proxy statement in connection with the annual meeting of stockholders.

SEC 158

SEC Prospectus United States Technical Review 158

Agile VC

JUNE 5, 2011

So Groupon obviously filed their S-1 the other day to formally being the IPO process. They’ve grown from nothing to >$2B in revenue in 30 months time, making the company among the fastest growing businesses in the histroy of the world. Financial Snapshot: 2010 Revenue: $713M. in net revenue and passes $0.58

North America 100

North America Chicago Boston Silicon Valley 100

View from Seed

MAY 16, 2019

I have friends who are execs or shareholders of the company, but I have no stake in Slack nor intent to invest in the IPO. If you haven’t seen these already, here are some of the headline figures about Slack’s business: $400M in GAAP revenue in the most recent year (fiscal year ’19 ended 1/31/19). 10M+ daily active users (DAUs).

Lock-up Period 168

Lock-up Period Retention Azure .Net 168

crowdSPRING Blog

JANUARY 18, 2013

A VC: MBA Mondays: Revenue Models – Subscriptions – [link]. Thanks To Facebook, Strongest Year For IPOs Since 2000 With $21.5 The 6 Marketing Metrics Your CEO Actually Cares About [Cheat Sheet] | Hubspot Blog - [link]. The 6 Marketing Metrics Your CEO Actually Cares About [Cheat Sheet] | Hubspot Blog - [link].

Social Media 94

Social Media Small Business Design Media 94

Startup Lessons Learned

APRIL 14, 2009

Lessons Learned by Eric Ries Tuesday, April 14, 2009 Validated learning about customers Would you rather have $30,000 or $1 million in revenues for your startup? All things being equal, of course, you’d rather have more revenue rather than less. And yet revenue alone is not a sufficient goal. More on that in a moment.

Customer 167

Customer San Francisco Lean Hockey Stick 167

Ben's Blog

OCTOBER 29, 2020

Since then, the debate over IPOs has continued, with a particular focus on allegedly underpriced offerings that jump shortly after opening — the dreaded “pop.” ” As some criticism has it, this supposedly deprives companies of millions of dollars that should have been theirs if not for underpricing the IPO.

IPO 36

IPO Securities and Exchange Commission Demand SEC 36

ConversionXL

AUGUST 13, 2019

SaaS sales and marketing teams can get overwhelmed by metrics. But without any metrics, it’s impossible to track growth. If growth is the best way to get out alive, marketing metrics do little unless they correlate with sales. But only 400 software companies have made it to the $500M revenue mark.

Metrics 117

Metrics SQL Retention Churn Rate 117

Agile VC

MAY 16, 2019

I have friends who are execs or shareholders of the company, but I have no stake in Slack nor intent to invest in the IPO. A somewhat unique thing about the Slack IPO is that they’re pursuing a direct listing on the NYSE. Slack’s net dollar retention rate is an incredibly impressive 143%. So Slack generated $1.43

Lock-up Period 100

Lock-up Period Retention Azure .Net 100

Startup Professionals Musings

AUGUST 13, 2012

In fact, a business plan is needed more by you than investors, as the blueprint for your company, team communication, and progress metrics. Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Exit strategy.

Business Plan 283

Business Plan Sweat Equity Exit Strategy Intellectual Property 283

Startup Lessons Learned

JANUARY 15, 2010

Behind this analysis is a spreadsheet model, complete with detailed metrics for a set of customer behaviors that show just how valuable the new product will be. They are on-schedule and on-budget, but their gross metrics are way off. Usually, they are delivering only a fraction of the revenue they promised.

Hockey Stick 105

Hockey Stick San Francisco Entrepreneur Lean 105

Feld Thoughts

DECEMBER 14, 2018

Examples would be “an acquisition” or “a financing” or “an IPO.” Then, I like to roll into metrics that create a floor on how the business will operate. ” Or, we won’t hire anyone new, other than replacing attrition, until after we have revenue of $X / person.”

Acquisition 145

Acquisition IPO Metrics Finance 145

Agile VC

MAY 26, 2011

Google is still a private company (their IPO was Aug 2004). LinkedIn’s product had only been live for a couple months, we only had tens of thousands of registered users, and wouldn’t start generating revenue for more than a year after this point. is the leading consumer internet company with Terry Semel as CEO.

Term Sheet 178

Term Sheet Silicon Valley Technical Review Social Network 178

Startup Professionals Musings

MAY 13, 2011

In fact, a business plan is needed more by you than investors, as the blueprint for your company, team communication, and progress metrics. Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Exit strategy.

Business Plan 290

Business Plan Sweat Equity Exit Strategy Intellectual Property 290

Startup Lessons Learned

SEPTEMBER 15, 2008

This slinging of whatever against the wall to see what sticks does not a market make, is to me a sign of too much capital in the wrong hands, and it's already the most over invested area in recent years- in both human and financial capital- particularly relative to revenue. Startup Lessons Learned - the Conference (April 23.

Lean 168

Lean San Francisco Startup Continuous Deployment 168

Cracking the Code

NOVEMBER 10, 2009

While poised with a limited number of transactions this year, the world of public Cloud Computing and SaaS companies has been marked by two events in the past few months: the acquisition of Omniture by Adobe and the high profile IPO of LogMeIn, a leading provider of PC remote access and support with a very interesting freemium model.

Software Review 48

Software Review Technical Review IPO Cloud 48

Both Sides of the Table

SEPTEMBER 18, 2014

There were no metrics. Him: On metrics. Revenue multiple? If we priced it based on any metrics your company would likely be worth less than 7 figures at your A round. Maybe an IPO – who knows? Him: But when I raised my first round we didn’t know how to price the company. Your A round? What proof points?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Lessons Learned

JUNE 5, 2009

And so the spreadsheet is built with conservative assumptions, including a final revenue target. No matter how low we make the revenue projections for this new product, it’s extremely unlikely that they are achievable. In a startup context, numbers like gross revenue are actually vanity metrics, not actionable metrics.

San Francisco 102

San Francisco Lean Continuous Deployment Startup 102

Both Sides of the Table

SEPTEMBER 28, 2013

A cautious person wouldn’t try to pry people out of Twitter right before their IPO to” join my cause!!” Good press and industry mojo wasn’t enough to overcome the financial metrics of the business and the offers came in at more like $10 million. It was not. I wasn’t surprised. We decided not to sell.

Startup 417

Startup Dilution San Diego Stock Options 417

Startup Lessons Learned

JANUARY 2, 2009

We were even more embarrassed by the pathetically small number of customers we had, and the pathetically low amount of revenue we had earned so far. We’d always cringe as we admitted that, no, we really only had a few thousand customers and a few thousand dollars in monthly revenue. Retention cohort analysis. I am chugging along.

San Francisco 60

San Francisco Tampa Continuous Deployment Lean 60

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. In the 20th century tech companies and their investors made money through an Initial Public Offering (IPO).

Founder 245

Founder Technical Review CTO Hire IPO 245

The Equity Kicker

OCTOBER 8, 2012

According to Paul most startups should look at revenue growth, but active users is a good proxy for companies that aren’t charging their customers (yet). Growth is the main driver of value in our companies and it is what makes them exciting to IPO investors and acquirers. I disagree that growth should be the sole focus though.

Silicon Valley 149

Silicon Valley IPO eCommerce Valuation 149

Gust

AUGUST 5, 2012

In fact, a business plan is needed more by you than investors, as the blueprint for your company, team communication, and progress metrics. Clearly define the customer, channel, and revenue model associated with this solution. In this section, you need to be passionate about revenue, profit, and volume growth. Exit strategy.

Business Plan 182

Business Plan Sweat Equity Exit Strategy Intellectual Property 182

The Equity Kicker

JULY 25, 2013

Whilst the company is still falling short of the heights it set for itself in last year’s IPO these results show that the business is in rude health. Other highlights are: Mobile revenues are now growing very fast (up 75% from last quarter, incredible at this scale) and are projected to overtake desktop revenues this year.

Europe 79

Europe IPO Mobile Metrics 79

Pascal's View

NOVEMBER 15, 2011

Dan Primack posted an article in Term Sheet last week titled Yelp This: IPO Market Is Killing It. Responding to these comments in a new post on Monday November 14, IPO Worries Put to the Test This Week , Dan reasserts “my belief that the death of small company IPOs has been greatly exaggerated.”

IPO 31

IPO Term Sheet Marketing United States 31