A Smart Bear: Startups and Marketing for Geeks

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Why it’s nice to compete against a large, profitable company

A Smart Bear: Startups and Marketing for Geeks

The current valuation of the company is based on continued growth in revenue and earnings, not erosion due to ankle-biters. In the big-boy and big-girl world of real, at-scale companies, valuation is about total future earnings. The big profitable revenue stream is the goose that’s laying the golden eggs. Not anymore.

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The wrongness of relativism

A Smart Bear: Startups and Marketing for Geeks

” It doesn’t matter whether we’re talking about valuations , growth rates , retention rates , NPS scores, early-stage uncertainty , ratio of revenue to employee, CAC , cash-burn, LTV , gross margin, or selling your company.

Metrics 246
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Should I invest my savings in this startup?

A Smart Bear: Startups and Marketing for Geeks

Should I invest my $95k at a $1m valuation to bring my total stock allocation into the double-digits? I have $95,000 saved from a previous exit. I don’t need the money in savings because I’ve been making $150/hour as a consultant so my “plan B” is fine. Or should I keep that money as an investment in my next venture?

Salary 229
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Why large companies acquire small companies

A Smart Bear: Startups and Marketing for Geeks

It was said that Facebook drastically overpaid (a billion dollars for a company with fanatical users but zero revenue) but also that that Instagram was stupid to sell so early (because after more “inevitable” growth it would be worth much more, and would “inevitably” be bought or go public at that larger valuation).

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How to think about cash vs. equity compensation

A Smart Bear: Startups and Marketing for Geeks

Of course the numbers don’t match because, again, I pulled those potential valuations out of nowhere. To make $250,000 out of $5m the investor would need 5%; to make $840,000 from $25m the investor needs 3%. That’s a much tighter range than you had before you started reading this article!

Equity 276
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A vote for me is a vote for dipshit businesses everywhere

A Smart Bear: Startups and Marketing for Geeks

And then, for the few companies that really do need VC-sized investments to take them from product/market fit to explosive growth, by the time they start touring Sand Hill Road their valuations are sky-high; they've already got all the trappings of a successful company, the major risks having been removed during the angel round.

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The rise of the “successful” unsustainable company

A Smart Bear: Startups and Marketing for Geeks

So it IPO’ed at a $13b valuation but has dropped month-over-month to one-fourth that value and appears to be in “constant pivot mode” while they try to figure out a new, massive market for which their existing infrastructure is an asset.

IPO 240