

Two Ways to Get to a $100 Million Valuation - akingyens
http://www.betakit.com/super-angel-boris-wertz-says-theres-only-two-ways-to-get-to-a-100-million-valuation/?utm_source=rss&utm_medium=rss&utm_campaign=super-angel-boris-wertz-says-theres-only-two-ways-to-get-to-a-100-million-valuation

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ryandrake
"Do the exact opposite. Don’t spend money acquiring users, instead build your
product to go viral, and then monetize through selling access to users (and
their data) to advertisers."

This idea that viral=free is pretty dangerous. "Viral" can be a very expensive
way to acquire customers. Who develops these viral features? free developers?
Who tests them, deploys them, scales systems to handle viral growth? Viral is
only free if you aren't paying your development, testing, and ops staff.

~~~
bennesvig
I'd think building virality into a product or service is one of the cheaper
ways of acquiring customers. If you create something that works on its own,
but is more fun when friends are using it, people are going to do the
marketing for you. Instagram is a great example.

~~~
fizzbar
"Virality" is not something anyone has figured out how to bottle up and
reproduce (and if they have, they're not sharing).

The music industry analogy would be to say "just make all your songs into hit
records, that's how you get listeners".

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liquidise
Acronyms Used: (trivial and otherwise)

\--

SaaS: Software as a Service (might as well include it)

\--

LTV: Life time Value (months of use * cost per month)

CAC: Customer Acquisition Cost

ARPU: Average Revenue per User (monthly)

Churn: Rate of customer loss (over specified period)

MAU: Monthly Active Users

\--

WoM: Word of mouth

SEO: Search Engine Optimization

SEM: Search Engine Marketing

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qwerty_asdf
Warning! The entire article is filled with arcane finance newspeak and obscure
acronyms!

tl;dr:

1\. Have a high LTV:CAC ratio (what???)

2\. Have high viral co-efficient. (okay.)

\-----

LTV = Loan to value, a ratio of the outstanding debt on a property to the
market value of that property. (or is it "Lifetime value" of a customer?)

\-----

CAC = Customer acquisition cost is the resource a business needs to allocate
in order to acquire an additional customer.

\-----

And, oh yeah, just "be viral".

~~~
pkaler
> Warning! The entire article is filled with arcane finance newspeak and
> obscure acronyms!

Boris Wertz is a SaaS/e-commerce investor. LTV, CAC, ARPU, churn, etc are
pretty standard metrics for those types of businesses.

Here is a good guide to SaaS Metrics: [http://www.forentrepreneurs.com/saas-
metrics/](http://www.forentrepreneurs.com/saas-metrics/)

Here is Bessemer's SaaS Reporting Template:
[http://www.bvp.com/system/files/reporting_saas.xls?download=...](http://www.bvp.com/system/files/reporting_saas.xls?download=1)

The Smart Bear blog has a good series of SaaS metrics articles:
[http://blog.asmartbear.com/?s=saas+metrics](http://blog.asmartbear.com/?s=saas+metrics)

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nextstep
Or, get one "investor" to pay you $1 for a 100-millionth of your company.

~~~
dictum
Or a _cool hundred billion_ [https://37signals.com/svn/posts/1941-press-
release-37signals...](https://37signals.com/svn/posts/1941-press-
release-37signals-valuation-tops-100-billion-after-bold-vc-investment)

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andreipop
The two options for a highly valuable company are to either spend heavily to
acquire high value users (i.e. Palantir, LTV:CAC ratio), or spend nothing to
acquire ubiquitous users (i.e. Facebook, high viral coefficient).

Another important factor not mentioned here (but highly relevant towards a
$100M valuation) is market size, which can often provide a restrictive upper
bound if the product is too niche (in either case above).

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Abundnce10
Will GrowConf provide videos of the talks from this year? I'd love to listen
to Boris Wertz's talk

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applecore
To get an idea of how likely it is, how many startups are reaching a $100+
million valuation in a given year?

~~~
jliechti1
The rule of thumb among VCs is about 15 per year. Assuming $100+ million is
considered a "big success". The cap for big success might be higher.

See more here:
[http://www.paulgraham.com/invtrend.html](http://www.paulgraham.com/invtrend.html)

Actually, this article here has some good quantitative data. It puts the
number around 200. It looks like most of the companies are non-tech/outside
the Valley though.

[http://bostinno.streetwise.co/2013/05/14/only-200-startups-p...](http://bostinno.streetwise.co/2013/05/14/only-200-startups-
per-year-end-up-mattering-most-of-them-arent-in-tech/)

~~~
ramanujan
I believe the rule of thumb is that there are 15 that reach $100M _revenue_.
We could square the figure of 200 at $100M valuation with this rule of thumb
if we assume valuation is say 10X revenue, so 200 reach ~$10M revenue. Thus
maybe 1/15 or so of the companies that reach $10M in revenue hit the next
level of scale and get to $100M revenue.

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philip1209
1) Revenue

2) Liquid assets

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dsugarman
what about businesses without users?

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beat
What do you mean by "users"? A business has to have customers, at least in the
long run. Those customers may or may not be the people who actually use the
products (Google/Facebook/Yahoo/etc - you're not the customer, you're the
product). But whether you're making tires or milk or websites or religious
experiences or whatever, you have a product, and _someone_ is using it.

~~~
mindcrime
I doubt anybody at Goodyear or B.F. Goodrich talk about people who buy their
tires as "users". To my way of thinking, saying "users" implies something very
specific about the nature of the business in question... eg, Google and
Facebook have "users", whereas Goodyear, Proctor & Gamble, and Alcoa have
"customers" (or "accounts").

