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All Revenue is Not Created Equal: The Keys to the 10X Revenue Club

All Revenue is Not Created Equal: The Keys to the 10X Revenue Club
May 24, 2011: May 24, 2011: [Follow Me on Twitter] “ Don’t you know that you are a shooting star,And all the world will love you just as long,As long as you are. With the IPO market now blown wide-open, and the media completely infatuated with frothy trades in the bubbly late stage private market, it is common to see articles that reference both “valuation” and “revenue” and suggest that there is a correlation between the two. What drives true equity value? Because of the difficulty of getting DCF right, investors commonly use a handful of other shortcuts to determine valuations. The following chart highlights 2012 forward price/revenue ratios for 122 global Internet stocks. Before we talk about why there is such disparity, it is important to highlight a few more points. What causes such a wide dispersion of price/revenue multiples? 1. By far, the most critical characteristic that separates high multiple companies from low multiple companies is competitive advantage. 2. 3. 4. 5. 6. 7. 8.

The 7 Habits of Highly Effective Mediocre Entrepreneurs [Editor’s note: James Altucher is an investor, programmer, author, and entrepreneur. He is Managing Director of Formula Capital and has written ten books. His latest books are I Was Blind But Now I See and 40 Alternatives to College. You can follow him on Twitter @jaltucher.] I’m pretty mediocre. Particularly as an entrepreneur. I’ve started a bunch of companies. That said, all entrepreneurs should be so lucky. If you want to get rich, sell your company, have time for your hobbies, raise a halfway decent family (with mediocre children, etc), and enjoy the sunset with your wife on occasion, here are some of my highly effective recommendations. - Procrastination – In between the time I wrote the last sentence and the time I wrote this one I played (and lost) a game of chess. Procrastination is your body telling you you need to back off a bit and think more about what you are doing. Try to figure out why you are procrastinating. [See also, "5 Great Things About Procrastination"]

Hidden Gems: The 100 .edu sites every Entrepreneur Should Read Whether you’re an ivy-leaguer or a high school dropout, chances are you still have quite a bit to learn from others. Why not learn from the people who do learning best? Check out these .edu blogs and other informative sites for strategies, theory, and concrete resources for building and growing your business. Marketing Marketing may be one of the many things you try to squeeze into your business, but for the people behind these sites, this is all they do. Innovation Inside every great entrepreneur is an inventor, constantly thinking of new and exciting ways to solve problems and create new things. Industries Educational resources can sometimes be frustrating because they tend to focus on theory, while you’re looking for concrete ideas. International Business In today’s global economy, entrepreneurs must be familiar with the ideas of international business. Knowledge & Information At the root of every institution of learning is information. Accounting Law Startups Get It Started! Management

dotMN — ‘Less TechCrunch & more reality,’ says local angel investor Nearly two months ago, AMP Partners was introduced to Minnesota’s tech entrepreneurs. Curious to learn more about where things are at, and if AMP is serious about funding local startups, we connected with partner Daren Marhula to hear it from the source: 1) How would you say things are going so far relative to what was anticipated? Overall, our business at AMP is in-line with our original expectations since launch. That being said, we continue to be surprised by the unrealistically high valuation expectations by many entrepreneurs out there, which has prevented us from making more investments. 2) How would you rate both the quantity and quality of dealflow? Since the article initially ran, we have talked with roughly 30 companies. 3) Has AMP made any tech investments? Our first investment was in HomeVisor, which is an online Realtor referral service. There were a couple of other companies we met with that we liked and we would have invested in, had the valuations been more realistic.

4 Things the NFL Can Teach Us About How to Succeed in Business - Jordan Weissmann - Business Economists love using football to test their theories. Call it Gridiron-omics 101. What have they learned? Businesses are bad at judging talent, performance, profit, and strategy. Reuters Pity Mike Smith. Yes. Pro football has become one of academia's favorite labs for testing out economic theories. Economists think they have a lot to teach football. Here are four lessons for business from Gridironomics 101. 1) GO FOR IT ON FOURTH DOWN! In 2003, Berkely professor David Romer released a classic paper asking a simple question: Do companies really maximize their profits? So to get an answer, Romer turned the gridiron. Using a probability analysis, Romer looked at data form more than 700 NFL games to measure the value of getting a first down at any point on the field against the value of punting the ball or kicking a field goal. Why were coaches risk averse at the cost of winning? 2) MARGIN OF VICTORY MATTERS MOST(Or: Why Companies Are Bad at Assessing Strategy 4) DON'T SUCK FOR LUCK!

How To Thrive In The Free-Product Economy Building technology has never been cheaper than it is today. Or faster. In the past twelve months, Ruby on Rails programmers built more than a million apps on top of Heroku, a platform that allows coders to save drastic amounts of development time. Historically, the majority of the cost of a typical app comes from maintenance, says Heroku COO Oren Teich; companies like his build layers of technology that deplete those setup and maintenance costs--not to mention experience required--to build software. Moore's Law says computer processing power gets steadily cheaper and faster to produce. If a product on the market can be monetized by any means other than directly selling it, a comparable version of that product will eventually be offered for free. It's Happened Throughout History Early newspapers cost money; we paid for the product. It Happens Because Of Networks It's Happening In Enterprise It's Happening With Various Models Setting Your Own Product Free People go to great lengths for free.

Convertible Debt Back in the summer of 2010, I wrote a post outlining why I don't like convertible debt investments. USV does a fair bit of seed investing and we have never done a convertible debt deal (although we have done bridge loans for our existing portfolio companies). My wife, aka Gotham Gal, does a fair bit of seed investing and she has done her share of convertible debt investments, always with a reasonable cap, but she also prefers a priced equity round. Convertible debt is being discussed again, I suspect because valuations are coming down and that is causing some problems, but also because there are folks suggesting improvements on the structure of these deals. My view on this is fairly simple: 1) A priced equity round can be done quickly and inexpensively. 2) When you set the price, both sides know what deal they got. 3) Equity is simple. Mark Suster has a long and winding but very good post on all of this on his blog.

Sure thing, I'd LOVE to help you move out of your two bedroom apartment! All artwork and content on this site is Copyright © 2015 Matthew Inman. Please don't steal. TheOatmeal.com was lovingly built using CakePHP All artwork and content on this site is Copyright © 2015 Matthew Inman. TheOatmeal.com was lovingly built using CakePHP North of Where We Are Today: Live Nation Labs in San Francisco - Live Nation Labs By Eric Garland [Update: Rexly duderino Joel Resnicow has written a better and more informative announcement. Please read his first.] Tonight I’m feeling reflective, on the eve of the announcement that we have acquired iPhone social music star Rexly and that the Rexly team will establish our new San Francisco presence, Live Nation Labs North, or LN² as it’s already known around here. I’m also feeling reflective because with team Rexly we continue to recruit the people who inspire us. After we started the Labs, but before we’d told anybody what we were up to, Ethan and I started sneaking** up north to court Rexly. The Live Nation Labs sketch looked a lot like Rexly’s sketch. Joel and Kyle, I am fortunate to know you and to have this chance now to partner with you in such a bold experiment. I believe: Labs is a great team of people, and great teams are even more powerful than great ideas or great leverage. A team of true believers will beat non-believers almost every time.

The Truth About Convertible Debt at Startups and The Hidden Terms You Didn’t Understand This article initially appeared on TechCrunch – with a minor update highlighted in red below. Ah. We’re back to discussing convertible debt again. This time by the efforts of Adeo Ressi to introduce a new kind of structure called “convertible equity.” I applaud all efforts by people to take on this issue and especially be Adeo who – let’s be honest – was really the first champion of trying to make the VC world more transparent by launching TheFunded, which didn’t exactly endear him to VCs initially. My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly. To better understand the arguments for / against convertible equity I suggest you read my posts on those topics: So let me weigh in more loudly than in the past. “What if I took some of the worst, most egregious terms in a standard term sheet and made them the defacto standard in most convertible debt deals?

Procrastination The Misconception: You procrastinate because you are lazy and can’t manage your time well. The Truth: Procrastination is fueled by weakness in the face of impulse and a failure to think about thinking. Netflix reveals something about your own behavior you should have noticed by now, something which keeps getting between you and the things you want to accomplish. If you have Netflix, especially if you stream it to your TV, you tend to gradually accumulate a cache of hundreds of films you think you’ll watch one day. This is a bigger deal than you think. Take a look at your queue. Psychologists actually know the answer to this question, to why you keep adding movies you will never watch to your growing collection of future rentals, and it is the same reason you believe you will eventually do what’s best for yourself in all the other parts of your life, but rarely do. A study conducted in 1999 by Read, Loewenstein and Kalyanaraman had people pick three movies out of a selection of 24. Sources:

Startup is the New Hipster. I went to a conference in June, actually, correction, I spoke at a conference in June (baller!), and watched a presentation given in prezi. It was awesome. "Prezi is awesome," I told my startup friend two weeks later. "Prezi is so two months ago," my startup friend snorted in derision. The insult was so familiar. Startup is the new hipster. Home Base Computer Phone Constantly Posting to Instrument of Choice Accessories Idea Storage Reading About Obsessively Checking Blogs About Shirt Additional Layer Pants Glasses Shoes Bag Facial Hair The Letter Y Mode of Transportation Accommodations Affection Expression Housing Pomodoro Morning Beverage Evening Beverage Breakfast Lunch Dinner Goal re: the Industry? "Do Great Things" Pick-Up Line **** All stereotypes in this publication are entirely stereotypical and any resemblance to real persons, living or dead, is purely coincidental. You can comment here on how inaccurate this list is because you run a startup but own a Droid and live in Chicago.

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