Valuation Quiz

May 29, 2013

I received an email today from Tom Astle, head of Investment Strategy at Difference Capital, (I am on their mailing list). It was a good email that is worthy of discussion for startups and investors. Here is the email in full, with some of my thoughts at the end.

Here’s a Valuation Quiz: 

Image

OK smart MBA grad / CFA type, what valuation would you give a private technology company that is six years old, had only $13 million in revenue, a 26 year old CEO, 175 employees and probably losing lots of money?  A few times revenue? More if its growing fast in hot sector?  Maybe 10 x revenue at the top end??

Wrong! Try $1.1 Billion or close to 100x revenue.  At least that’s what Yahoo valued internet blogging site Tumblr at earlier this week.  And this isn’t the first head scratcher in the internet space.  I.e. Facebook’s $1 billion purchase of Instagram also comes to mind. Read more

3 Insights from 2013 World Mobile Congress

March 1, 2013

World Mobile Congress Vodafone Viber
The 2013 World Mobile Congress was held in Barcelona Spain this past week. 70,000 people representing most of the upper echelons of the mobile business world were in attendance.

Their agenda: Develop strategy, do deals, sell product, gain market share, and just move, above all else – keep moving. The event is a whirlwind of activity and intensity and depending on who you are and what your agenda is, you are going to have a different experience. Since I am always looking at the current landscape and what it means as to what we have to do next, my experience revealed three themes that seemed to permeate and should be considered in your strategic thinking.
Read more

The Root of Social Media and why it is so powerful

February 6, 2013

One word can describe the power of Social Media,

Attachment!

There is a significant amount of work now available on the psychology of Social Media and why it has become the phenomena that it is. There are marketing steps and psychological plays to determine why we act or react the way we do. Down to case studies of corporate engagement. From the reading and research I have done, I came across what I think is the most acute explanation of the phenomena in the most unlikely but obvious place.

I am currently reading Hold On To Your Kids by Dr. Gordon Neufeld and Dr. Gabor Mate, This is a fascinating book on what Neufeld refers to a peer orientation, that explains the absolute need for people, children in particular, to be orientated and the post WW II increasing cultural problem we are encountering of children attaching to their peers and not their parents. Read more

Strategy or Execution?

October 30, 2012

"I would rather have great execution and mediocre strategy than the other way around."

I have heard this so often, and in fact used to be one of those people that would pound the table and repeat the above statement. What I have come to realize is that with mediocre strategy I had mediocre companies, mediocre talent, mediocre financing and at best mediocre results.

Execution is what we can really see, feel, and experience so we migrate to basing our judgments on execution. Of course since we as leaders all think our strategies are really good when things are not going well we like to point to the execution as the problem. Statements like, "If people would just do what they say", or "we need people who get it", and the list goes on, are indicative of leaders not taking responsibility for a strategy that can not be effectively executed.

Read more

Welcome to the era of MeData™

August 22, 2012

iStock 000018931647XSmall

I just finished participating in the Silicon Alley Invitational Golf Tournament in New York. Every year, one of the projects PODIUM Ventures is working on sponsors this tournament, as it is one of the best networking events available when it comes to Consumer Internet Advertising based projects. As it relates to internet advertising, innovation and startups, many of the most knowledgeable and experienced players in the world make up the field of only 46 players and another 50ish attendees for the luncheon. In this crowd everyone has something worth listening to and learning from.

Read more

8 Things I Learned About Financial Modeling In Russia

August 3, 2012

Multinational Finance

I recently returned from a trip to Moscow where I was working on a project with a team of Russian investors and advisors. As one would expect when travelling in a foreign country, language can sometimes be a barrier to understanding or conveying ideas. The project we were working on was particularly complex and had several moving parts, many of which were entirely new approaches to providing a particular product into a new market. After a day of productive but somewhat frustrating meetings, I was resided to the notion that some of our language and cultural barriers would prevent us from having the project we were working on fully understood and subsequently valued.

Read more

Money Flows and Trend Lines In the Startup World

July 30, 2012

iStock 000019951391XSmall

A big part of successful investing is understanding the trend. “The trend is your friend” is an old trader’s adage that seems always to hold true, and many a trader has been buried who has not heeded this advice.

How does this look in the Startup/Venture Creation world? It is about being able to look 24 to 36 months out and position your investment to be on the trend at that time. You need to be in a position to be exiting when a sector is trending up and already be investing in the next sector that will be trending up.

I want to be very clear at this point, investing at the right point in a company that is positioned well for where money is flowing next is smart. Investing in a company that looks to be well positioned to take advantage of the trend, but is not creating value, is irresponsible.

Read more

BIG DATA – The Only Business Model Left

April 27, 2012

My Partner, Paul Readwin (our Chief Intelligent Officer at Business Instincts Group) recently send me a great article on the Only Business Model Left. It’s an article that resonates very deeply with us here at Business Instincts Group and PODIUM Ventures.

Shomit Ghose, in his March 12 Forbes article, very aptly pointed out that with the cost of IT has practically dropped to nothing. The barrier of entry for competition is so low and the fight for market share so high that the notion of charging a customer for the privilege of using your infrastructure or code is almost nonexistent. What John Smith is suggesting is the only business model left is collecting your data and selling your information.

The amount of information that is now being produced is so vast, estimates suggest that in 2012 alone we will produce 2.7 Zettabytes (2.7 x 1021) of information. IBM recently announced that that it will be analyzing the data received from Project DOME, an upcoming telescope project that will produce more data in a year than in all of data produced by the Internet throughout its entire history.

Read more

What The Facebook IPO Means For Your Sustainable Startup

February 14, 2012

An IPO like Facebook is essentially the white whale of liquidity events for a startup. But it is one outlier among many in a sea of companies trying to find exits.

A Sustainable Startup is built not with an exit in mind, but around the fundamentals of solving a problem. When it comes to exits, and in this case IPO’s, so much is dependent on what your startup is i.e. the specific space you play in and the stage you are at in your Sustainable Startup.

Read more