Can this be a $B Startup???

billion

How often have you sat in front of VCs or advisors and been asked ‘Can this be a billion $ business?’. I have. I find it to be an incredibly frustrating question. When you’re at the start of your business, if you’re spending time thinking about how to be a billion $ business, you’re wasting time.

Here are some stats: There are 100s of venture firms investing in many 1,000s of startups. Out of all of that activity there are 80 privately held technology companies worth $1B (source: CBinsights) in the US. In Canada, there are two (Shopify and Hootsuite).

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Momentum

Momentum

I was reading this morning about Slack‘s rumoured $ 160M round, coming hot on the heels of last Fall’s $ 120M round. If this round closes then in the space of 7 months the company will have raised $ 280M and grown it’s valuation over 10x from the previous funding rounds.

This is a beautiful illustration of the importance of momentum in building a valuable company. Most startups take some time to find their stride. But once they find product/ market fit and scalable customer acquisition channels, the market-leading startups seemingly never stop raising capital. Instead, they raise more money, quicker to keep piling on to the growth they already have. This is why in most markets, the bulk of the market value goes to the leader. There’s just such a huge gap between that company and the ‘also rans’.

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The Three Ps of Venture Funding

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If you’re a student of marketing then you’ve likely heard of the ‘four Ps’. A lesser known, but I’d say more important set of Ps are the three Ps of funding. Why are they more important? Without them, you won’t have any money to pay for all that marketing.

People

In Jim Collin’s seminal book ‘Good to Great‘, the companies he profiled all started by getting ‘the right people on the bus’. All great companies begin and end with great people. In the context of funding a startup, investors are looking for any of the following: Read More

Two ways to grow your SaaS business

PhotoSpin Money & Finance 2 ? 2001 PhotoSpin www.photospin.comSaaS is a pretty simple business: You pay to acquire a customer on day one. Over time as you invoice that customer you recover your acquisition cost. From then on, the longer you keep that customer the more profitable they are. As the years go on and you keep more and more customers that you have already paid for, your business as a whole becomes profitable. Simple, right?

Tomasz Tunguz from Redpoint recently asked whether SaaS startups are less profitable these days. According to his data (below), no matter whether you sell to small companies or enterprise, over time the profitability of SaaS companies converges around a similar median.

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