creating value in your startup company ppt
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Creating Value in your StartupDec 5, 2012
R. Paul SinghEntrepreneur@rpaulsingh
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AGENDA• Components of Value• Team• Technology• Customers• Profitability/Growth• Branding• Scaling• Examples
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Value lies in the eye of the acquirer
VALUE OF A COMPANY IS IN THE EYE OF THE ACQUIRERMORE LIKE IN THE HANDS OF YOUR TEAM
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Components of Company Value
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TEAMTEAM
TECHNOLOGYTECHNOLOGY
CUSTOMERSCUSTOMERS
PROFITABILITY/GROWTHPROFITABILITY/GROWTH
BRANDINGBRANDING
SCALINGSCALING
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Components of Company Value
• Team Value– Composition – Business Vs Technical–Domain Knowledge & Experience–Record of team members–Chemistry of the team–Location of the team–Size matters but Quality matters more in a startup
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TEAMTEAM
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Components of Company Value
• Technology Value– Breakthrough Technology Vs
Incremental Technology– Design is new Technology– Causing disruption to an existing
Market– Relevance to trends–Are you filling in product gap for a large vendor– Are you tied to an Ecosystem– Protecting IP
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TECHNOLOGYTECHNOLOGY
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Do companies get acquired just for
• Many large companies buying just for getting good teams
• Who has done most team/tech acquisitions amongst large companies?
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TEAMTEAM
TECHNOLOGYTECHNOLOGY
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Some Examples & Analysis of Acquisitions for
• Twitter Acquisitions– Vine – Video Sharing – 3 Employees– Posterous – Tumblr like– Rest Engine – Personalized Email Marketing– Clutch.io – Mobile IP Testing
• Google Acquisitions–Bufferbox – Shipping lockbox–Incentive Targeting – Online marketing coupon–Nick Software – Snapseed mobile photo editing– Sparrow – Email for iOS
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TEAMTEAM
TECHNOLOGYTECHNOLOGY
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What you get in Acquisitions for
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TEAMTEAM
TECHNOLOGYTECHNOLOGY
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Components of Company Value
• Customer Value is the true value – Consumer Vs Enterprise– Life time value of customer– Cost of Acquisition– How easily can you be replaced?– Type of customer matters too!– Size matters but Quality matters more in a startup– Is customer service just for Enterprise products?– Why are pure services company valued lower?
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CUSTOMERSCUSTOMERS
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Components of Company Value
• Profitability gives you Freedom but– Profitability Vs Cash flow– Profitability Vs Growth– Revenue matters more– Gross Vs Net Revenue
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PROFITABILITYPROFITABILITY
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Components of Company Value
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PROFITABILITYPROFITABILITY
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5
Revenue 5 9 15 27 47
COGS 2 3 5 9 16
GM 3 6 10 18 31
Op. Costs 4 8 12 14 16
Profits (1) (2) (2) 4 15
Revenue 5 6 8 10 12
COGS 2 2 3 3 4
GM 3 4 5 7 8
Op Costs 3 3 4 5 5
Profits 0 1 1 2 3
Company A
Company B
Which company is more valuable?
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Components of Company Value
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BRANDINGBRANDING
Peter Thiel: Brand is as a classic code word for monopoly. But getting more specific than that is hard. Whatever a brand is, it means that people do not see products as interchangeable and are thus willing to pay more.
A good brand provides a clear and memorable sense of what your business stands for!
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Brand Building 101 – source KissMetrics
• Some simple steps in Startup Marketing– Market Segmentation– Keyword Definition– Defining and Measuring Success– Marketing Budget – Inbound and
Outbound– Inbound – PR, Influencers, Social
Networks, Blogging– Outbound – Ads, Conferences,
Analysts14
BRANDINGBRANDING
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Components of Company Value
• Building Brand is as important as finding Customers– Brand is more valuable when others
talk about it– Brand Building is very similar whether you are
dealing with B2B or B2C Markets– Brand building costs are always underestimated– Always seek a healthy balance of Push Vs Pull
Marketing– Brand building is responsibility of everyone in your
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BRANDINGBRANDING
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Scaling gone wrong
http://www.youtube.com/watch?v=gpy5tR3UOaQ
SCALINGSCALING
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Some Recent Examples
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TEAMTEAM
TECHNOLOGYTECHNOLOGY
CUSTOMERSCUSTOMERS
PROFITABILITY/GROWTHPROFITABILITY/GROWTH
BRANDINGBRANDING
SCALINGSCALING
Cariden – Optical Nw & Tools - $141MMeraki – Wifi + Cloud = $1.2B
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Some Recent Examples
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TEAMTEAM
TECHNOLOGYTECHNOLOGY
CUSTOMERSCUSTOMERS
PROFITABILITY/GROWTHPROFITABILITY/GROWTH
BRANDINGBRANDING
SCALINGSCALING
Marketing Pilot – Mktg automationPhone Factor – Multi-factor AuthStorSimple – Ent. Cloud StorageYammer – Social Enterprise
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SummarySummary
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Focus on building long term value and the rest will fall in place
Value is not just technology or team but a combination of these, branding, profitability and growth
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Thank You
Questions?