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Showing posts from October, 2016

Valuation of Evolutionary vs. Revolutionary Startups

I was talking to a very successful entrepreneur recently about valuations of startups as they grow. Specifically, valuation multiples for an evolutionary startup with great revenues vs. a revolutionary startup with good revenues, especially when both are still in early-stage. 
In an evolutionary startup, the product offering is just that – evolutionary. That is, the industry has been moving in this direction for years. The valuation of this startup can be good due to traction, but as an evolutionary company in an established market, competitors will follow and then the evolutionary product becomes substitutable. Its multiple is likely less than 4X.
In a revolutionary startup, the product offering is defining a new space. Getting traction can be hugely difficult like pushing a boulder up a mountain. But once momentum hits, the valuation multiple can be significantly higher due to the meta knowledge and technology surrounding the startup. Yes, a startup doing well in this new revolution …

The Trap of Optimism Bias

In a couple talks I’ve given this year, I talked about failure – promote the book! I talked about over-confidence/ hubris as one of the reasons I, at least, failed.
I spoke to and heard from a number of successful entrepreneurs who advised me on certain traps as a first-time entrepreneur. I ignored some of the advice thinking we were going to be successful despite these “red flags”. This confidence is an example of optimism bias.
From Wikipedia, “optimism bias is a cognitive bias that causes a person to believe that they are less at risk of experiencing negative events compared to others”. There is optimism bias for both positive events – we will be more successful than others – and negative events – we will not succumb to the trappings of others who have failed.
Optimism bias is powerful and part and parcel of the confidence to succeed; however, it needs to be paired with a healthy dose of curiosity and adaptability. In our case, we should have heeded the cautions from entrepreneur…

Google Analytics vs. Event Tracking Apps – Through the Lens of an Office Tour

I was back with a startup I’m advising this past weekend discussing the importance of metrics. Or rather, more specifically, what you get with event tracking apps like MixPanel vs. Google Analytics.
So let’s start with an example from my office – tours at Atlanta Tech Village. You’ve taken the tour before, but you’re here with 2 friends who have never been. Meanwhile, there are seven other tour guests to which two say they’ve taken the tour again, but they loved it so much they’re doing it again.  The tour starts downstairs in the lobby before entering the rec room with game consoles, a ping pong table, shuffle board, and a kitchen.  Then, the tour goes through the “hot desk” area before re-entering the lobby and going up a flight of stairs to the second floor with dedicated desks and some smaller offices.  The group then goes up to one of 3rd, 4th, or 5th floors to see the larger office spaces. The tour guide is showing the group the kitchen as well as maybe an introduction to a sta…

Book Review: Start With Why

I recently finished Simon Sinek’s Start With Why. I didn’t even know about this book despite knowing of his infamous Ted Talk, but when I did hear of this, I was excited to go in-depth on the subject.

If you’ve been reading my blog for a while (or probably even recently), you’ll know that I’m a big proponent of being grounded in purpose and why – as an individual and as a company.
My take-aways: Leaders and founders utilize WHY to set the vision of the company. Typically, too, the founders are complementary in one providing the WHY while the other enables the HOW. For greatest effect, both must be present. Note: one is not “better” than the other. They’re complementary.We (and companies) are good at espousing the WHAT and HOW we do, but are “fuzzier” on our WHY. Starting with WHY allows us to build on an emotional pull with our audience – a trust. When we sell on our WHAT and HOW, we differentiate by features, price, etc. Why allows us differentiate on a deeper level – a belief and co…