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The only 2 ways to build a
$100 million business
Boris Wertz | August 2013
Why $100 million?
“VC fundable”
(but you can a build great company
without VC)
some VC math
-  $20 million seed fund
-  return target 3-4x = $80 million
-  5% stake at exit > $1.6 billion in exit
value...
LTV > CAC
(ideally 4-5x at scale)
high LTV / user
(SaaS, e-commerce
> transactional businesses)
1
SaaS example
-  ARPU: $70
-  Monthly Churn: 2% (> 50 months)
-  LTV: $3,500
1
1
CAC
acquisition channels
WoM
SEO
SEM
Tradeshows
Outbound sales
Increasing LTV
-  increase ARPU: upsell, enterprise
accounts
-  decrease churn: increase utility of
product, customer succ...
viral effect
(social networks, platforms
> often advertising businesses)
2
Facebook
-  ARPU / year: $6
-  MAU: 1.15 billion
-  Other examples: Twitter, YouTube,
Instagram, Snapchat, Wattpad
2
virality & network effect
-  virality: sharing / WoM (e.g.
communication products, social games)
-  network effect: additi...
stuck in the middle
(most start-ups)
3
e.g.: news curation
-  low viral co-efficient
-  low monetization (advertising)
3
e.g.: low-utility SaaS
-  combination of low ARPU ($30) and high
churn (7-8%) – e.g. marketing tool for
SMB s
-  resulting...
e.g.: one product e-com
-  low repeat purchase frequency = low
LTV
-  competing with multi-product retailers
like Amazon o...
take-aways
-  $100m opportunity = “VC fundable”
-  2 models to get there: high LTV / high
CAC or low LTV / low (=zero) CAC...
thank you
bwertz@versiononeventures.com
twitter: @bwertz
about me
•  early stage investor through Version One Ventures
•  40+ investments in consumer & enterprise co s - 6
exits (...
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There are only 2 ways to build a $100M company | Boris Wertz, Version One Ventures

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Boris Wertz, Founder and General Partner, Version One Ventures

With tens of thousands of new start-ups being created every year, the potential of a company to truly scale and become a large, stand-alone business is more crucial than ever before. This session looks at the business models and distribution channels that can create a $100 million company.

Published in: Economy & Finance, Business
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There are only 2 ways to build a $100M company | Boris Wertz, Version One Ventures

  1. 1. The only 2 ways to build a $100 million business Boris Wertz | August 2013
  2. 2. Why $100 million?
  3. 3. “VC fundable” (but you can a build great company without VC)
  4. 4. some VC math -  $20 million seed fund -  return target 3-4x = $80 million -  5% stake at exit > $1.6 billion in exit value needed on 20-25 investments
  5. 5. LTV > CAC (ideally 4-5x at scale)
  6. 6. high LTV / user (SaaS, e-commerce > transactional businesses) 1
  7. 7. SaaS example -  ARPU: $70 -  Monthly Churn: 2% (> 50 months) -  LTV: $3,500 1
  8. 8. 1 CAC acquisition channels WoM SEO SEM Tradeshows Outbound sales
  9. 9. Increasing LTV -  increase ARPU: upsell, enterprise accounts -  decrease churn: increase utility of product, customer success 1
  10. 10. viral effect (social networks, platforms > often advertising businesses) 2
  11. 11. Facebook -  ARPU / year: $6 -  MAU: 1.15 billion -  Other examples: Twitter, YouTube, Instagram, Snapchat, Wattpad 2
  12. 12. virality & network effect -  virality: sharing / WoM (e.g. communication products, social games) -  network effect: additional user = additional value (e.g. Craigslist, Indiegogo, Twitter) 2
  13. 13. stuck in the middle (most start-ups) 3
  14. 14. e.g.: news curation -  low viral co-efficient -  low monetization (advertising) 3
  15. 15. e.g.: low-utility SaaS -  combination of low ARPU ($30) and high churn (7-8%) – e.g. marketing tool for SMB s -  resulting LTV of around $400 too low to use most acquisition channels 3
  16. 16. e.g.: one product e-com -  low repeat purchase frequency = low LTV -  competing with multi-product retailers like Amazon on customer acquisition 3
  17. 17. take-aways -  $100m opportunity = “VC fundable” -  2 models to get there: high LTV / high CAC or low LTV / low (=zero) CAC -  think about distribution early on
  18. 18. thank you bwertz@versiononeventures.com twitter: @bwertz
  19. 19. about me •  early stage investor through Version One Ventures •  40+ investments in consumer & enterprise co s - 6 exits (Twitter, Groupon, Google, Salesforce) •  entrepreneur: co-founded JustBooks / AbeBooks (sold to Amazon in 2008) •  co-founder of startup accelerator GrowLab •  BC Angel of the Year 2011 / Pacific E&Y Entrepreneur Of The Year 2005 •  Masters and PhD in business administration

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