Author, Investor, Speaker, Mentor
We’re in a buyer’s market for capital these days, which means that every day I read headlines about how Startup X raised Y million at a Z billion-dollar valuation from Funds A, B, and Tiger Global. It’s very easy for first-time entrepreneurs to read these headlines and think that the most important number is Z, … Continue reading Choosing a VC based on valuation is like hiring the cheapest job candidate
Jason Lemkin has written an excellent post pointing out that a major drop in public market valuations is about to affect SaaS startups: http://bit.ly/1si4dMG Lemkin points out that major SaaS players like Workday and Cornerstone have fallen by nearly 50% since February 2014, and predicts that early-stage startup valuations will plummet. Bad news? Maybe. But … Continue reading Valuation Multiples Don’t Matter If Your Startup Is Growing Exponentially
Facebook’s acquisition of WhatsApp for $19 billion has dominated all news in Silicon Valley for the past 48 hours. Yesterday, I was at a urinal, and a group of people asked me what I thought. Most of the discussion seems to be around whether Mark Zuckerberg was crazy to pay so much for a relatively … Continue reading What Entrepreneurs Should Learn From WhatsApp
Paul Graham has just published one of his best essays ever, “How To Raise Money” http://bit.ly/18acSGq I was nodding my head through the entire essay, but I want to draw particular attention to what Paul has to say about valuation. Now YC companies are (in)famous for raising money at huge valuations, and Paul has been … Continue reading Paul Graham to Entrepreneurs: Stop Worrying About Valuation
It seems like it’s unfashionable these days for investors to worry about startup valuations. In my opinion, that kind of thinking is likely to lead to disaster for both investors and startups. Far too many people make the mistake of focusing on relative valuation. “This deal is a bargain in comparison to the other deals … Continue reading The reasonable startup valuation formula
My friend Adam Rifkin, who runs the awesome PandaWhale (where I get a ton of my news), recently wrote about the Tumblr acquisition for AllThingsD. It’s a smart and well-reasoned essay, which is well worth reading: http://dthin.gs/113xmz8 His basic argument is that Tumble is valuable because it is a massive interest graph: “Tumblr is one … Continue reading If Tumblr is worth $1.1 Billion, is Pinterest worth $19 Billion
Word on the street is that Dropbox is about to raise a major round of financing at a $5 billion+ valuation. While some will cry “Bubble!”, I think there’s a different lesson we can learn: Usage = Value. Let’s face it–Dropbox isn’t the most complicated business or technology. It’s a relatively simple storage app that … Continue reading The Lesson of Dropbox: Usage = Value