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Just released today’s YouTube video, ‘I Created The Perfect Business’, live now.
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Key takeaways
- This might be worth something." So, I called an investment banking friend of mine and I said, "Hey, if I were to sell my business, like, do you think I could get anything for it?" And he's like, "Oh, you could get millions of dollars for this business." I was like, "Wow, that sounds amazing." He said, "Wait, there's a ton of things wrong with it that you'd have to fix in order to get an institutional investor to want to invest the kind of money that you would [music] want to make an exit." So, there's only three variables that are really going to affect how much a company is going to be worth.
- One is increasing the number of customers.
- If all else remains the same, if you 10x the number of customers, you will 10x the value of the business.
- And so, if I want to make more money, I'll either have to get more customers or make them worth more.
Chapters
Full transcript
Locally archived YouTube transcript with timecodes. Speakers are assigned heuristically and may be corrected editorially.
0:00We went from $0 to $4.4 million per month in 20 months and it also sucked. It got so bad that Leila and I, my wife, were walking one day and she says, "Let's just shut this thing down." I was like, "Wait, hold on. This might be worth something." So, I called an investment banking friend of mine and I said, "Hey, if I were to sell my business, like, do you think I could get anything for it?" And he's like, "Oh, you could get millions of dollars for this business." I was like, "Wow, that sounds amazing." He said, "Wait, there's a ton of things wrong with it that you'd have to fix in order to get an institutional investor to want to invest the kind of money that you would [music] want to make an exit." So, there's only three variables that are really going to affect how much a company is going to be worth. One is increasing the number of customers. If all else remains the same, if you 10x the number of customers, you will 10x the value of the business. The next is something I call lifetime gross profit. And so, if I want to make more money, I'll either have to get more customers or make them worth more. So, then what's the third variable? You divide that by risk. How likely is it that this will continue in the future?
0:56Those are the three variables that you have to increase or decrease the value of a company.