Comments on: How do you Measure a Startup? http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/ a perspective as seen from the trenches. Tue, 13 Oct 2009 07:22:31 +0000 http://wordpress.com/ hourly 1 By: Kaushik http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/#comment-3275 Kaushik Sat, 03 May 2008 17:13:40 +0000 http://vijaysblog.wordpress.com/?p=188#comment-3275 The SAI process looks good but i have an issue with such a strong emphasis on financial metrics to be used as part of valuating a startup like they seem to indicate. My question then would be if the companies do indeed have predictable financial metrics when do they stop being a startup and enter the regular space ?? There has to be some additional soft metrics to be taken into consideration ? The SAI process looks good but i have an issue with such a strong emphasis on financial metrics to be used as part of valuating a startup like they seem to indicate. My question then would be if the companies do indeed have predictable financial metrics when do they stop being a startup and enter the regular space ?? There has to be some additional soft metrics to be taken into consideration ?

]]> By: Vijay http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/#comment-3270 Vijay Sat, 03 May 2008 08:45:38 +0000 http://vijaysblog.wordpress.com/?p=188#comment-3270 Nice discussion. Kausik, very good notes. Gabhijit, fair points. Will wait for some more responses and will summarize on this. What do you guys think about what SAI is doing? Nice discussion. Kausik, very good notes.

Gabhijit, fair points.

Will wait for some more responses and will summarize on this.

What do you guys think about what SAI is doing?

]]> By: Kaushik http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/#comment-3269 Kaushik Sat, 03 May 2008 07:30:51 +0000 http://vijaysblog.wordpress.com/?p=188#comment-3269 More of a question here, would this by any different from the way current valuations take place for early stage companies to evaluate investments for seed/early stage funding. In that case the common parameters that apply in such case would still apply: 1. Market Size: Critical factor, what is the total addressable market. Is a key factor for valuation. 2. Team/Background: Teams with a background in the space, previous successful records will get significantly higher valuations. I did not find any standardized approaches for this but there are a few interesting approaches from some companies: http://upcoming.yahoo.com/event/57116/ They use "initial public offerings and acquisitions of similar technologies or operating companies applied to future company cash flows or liquidity events, modified by present valuing techniques" .. for valuation. So compare with others in a similar space. I guess this will not work if it is something really not done before. The have some good docs on this here: http://www.cogentvaluation.com/con_services_ESInvestmentValuation.cfm More of a question here, would this by any different from the way current valuations take place for early stage companies to evaluate investments for seed/early stage funding.

In that case the common parameters that apply in such case would still apply:
1. Market Size: Critical factor, what is the total addressable market. Is a key factor for valuation.
2. Team/Background: Teams with a background in the space, previous successful records will get significantly higher valuations.

I did not find any standardized approaches for this but there are a few interesting approaches from some companies: http://upcoming.yahoo.com/event/57116/

They use “initial public offerings and acquisitions of similar technologies or operating companies applied to future company cash flows or liquidity events, modified by present valuing techniques” .. for valuation. So compare with others in a similar space. I guess this will not work if it is something really not done before.

The have some good docs on this here:
http://www.cogentvaluation.com/con_services_ESInvestmentValuation.cfm

]]> By: gabhijit http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/#comment-3266 gabhijit Sat, 03 May 2008 06:20:32 +0000 http://vijaysblog.wordpress.com/?p=188#comment-3266 Vijay, I thought initially of replying to this post inline, but subsequently I realized that the thoughts that I have are suitable for a blog post itself. If interested, please follow the following link as a comment. Though I must admit, this goes way beyond "web 2.0 startups" per say!! http://oltsm.wordpress.com/2008/05/03/on-startups-and-aims/ Vijay, I thought initially of replying to this post inline, but subsequently I realized that the thoughts that I have are suitable for a blog post itself. If interested, please follow the following link as a comment. Though I must admit, this goes way beyond “web 2.0 startups” per say!!

http://oltsm.wordpress.com/2008/05/03/on-startups-and-aims/

]]> By: On Startups, AIMS and Social Networks « Abhijit Speaks : http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/#comment-3265 On Startups, AIMS and Social Networks « Abhijit Speaks : Sat, 03 May 2008 06:18:44 +0000 http://vijaysblog.wordpress.com/?p=188#comment-3265 [...] How do you measure a startup? Instead of trying to answer in a straight-forward manner, I’d take my usual convoulted way - [...] [...] How do you measure a startup? Instead of trying to answer in a straight-forward manner, I’d take my usual convoulted way – [...]

]]> By: Prashant Trivedi http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/#comment-3264 Prashant Trivedi Sat, 03 May 2008 03:36:13 +0000 http://vijaysblog.wordpress.com/?p=188#comment-3264 First measure of success for a startup is that how long founders remain motivated to run the startup. There are few other metrics that could be used for startups: (1). Burn rate - For all businesses (2). How does start up compare with projected values in business plan . Active Users (for Web2.0 companies) . Design wins and revenue (product companies) . customer wins (service companies) First measure of success for a startup is that how long founders remain motivated to run the startup.

There are few other metrics that could be used for startups:

(1). Burn rate – For all businesses
(2). How does start up compare with projected values in business plan
. Active Users (for Web2.0 companies)
. Design wins and revenue (product companies)
. customer wins (service companies)

]]> By: Dilip P http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/#comment-3263 Dilip P Sat, 03 May 2008 01:08:24 +0000 http://vijaysblog.wordpress.com/?p=188#comment-3263 //Alright, good point, but when it comes to the case of “Web 2.0″ startups, userbase is a very easy stat to go with. It's true only in certain cases.. A very good example where it failed was in the case of twitter. Twitter valued its user base much lower than the actual, cos majority of the users use mobile or other clients to send Tweets and it wasn't possible for them to track it all... I'd say user base should be left out while measuring a web startup //Alright, good point, but when it comes to the case of “Web 2.0″ startups, userbase is a very easy stat to go with.

It’s true only in certain cases.. A very good example where it failed was in the case of twitter. Twitter valued its user base much lower than the actual, cos majority of the users use mobile or other clients to send Tweets and it wasn’t possible for them to track it all… I’d say user base should be left out while measuring a web startup

]]> By: Vijay http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/#comment-3261 Vijay Fri, 02 May 2008 21:07:32 +0000 http://vijaysblog.wordpress.com/?p=188#comment-3261 Shivaas, thats what "Product review" would be :) Shivaas, thats what “Product review” would be :)

]]> By: Shivaas Gulati http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/#comment-3260 Shivaas Gulati Fri, 02 May 2008 20:57:45 +0000 http://vijaysblog.wordpress.com/?p=188#comment-3260 How about measuring user satisfaction ? does the application/startup deliver on what it promises to deliver, and score a 10 on 10 for the consumer ? I think that will be a good metric to measure a startup. How about measuring user satisfaction ? does the application/startup deliver on what it promises to deliver, and score a 10 on 10 for the consumer ?
I think that will be a good metric to measure a startup.

]]> By: Vijay http://vijaysblog.wordpress.com/2008/05/02/how-do-you-measure-a-startup/#comment-3256 Vijay Fri, 02 May 2008 19:25:48 +0000 http://vijaysblog.wordpress.com/?p=188#comment-3256 Alright, good point, but when it comes to the case of "Web 2.0" startups, userbase is a very easy stat to go with. I am going to assume that we live in a world where there are startups that are not totally "web 2.0" compliant. Lets keep the discussions around that. Alright, good point, but when it comes to the case of “Web 2.0″ startups, userbase is a very easy stat to go with.

I am going to assume that we live in a world where there are startups that are not totally “web 2.0″ compliant. Lets keep the discussions around that.

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