107. Every company is a tech company.
Good morning beautiful people!
I just got back from a beautiful 4 day trip to Tilburg, visiting a Dutch girl whom I met in Athens. The Netherlands amazes me for the second time with its tactful infrastructure and gives me hope for a better place to raise my kids one day.
Daily quote:
“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time – none, zero.“
—Charlie Munger
Fuck the vanity metrics.
It does not matter how many books you’ve read. What matters is how much you absorb. The longer I live, the more I realise how so many people can come in contact with the same material; but leave with such different lessons.
It is not what resources that you have that determine your success. It is how you leverage what you have that does.
Software engineers.
Immigration reform is being called for in the US, as employers quickly realise that they are all tech companies. The lack of software engineers has made everyone realise how much their jobs are dependent on them. Without engineers, all other parts of organisations are rendered useless.
No matter how well a product is designed, no matter how strategic a business model is, without an architect to build the product, all other work is pointless. I think companies are only now realising the importance the technical knowledge, and I personally think that it should be a pre-requisite for all founders nowadays.
Spending some time to understand software builds a foundation that is infinitely beneficial in the long-run. Software is changing so quickly, and I do believe the startups and companies that will move the fastest are the ones who understand what is out there and how to leverage it. This is an essential part of strategy and will affect how quickly you move far more than anything else.
Valuation.
Here are a few different ways to value your startup:
The Discounted Cash Flow
The First Chicago method
Market & Transaction Comparables
Asset-Based Valuations
i.e. The Book Value, The Liquidation Value
Venture Capital Method
—> Calculates valuation based on expected rates of return at exit
Berkus Method
—> Assigns range of dollar values to the progress founders have made in commercialisation activities
Scorecard Valuation Method
—> Adjusts median pre-money valuation for seed/startup deals in a specific egion & in the business vertical of the target
—> Based on 7 characteristics of the company
Risk Factor Summation Method
—> Compares 12 characteristics of the target company to what might be expected in a fundable seed/startup company
Tech companies with a high growth component should expect to raise $500K - $2.5M at a $2M-$6M (pre-money) valuation at Seed, and revenues expected are $0-$50K/month.
Best way to establish valuation:
—> See what the market is paying for some of your competitors when they were at your stage
—> Compare metrics and take it from there
Zara and I went book-shopping in Maastricht together and recommended books to each other. I was stunned by our shared discovery of Herman Hesse, and she made a great recommendation for me the read Dead Poets Society, which I greatly resonated with,
Until tomorrow,
Angeline 🤍
Resources:
“NATO’s Nordic expansion.” The Bloomberg Open, Europe Edition, May 19, 2022.
“Reading Better.” Farnam Street
Cremades, Alejandro. “The Valuation Dilemma.” The Inner Circle, May 13, 2022.
Thomas, Zoe & Young, Jennifer & Bykowicz, Julie. “Tech Industry Warns Remote Work Could Hurt U.S. Competitiveness.” WSJ Tech News Briefing, The Wall Street Journal, May 16, 2022.
