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Came here to say roughly the same thing. I really don't understand some of the numbers, especially for easily replicated business models. e.g. 120M for MyDreamP

Came here to say roughly the same thing. I really don't understand some of the numbers, especially for easily replicated business models. e.g. 120M for MyDreamPlus, a co-working space start-up Some back of the envelope stuff approx $200/desk/month If they could fill a 1000 desks a month it would take 50 years to reach 120M. I've no idea what they consider what the company might be worth. Anyone have any insight on what I'm missing?

bsder 8y ago
Probably real estate speculation. They probably will start purchasing real estate, use the rents to defray the mortgage, and then flip the real estate. It's much like nuts in California's Central Valley. You generally make about even on the nuts or even a loss. But you make all the profit when you harvest the wood of the stock you grafted onto (generally something like Walnut).
lubujackson 8y ago
The finance guys come in and make an expected lifetime value of a customer. So at $200 a month, that's $2400 a year. But right away they assume the average person will stay with them for 5 years, so thats $12,000 per signup. Now that they have this figure, all math is based off it. So if you sign up 100 people you just made 1.2M of expected value. So if you want to be worth 120M you just need to be able to get 10,000 signups. Of course, when reality hits this all falls apart. Customers churn with new competition, so the 5 years was too optimistic. You also to lower your rate to $100 a month to keep up with the market, and costs increase. That's why you try to get acquired before that happens.
- mywacaday 8y ago
  There really is a different mentality when it comes to startups. When I think about any of my ideas I shoot them down because I can't see any value in them longer than 5 years or diminishing returns. Can anyone recommend some good reading on where the value comes from or how it can be created?

bsder 8y ago

Probably real estate speculation. They probably will start purchasing real estate, use the rents to defray the mortgage, and then flip the real estate. It's much like nuts in California's Central Valley. You generally make about even on the nuts or even a loss. But you make all the profit when you harvest the wood of the stock you grafted onto (generally something like Walnut).

lubujackson 8y ago

The finance guys come in and make an expected lifetime value of a customer. So at $200 a month, that's $2400 a year. But right away they assume the average person will stay with them for 5 years, so thats $12,000 per signup. Now that they have this figure, all math is based off it. So if you sign up 100 people you just made 1.2M of expected value. So if you want to be worth 120M you just need to be able to get 10,000 signups. Of course, when reality hits this all falls apart. Customers churn with new competition, so the 5 years was too optimistic. You also to lower your rate to $100 a month to keep up with the market, and costs increase. That's why you try to get acquired before that happens.

mywacaday 8y ago
There really is a different mentality when it comes to startups. When I think about any of my ideas I shoot them down because I can't see any value in them longer than 5 years or diminishing returns. Can anyone recommend some good reading on where the value comes from or how it can be created?