If I was going to start a company today, I would not aim for a $100M+ exit. VCs will hate this, but here's what I think the new startup model looks like:
BACKGROUND:
In 2024, what should the goal be of starting a new venture?
Simple.
Sell the company as soon as you're ensured that every person in the team makes an average of $600K - $1M / year in the 18m-24m month period.
Why?
Because early stage entrepreneurs take on far too much risk.
Ask yourself, would you rather have a lottery ticket for $100M, where most of the proceeds go to institutional investors or would you rather sell for ~$15M where you get to keep all the proceeds and set aside some for the next job? Â
If your answer is the latter, then let me show you how you start your next venture:
YOUR CONTRIBUTION?
- Don’t build anything novel. Stay away from technical innovation. Repackage what already exists for the lower end of the market
- All you need to do is disrupt the GTM and pricing plan (charge $99-$495/mo in a market that’s used to paying $20K+/year)Â
- Offer 50% of the most used features disrupting the existing vendors and then sell the company back to one of the existing vendors
HOW DO YOU IDENTIFY A BUSINESS IDEA?
If you want to impress VCs then you can go into a rabbit hole justifying competition and why you are different and create slides on how you use LLMs or AI. I can't help you with that, but if you want to bootstrap the business then here’s a framework to identify ideas:
1. Keep it simple: Stay away from anything complicated or new. New technologies come with a lot of risk, let VCs and well capitalized companies take that risk - not you.
2. High ACV Markets: Do a thorough research on G2 or Trustradius and find categories that have SaaS tools selling for anything above $15K in ACV. The higher the better.
3. Low Building Cost: Find a SaaS category where you can literally copy the tool from other competitors with minimal effort.
4. Customer List : Prefer category where it is easy to pull the customers of the tool using technographics providers (such as builtwith or HGInsights).
5. Choose a category where one of co founders have expertise in or have prior work experience as an exec and can command trust.
HOW DO YOU BUILD THE TECHNOLOGY?
- The entire technology needs to be developed by a single full stack developer in less than 6 weeks. Period.Â
- Don’t outsource. One of the co-founders needs to be able to build the entire tool. Avoid UI/UX or design cycles if possible.Â
- Buy free trials of existing tool in the market and make a cheap knockoff of the most popular used interfaces or workflows
- Use automation to generate code, add some of your own skin and viola you have a product that can be marketed
- Don’t invest in technology thereafter, other than minor enhancements
POST CONTINUED IN THE COMMENTS 👇
BACKGROUND:
In 2024, what should the goal be of starting a new venture?
Simple.
Sell the company as soon as you're ensured that every person in the team makes an average of $600K - $1M / year in the 18m-24m month period.
Why?
Because early stage entrepreneurs take on far too much risk.
Ask yourself, would you rather have a lottery ticket for $100M, where most of the proceeds go to institutional investors or would you rather sell for ~$15M where you get to keep all the proceeds and set aside some for the next job? Â
If your answer is the latter, then let me show you how you start your next venture:
YOUR CONTRIBUTION?
- Don’t build anything novel. Stay away from technical innovation. Repackage what already exists for the lower end of the market
- All you need to do is disrupt the GTM and pricing plan (charge $99-$495/mo in a market that’s used to paying $20K+/year)Â
- Offer 50% of the most used features disrupting the existing vendors and then sell the company back to one of the existing vendors
HOW DO YOU IDENTIFY A BUSINESS IDEA?
If you want to impress VCs then you can go into a rabbit hole justifying competition and why you are different and create slides on how you use LLMs or AI. I can't help you with that, but if you want to bootstrap the business then here’s a framework to identify ideas:
1. Keep it simple: Stay away from anything complicated or new. New technologies come with a lot of risk, let VCs and well capitalized companies take that risk - not you.
2. High ACV Markets: Do a thorough research on G2 or Trustradius and find categories that have SaaS tools selling for anything above $15K in ACV. The higher the better.
3. Low Building Cost: Find a SaaS category where you can literally copy the tool from other competitors with minimal effort.
4. Customer List : Prefer category where it is easy to pull the customers of the tool using technographics providers (such as builtwith or HGInsights).
5. Choose a category where one of co founders have expertise in or have prior work experience as an exec and can command trust.
HOW DO YOU BUILD THE TECHNOLOGY?
- The entire technology needs to be developed by a single full stack developer in less than 6 weeks. Period.Â
- Don’t outsource. One of the co-founders needs to be able to build the entire tool. Avoid UI/UX or design cycles if possible.Â
- Buy free trials of existing tool in the market and make a cheap knockoff of the most popular used interfaces or workflows
- Use automation to generate code, add some of your own skin and viola you have a product that can be marketed
- Don’t invest in technology thereafter, other than minor enhancements
POST CONTINUED IN THE COMMENTS 👇
