building a $100m company

by cmptlk
29 replies
I recently read of a NY startup selling for $100m. They had 10,000 people paying them $495 a year. I have been reading about planning an exit and building towards a figure etc. I have noticed a lot of people have different ways of valuing a company, then you also have the value of the brand, trademarks you own etc. My goal is to exit for $50m+ with an online directory, with the aim to have at least 3500 people (out of 12,000) paying a minimum of $399 a year for basic membership up to around $699 a year, and 500,000+ views a month. I am still working on pricing / plan but i do want critical mass, so i will charge less than the industry standard.

i cant seem to find any specific data on valuing an online directory, since there is very minimal overheads and the niche advertising dollars are very good on top of membership listings and reviews. I have read things about directories selling for $5m + as well.

with my current plan it would turn over $1,396,500 minimum, before advertising and not taking into account higher memberships. I read some websites can go for 10-20 times turnover, which means i would need to turn over $4m+ a year?

Does anyone have a good link or some knowledge on what i should aim to turn over a year for for my exit, keep in mind i will be creating a strong brand as well as a directory so i stand out more and create more value.
#$100m #building #company
  • Profile picture of the author butters
    Right now figures are just that, figures, they mean nothing right now, we can all do the math saying we are going to get 10k subscribers at $100 a pop and turn over a million pound a year, in reality very few actually do that. Your already talking about memberships and how much they are valued at even though you don't have the traffic in place which tells you how much you need to charge. You haven't even built the thing yet, how can you even come to this conclusion about the figures? Anyway, I feel like the grinch a bit, just remember this, not many people in life become millionairs, even less earn 50+, I hope you do it tho Just don't get caught up in numbers, action is worth more then writing numbers on a piece of paper.

    Oh and to answer your question, what ever amount makes you happy, if your happy, your done .
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  • Profile picture of the author rendell
    Normally an acquisition occurs if the company "brings value" to the buyer.

    However in today's scene, it's more of the high level bankers who will brokerage the deals ...

    1st They invest in the Seed funding of the high tech company (to grab some shares)
    2nd They invest in 2nd round, 3rd round (to grab more shares)
    3rd They will find big players and "hard sell" them the ideas
    4th Vola ! Cash out on their stage 1 and 2 investment.

    So instead of just planning for the "exit figure", get connected with some bankers.
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    .
    Ever notice that people who spend money on WSO, memberships and courses, are always complaining about being broke and not making any money ?

    They should have bought ASSETS instead.

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  • Profile picture of the author lotsofsnow
    Originally Posted by cmptlk View Post

    My goal is to exit for $50m+ with an online directory, with the aim to have at least 3500 people (out of 12,000) paying a minimum of $399 a year for basic membership up to around $699 a year, and 500,000+ views a month. I am still working on pricing / plan but i do want critical mass, so i will charge less than the industry standard.
    This is a great goal but probably the wrong approach.

    About 20 years ago online directories where "the thing". Now an online directory is something that nobody would really pay to be listed in anymore unless you provide lots of real value (PR of at least 6 PLUS a lot of traffic).


    HP

    PS:
    I know how to create a company that can be sold for $50m. It would be 100% online but not a directory. If you have some capital... let's talk.
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    • Profile picture of the author cmptlk
      Originally Posted by hpgoodboy View Post

      This is a great goal but probably the wrong approach.

      About 20 years ago online directories where "the thing". Now an online directory is something that nobody would really pay to be listed in anymore unless you provide lots of real value (PR of at least 6 PLUS a lot of traffic).
      .
      The old plain directory maybe, these days i am seeing a lot of directories, or a site is just basically a directory dressed differently. Real estate, carsales, hotels, holiday parks (long list) there are plenty of them online that make $$$ or have sold for $$$ , i dont think they will go anywhere or will just appear in a different form. If you can get the reviews and audience you have a good chance as well, just look at yelp, foursqaure.


      Originally Posted by hpgoodboy View Post

      I know how to create a company that can be sold for $50m. It would be 100% online but not a directory. If you have some capital... let's talk.
      i will let you know when i sell my site
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    • Profile picture of the author iAmNameLess
      Originally Posted by hpgoodboy View Post

      PS:
      I know how to create a company that can be sold for $50m. It would be 100% online but not a directory. If you have some capital... let's talk.
      Is this really allowed? I've never seen something look so outright shady with no effort to conceal it. If you know how to create a company that can be sold for 50mill, then you wouldn't be offering WSOs in your signature.

      Here is the reality.... if you have never sold a company for 50 million, then you don't know how to. Simple as that... everything is just theory until you have experienced it.

      My advice to the OP.. make a lower goal. You have to hit 1 million before you can hit 10, and before you hit 100.
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      • Profile picture of the author lotsofsnow
        Originally Posted by iAmNameLess View Post

        If you know how to create a company that can be sold for 50mill, then you wouldn't be offering WSOs in your signature.
        Just because you don't know how to do it does not mean that others don't know.

        I also know how to speak French - does not mean that I talk French at all. I also know how to ride a bike - driving a car though.
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        • Profile picture of the author iAmNameLess
          Originally Posted by hpgoodboy View Post

          Just because you don't know how to do it does not mean that others don't know.

          I also know how to speak French - does not mean that I talk French at all. I also know how to ride a bike - driving a car though.
          No, you're just full of it and running your own agenda, that's all.
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          • Profile picture of the author lotsofsnow
            Originally Posted by iAmNameLess View Post

            No, you're just full of it and running your own agenda, that's all.
            Sure, I am full of good ideas.
            And yes, I am running my own agenda and I know it.

            That is better than running somebody else's agenda and
            much better than running somebody else's agenda not even knowing it.

            I am pretty sure that you also have an agenda.

            Question is whether you are aware of it or not.

            HP

            PS:
            Just to make things clear, here the definition of agenda:
            a gen┬Ěda
            /əˈjendə/
            Noun
            A list of items of business to be considered and discussed at a meeting.
            A list or program of things to be done or problems to be addressed.

            Agenda, "things to be done," is the plural of the Latin gerund agendum and is used today in the sense "a plan or list of matters to be acted upon."
            PPS:
            That you quit smoking is a good thing.
            Did the same about 4 years ago
            and smoke free ever since.
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  • Profile picture of the author dvduval
    1. Rich Parents
    2. Ivy League education
    2. Family friends in government
    Just kidding!
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    • Profile picture of the author lotsofsnow
      Originally Posted by dvduval View Post

      1. Rich Parents
      2. Ivy League education
      2. Family friends in government
      Just kidding!
      Rich parents get you an Ivy League education
      and then you can have lots of friends in government (no kidding
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    • Profile picture of the author cmptlk
      Originally Posted by dvduval View Post

      1. Rich Parents
      2. Ivy League education
      2. Family friends in government
      Just kidding!
      number 1 might be ok on its own as you could "buy" number 2 and 3 and no need for investors lol..
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  • Profile picture of the author cmptlk
    Thanks

    It is a niche market that i know very well so i know the figures regarding the market itself. Pricing is based off ( actually less) than the current competition, one of whom i know has 700k monthly views as i requested their media package for "research", which has their views, pricing, top categories etc..... but yes i have no live site so i have no views to work with lol.

    the site is actually almost complete, and we are taking a lot of action to get in the market and affiliate with big organizations who have seen a private beta and like it. we also own 4 trademarks in two countries for our brand. I do understand that numbers and predictions are just that, but i also believe goals, how to get there ,a plan is very important as apposed to just winging it.... also leveraging other companies to help

    we are thinking about selling off 10-20% to an investor to help build it. Seed rounds and investors is something i know very little about though, that is also something i am researching at the moment.

    i have a business partner so we have some % share each and we do not want to water down our stake too much. I do understand a small piece of something is better than a big piece of nothing.

    @rendell, could you recommend some tips, good articles, links so i can better understand investors etc?

    thanks again
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  • Profile picture of the author rendell
    Business idea must be "disruptive" before most seed fund investors will want to talk to you.

    What you are doing is "reverse engineering" your aim of $50 million exit ... but is there really a buyer for your business?

    Look at famous acquisition and you will get some idea:

    List of mergers and acquisitions by Facebook - Wikipedia, the free encyclopedia
    List of mergers and acquisitions by Apple - Wikipedia, the free encyclopedia
    List of mergers and acquisitions by Google - Wikipedia, the free encyclopedia
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    .
    Ever notice that people who spend money on WSO, memberships and courses, are always complaining about being broke and not making any money ?

    They should have bought ASSETS instead.

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  • Profile picture of the author Devin X
    Banned
    Originally Posted by cmptlk View Post

    with my current plan it would turn over $1,396,500 minimum, before advertising and not taking into account higher memberships. I read some websites can go for 10-20 times turnover, which means i would need to turn over $4m+ a year?

    Does anyone have a good link or some knowledge on what i should aim to turn over a year for for my exit, keep in mind i will be creating a strong brand as well as a directory so i stand out more and create more value.
    Sounds like mental masturbation. How about you get on building a $1000 company first, then scaling to a $10,000 company, then a $50,000 company... everyone seems to look for the big home runs when the game is won by making consistent base hits.

    You see where I'm going with this, right?
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    • Profile picture of the author Gozang
      Hi:

      I'm with you. You can do it especially you know what you are doing and have found someone to invest in it. Even if you start with small directory free you will start making some money not even talking about the advertisement money you can collect once it starts picking up the traffic. I had been thinking this for a long time myself but just doesn't have much to invest and help to create a directory site of my concept. But I haven't given up yet. I will definitely consider it again if that generates in M not in K.

      Thanks for starting this thread with hope.
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      • Profile picture of the author cmptlk
        Originally Posted by rendell View Post

        Business idea must be "disruptive" before most seed fund investors ....
        > It is disruptive in a small way, but our planned growth becomes more disruptive for sure.Thanks i will check that out and read some books on the subject

        Originally Posted by TheRealDudeman View Post

        Sounds like mental masturbation. How about you get on building a $1000 company first, then scaling to a $10,000 company, then a $50,000 company... everyone seems to look for the big home runs when the game is won by making consistent base hits.
        thanks, i merely was showing the end vision. Yes i see where you are going with it, but i believe in setting big goals and working towards them with steps to get to the final point, which is basically what you said. Aiming to build a $1000 company then go for 10k, is no different to having the end big vision set then reverse engineering how to get there with small goals along the way which is what i prefer.

        Originally Posted by Gozang View Post

        Hi:

        I'm with you. You can do it especially you know what you are doing and have found someone to invest in it.
        yes there are plenty of examples of online directories, whether its old or newly dressed that are making some serious coin, especially honing in on a good niche
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  • Profile picture of the author GoodFE
    I like it. Shoot for the stars brother, no point aiming low IMO. With your goals so high you need toi accept before hand that it will take lots and lots of hard work. So when you hit $10k you won't be happy because you are so far from your goal.

    It's the people that aim for low amounts that tend to struggle to make money online.
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  • Profile picture of the author aceshigh888
    lets copy there secret receipe and we'll add our own 11 herbs and spices!
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  • Profile picture of the author bizgrower
    Yes, read up and when the time comes, talk with bankers, investment bankers, financial advisors, CPA's, attorneys. Make sure they have relevant experience. Also, when the time comes ask for referrals to business valuation experts - not really many around.

    Mainly, along the way, be very careful with whom you deal with. There are a lot of outright conmen who can put up a good front and they will want to charge you up front for their "connections" or to get you financing... And, there are the securities laws...

    Also, good investors are very hard to find and it can be a long process. Example: A friend of mine had a very viable invention and a local lawyer who had a good local rep was interested in investing. But, then she wanted to own too much of the company and give her own people key positions...

    Dan
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    • Profile picture of the author cmptlk
      Originally Posted by bizgrower View Post

      Yes, read up and when the time comes, talk with bankers, investment bankers, financial advisors, CPA's, attorneys. Make sure they have relevant experience. Also, when the time comes ask for referrals to business valuation experts - not really many around.
      will do, i have actually grown up with some people who are now lawyers so i am both cutting cost and getting solid advice, hints and tips along the way when i need it which is making it a little easier.
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      • Profile picture of the author robestrong
        Although the scope makes me chuckle, I have to say that you really can't lose by aiming high. Kind of puts everything back into perspective.
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      • Profile picture of the author bizgrower
        Originally Posted by cmptlk View Post

        will do, i have actually grown up with some people who are now lawyers so i am both cutting cost and getting solid advice, hints and tips along the way when i need it which is making it a little easier.
        Excellent. Then they should steer you in the right direction and the right way to do this and to the people or institutions with the solid reputations.

        Actually, I'd try to avoid investors/partners as much as possible and bootstrap as much as possible and run as lean as possible. My friend in the earlier example ended up with too many people on his Board of Directors (which he did not need yet) and too many people (with fine resumes) in executive positions. And, there was not even a pie yet. And if there was ever going to be a pie, there could only be so many slices taken from that pie.

        I don't know, of course, that you will ever face hiring executive people, but one thing I noted through my friends experience is that there is a huge skill set difference between those who have actually started a business, and those who were hired by a well funded start up business. Huge difference in mentality and how you do things with no budget except revenue, or maybe a small loan from a friend or relative.

        If one saw those fine resumes I referred to above, one might think they have start up experience when the reality was that they were hired by this well funded pharmaceutical company after it obtained it's first or second round of financing.

        NOt founders at all and they really had no idea how to help my friend get his product to market, or get funding to create the prototype for his invention, or funding for anything else for that matter.

        Sorry to ramble and good luck to you. Maybe it will go in stages: You sell your first incarnation to Yahoo for 5 million, and your second to Facebook for 25 million...

        But, like the Broncos, take it one week at a time, improve, and don't even think about the Super Bowl.
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  • Profile picture of the author dvduval
    More seriously, a common profile is you build a $500,000 company, sell it, build a $2 million company, sell it. Then you have someone of a reputation and you can attract serious investors. Might need the third step of build a $10 million company and sell it.
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    • Profile picture of the author cmptlk
      Originally Posted by dvduval View Post

      More seriously, a common profile is you build a $500,000 company, sell it, build a $2 million company, sell it. Then you have someone of a reputation and you can attract serious investors. Might need the third step of build a $10 million company and sell it.
      interesting...... but to build a company to be worth 500k-1m-2m etc your company would already be turning over some money so you would not need too much capital. Why wouldn't you just keep building it and or then get an investor in to acquire a competition site to build your value , then in another year you would be worth a lot more. Like a lot of people i read a lot of tech sites / internet company information and a lot of offers get rejected when they are million dollar offers because they 1-they believe in the bigger vision 2-have enough turn over to reject it and keep building and 3- use that offer to get investors to then build it for a bigger exit. (more points etc....)
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      • Profile picture of the author dvduval
        Originally Posted by cmptlk View Post

        interesting...... but to build a company to be worth 500k-1m-2m etc your company would already be turning over some money so you would not need too much capital. Why wouldn't you just keep building it and or then get an investor in to acquire a competition site to build your value , then in another year you would be worth a lot more. Like a lot of people i read a lot of tech sites / internet company information and a lot of offers get rejected when they are million dollar offers because they 1-they believe in the bigger vision 2-have enough turn over to reject it and keep building and 3- use that offer to get investors to then build it for a bigger exit. (more points etc....)
        It can happen that way, but often you find people that can add more value, or find your company a nice addition to their existing business. You see many start ups involving the same people. And you see venture capitalists that specialize in buying different sized start ups.

        Often selling puts you in a strong capital position for a new start up and you have more capital than if you continue to run your existing company.

        I saw quite a bit of this in Silicon Valley. Now I am learning about the LA version of this.
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  • Profile picture of the author Captain Kent
    what company was that, if I can know please!
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    • Profile picture of the author cmptlk
      Originally Posted by Marcinao View Post

      It's great that you actually aim to build a strong brand and real business.....
      i think it is a much better idea than just making some cash and not focusing on branding too much, creating a recognizable brand creates real value and also adds to more $$ when exiting from a company because you can copy any business but the brand is what is worth money which takes time so build so it is not easily duplicated.

      Originally Posted by Captain Kent View Post

      what company was that, if I can know please!
      if you mean that start up i was reading about, i have this link, i cant remember the original story i read. Another Big Exit For NY Startups: SinglePlatform Gets Acquired For $100 Million By Constant Contact - Business Insider
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  • Profile picture of the author Alex Blades
    You have some high expectations, but nothing wrong with that. Maybe you should start small and go from there, things always look good on paper
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