A fascinating business conversation.

This week at Web Summit, I had mentor hour.

Mentor hour connects startups with experienced entrepreneurs.

The YC-selected founder who mentored me had grown his company to $100 million in 18 months.

I had 45 minutes to question him.

I've compiled this.

Context

Founder's name is Zack.

After working in private equity, Zack opted to acquire an MBA.

Surrounded by entrepreneurs at a prominent school, he decided to become one himself.

Unsure how to proceed, he bet on two horses.

On one side, he received an offer from folks who needed help running their startup owing to lack of time. On the other hand, he had an idea for a SaaS to start himself.

He just needed to validate it.

Validating

Since Zack's proposal helped companies, he contacted university entrepreneurs for comments.

He contacted university founders.

Once he knew he'd correctly identified the problem and that people were willing to pay to address it, he started developing.

He earned $100k in a university entrepreneurship competition.

His plan was evident by then.

The other startup's founders saw his potential and granted him $400k to launch his own SaaS.

Hiring

He started looking for a tech co-founder because he lacked IT skills.

He interviewed dozens and picked the finest.

As he didn't want to wait for his program to be ready, he contacted hundreds of potential clients and got 15 letters of intent promising they'd join up when it was available.

YC accepted him by then.

He had enough positive signals to raise.

Raising

He didn't say how many VCs he called, but he indicated 50 were interested.

He jammed meetings into two weeks to generate pressure and encourage them to invest.

Seed raise: $11 million.

Selling

His objective was to contact as many entrepreneurs as possible to promote his product.

He first contacted startups by scraping CrunchBase data.

Once he had more money, he started targeting companies with ZoomInfo.

His VC urged him not to hire salespeople until he closed 50 clients himself.

He closed 100 and hired a CRO through a headhunter.

Scaling

Three persons started the business.

1. He primarily works in sales.

2. Coding the product was done by his co-founder.

3. Another person performing operational duties.

He regretted recruiting the third co-founder, who was ineffective (could have hired an employee instead).

He wanted his company to be big, so he hired two young marketing people from a competing company.

After validating several marketing channels, he chose PR.

$100 Million and under

He developed a sales team and now employs 30 individuals.

He raised a $100 million Series A.

Additionally, he stated

• He’s been rejected a lot. Like, a lot.

• Two great books to read: Steve Jobs by Isaacson, and Why Startups Fail by Tom Eisenmann.

• The best skill to learn for non-tech founders is “telling stories”, which means sales. A founder’s main job is to convince: co-founders, employees, investors, and customers. Learn code, or learn sales.

Conclusion

I often read about these stories but hardly take them seriously.

Zack was amazing.

Three things about him stand out:

1. His vision. He possessed a certain amount of fire.

2. His vitality. The man had a lot of enthusiasm and spoke quickly and decisively. He takes no chances and pushes the envelope in all he does.

3. His Rolex.

He didn't do all this in 18 months.

Not really.

He couldn't launch his company without private equity experience.

These accounts disregard entrepreneurs' original knowledge.

Hormozi will tell you how he founded Gym Launch, but he won't tell you how he had a gym first, how he worked at uni to pay for his gym, or how he went to the gym and learnt about fitness, which gave him the idea to open his own.

Nobody knows nothing. If you scale quickly, it's probable because you gained information early.

Lincoln said, "Give me six hours to chop down a tree, and I'll spend four sharpening the axe."

Sharper axes cut trees faster.

Do you want to build and launch your own software company? To do this, all you need is a product that solves a problem.

Coming up with profitable ideas is not that easy. But you’re in luck because you got me!

I’ll give you the idea for free. All you need to do is execute it properly.

If you’re ready, let’s jump right into it! Starting with the problem.

Problem

Youtube has many creators. Every day, they think of new ways to entertain or inform us.

They work hard to make videos. Many of their efforts go to waste. They limit their revenue and reach.

Solution

Content repurposing solves this problem.

One video can become several TikToks. Creating YouTube videos from a podcast episode.

Or, one video might become a blog entry.

By turning videos into blog entries, Youtubers may develop evergreen SEO content, attract a new audience, and reach a non-YouTube audience.

Many YouTube creators want this easy feature.

Let's build it!

Implementation

We identified the problem, and we have a solution. All that’s left to do is see how it can be done.

Monitoring new video uploads

First, watch when a friend uploads a new video. Everything should happen automatically without user input.

YouTube Webhooks make this easy. Our server listens for YouTube Webhook notifications.

After publishing a new video, we create a conversion job.

Creating a Blog Post from a Video

Next, turn a video into a blog article.

To convert, we must extract the video's audio (which can be achieved by using FFmpeg on the server).

Once we have the audio channel, we can use speech-to-text.

Services can accomplish this easily.

• Speech-to-text on Google

• Google Translate

• Deepgram

Deepgram's affordability and integration make it my pick.

After conversion, the blog post needs formatting, error checking, and proofreading.

After this, a new blog post will appear in our web app's dashboard.

Completing a blog post

After conversion, users must examine and amend their blog posts.

Our application dashboard would handle all of this. It's a dashboard-style software where users can:

• Link their Youtube account

• Check out the converted videos in the future.

• View the conversions that are ongoing.

• Edit and format converted blog articles.

It's a web-based app.

It doesn't matter how it's made but I'd choose Next.js.

Next.js is a React front-end standard. Vercel serverless functions could conduct the conversions.

This would let me host the software for free and reduce server expenditures.

Taking It One Step Further

SaaS in a nutshell. Future improvements include integrating with WordPress or Ghost.

Our app users could then publish blog posts. Streamlining the procedure.

MVPs don't need this functionality.

Final Thoughts

Repurposing content helps you post more often, reach more people, and develop faster.

Many agencies charge a fortune for this service. Handmade means pricey.

Content creators will go crazy if you automate and cheaply solve this problem.

Just execute this idea!

What Is That?

Berkus is a pre-revenue valuation method based exclusively on qualitative criteria, like Scorecard.

Few firms match their financial estimates, especially in the early stages, so valuation methodologies like the Berkus method are a good way to establish a valuation when the economic measures are not reliable.

How does it work?

This technique evaluates five key success factors.

• Fundamental principle

• Technology

• Execution

• Strategic alliances in its primary market

• Production, followed by sales

The Berkus technique values the business idea and four success factors. As seen in the matrix below, each of these dimensions poses a danger to the startup's success.

It assigns $0-$500,000 to each of these beginning regions. This approach enables a maximum $2.5M pre-money valuation.

This approach relies significantly on geography and uses the US as a baseline, as it differs in every country in Europe.

A set of standards for analyzing each dimension individually

Fundamental principle (or strength of the idea)

Ideas are worthless; execution matters. Most of us can relate to seeing a new business open in our area or a startup get funded and thinking, "I had this concept years ago!" Someone did it.

The concept remains. To assess the idea's viability, we must consider several criteria.

• The concept's exclusivity It is necessary to protect a product or service's concept using patents and copyrights. Additionally, it must be capable of generating large profits.

• Planned growth and growth that goes in a specific direction have a lot of potential, therefore incorporating them into a business is really advantageous.

• The ability of a concept to grow A venture's ability to generate scalable revenue is a key factor in its emergence and continuation. A startup needs a scalable idea in order to compete successfully in the market.

• The attraction of a business idea to a broad spectrum of people is significantly influenced by the current socio-political climate. Thus, the requirement for the assumption of conformity.

• Concept Validation Ideas must go through rigorous testing with a variety of audiences in order to lower risk during the implementation phase.

Technology (Prototype)

This aspect reduces startup's technological risk. How good is the startup prototype when facing cyber threats, GDPR compliance (in Europe), tech stack replication difficulty, etc.?

Execution

Check the management team's efficacy. A potential angel investor must verify the founders' experience and track record with previous ventures. Good leadership is needed to chart a ship's course.

Strategic alliances in its primary market

Existing and new relationships will play a vital role in the development of both B2B and B2C startups. What are the startup's synergies? potential ones?

Production, followed by sales (product rollout)

Startup success depends on its manufacturing and product rollout. It depends on the overall addressable market, the startup's ability to market and sell their product, and their capacity to provide consistent, high-quality support.

Example

We're now founders of EyeCaramba, a machine vision-assisted streaming platform. My imagination always goes to poor puns when naming a startup.

Since we're first-time founders and the Berkus technique depends exclusively on qualitative methods and the evaluator's skill, we ask our angel-investor acquaintance for a pre-money appraisal of EyeCaramba.

Our friend offers us the following table:

Because we're first-time founders, our pal lowered our Execution score. He knows the idea's value and that the gaming industry is red-hot, with worse startup ideas getting funded, therefore he gave the Basic value the highest value (idea).

EyeCaramba's pre-money valuation is $400,000 + $250,000 + $75,000 + $275,000 + $164,000 (1.16M). Good.

References

• https://medium.com/humble-ventures/how-angel-investors-value-pre-revenue-startups-part-iii-8271405f0774#:~:text=pre%2Drevenue%20startups.-,Berkus%20Method,potential%20of%20the%20idea%20itself.%E2%80%9D

• https://eqvista.com/berkus-valuation-method-for-startups/

• https://www.venionaire.com/early-stage-startup-valuation-part-2-the-berkus-method/

Ethereum is the second-largest cryptocurrency. The Merge, a mid-September event that will convert Ethereum's consensus process from proof-of-work to proof-of-stake if all goes according to plan, will be a game changer.

Why is Ethereum ditching proof-of-work? Because it can. We're talking about a fully functioning, open-source ecosystem with a capacity for evolution that other cryptocurrencies lack, a change that would allow it to scale up its performance from 15 transactions per second to 100,000 as its blockchain is used for more and more things. It would reduce its energy consumption by 99.95%. Vitalik Buterin, the system's founder, would play a less active role due to decentralization, and miners, who validated transactions through proof of work, would be far less important.

Why has this conversion taken so long and been so cautious? Because it involves modifying a core process while it's running to boost its performance. It requires running the new mechanism in test chains on an ever-increasing scale, assessing participant reactions, and checking for issues or restrictions. The last big test was in early June and was successful. All that's left is to converge the mechanism with the Ethereum blockchain to conclude the switch.

What's stopping Bitcoin, the leader in market capitalization and the cryptocurrency that began blockchain's appeal, from doing the same? Satoshi Nakamoto, whoever he or she is, departed from public life long ago, therefore there's no community leadership. Changing it takes a level of consensus that is impossible to achieve without strong leadership, which is why Bitcoin's evolution has been sluggish and conservative, with few modifications.

Secondly, The Merge will balance the consensus mechanism (proof-of-work or proof-of-stake) and the system decentralization or centralization. Proof-of-work prevents double-spending, thus validators must buy hardware. The system works, but it requires a lot of electricity and, as it scales up, tends to re-centralize as validators acquire more hardware and the entire network activity gets focused in a few nodes. Larger operations save more money, which increases profitability and market share. This evolution runs opposed to the concept of decentralization, and some anticipate that any system that uses proof of work as a consensus mechanism will evolve towards centralization, with fewer large firms able to invest in efficient network nodes.

Yet radical bitcoin enthusiasts share an opposite argument. In proof-of-stake, transaction validators put their funds at stake to attest that transactions are valid. The algorithm chooses who validates each transaction, giving more possibilities to nodes that put more coins at stake, which could open the door to centralization and government control.

In both cases, we're talking about long-term changes, but Bitcoin's proof-of-work has been evolving longer and seems to confirm those fears, while proof-of-stake is only employed in coins with a minuscule volume compared to Ethereum and has no predictive value.

As of mid-September, we will have two significant cryptocurrencies, each with a different consensus mechanisms and equally different characteristics: one is intrinsically conservative and used only for economic transactions, while the other has been evolving in open source mode, and can be used for other types of assets, smart contracts, or decentralized finance systems. Some even see it as the foundation of Web3.

Many things could change before September 15, but The Merge is likely to be a turning point. We'll have to follow this closely.

Calmness is a vital life skill.

It aids communication. It boosts creativity and performance.

I've studied calm people's habits for years. Commonalities:

Have mastered the art of self-humor.

Protectors take their job seriously, draining the room's energy.

They are fixated on positive pursuits like making cool things, building a strong physique, and having fun with others rather than on depressing influences like the news and gossip.

Every day, spend at least 20 minutes moving, whether it's walking, yoga, or lifting weights.

Discover ways to take pleasure in life's challenges.

Since perspective is malleable, they change their view.

Set your own needs first.

Stressed people neglect themselves and wonder why they struggle.

Prioritize self-care.

Don't ruin your life to please others.

Make something.

Calm people create more than react.

They love creating beautiful things—paintings, children, relationships, and projects.

Don’t hold their breath.

If you're stressed or angry, you may be surprised how much time you spend holding your breath and tightening your belly.

Release, breathe, and relax to find calm.

Stopped rushing.

Rushing is disadvantageous.

Calm people handle life better.

Are aware of their own dietary requirements.

They avoid junk food and eat foods that keep them healthy, happy, and calm.

Don’t take anything personally.

Stressed people control everything.

Self-conscious.

Calm people put others and their work first.

Keep their surroundings neat.

Maintaining an uplifting and clutter-free environment daily calms the mind.

Minimise negative people.

Calm people are ruthless with their boundaries and avoid negative and drama-prone people.

From 1984 until 2011, he ran Apple using the same template.

What is a founder CEO's most crucial skill?

Presentation, communication, and sales

As a Business Angel Investor, I saw many pitch presentations and met with investors one-on-one to promote my companies.

There is always the conception of “Investors have to invest,” so there is no need to care about the presentation.

It's false. Nobody must invest. Many investors believe that entrepreneurs must convince them to invest in their business.

Sometimes — like in 2018–2022 — too much money enters the market, and everyone makes good money.

Do you recall the Buy Now, Pay Later Movement? This amazing narrative had no return potential. Only buyers who couldn't acquire financing elsewhere shopped at these companies.

Klarna's failing business concept led to high valuations.

Investors become more cautious when the economy falters. 2022 sees rising inflation, interest rates, wars, and civil instability. It's like the apocalypse's four horsemen have arrived.

Storytelling is important in rough economies.

When investors draw back, how can entrepreneurs stand out?

In Q2/2022, every study I've read said:

Investors cease investing

Deals are down in almost all IT industries from previous quarters.

What do founders need to do?

Differentiate yourself.

Storytelling talents help.

The Steve Jobs Way

Every time I watch a Steve Jobs presentation, I'm enthralled.

I'm a techie. Everything technical interests me. But, I skim most presentations.

What's Steve Jobs's secret?

Steve Jobs created Apple in 1976 and made it a profitable software and hardware firm in the 1980s. Macintosh goods couldn't beat IBM's. This mistake sacked him in 1985.

Before rejoining Apple in 1997, Steve Jobs founded Next Inc. and Pixar.

From then on, Apple became America's most valuable firm.

Steve Jobs understood people's needs. He said:

“People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.”

In his opinion, people talk about problems. A lot. Entrepreneurs must learn what the population's pressing problems are and create a solution.

Steve Jobs showed people what they needed before they realized it.

I'll explain:

Present a Big Vision

Steve Jobs starts every presentation by describing his long-term goals for Apple.

1984's Macintosh presentation set up David vs. Goliath. In a George Orwell-style dystopia, IBM computers were bad. It was 1984.

Apple will save the world, like Jedis.

Why do customers and investors like Big Vision?

People want a wider perspective, I think. Humans love improving the planet.

Apple users often cite emotional reasons for buying the brand.

Revolutionizing several industries with breakthrough inventions

Establish Authority

Everyone knows Apple in 2022. It's hard to find folks who confuse Apple with an apple around the world.

Apple wasn't as famous as it is today until Steve Jobs left in 2011.

Most entrepreneurs lack experience. They may market their company or items to folks who haven't heard of it.

Steve Jobs presented the company's historical accomplishments to overcome opposition.

In his presentation of the first iPhone, he talked about the Apple Macintosh, which altered the computing sector, and the iPod, which changed the music industry.

People who have never heard of Apple feel like they're seeing a winner. It raises expectations that the new product will be game-changing and must-have.

The Big Reveal

A pitch or product presentation always has something new.

Steve Jobs doesn't only demonstrate the product. I don't think he'd skip the major point of a company presentation.

He consistently discusses present market solutions, their faults, and a better consumer solution.

No solution exists yet.

It's a multi-faceted play:

• It's comparing the new product to something familiar. This makes novelty and the product more relatable.

• Describe a desirable solution.

• He's funny. He demonstrated an iPod with an 80s phone dial in his iPhone presentation.

Then he reveals the new product. Macintosh presented itself.

Show the benefits

He outlines what Apple is doing differently after demonstrating the product.

How do you distinguish from others? The Big Breakthrough Presentation.

A few hundred slides might list all benefits.

Everyone would fall asleep. Have you ever had similar presentations?

When the brain is overloaded with knowledge, the limbic system changes to other duties, like lunch planning.

What should a speaker do? There's a classic proverb:

“Tell me and I forget, teach me and I may remember, involve me and I learn” (— Not Benjamin Franklin).

Steve Jobs showcased the product live.

Again, using ordinary scenarios to highlight the product's benefits makes it relatable.

The 2010 iPad Presentation uses this technique.

Invite the Team and Let Them Run the Presentation

CEOs spend most time outside the organization. Many companies elect to have only one presenter.

It sends the incorrect message to investors. Product presentations should always include the whole team.

Let me explain why.

Companies needing investment money frequently have shaky business strategies or no product-market fit or robust corporate structure.

Investors solely bet on a team's ability to implement ideas and make a profit.

Early team involvement helps investors understand the company's drivers. Travel costs are worthwhile.

But why for product presentations?

Presenters of varied ages, genders, social backgrounds, and skillsets are relatable. CEOs want relatable products.

Some customers may not believe a white man's message. A black woman's message may be more accepted.

Make the story relatable when you have the best product that solves people's concerns.

Best example: 1984 Macintosh presentation with development team panel.

What is the largest error people make when companies fail?

Saving money on the corporate and product presentation.

Invite your team to five partner meetings when five investors are shortlisted.

Rehearse the presentation till it's natural. Let the team speak.

Successful presentations require structure, rehearsal, and a team. Steve Jobs nailed it.