Boris Wertz, Founder and General Partner, Version One Ventures With tens of thousands of new start-ups being created every year, the potential of a company to truly scale and become a large, stand-alone business is more crucial than ever before. This session looks at the business models and distribution channels that can create a $100 million company.

1. The only 2 ways to build a
$100 million business
Boris Wertz | August 2013

2. Why $100 million?

3. “VC fundable”
(but you can a build great company
without VC)

4. some VC math
- $20 million seed fund
- return target 3-4x = $80 million
- 5% stake at exit > $1.6 billion in exit
value needed on 20-25 investments

5. LTV > CAC
(ideally 4-5x at scale)

6. high LTV / user
(SaaS, e-commerce
> transactional businesses)
1

7. SaaS example
- ARPU: $70
- Monthly Churn: 2% (> 50 months)
- LTV: $3,500
1

8. 1
CAC
acquisition channels
WoM
SEO
SEM
Tradeshows
Outbound sales

9. Increasing LTV
- increase ARPU: upsell, enterprise
accounts
- decrease churn: increase utility of
product, customer success
1

10. viral effect
(social networks, platforms
> often advertising businesses)
2

11. Facebook
- ARPU / year: $6
- MAU: 1.15 billion
- Other examples: Twitter, YouTube,
Instagram, Snapchat, Wattpad
2

12. virality & network effect
- virality: sharing / WoM (e.g.
communication products, social games)
- network effect: additional user = additional
value (e.g. Craigslist, Indiegogo, Twitter)
2

13. stuck in the middle
(most start-ups)
3

14. e.g.: news curation
- low viral co-efficient
- low monetization (advertising)
3

15. e.g.: low-utility SaaS
- combination of low ARPU ($30) and high
churn (7-8%) – e.g. marketing tool for
SMB s
- resulting LTV of around $400 too low to
use most acquisition channels
3

16. e.g.: one product e-com
- low repeat purchase frequency = low
LTV
- competing with multi-product retailers
like Amazon on customer acquisition
3

17. take-aways
- $100m opportunity = “VC fundable”
- 2 models to get there: high LTV / high
CAC or low LTV / low (=zero) CAC
- think about distribution early on

18. thank you
bwertz@versiononeventures.com
twitter: @bwertz

19. about me
• early stage investor through Version One Ventures
• 40+ investments in consumer & enterprise co s - 6
exits (Twitter, Groupon, Google, Salesforce)
• entrepreneur: co-founded JustBooks / AbeBooks (sold
to Amazon in 2008)
• co-founder of startup accelerator GrowLab
• BC Angel of the Year 2011 / Pacific E&Y Entrepreneur
Of The Year 2005
• Masters and PhD in business administration