Caffeinated Contribution

Breakout Valuation

Breakout valuations are achieved when a business is valued based on how it makes people feel and its future potential, not just what it’s done in the past.

The nine components of a breakout valuation are confidence, vision, curiosity, people, communications, cash management, financial forecasting, capital strategy, and business design. Whether or not you sell your company, business owners who optimize in these areas, position themselves to capture a breakout valuation.

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This caffeinated contribution is a special adaptation from Breakout Valuation, which is the #1 New Release in Venture Capital and was written by my good friend, Patrick E. Donohue. Patrick is an entrepreneur, mentor, advisor, investor, valuation expert, and community builder who offers unique insights into the dynamics of money and business.

While you’re running a company, breakout valuations make everything easier. It attracts talented employees and quality customers. This expands your market position, makes financial capital less expensive, and invites vendors to extend better terms based on your surging trajectory.

Knowing what your ownership of the business is worth helps you make important financial decisions and becomes increasingly important as a business matures. If a business grows to the point where it becomes valuable to acquire, academic and finance professionals attempt to make valuation objective, but the complexity of each transaction makes valuation subjective in the end. Along with all the objective data, valuation is highly influenced by the environment, relationship, and personal views of the participants in a transaction. Knowing how investors and lenders use objective valuation tactics is crucial, but understanding the potential value of the business, articulating it to potential partners, and having them buy into the vision will arm you with an advantage to get what you want—a breakout valuation.

Breakout valuations are not aspirational. They emerge from what you are doing right now. It’s all about being clear with your mission and vision. It’s knowing your numbers and how everything comes together through a shared mindset, communication, and workflow. The pursuit toward a breakout valuation compounds, requiring attention today, and every day moving forward. This aggregates understanding and builds confidence. When the day comes to part with some or all of your business, the confidence from a breakout valuation will maximize the payout or deliver assurance in walking away from the deal.

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What are we doing today to support our goals for tomorrow?

By Ben McDougal, ago

Ask For Help

I was raised to “go figure it out”.

This DIY mindset was reinforced through years of education and employment in traditional, corporate environments. If there was a problem that I didn’t have the answer to, I would naturally slide into problem solving mode to independently determine different ways to ensure progress. By and large, this mindset has served me well. It has taught me to be resilient in the face of challenges, even when it’s not the popular path forward. It’s left me with an open, achievement-oriented approach with less limitations, because I am a DIY business woman.

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This caffeinated contribution was written by Laurie Brown. I had the pleasure of collaborating with this operational savant through her work inside the Kauffman Foundation and with 1 Million Cups. Laurie is now helping fellow founders optimize their own business operations, so let me know if you’d like a warm introduction.

Lately, I’ve been re-thinking this approach. Perhaps my DIY mindset should include more asking for help?

Within a recent career transition, I’ve been exploring this new attitude through an experiment. On numerous occasions, I’ve encountered unknowns. In these moments of uncertainty, I’ve resisted my life-long instinct to figure out every answer on my own. Instead, I have started asking myself, who in my network might be able to help me learn?  As this experiment has unfolded, I have three key takeaways.

  1. Asking for help drives results. I can learn from others who have pioneered effective solutions, which saves me time (and pain) along the way.
  2. The collaboration from these exchanges go beyond the problem at hand. Many times it strengthens relationships, the fun of helping each other forms friendships, and mutual professional growth is a welcomed side effect.
  3. By leading the way to ask for help, I serve as a role model to my peers and open the door from them to ask me for help in return.

My DIY ways will continue to serve me well, but I’ve learned that an added dose of curiosity and willingness to listen can add fresh layers of potential. I’ll continue to carry forward my resilient, solution-driven approach, but plan to incorporate more inclusive problem solving and an “AFH attitude” within my engaged network. This will keep problems from staying problems, while also creating a new catalyst for prosperity.

By Ben McDougal, ago

Venture Studios

Venture studios work with different startups to activate a portfolio of ideas into reality.

They invest financial capital, then use a long-term lens to enhance the chance for traction by pouring resources into each startup they invest in. A compounding collection of services are provided within these funds and full access helps everyone building together, often in sprints.

The compressed nature of the building process makes venture studios somewhat comparable to accelerators, yet with an extended, almost open-ended timeline. This emerging model can also be used as a form of due diligence for venture capital funds. While there’s still a lack of standardization and wonky economics have some investors questioning the long-term mechanics of such an approach to investing in startups, it’s no surprise that the innovation economy continues to drive fresh approaches to raising financial capital through the art of supporting entrepreneurs.

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This caffeinated contribution was written by Miles Dotson. I met Miles through mentor madness with Techstars. We bonded over our shared interested in this emerging approach to supporting entrepreneurship. Miles co-founded Devland, which is an investment company that focuses on new innovative ventures with brilliant technologists and wildly underestimated entrepreneurs. Devland provides an alternative mix of investment pathways for committed entrepreneurs with program guidance and direct funding through Series A.

The builders venture studios can attract, do not always have familiarity with venture capital and the language of finance. Whether you call them venture studios or startup studios, the word “studio” gives them the sense that there is a seat for them, regardless if they have a passion for a new idea or if they have formed initial traction. Terms, timelines, and investment theses vary between venture studios, as they should, knowing each company and fund provide different strategic values. After years of experimentation, our team is currently using the venture studio approach to conduct due diligence over an average of 14 months, working alongside builders, getting in the trenches with them, and advocating for their growth. This provides a much better gauge of the entrepreneur as a corporate builder, leader, and team builder — further validating our cause to invest and market them to firms upstream from us.

To bring this short intro to venture studios together, we can think about this as a validation-led approach to venture capital. The intention is to discover outsized returns from potentials who do not generally have network into the world of capital, relationships, and resources needed to build a market leading business. We are operators, product leaders, and venture capital thinkers who understand the role startup creation plays in the market. Our goal is to illuminate repeatable paths that often result in early acquisitions, stable long-term growth, or public market entry while improving the average cost required to create that outcome.

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This has been a fun little series, brewed around a few interesting actors within entrepreneurial ecosystems. There are many more key actors, factors, and instigators throughout any startup community, but we hope you’ve enjoyed this sip of awareness around Accelerators + Incubators + Coworking + Venture Studios. As always, subscribe to Roasted Reflections and stay tuned for what’s being poured next week!

By Ben McDougal, ago

Hole-In-One

I grew up playing golf, but inadvertently fell out of the game due to work and other priorities. I‘d been longing to get back into the game, but kept procrastinating. So, when my friend Ben asked me to join him for 9 holes to celebrate his 40th birthday at Glen Oaks, I thought… here’s my chance! (LESSON #1: yes = adventure)

At first, I was intimidated and hesitant to have my first round in 8 years be at a fancy country club. I mean, I didn’t even have golf clothes, a glove, or shoes anymore, but I figured this would be a great way to dive in head first and get back out there. So, I quickly went shopping and got a few practice swings in at the driving range. (LESSON #2: now > later)

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This caffeinated contribution was written by Derek Brooks. Derek is a 40.79 year old midwestern American dude who enjoys building, traveling, partying, extremish sports, and can be found in our Roasted Reflections group on Discord.

On Ben’s birthday, I showed up to find him sipping on a Miami Vice cocktail with his buddy and business partner, Sinclair. This immediately set the stage that we were going to have some fun. Golfing with Ben was awesome. Whether it was his general demeanor, his lack of grabbing a scorecard, the way we strolled around the clubhouse, or laughs along the way, this freshly minted 40 year old was a constant reminder that we were here to relax. (LESSON #3: fun > serious)

For the first 5 holes on the back 9, my subconscious nerves were getting in the way. My hits weren’t clean and the strong winds certainly weren’t helping… But despite all the double bogeys, I was still having fun and it felt great being back on the course. (LESSON #4: fun + humility + patience = growth)

Halfway through the round, I could feel the groove coming back. On hole 15, I finally snagged my first par (Ben caught a birdie, haha). After that, we walked up to Hole 16, a 168-yard par 3, with wind in our face. Feeling incredibly relaxed, I lined up with my 7-iron and hit a super clean shot. It felt great and looked even better. The ball dropped just short and left of the pin, took 2 small hops, and then smoothly rolled right into the hole. A freakin hole-in-one. (LESSON #5: openness + growth + serendipity = opportunity)

I couldn’t believe what I’d just seen. Ben and I started screaming and laughing as we ran around the tee box. We full-on bear hugged and I think he even picked me up at one point. Neither of us knew what to do or how to act, so I just threw my gold chain on and giggled while Ben pulled out his GoPro to capture the moment.

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Watch this magical moment!

After that ace, the next hole was a complete blur, but I ended the round with a birdie on 18. If I hadn’t set my nerves/ego aside and took that opportunity to get back into the game by having my first round in 8 years at an intimidating country club, I’d still be in that procrastination loop. I would’ve never gotten my first hole-in-one or shared this incredible experience on Ben’s 40th birthday. (LESSON #6: yes + growth = celebrate)

When I think about this experience through the lens of my career as a technologist, I’m reminded that getting in over-my-head has always been the fastest way for me to grow and move forward. I’m not expecting to be cranking out hole-in-ones from here, but once again, jumping back in head first is something that I will never regret. This memorable day was the reminder I needed to push outside comfort zones, enjoy the moments, and celebrate always.

By Ben McDougal, ago

Playforce

Work and play are often seen as distinct and different, but the expectation of top talent has evolved. People crave a connection to enjoyable activities that deliver a sense of purpose and belonging. When work feels like play, the fun environment invites people to take on bigger challenges. To support the future of work, students, educational organizations, employees, and employers must adapt together.

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Welcome to your first taste of a new community-driven initiative that will feature special guests sharing occasional contributions. Interested in collaborating? Let’s chat!

When we think about work that feels like play, it’s not just pinball all day. The definition of “fun” is to spend time doing an enjoyable activity. When a team has fun with satisfying work that matters, the group’s true potential is unlocked and individuals are more likely to become indispensable. This leads to more generosity, laughter, caring, scientific questions, learning, gift-giving, and mapmakers eager to go beyond what’s expected.

A recent study identified 16 trends that are shaping the future of work. It found that, in addition to more flexibility and fair wages, employees want greater autonomy. Employees want the freedom to be creative and to find purpose in the way they spend their time. When this balance is achieved, people are happy and the sense of satisfaction allows them to do their best work. Along with more innovative productivity, this culture also leads to lasting retention.

As today’s workforce is transformed into tomorrow’s playforce, it’s important to consider the difference between work that feels like play, compared to work with playgrounds nearby. When fun activities only serve as a distraction, the facade of fun will wear off. It’s also good to remember that what’s fun for one person could be more of a chore for others. Personality assessments and ongoing interactivity will help you understand individuals and the part they play within the system. The better people know each other, the more inclined they’ll be to act themselves. Acting professionally shouldn’t mean dimming one’s personality. The more comfortable people feel at work, the better they’ll be able to focus on what’s important. Too often, attempts to optimize employees’ work-life balance stem from a flawed assumption that we must create boundaries to differentiate life and our work. Perhaps the opportunity and the future of work, is to create an experience where the two coexist as one?

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This caffeinated contribution was written by Elizabeth Tweedale. Elizabeth has (co)authored six books, exited an AI company called GoSpace, and is now the CEO of Cypher Coders, the UK’s leading coding school for children. She’s passionate about family, preparing kids for the future, and can be found in our Roasted Reflections group.

If the future of work is fun, we must guide children away from an outdated “workforce” and toward a “playforce” to activate creativity, productivity, satisfaction, involvement, and purpose. The world is their playground and no permission is needed to contribute. Education can be about delivering access to skills, tools, and community. When children are encouraged to connect, play games, be kind, and learn with passion, they engage not because they have to, but because they’re having fun. This empowers students and as they reach the playforce, they’ll understand the superpowers they’ve nurtured in their own areas of interest. Beyond the classroom, this translates into employees and employers who are more likely to enjoy their work when given the opportunity to do what they’re best at.

As we see/hear in the closing chapter of YDNTB, “life is too short not to enjoy your work.” Together, let’s change the equation to make work a lifestyle, which sets us free to have fun making a difference.

By Ben McDougal, ago