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/

Here is the ugly stuff, read this if you have a founder in your life or are trying to become one. Your call.

#1 You'll try to talk yourself to sleep, but it won't always work.

As founders, we're all driven. Good and bad, you're restless. Success requires resistance and discipline. Your startup will be on your mind 24/7, and not everyone will have the patience to listen to your worries, ideas, and coffee runs. You become more self-sufficient than ever before.

#2 No one will understand what you're going through unless they've been a founder.

Some of my closest friends don't understand the work that goes into starting a business, and we can't blame them.

#3 You'll feel alienated.

Your problems aren't common; calling your bestie won't help. You must search hard for the right resources. It alienates you from conversations you no longer relate to. (No 4th of July, no long weekends!)

#4 Since you're your "own boss," people assume you have lots of free time.

Do you agree? I was on a webinar with lots of new entrepreneurs, and one woman said, "I started my own business so I could have more time for myself." This may be true for some lucky people, and you can be flexible with your schedule. If you want your business to succeed, you'll probably be its slave for a while.

#5 No time for illness or family emergencies.

Both last month. Oh, no! Physically and emotionally withdrawing at the worst times will give you perspective. I learned this the hard way because I was too stubborn to postpone an important interview. I thought if I rested all day and only took one call, I'd be fine. Nope. I had a fever and my mind wasn't as sharp, so my performance and audience interaction suffered. Nope. Better to delay than miss out.

Oh, and setting a "OoO" makes you cringe.

#6 Good luck with your mental health, perfectionists.

When building a startup, it's difficult to accept that there won't be enough time to do everything. You can't make them all, not perfectly. You must learn to accept things that are done but not perfect.

#7 As a founder, you'll make mistakes, but you'll want to make them quickly so you can learn.

Hard lessons are learned quicker. You'll need to pivot and try new things often; some won't work, and it's best to discover them sooner rather than later.

#8 Pyramid schemes abound.

I didn't realize how bad it was until I started a company. You must spy and constantly research. As a founder, you'll receive many emails from people claiming to "support" you. Be wary and keep your eyes open. When it's too good to be true. Some "companies" will try to get you to pay for "competitions" to "pitch at events." Don't do it.

#9 Keep your competitor research to a minimum.

Actually, competition is good. It means there's a market for those solutions. However, this can be mentally exhausting too. Learn about their geography and updates, but that's it.

#10 You'll feel guilty taking vacation.

I don't know what to say, but I no longer enjoy watching TV, and that's okay. Pay attention to things that enrich you, bring you joy, and have fun. It boosts creativity.

Being a startup founder may be one of the hardest professional challenges you face, but it's also a great learning experience. Your passion will take you places you never imagined and open doors to opportunities you wouldn't have otherwise. You'll meet amazing people. No regrets, no complaints. It's a roller coaster, but the good days are great.

Miss anything? Comment below

We're opening up Maki through a series of Medium posts. We'll describe what Maki is building and how. We'll explain how we built a SaaS in 100 days. This isn't a step-by-step guide to starting a business, but a product philosophy to help you build quickly.

Focus on end-users.

This may seem obvious, but it's important to talk to users first. When we started thinking about Maki, we interviewed 100 HR directors from SMBs, Next40 scale-ups, and major Enterprises to understand their concerns. We initially thought about the future of employment, but most of their worries centered on Recruitment. We don't have a clear recruiting process, it's time-consuming, we recruit clones, we don't support diversity, etc. And as hiring managers, we couldn't help but agree.

Co-create your product with your end-users.

We went to the drawing board, read as many books as possible (here, here, and here), and when we started getting a sense for a solution, we questioned 100 more operational HR specialists to corroborate the idea and get a feel for our potential answer. This confirmed our direction to help hire more objectively and efficiently.

Back to the drawing board, we designed our first flows and screens. We organized sessions with certain survey respondents to show them our early work and get comments. We got great input that helped us build Maki, and we met some consumers. Obsess about users and execute alongside them.

Don’t shoot for the moon, yet. Make pragmatic choices first.

Once we were convinced, we began building. To launch a SaaS in 100 days, we needed an operating principle that allowed us to accelerate while still providing a reliable, secure, scalable experience. We focused on adding value and outsourced everything else. Example:

Concentrate on adding value. Reuse existing bricks.

When determining which technology to use, we looked at our strengths and the future to see what would last. Node.js for backend, React for frontend, both with typescript. We thought this technique would scale well since it would attract more talent and the surrounding mature ecosystem would help us go quicker.

We explored for ways to bootstrap services while setting down strong foundations that might support millions of users. We built our backend services on NestJS so we could extend into microservices later. Hasura, a GraphQL APIs engine, automates Postgres data exposing through a graphQL layer. MUI's ready-to-use components powered our design-system. We used well-maintained open-source projects to speed up certain tasks.

We outsourced important components of our platform (Auth0 for authentication, Stripe for billing, SendGrid for notifications) because, let's face it, we couldn't do better. We choose to host our complete infrastructure (SQL, Cloud run, Logs, Monitoring) on GCP to simplify our work between numerous providers.

Focus on your business, use existing bricks for the rest. For the curious, we'll shortly publish articles detailing each stage.

Most importantly, empower people and step back.

We couldn't have done this without the incredible people who have supported us from the start. Since Powership is one of our key values, we provided our staff the power to make autonomous decisions from day one. Because we believe our firm is its people, we hired smart builders and let them build.

Nicolas left Spendesk to create scalable interfaces using react-router, react-queries, and MUI. JD joined Swile and chose Hasura as our GraphQL engine. Jérôme chose NestJS to build our backend services. Since then, Justin, Ben, Anas, Yann, Benoit, and others have followed suit.

If you consider your team a collective brain, you should let them make decisions instead of directing them what to do. You'll make mistakes, but you'll go faster and learn faster overall.

Invest in great talent and develop a strong culture from the start. Here's how to establish a SaaS in 100 days.

Ethereum's blockchain rules NFTs. Many consider it the one-stop shop for NFTs, and it's become the most talked-about and trafficked blockchain in existence.

Other blockchains are becoming popular in NFTs. Crypto-artists and NFT enthusiasts have sought new places to mint and trade NFTs due to Ethereum's high transaction costs and environmental impact.

When choosing a blockchain to mint on, there are several factors to consider. Size, creator costs, consumer spending habits, security, and community input are important. We've created a high-level summary of blockchains for NFTs to help clarify the fast-paced world of web3 tech.

Ethereum

Ethereum currently has the most NFTs. It's decentralized and provides financial and legal services without intermediaries. It houses popular NFT marketplaces (OpenSea), projects (CryptoPunks and the Bored Ape Yacht Club), and artists (Pak and Beeple).

It's also expensive and energy-intensive. This is because Ethereum works using a Proof-of-Work (PoW) mechanism. PoW requires computers to solve puzzles to add blocks and transactions to the blockchain. Solving these puzzles requires a lot of computer power, resulting in astronomical energy loss.

You should consider this blockchain first due to its popularity, security, decentralization, and ease of use.

Solana

Solana is a fast programmable blockchain. Its proof-of-history and proof-of-stake (PoS) consensus mechanisms eliminate complex puzzles. Reduced validation times and fees result.

PoS users stake their cryptocurrency to become a block validator. Validators get SOL. This encourages and rewards users to become stakers. PoH works with PoS to cryptographically verify time between events. Solana blockchain ensures transactions are in order and found by the correct leader (validator).

Solana's PoS and PoH mechanisms keep transaction fees and times low. Solana isn't as popular as Ethereum, so there are fewer NFT marketplaces and blockchain traders.

Tezos

Tezos is a greener blockchain. Tezos rose in 2021. Hic et Nunc was hailed as an economic alternative to Ethereum-centric marketplaces until Nov. 14, 2021.

Similar to Solana, Tezos uses a PoS consensus mechanism and only a PoS mechanism to reduce computational work. This blockchain uses two million times less energy than Ethereum. It's cheaper than Ethereum (but does cost more than Solana).

Tezos is a good place to start minting NFTs in bulk. Objkt is the largest Tezos marketplace.

Flow

Flow is a high-performance blockchain for NFTs, games, and decentralized apps (dApps). Flow is built with scalability in mind, so billions of people could interact with NFTs on the blockchain.

Flow became the NBA's blockchain partner in 2019. Flow, a product of Dapper labs (the team behind CryptoKitties), launched and hosts NBA Top Shot, making the blockchain integral to the popularity of non-fungible tokens.

Flow uses PoS to verify transactions, like Tezos. Developers are working on a model to handle 10,000 transactions per second on the blockchain. Low transaction fees.

Flow NFTs are tradeable on Blocktobay, OpenSea, Rarible, Foundation, and other platforms. NBA, NFL, UFC, and others have launched NFT marketplaces on Flow. Flow isn't as popular as Ethereum, resulting in fewer NFT marketplaces and blockchain traders.

Asset Exchange (WAX)

WAX is king of virtual collectibles. WAX is popular for digitalized versions of legacy collectibles like trading cards, figurines, memorabilia, etc.

Wax uses a PoS mechanism, but also creates carbon offset NFTs and partners with Climate Care. Like Flow, WAX transaction fees are low, and network fees are redistributed to the WAX community as an incentive to collectors.

WAX marketplaces host Topps, NASCAR, Hot Wheels, and cult classic film franchises like Godzilla, The Princess Bride, and Spiderman.

Binance Smart Chain

BSC is another good option for balancing fees and performance. High-speed transactions and low fees hurt decentralization. BSC is most centralized.

Binance Smart Chain uses Proof of Staked Authority (PoSA) to support a short block time and low fees. The 21 validators needed to run the exchange switch every 24 hours. 11 of the 21 validators are directly connected to the Binance Crypto Exchange, according to reports.

While many in the crypto and NFT ecosystems dislike centralization, the BSC NFT market picked up speed in 2021. OpenBiSea, AirNFTs, JuggerWorld, and others are gaining popularity despite not having as robust an ecosystem as Ethereum.

Restructuring and layoffs cause career reevaluation. Your career can benefit.

Once you become institutionalized, the corporate ladder is all you know.

You're bubbled. Extremists term it the corporate Matrix. I'm not so severe because the business world brainwashed me, too.

This boosted my corporate career.

Until I hit bottom.

15 months later, I view my corporate life differently. You may wish to advance professionally. Read this before you do.

Your happiness in the workplace may be deceptive.

I've been fortunate to spend time with corporate aces.

Working for 2.5 years in banking social media gave me some of these experiences. Earlier in my career, I recorded interviews with business leaders.

These people have titles like Chief General Manager and Head Of. New titles brought life-changing salaries.

They seemed happy.

I’d pass them in the hallway and they’d smile or shake my hand. I dreamt of having their life.

The ominous pattern

Unfiltered talks with some of them revealed a different world.

They acted well. They were skilled at smiling and saying the correct things. All had the same dark pattern, though.

Something felt off.

I found my conversations with them were generally for their benefit. They hoped my online antics as a writer/coach would shed light on their dilemma.

They'd tell me they wanted more. When you're one position away from CEO, it's hard not to wonder if this next move will matter.

What really displeased corporate ladder chasers

Before ascending further, consider these.

Zero autonomy

As you rise in a company, your days get busier.

Many people and initiatives need supervision. Everyone expects you to know business details. Weak when you don't. A poor leader is fired during the next restructuring and left to pursue their corporate ambition.

Full calendars leave no time for reflection. You can't have a coffee with a friend or waste a day.

You’re always on call. It’s a roll call kinda life.

Unable to express oneself freely

My 8 years of LinkedIn writing helped me meet these leaders.

I didn't think they'd care. Mistake.

Corporate leaders envied me because they wanted to talk freely again without corporate comms or a PR firm directing them what to say.

They couldn't share their flaws or inspiring experiences.

They wanted to.

Every day they were muzzled eroded by their business dream.

Limited family time

Top leaders had families.

They've climbed the corporate ladder. Nothing excellent happens overnight.

Corporate dreamers rarely saw their families.

Late meetings, customer functions, expos, training, leadership days, team days, town halls, and product demos regularly occurred after work.

Or they had to travel interstate or internationally for work events. They used bags and motel showers.

Initially, they said business class flights and hotels were nice. They'd get bored. 5-star hotels become monotonous.

No hotel beats home.

One leader said he hadn't seen his daughter much. They used to Facetime, but now that he's been gone so long, she rarely wants to talk to him.

So they iPad-parented.

You're miserable without your family.

Held captive by other job titles

Going up the business ladder seems like a battle.

Leaders compete for business gains and corporate advancement.

I saw shocking filthy tricks. Leaders would lie to seem nice.

Captives included top officials.

A different section every week. If they ran technology, the Head of Sales would argue their CRM cost millions. Or an Operations chief would battle a product team over support requests.

After one conflict, another began.

Corporate echelons are antagonistic. Huge pay and bonuses guarantee bad behavior.

Overly centered on revenue

As you rise, revenue becomes more prevalent. Most days, you'd believe revenue was everything. Here’s the problem…

Numbers drain us.

Unless you're a closet math nerd, contemplating and talking about numbers drains your creativity.

Revenue will never substitute impact.

Incapable of taking risks

Corporate success requires taking fewer risks.

Risks can cause dismissal. Risks can interrupt business. Keep things moving so you may keep getting paid your enormous salary and bonus.

Restructuring or layoffs are inevitable. All corporate climbers experience it.

On this fateful day, a small few realize the game they’ve been trapped in and escape. Most return to play for a new company, but it takes time.

Addiction keeps them trapped. You know nothing else. The rest is strange.

You start to think “I’m getting old” or “it’s nearly retirement.” So you settle yet again for the trappings of the corporate ladder game to nowhere.

Should you climb the corporate ladder?

Let me end on a surprising note.

Young people should ascend the corporate ladder. It teaches you business skills and helps support your side gig and (potential) online business.

Don't get trapped, shackled, or muzzled.

Your ideas and creativity become stifled after too much gaming play.

Corporate success won't bring happiness.

Find fulfilling employment that matters. That's it.