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Esteban

Esteban

3 years ago

The Berkus Startup Valuation Method: What Is It?

More on Entrepreneurship/Creators

Athirah Syamimi

Athirah Syamimi

3 years ago

Here's How I Built A Business Offering Unlimited Design Services in Just One Weekend.

Weekend project: limitless design service. It was fun to see whether I could start a business quickly.

I use no-code apps to save time and resources.

TL;DR I started a business utilizing EditorX for my website, Notion for client project management, and a few favors to finish my portfolio.

First step: research (Day 1)

I got this concept from a Kimp Instagram ad. The Minimalist Hustler Daily newsletter mentioned a similar and cheaper service (Graphically).

I Googled other unlimited design companies. Many provide different costs and services. Some supplied solely graphic design, web development, or copywriting.

Step 2: Brainstorming (Day 1)

I did something simple.

  • What benefits and services to provide

  • Price to charge

Since it's a one-person performance (for now), I'm focusing on graphic design. I can charge less.

So I don't overwhelm myself and can accommodate budget-conscious clientele.

Step 3: Construction (Day 1 & 2)

This project includes a management tool, a website, and a team procedure.

I built a project management tool and flow first. Once I had the flow and a Notion board, I tested it with design volunteers. They fake-designed while I built the website.

Tool for Project Management

I modified a Notion template. My goal is to keep clients and designers happy.

Screenshot of project management board in Notion

Team Approach

My sister, my partner, and I kept this business lean. I tweaked the Notion board to make the process smooth. By the end of Sunday, I’d say it’s perfect!

Website

I created the website after they finished the fake design demands. EditorX's drag-and-drop builder attracted me. I didn't need to learn code, and there are templates.

I used a template wireframe.

This project's hardest aspect is developing the site. It's my first time using EditorX and I'm no developer.

People answer all your inquiries in a large community forum.

As a first-time user developing a site in two days, I think I performed OK. Here's the site for feedback.

Screenshot of deuxcreators.com homepage

4th step: testing (Day 2)

Testing is frustrating because it works or doesn't. My testing day was split in two.

  • testing the workflow from payment to onboarding to the website

  • the demand being tested

It's working so far. If someone gets the trial, they can request design work.

I've gotten a couple of inquiries about demand. I’ll be working with them as a start.

Completion

Finally! I built my side project in one weekend. It's too early to tell if this is successful. I liked that I didn't squander months of resources testing out an idea.

Sammy Abdullah

Sammy Abdullah

24 years ago

How to properly price SaaS

Price Intelligently put out amazing content on pricing your SaaS product. This blog's link to the whole report is worth reading. Our key takeaways are below.

Don't base prices on the competition. Competitor-based pricing has clear drawbacks. Their pricing approach is yours. Your company offers customers something unique. Otherwise, you wouldn't create it. This strategy is static, therefore you can't add value by raising prices without outpricing competitors. Look, but don't touch is the competitor-based moral. You want to know your competitors' prices so you're in the same ballpark, but they shouldn't guide your selections. Competitor-based pricing also drives down prices.

Value-based pricing wins. This is customer-based pricing. Value-based pricing looks outward, not inward or laterally at competitors. Your clients are the best source of pricing information. By valuing customer comments, you're focusing on buyers. They'll decide if your pricing and packaging are right. In addition to asking consumers about cost savings or revenue increases, look at data like number of users, usage per user, etc.

Value-based pricing increases prices. As you learn more about the client and your worth, you'll know when and how much to boost rates. Every 6 months, examine pricing.

Cloning top customers. You clone your consumers by learning as much as you can about them and then reaching out to comparable people or organizations. You can't accomplish this without knowing your customers. Segmenting and reproducing them requires as much detail as feasible. Offer pricing plans and feature packages for 4 personas. The top plan should state Contact Us. Your highest-value customers want more advice and support.

Question your 4 personas. What's the one item you can't live without? Which integrations matter most? Do you do analytics? Is support important or does your company self-solve? What's too cheap? What's too expensive?

Not everyone likes per-user pricing. SaaS organizations often default to per-user analytics. About 80% of companies utilizing per-user pricing should use an alternative value metric because their goods don't give more value with more users, so charging for them doesn't make sense.

At least 3:1 LTV/CAC. Break even on the customer within 2 years, and LTV to CAC is greater than 3:1. Because customer acquisition costs are paid upfront but SaaS revenues accrue over time, SaaS companies face an early financial shortfall while paying back the CAC.

ROI should be >20:1. Indeed. Ensure the customer's ROI is 20x the product's cost. Microsoft Office costs $80 a year, but consumers would pay much more to maintain it.

A/B Testing. A/B testing is guessing. When your pricing page varies based on assumptions, you'll upset customers. You don't have enough customers anyway. A/B testing optimizes landing pages, design decisions, and other site features when you know the problem but not pricing.

Don't discount. It cheapens the product, makes it permanent, and increases churn. By discounting, you're ruining your pricing analysis.

Vanessa Karel

Vanessa Karel

3 years ago

10 hard lessons from founding a startup.

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

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Dung Claire Tran

Dung Claire Tran

3 years ago

Is the future of brand marketing with virtual influencers?

Digital influences that mimic humans are rising.

Lil Miquela has 3M Instagram followers, 3.6M TikTok followers, and 30K Twitter followers. She's been on the covers of Prada, Dior, and Calvin Klein magazines. Miquela released Not Mine in 2017 and launched Hard Feelings at Lollapazoolas this year. This isn't surprising, given the rise of influencer marketing.

This may be unexpected. Miquela's fake. Brud, a Los Angeles startup, produced her in 2016.

Lil Miquela is one of many rising virtual influencers in the new era of social media marketing. She acts like a real person and performs the same tasks as sports stars and models.

The emergence of online influencers

Before 2018, computer-generated characters were rare. Since the virtual human industry boomed, they've appeared in marketing efforts worldwide.

In 2020, the WHO partnered up with Atlanta-based virtual influencer Knox Frost (@knoxfrost) to gather contributions for the COVID-19 Solidarity Response Fund.

Lu do Magalu (@magazineluiza) has been the virtual spokeswoman for Magalu since 2009, using social media to promote reviews, product recommendations, unboxing videos, and brand updates. Magalu's 10-year profit was $552M.

In 2020, PUMA partnered with Southeast Asia's first virtual model, Maya (@mayaaa.gram). She joined Singaporean actor Tosh Zhang in the PUMA campaign. Local virtual influencer Ava Lee-Graham (@avagram.ai) partnered with retail firm BHG to promote their in-house labels.

Maya and Tosh Zhang in PUMA Rider campaign. Credits to Vulcan Post

In Japan, Imma (@imma.gram) is the face of Nike, PUMA, Dior, Salvatore Ferragamo SpA, and Valentino. Imma's bubblegum pink bob and ultra-fine fashion landed her on the cover of Grazia magazine.

Imma on Grazia cover. Credits to aww.tokyo

Lotte Home Shopping created Lucy (@here.me.lucy) in September 2020. She made her TV debut as a Christmas show host in 2021. Since then, she has 100K Instagram followers and 13K TikTok followers.

Liu Yiexi gained 3 million fans in five days on Douyin, China's TikTok, in 2021. Her two-minute video went viral overnight. She's posted 6 videos and has 830 million Douyin followers.

Liu Yiexi’s video on Douyin. Credits to Ji Yuqiao on Global Times

China's virtual human industry was worth $487 million in 2020, up 70% year over year, and is expected to reach $875.9 million in 2021.

Investors worldwide are interested. Immas creator Aww Inc. raised $1 million from Coral Capital in September 2020, according to Bloomberg. Superplastic Inc., the Vermont-based startup behind influencers Janky and Guggimon, raised $16 million by 2020. Craft Ventures, SV Angels, and Scooter Braun invested. Crunchbase shows the company has raised $47 million.

The industries they represent, including Augmented and Virtual reality, were worth $14.84 billion in 2020 and are projected to reach $454.73 billion by 2030, a CAGR of 40.7%, according to PR Newswire.

Advantages for brands

Forbes suggests brands embrace computer-generated influencers. Examples:

  1. Unlimited creative opportunities: Because brands can personalize everything—from a person's look and activities to the style of their content—virtual influencers may be suited to a brand's needs and personalities.

  2. 100% brand control: Brand managers now have more influence over virtual influencers, so they no longer have to give up and rely on content creators to include brands into their storytelling and style. Virtual influencers can constantly produce social media content to promote a brand's identity and ideals because they are completely scandal-free.

  3. Long-term cost savings: Because virtual influencers are made of pixels, they may be reused endlessly and never lose their beauty. Additionally, they can move anywhere around the world and even into space to fit a brand notion. They are also always available. Additionally, the expense of creating their content will not rise in step with their expanding fan base.

  4. Introduction to the metaverse: Statista reports that 75% of American consumers between the ages of 18 and 25 follow at least one virtual influencer. As a result, marketers that support virtual celebrities may now interact with younger audiences that are more tech-savvy and accustomed to the digital world. Virtual influencers can be included into any digital space, including the metaverse, as they are entirely computer-generated 3D personas. Virtual influencers can provide brands with a smooth transition into this new digital universe to increase brand trust and develop emotional ties, in addition to the young generations' rapid adoption of the metaverse.

  5. Better engagement than in-person influencers: A Hype Auditor study found that online influencers have roughly three times the engagement of their conventional counterparts. Virtual influencers should be used to boost brand engagement even though the data might not accurately reflect the entire sector.

Concerns about influencers created by computers

Virtual influencers could encourage excessive beauty standards in South Korea, which has a $10.7 billion plastic surgery industry.

A classic Korean beauty has a small face, huge eyes, and pale, immaculate skin. Virtual influencers like Lucy have these traits. According to Lee Eun-hee, a professor at Inha University's Department of Consumer Science, this could make national beauty standards more unrealistic, increasing demand for plastic surgery or cosmetic items.

Lucy by Lotte Home Shopping. Credits to Lotte Home Shopping on CNN

Other parts of the world raise issues regarding selling items to consumers who don't recognize the models aren't human and the potential of cultural appropriation when generating influencers of other ethnicities, called digital blackface by some.

Meta, Facebook and Instagram's parent corporation, acknowledges this risk.

“Like any disruptive technology, synthetic media has the potential for both good and harm. Issues of representation, cultural appropriation and expressive liberty are already a growing concern,” the company stated in a blog post. “To help brands navigate the ethical quandaries of this emerging medium and avoid potential hazards, (Meta) is working with partners to develop an ethical framework to guide the use of (virtual influencers).”

Despite theoretical controversies, the industry will likely survive. Companies think virtual influencers are the next frontier in the digital world, which includes the metaverse, virtual reality, and digital currency.

In conclusion

Virtual influencers may garner millions of followers online and help marketers reach youthful audiences. According to a YouGov survey, the real impact of computer-generated influencers is yet unknown because people prefer genuine connections. Virtual characters can supplement brand marketing methods. When brands are metaverse-ready, the author predicts virtual influencer endorsement will continue to expand.

Theresa W. Carey

Theresa W. Carey

3 years ago

How Payment for Order Flow (PFOF) Works

What is PFOF?

PFOF is a brokerage firm's compensation for directing orders to different parties for trade execution. The brokerage firm receives fractions of a penny per share for directing the order to a market maker.

Each optionable stock could have thousands of contracts, so market makers dominate options trades. Order flow payments average less than $0.50 per option contract.

Order Flow Payments (PFOF) Explained

The proliferation of exchanges and electronic communication networks has complicated equity and options trading (ECNs) Ironically, Bernard Madoff, the Ponzi schemer, pioneered pay-for-order-flow.

In a December 2000 study on PFOF, the SEC said, "Payment for order flow is a method of transferring trading profits from market making to brokers who route customer orders to specialists for execution."

Given the complexity of trading thousands of stocks on multiple exchanges, market making has grown. Market makers are large firms that specialize in a set of stocks and options, maintaining an inventory of shares and contracts for buyers and sellers. Market makers are paid the bid-ask spread. Spreads have narrowed since 2001, when exchanges switched to decimals. A market maker's ability to play both sides of trades is key to profitability.

Benefits, requirements

A broker receives fees from a third party for order flow, sometimes without a client's knowledge. This invites conflicts of interest and criticism. Regulation NMS from 2005 requires brokers to disclose their policies and financial relationships with market makers.

Your broker must tell you if it's paid to send your orders to specific parties. This must be done at account opening and annually. The firm must disclose whether it participates in payment-for-order-flow and, upon request, every paid order. Brokerage clients can request payment data on specific transactions, but the response takes weeks.

Order flow payments save money. Smaller brokerage firms can benefit from routing orders through market makers and getting paid. This allows brokerage firms to send their orders to another firm to be executed with other orders, reducing costs. The market maker or exchange benefits from additional share volume, so it pays brokerage firms to direct traffic.

Retail investors, who lack bargaining power, may benefit from order-filling competition. Arrangements to steer the business in one direction invite wrongdoing, which can erode investor confidence in financial markets and their players.

Pay-for-order-flow criticism

It has always been controversial. Several firms offering zero-commission trades in the late 1990s routed orders to untrustworthy market makers. During the end of fractional pricing, the smallest stock spread was $0.125. Options spreads widened. Traders found that some of their "free" trades cost them a lot because they weren't getting the best price.

The SEC then studied the issue, focusing on options trades, and nearly decided to ban PFOF. The proliferation of options exchanges narrowed spreads because there was more competition for executing orders. Options market makers said their services provided liquidity. In its conclusion, the report said, "While increased multiple-listing produced immediate economic benefits to investors in the form of narrower quotes and effective spreads, these improvements have been muted with the spread of payment for order flow and internalization." 

The SEC allowed payment for order flow to continue to prevent exchanges from gaining monopoly power. What would happen to trades if the practice was outlawed was also unclear. SEC requires brokers to disclose financial arrangements with market makers. Since then, the SEC has watched closely.

2020 Order Flow Payment

Rule 605 and Rule 606 show execution quality and order flow payment statistics on a broker's website. Despite being required by the SEC, these reports can be hard to find. The SEC mandated these reports in 2005, but the format and reporting requirements have changed over the years, most recently in 2018.

Brokers and market makers formed a working group with the Financial Information Forum (FIF) to standardize order execution quality reporting. Only one retail brokerage (Fidelity) and one market maker remain (Two Sigma Securities). FIF notes that the 605/606 reports "do not provide the level of information that allows a retail investor to gauge how well a broker-dealer fills a retail order compared to the NBBO (national best bid or offer’) at the time the order was received by the executing broker-dealer."

In the first quarter of 2020, Rule 606 reporting changed to require brokers to report net payments from market makers for S&P 500 and non-S&P 500 equity trades and options trades. Brokers must disclose payment rates per 100 shares by order type (market orders, marketable limit orders, non-marketable limit orders, and other orders).

Richard Repetto, Managing Director of New York-based Piper Sandler & Co., publishes a report on Rule 606 broker reports. Repetto focused on Charles Schwab, TD Ameritrade, E-TRADE, and Robinhood in Q2 2020. Repetto reported that payment for order flow was higher in the second quarter than the first due to increased trading activity, and that options paid more than equities.

Repetto says PFOF contributions rose overall. Schwab has the lowest options rates, while TD Ameritrade and Robinhood have the highest. Robinhood had the highest equity rating. Repetto assumes Robinhood's ability to charge higher PFOF reflects their order flow profitability and that they receive a fixed rate per spread (vs. a fixed rate per share by the other brokers).

Robinhood's PFOF in equities and options grew the most quarter-over-quarter of the four brokers Piper Sandler analyzed, as did their implied volumes. All four brokers saw higher PFOF rates.

TD Ameritrade took the biggest income hit when cutting trading commissions in fall 2019, and this report shows they're trying to make up the shortfall by routing orders for additional PFOF. Robinhood refuses to disclose trading statistics using the same metrics as the rest of the industry, offering only a vague explanation on their website.

Summary

Payment for order flow has become a major source of revenue as brokers offer no-commission equity (stock and ETF) orders. For retail investors, payment for order flow poses a problem because the brokerage may route orders to a market maker for its own benefit, not the investor's.

Infrequent or small-volume traders may not notice their broker's PFOF practices. Frequent traders and those who trade larger quantities should learn about their broker's order routing system to ensure they're not losing out on price improvement due to a broker prioritizing payment for order flow.


This post is a summary. Read full article here

Leah

Leah

3 years ago

The Burnout Recovery Secrets Nobody Is Talking About

Photo by Tangerine Newt on Unsplash

What works and what’s just more toxic positivity

Just keep at it; you’ll get it.

I closed the Zoom call and immediately dropped my head. Open tabs included material on inspiration, burnout, and recovery.

I searched everywhere for ways to avoid burnout.

It wasn't that I needed to keep going, change my routine, employ 8D audio playlists, or come up with fresh ideas. I had several ideas and a schedule. I knew what to do.

I wasn't interested. I kept reading, changing my self-care and mental health routines, and writing even though it was tiring.

Since burnout became a psychiatric illness in 2019, thousands have shared their experiences. It's spreading rapidly among writers.

What is the actual key to recovering from burnout?

Every A-list burnout story emphasizes prevention. Other lists provide repackaged self-care tips. More discuss mental health.

It's like the mid-2000s, when pink quotes about bubble baths saturated social media.

The self-care mania cost us all. Self-care is crucial, but utilizing it to address everything didn't work then or now.

How can you recover from burnout?

Time

Are extended breaks actually good for you? Most people need a break every 62 days or so to avoid burnout.

Real-life burnout victims all took breaks. Perhaps not a long hiatus, but breaks nonetheless.

Burnout is slow and gradual. It takes little bits of your motivation and passion at a time. Sometimes it’s so slow that you barely notice or blame it on other things like stress and poor sleep.

Burnout doesn't come overnight; neither will recovery.

I don’t care what anyone else says the cure for burnout is. It has to be time because time is what gave us all burnout in the first place.