Dan Martell - How to Build a $100M Startup in 3 Years

00:00:00.240 How do you build a hundred million dollar company

00:00:03.920 in three years?

00:00:05.080 I have had dozens of friends do it,

00:00:07.560 some of them billion dollar companies.

00:00:09.160 And when I think of the conversations I've had

00:00:11.480 with each one of them about the early days,

00:00:13.800 what challenges did they overcome

00:00:15.840 to get to a place that create repeatability and scale

00:00:19.080 to become attractive enough

00:00:20.280 to somebody to buy them for a hundred million?

00:00:21.880 This is what I extracted and through that process,

00:00:24.800 discovered some unexpected strategies

00:00:27.320 that I wanna share with you guys today.

00:00:30.000 the first thing is that you have to solve a huge problem in a unique way most people build

00:00:37.300 businesses and it's just an incremental improvement so they have an agency they do it faster they have

00:00:42.660 a software tool they have one extra feature but the companies that exited for 100 million

00:00:47.300 they all have this in common they solved a problem that a lot of people had in a very unique and

00:00:53.420 creative way that never been done before that the market pulled the product into and that's why it's

00:00:59.100 called product market fit. You need to make sure that the product is so good that you get word of

00:01:05.140 mouth virality. What's called V1 viral word of mouth marketing to get people to be aware of your

00:01:10.600 solution to grow really quick. Number two is they had a growth engine. When you look at a product

00:01:16.740 that grew really quick, they had a lot of people purchasing. What they had is a positive cash

00:01:21.980 conversion cycle, meaning that they were able to not require a lot of capital initially to grow

00:01:28.960 the business. If it takes you nine months to pay back the acquisition costs after you pay for the

00:01:35.120 thing you sold and the amount of money in marketing and sales, then it's going to require a ton of

00:01:40.180 money to make the $100 million exit. So what a lot of them had is a cash conversion cycle. It was

00:01:47.180 called a CAC payback period that was under 60, ideally 30 days. If you're able even better to

00:01:54.840 sell something that people buy today but you don't deliver it for three or four or seven days after

00:02:00.000 the fact that you collected that cash that's how you have the self-funding to grow incredibly quick

00:02:06.080 so you might just need to reconsider your pricing strategy your payment terms renegotiate your

00:02:11.580 expenses or your vendors so the money out of your business slows down the money coming into your

00:02:16.180 business gets faster and then that way you've got this ability to finance your growth off of a credit

00:02:21.600 card the third thing is they built incredible teams there's no amount of like steve jobs hero

00:02:28.820 complex genius that's going to overcome the ability for talented folks to own different

00:02:35.040 areas of a business when i first moved to san francisco i met this guy named keith roboi and

00:02:39.780 he's arguably one of the top operators in silicon valley i remember asking this question at a party

00:02:44.940 i said keith why do you think that some of the best companies were created in a down economy the

00:02:50.580 Googles, the PayPals of the world that we all know about. And he says it's because in a downward

00:02:55.220 economy, you're not competing for talent. So what you have is you have a high concentration of IQ

00:03:00.520 per square foot. And I was like, oh, that makes sense. It's like when you look at the PayPal

00:03:05.140 mafia, you got Elon Musk and Peter Thiel and literally all these multi-billionaires that came

00:03:11.220 from the beginning of a team at one company. You got to ask yourself, well, what was in the water

00:03:17.360 at that office but the truth was is because the economy wasn't doing so well they weren't getting

00:03:22.180 pulled off from their competitors they weren't buying to go do their own thing and when you can

00:03:27.060 get high caliber team members and that's what you got really good at you got to be able to attract

00:03:32.020 top talent to come in and own outcomes so that you as a ceo can run to the next problem and keep

00:03:37.480 building the business behind you the next step is you got to be able to raise money when i look at

00:03:43.040 the four master skills of entrepreneurship,

00:03:45.620 things that create great leverage.

00:03:47.400 They're called the four Cs.

00:03:48.520 I got this from Naval Ravikant.

00:03:50.020 You've got content, you've got code,

00:03:52.880 you have collaboration, and you have capital.

00:03:55.400 What you don't wanna be is capital constraint.

00:03:57.780 If there's opportunity,

00:03:59.120 the market's pulling your product into it,

00:04:01.100 but you need to hire ahead of your cashflow,

00:04:04.160 that is the constraint.

00:04:05.700 And you never want that to be the reason

00:04:07.660 that you aren't able to grow.

00:04:09.020 So the ability to raise capital on positive terms

00:04:12.500 in a fast process will give you incredible leverage to grow a business to 100 million

00:04:17.300 and finally you have to build a sellable business you know oftentimes i meet these entrepreneurs and

00:04:22.820 they have great businesses they're profitable they're growing but when i look under the hood

00:04:27.700 it's a genius with a thousand servants like there's no team in place or they do this marketing

00:04:34.020 strategy that let's call a little gray and nefarious they call it a growth hack but essentially

00:04:39.380 it's breaking the law and eventually it's going to stop or there's no systems or processes for how

00:04:44.740 to actually repeat the success they've had to scale it up right and that's what makes a company

00:04:51.860 attractive to a buyer a person will buy another company essentially an asset or an engine of

00:04:57.140 producing revenue if it's predictable so if you have no repeatability no predictability in your

00:05:03.300 growth and anybody evaluating that's going to look at the team or look at your systems or look at

00:05:07.460 at your software that you're using to run this thing and they can't make sense of it they're not

00:05:11.000 going to give you the multiples to get that kind of exit so as you build a high growth business you

00:05:15.260 want to continuously backfill build the playbooks build the team create the process for repeatability

00:05:22.140 and scale so that you have something that somebody would buy to generate the same profit you've been

00:05:26.740 getting and that's why you get paid on the multiples how many multiples of profit and or

00:05:31.780 top line into the future they're paying today for that's the equation so my question to you is

00:05:37.920 would you dedicate your life to building a hundred million dollar business in three years if you knew

00:05:43.180 you only had a 20 chance or a 30 chance or maybe even a 50 chance of being successful because it's

00:05:50.060 going to require everything from you with zero probability that it's 100 guaranteed that is the

00:05:58.020 question you have to ask yourself. But if you want to learn more strategies like the ones I just

00:06:02.460 taught, then I want to invite you to subscribe to my brand new newsletter all around buying back

00:06:06.760 your time and getting leverage. So click the link, subscribe, because I want to help you learn how to

00:06:11.320 build a business that you don't grow to hate. I'll see you on the other side.

Dan Martell - October 30, 2023

How to Build a $100M Startup in 3 Years

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