Bryan Jurewicz Entrepreneur/Executive/Advisor

Accelerating Growth, Funding & Exits

Bryan Jurewicz @BryanJurewicz

Experience CEO - GradeBeam.com Construction Communication Network

Database/Qualifications/Documents/Messaging/Bidding 500,000+ Construction Firms & Millions of Monthly Transactions GradeBeam.com Acquired By Textura 2011 & IPO 2013 (NYSE:TXTR)

Partner - LeanTech Group Maximizing Valuations, Funding, Mergers & Acquisitions

CEO - ROI Magnet Strategic Growth Consulting & Outsourced Executive Leadership

Mentor - 1871

CEO Mentor – Junto Institute For Entrepreneurial Leadership Bryan Jurewicz 2

Badger Pride Graduated UW ‘97 Studied Engineering & Business 4 Year Football Starter

Academic All American Helped Barry Alvarez Build Success

Rose Bowl ‘94 Hall of Fame Bowl ‘95 Copper Bowl ‘97

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Lean Startup Revolution Business Plans Are Dead (Use Business Model Canvas) Steps Before Building Product, Team & Expenses:

1. Be Laser Focused On Problem & Solution! 2. Who Is Customer? 3. Narrow Value Proposition (Don’t Be Everything For Everyone) 4. Create Future Valuation Hypothesis & Work Backward

(Target Market x Small % x $Revenue x Valuation Multiple) 5. Build Business Model Canvas 6. Build Financial Projections 7. Estimate Funding Needed 8. Determine Future Ownership %, Potential Valuation & Exit

Opportunities 9. Begin Customer Development 10. Iterate/Test/Iterate/Test 11. Pivot? 12. Begin Building Business

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Steve Blank’s Customer Development

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5 Alexander Osterwalder's Canvas

Physical vs Digital Businesses From Ted Feierstein’s Entrepreneuron presentation:

National Science Foundation exploring lean startup. 60% success vs 18% in raising equity funding

Use Customer Development: Talk to potential customers & test hypothesis. Regardless of your business product/service. Before spending time/money building the business.

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Ideal Business Model *Legitimate Problem/Pain

SPIN Selling (Situation = Pain = Implications = Needs) Large Target Market Disruptive Solution *Must Have Value Proposition *Attractive Customer ROI (5X+ Benefit Ideal) *Scalable & Capital Efficient Strategy *Measurable Real Time Success Metrics *Proven Success & Limited Execution Risk Maximized Pre-Investor Valuation Excellent Risk-Adjusted Investor Return Potential *Customer Development & Acquisition Requirements

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Know Your Revenue Model! Products Subscription Freemium Lead Generation Commerce Social Network Marketplace Payments Gaming New Media Search Audio/Video Rental Royalties

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How does your company provide

value & earn revenue?

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Customer Development/Acquisition & Business Models From Disruptive Companies

Scale

Toe-Hold With Initial Killer-App

Monetize

Multi-Dimensional Biz Models

• 100 million+ members in 200 countries adding 1 million new members per week.

• Free Individual professional bios/personal web site;

• Professional network connections.

• Premium subscriptions- 3 levels. (27%)

• Hiring Solutions: Sell analytics to F2000 HR depts. (41%)

• Marketing Solutions –Targeted Ads (32%)

• B2C; B2C2B (online); • B2B (offline) • Ad Model

• Easy-to-use low cost project management and collaboration tool (Basecamp); pay-as-you-go, unlimited use.

• Free cloud-based data storage service.

• 5 million people collaborating on 4 million projects.

• 25 million individual users across the globe in LT 4 years.

• Built trusted brand (product/company)

• Release more products (4) cross/upsell

• Free (2GB); • Paid monthly subscriptions for

50GB; 100GB, 350+ GB

• B2C • B2B • B2B2C

• B2C • B2C2B

GradeBeam.com Case Study $Millions Invested & Built Platform 2001 Launched @ $100/Year Subscription & .Com Crash

3 Month Direct Mail Campaign = 500 Customers

2002 Raised Price = $250/Year (+Revenue & 90% Renewal) Print & Email Marketing, Direct Sales & Events

2003 Raised Price = $350/Year (+Revenue & 70% Renewal) Email Marketing, Direct Sales & Events

2004 Multi-Tiered Pricing (+Revenue & 80% Renewal) Email & Telemarketing, Direct Sales & Events

2005 Raised Top Tier Pricing (+Revenue & 85% Renewal) Email & Telemarketing & Direct Sales Investor Funding Ceased & Forced To Cut Staff/Bootstrap/Self Fund

2006 Held Pricing (+Revenue & 90% Renewal) Email, Telemarketing & Independent Contractor Sales

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What Was Missing/Learned? Customer Development Proven Business Model

Customer Acquisition Channels Customer Acquisition Metrics Customer Acquisition Costs Successful Financial Model Pricing

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GradeBeam.com Success 2007 Sales Model Proven

Cash Flow Breakeven

2008 Fundraising & Sales Secured Hyde Park Angels Investment

Real estate collapse forces contractors to do more with less.

2009 Funded Sales Model (2X Revenue) Added 5 Sales Reps & Metrics

2010 Rebranded & Strategic Partners (2X Revenue) Social Media, SEO & PPC

Reseller Agreements (Associations & Complementary Services)

2011 Acquired By Textura (5X Gross Revenue Multiple) Proposed Textura Strategic Partnership

Textura Proposed Acquisition

Negotiated sale, successful exit & ROI for all investors. Bryan Jurewicz 12

Steve Blank’s Customer Development

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Customer Discovery Founders Get Out Of The Office Interview Prospective Customers

Listen to customer pain. Know/learn the competition.

Present your understanding of problem & solution. Do not waste money building products. Use PowerPoint!

Ask how much your solution would help: Time/Efficiency/Sales/Costs/Profit/ROI? What do they spend now to solve this problem? Do they have budget for this? Are they willing to pay what your price or more?

More Interviews! Leverage learnings, iterate/pivot & repeat until proven!

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Customer Discovery Problem/Solution Interview Example

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Documents

Engineers

Subs

Municipalities Owners

GC

Associations Architects

Subs Subs Subs Subs Subs Subs Subs

GC GC GC GC

Documents Documents Documents Documents

Construction Communication Fragmentation

Subs

Engineers Municipalities Owners Architects

Universal Construction Communication Network

GC

GC GC

GC

Subs Subs Subs Subs Subs Subs

Subs

Design

Notifications

Database

Qualifications

Messages

Documents Estimates

Contracts

Project Management

Accounting

Close Out

Maintain

API’s Translators

Integrations

XML

Export Import

Archive

Security

Viewers

Email

Fax

Qualifications

Messages

Documents Bids

Database

Customer Validation (Acquisition) Prove you can acquire customers without staff/operations.

Do not prematurely scale! Founders focused on getting 1st sales! Use scientific method to test customer acquisition channels.

This is growth hacking. Not a launch! Small scale testing/iterating until proven. Do not get a fancy office or a big salary! No overly expensive marketing!

Sell interviewed prospective customers first. Build repeatable marketing & sales process/metrics. Determine ultimate financial & business model.

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MVP (Minimal Viable Product) What’s the minimal solution needed to get customers? Stay focused on initial value proposition! Eliminate everything not critical to early sales! Minimize costs & time to market!

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Marketing & Sales Channels 1. Search Engine Optimization (SEO) 2. Pay Per Click (PPC) 3. Social Media 4. Email Marketing 5. Press Releases/PR 6. Telemarketing 7. Strategic Partners 8. Direct Mail 9. Enterprise Sales 10. Conferences & Events 11. Banner Advertising 12. Print Ads

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Building Success GradeBeam.com Channels & Customers

Thousands Sub Clients

Direct GC Sales

Subs Invited

Direct Sub

Sales

Millions Transactions,

Insights, Analytics & Client Scalability

Hundreds GC Clients

One Common Platform

Tens Sales

Reps & Channels

Hundreds of Thousands Companies Accessing

GradeBeam.com

GB

Sales Reps

Website

Partners

GCs Invited

Subs Invited

Project Access

Architects Owners

Planroom Access

GC Partner Clients

Sub Partner Clients

Geography: •North America->Global Construction Phases: •Bid->Construction->Close->Manage Project Data: •Qualifications, Financials & Ratings •Contractor Searches & Views •Contractor Relationships & Regions •Contractor Recommendations •Contacts & Messages •Document Activity •Bidders, Quotes & Awards •Contractor CRM/Revenue Forecasts Industry: •Economic Activity •Regional Markets •Trade Segments, Costs & Pricing •Crowd Sourcing •Targeted Marketing •Group Discounts

SEO PPC

Channel Strategy Metrics Example Conversion to

Campaigns Impressions Interest Member Subscriber $'s Invested Cost/

Member Cost/

Subscriber

User Contests 23,400,000 819,000 286,650 8,596 $100,000 $0.35 $11.63

Pro Sponsorships 13,477,000 235,844 82,544 2,478 $60,000 $0.73 $24.21

Strategic Partner 256,000,000 704,000 176,000 1,760 $10,000 $0.06 $5.68

Content Providers 3,850,000 59,167 19,719 592 $60,000 $3.04 $101.35

Digital Advertising - PPC 384,616 192,311 5,770 $250,000 $1.30 $43.33

Inbound Marketing - Social 1,158,290 115,829 3,473 $22,000 $0.19 $6.33

Inbound Marketing - Content 1,191,663 297,913 8,932 $22,000 $0.07 $2.46

E-mail 100,000,000 275,000 41,250 825 $31,084 $0.75 $37.68

Inbound Marketing - Referral 18,347 735 $22,000 $1.07 $29.33

396,727,000 4,827,580 1,230,563 33,161 $577,084

Metrics & Terms Customer Acquisition Costs (CAC):

Incremental costs to sell customers. Typically marketing, sales & associated expenses.

Costs Of Goods Sold (COGS): Costs to serve customers without marketing/sales/R&D.

Gross Profit: Gross Revenue – COGS Gross Margin %: Gross Profit/Gross Revenue Non-Recurring Revenue (NRR): One-time fees that are not paid upon renewal. Monthly Recurring Revenue (MRR): Monthly continuing revenue owed by customers. Annual Recurring Revenue (ARR): Annual continuing revenue owed by customers. Annual Revenue Run Rate: Current Month’s MRR x 12 CAC Payback Period: Months to recover CAC = CAC/(MRR x Gross Margin%)

<6 Months Great! 6-18 Typical. 18-36 Needs High Upsells & Retention. >36 Bad! Churn: Annual % Lost ARR or Cancelled Customers <10% Good CLTV: Customer LifeTime Value

Simple Calculation = ARR/Churn Detailed Calculation = Net Present Value of Recurring Profit Streams – CAC

Burn Rate: Monthly Cash Flow Loss Runway: Months company survives @ current burn rate without funding.

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Metrics Example

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Marketing Resources Internal vs External?

Are sales 100% dependent on marketing? Anyone on your team marketed in your channels before? Hiring proven internal resources is hard.

Can you find them? Do you know a good one when you see it? Do they know digital marketing & your industry? Can they talk about proven methods, metrics & achievements? Can they hit the ground running?

Digital: SEO, PPC & Social Media = Analytical Science Consultants can validate digital strategy before hiring. Digital marketing requires weekly if not daily attention.

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Google Analytics

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GradeBeam.com Activity 11/15/10

GradeBeam.com Activity 11/15/10

Organic Search Engine Optimization (SEO) Stats

Monthly Search Average 14,992 visitors April Searches 18,309 visitors

YTD Cost Per Click Average $0.07 April Cost Per Click $0.05

Google Adwords

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Pay Per Click Advertising Stats

Other Digital Marketing Tools Compete.com Alexa.com Moz.com Hubspot.com

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Competition

Hire Sales Team? Where do you get leads & do you have enough? Do your customers need to be touched to get a sale? Can you sell customers yourself? Do you have a proven ramp up sales process?

(scripts, metrics & marketing collateral) Sales Director?

Should create/improve sales process/success without reps. This hire can make or break a company!

Interview Tips: Role play & 1st interview telesales over the phone. Don’t let a candidate sales rep sell you!

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Sales Metrics? Compensation:

50% Base + 50% Commission (3 Month Probation Period) Base: $50K - $100K Annually Quota: $700K - $1.2M Annually Telemarketing = minimum 40 prospect touches per day. Hire 2 sales reps at a time for camaraderie & competition. Do not hire >2 reps till ARR > $1M (learning curve) & CAC < 50% (efficiency).

Sales Rep Profile: Self motivated hunter with minimum 3 years experience. Willing to cold call & accepts rejection. Knows when to move on to next prospect. Avoids Seemores, navigates to decision maker & qualifies prospects. Good sales reps have jobs & manage their own desks! Preferably in your industry with similar sales process & existing contacts. Inside is very different than outside sales!

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Strategic Partners Larger Companies With Market Penetration Complementary Services Future Acquirers Resellers Distributors Associations White Label

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Customer Creation Launch! Early adopters are easy customers. Can you cross the chasm?

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Execution Requirements Financial Model, Cash Flow Projection, GAAP P&L Monitoring Metrics vs Forecast

Accounting Resources, Tools, Controls & Reporting Executive Dashboard/KPIs Google Analytics

Goals & Business Processes Organizational Chart, Roles &Responsibilities Employee Knowledge of Strategy & Success

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Company Building You can’t do everything yourself! What kind of leader are you?

(Example/Director/Motivator) Know what type of culture you want to create. Hire Slow & Fire Fast! Marriage: building a company is like raising a child. Get right people on the bus vs cut throat moneymakers. Try to surround yourself with people smarter than you. Build mentor training processes.

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Raise Funding? Know what drives revenue! Financial model calculated with revenue drivers. Valuation Now & Future What happens to your cap table?

Don’t give away more than 30% per round. Potential Exit Opportunities? Fundraising Takes Time!

Minimum 3-6 Months Serious time away from company growing. Many investors will want to watch. Your funding competition is other startups.

Know Investor’s Goals Exit early, go big or go home?

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Pre-Funding Checklist: 1. Backable Team: Visionary, Hacker & Hustler (Ideally been there/done that.) 2. Post MVP Early Production Product 3. Multiple Target Markets 4. Early Product Market Fit 5. Scalability 6. Proven Sales Channels & Success Metrics 7. Vetted Financial Forecast 8. Path To Profitability 9. Funding Needed 10. Use Of Funds Budget 11. Funding Success Milestones & Goals 12. Runway Estimate 13. Pre/Post-money Valuation 14. Estimated Future Funding Needed 15. # of Funding Rounds 16. Potential Exit Strategies 17. Forecasted Enterprise Valuation 18. Calculated Return 19. Multiple Investor Leads, Contacts & Relationships 20. Marketing Documents

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Terms, Structure & Preferences Loans/Convertible Notes/Equity Blocking Rights Preemptive Rights Co-Investment Rights Pro-Rata Rights Dividends Discounts Caps Etc….

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Exit? Know your market, growth potential & valuation. Quarterly SWOT Analysis Better to be bought than sold. Today’s strategic partner could be tomorrow’s acquirer. Create pain for your competitors. Go big or exit early?

What are your realistic exit opportunities/timeframes? What are your & your investor’s goals? Can you carry the long term load/risk? Will you get pushed aside? IPO requires >$40M funding!

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Bryan Jurewicz Entrepreneur/Executive/Advisor

Accelerating Growth, Funding & Exits

Bryan Jurewicz @BryanJurewicz

SEO/PPC Tools: Book - Ultimate Guide To Google AdWords (Perry Marshall) Google Analytics/Moz.com/Alexa.com/Compete.com/Hubspot.com Andy Crestodina & Orbit Media Blog

www.OrbitMedia.com/Blog/Marketing-SEO Startup Classes: Udacity – How To Build A Startup (Steve Blank)

www.Udacity.com/course/ep245 Business Model Generation (Alexander Osterwalder)

www.BusinessModelGeneration.com/OnlineCourse UW - WARF Entrepreneurons Startup Series Videos

www.WARF.org/Home/News-Media/Campus-Programs/Entrepreneurons-Series/Video-Archive/Entrepreneurons-Videos.cmsx Startup Books: Business Model Generation (Alexander Osterwalder) Four Steps To The Epiphany (Steve Blank) Lean Startup (Eric Ries) Startup Owner’s Manual (Steve Blank)

Resources

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Thanks! Questions? How can I help? Connect with me ->