👊 Domi's favourite Things - Issue #26

Read time: 6.50 Minutes

Servus Friends, 👊

Half a Year gone already since I started this Newsletter. That was a fast One. 🙃

And really from the bottom of my Heart:

“THANK YOU, for reading and your Feedback” 😘

To make things more exciting for you, we will change the Mode of Operations slightly.

But no worries. You still get served with great useful Stuff.

From today on, but not forever, I have a „Domi is building in Public“-Section for you.

A dedicated Space I try to implement all the Tactics from the last Weeks Special in a real Experiment. 🥼 

→ Trying to grow this Newsletter to the first 1000 Subscribers. 🎯 ←

Hope you also excited for this as I am. 🚀

So let's start…

The Things we are digging in Today:

1. 🛠️ Why having a good Startup-Exit still can Bankrupt you… 🚧

2. 🏗️ Domi’s build in Public: 🥇 Ranking Growth Ideas 🚀

3. #Twitter-Box: 🧮 Solving your Hook Problems…🪝 

4. #Domi's favourite 5 - Random Bundle Edition 📚

# 1 - 🛠️ The Economics of selling your Startup 🚧

Let’s talk Startups again…

Why? Because last Week the Berlin based opinion research Startup Opinary got sold by a high Seven-Figure Exit.

So far so normal.

Some Founders went for the big Exit… So what?

They cashed out and can enjoy Life or look into new exciting Business Ideas now.

Sounds great or? (I know we all secretly Desire this too…🥸)

What if I tell you, that except you cash out with a Unicorn-Valuation, this is often not as good as you may think?

You don’t believe me?

Okay, in the Following I will break down for you why scaling a Startup-Idea with VC Money can be often not that rewarding like we all think it is. (…and especially VC‘s telling us)

First a small Intro for Context.

Opinary is a SaaS-Business which is helping Brands, Outlets and Media Ventures to capture their Readers Opinions to certain Topics with new innovative Surveys. (with around + 30 Employees)

Last Week they announced their Acquisition by Affinity an indian Media Agency with a Price Tag in the higher Seven-Figures Area.

This is the Press Release of the Opinary-Exit:

Link

Now the harsh Truth...

Selling Opinary under these Terms is maybe a real shitty Deal for the Founders. 

Let‘s break it down together:

First we have to estimate the Price. In this Example, we go for an estimated 7.5 Million €. (because of the high Seven-Figures in the Press Release)

This sounds nice in the first Place, but is not that good as you may think.

But we find the Details for this in the Legal Work of the VC‘s…

You never get Money for free. And before you earn a Penny, the VC‘s come first.

Opinary got funded by Venture Capital with 3.5 Million € over the Years.

Now the clue. If an Investor gives you Money, you usually agree on the Terms for a later Exit as well.

In most Cases, this means if an Exit happens, you have to payback the invested Money first.

So 7.5 Million € - 3.5 Million € = 4 Million €.

I know. Still sounds a like a lot of Money. But next we talk about the Cap Table and its Shareholders.

If you start out with a Startup, there are only the Founders on the Cap Table. So we use in this Example 50/50 by two Founders.

But to grow your Startup, you need Money. This is there the Seed Round starts.

Usually a Ticket is from 500k till 1 Million € by around 12-15% in Shares. In the later Stage (Series A) we talking 1 to 3 Million € per Ticket around 7-15%.

Of course all this Numbers are Estimations and rely on your Negation Skills and the Economic Environment.

If we assume they had 3 Investors (2 Seed & 1 Series A) and they invest via two 750k Tickets and one 2 Million Ticket, the Cap Table can look like this:

Investors Seed = both 12,5% = 25% and Investor Series A = 15% we get a combined 40% on the Cap Table. (we not including Dilution here)

Next the First Employees. Because you need great People you usually spent 10% of your Cap Table for your first Hires. Without this you not getting good People.

In addition Opinary hired in the later Years a new supporting CEO. This also not comes cheap. In addition we estimate 5% for this hire.

Now let‘s calculate:

40% Investors + 10% Employees + 5% CEO = 55%

45% left. Divided by the 2 Founders is 22,5% each.

4 Million € left. That means 1.6 Million for the VC‘s. 400K for the Employees. 200k for the late CEO.

1.8 Million € for two Founders. So each 900k.

Still sounds nice?

Of course you have to pay Tax. We assume half here for an easy calculation.

450k after Tax.

Not too bad I know.

But keep in Mind that the Founders usually not get a high Salary during their Time building a Startup till Exit.

Opinary got founded in 2016. So we have 7 Years here.

450k : 7 Years = around 60K a Year.

Don‘t get me wrong. Plus a mediocre Salary it‘s still good Money.

But it‘s definitely not a Life changing Amount. (don‘t forget as Founder you work properly +80h a Week)

Do you still think this Exit is great?

So please be careful with VC Money…

- - -

Don‘t get me wrong here. The Founders which are selling under these Conditions, still done a great Job growing a Company to that Point. And I know I was a bit basic in the Calculation Process.

But we talking Opportunity Costs here. You may get far more for your Work if you be very frugal with Outside Investments and Bootstrap instead…

# 2 - 🏗️ Domi’s „Building in Public“: 🥇 Ranking Growth Ideas 🚀

Welcome to my Public Building Section. This is where you can sit next to me in the first Coach of the Rollercoaster and learn with me together…

First Thing First again. I made a bold Statement in the beginning today:

Scaling this Newsletter to 1000 Subs.

And I haven’t told you the best Thing about it yet…

To show you that Bootstrapping is not a Myth. I will do it like Ryan Trahan or Sam Wilson with NO MONEY…

Therefore we use the Blueprint for Growth from last Week’s Special. So I can test my own Words and proof the Concept of my Growth Strategy. (or un-proof it 🫠)

I will be 100% honest to you. I promise you this. If I fuck something up on the Way, I will tell.

Of course I will show you all the Result in real Numbers, the Failures and my Swings for Growth.

Enough talking, let’s Start:

First the Status Quo. As I told you at the Start, this Newsletter is now a half Year old. I improved with your Feedback the Structure, the Writing and Content.

So we have an initial MVP here with very loyal Readers.

Here are the current Statistics:

Both Numbers are great and high above the Industry Standard of around 30% Open Rate and 10% Click Rate.

This high Engagement proofs I’m may on the right Path. But with growing the NL, these Numbers will drop naturally a bit.

Let’s think about Ideas for Growth. Like in the Blueprint, we will rank the Ideas as followed:

You recognise I come up with different Social Channels here. But why?

With no Money but already 26 Issues in the Bank, filling these Channels with Content is an easy Job for me. I can straight go full Force here.

You can see in the Results LinkedIn could be a a good Idea worth trying. Also Short Content, Twitter and telling Everyone I know.

These Channels all have an Advantage: I can find my Target Audience there.

That’s why LinkedIn is the clear Winner. Especially in Europe most of the Target Audience is at LinkedIn.

If I would go for American Entrepreneurial Minds, I may would rank Twitter higher. But I don’t know many european Entrepreneurs at Twitter…

So, LinkedIn it is.

I think this is the best Idea to start first with. As Backup I choose the “Telling Everyone I know”-Channel, because it’s a fast and easy one.

Now that we have a starting Point I will research Methods till next Issue, in how I can scale my Newsletter via LinkedIn.

So stay tuned. Because this is real Action. Not like at the WWE… 👊

This is exciting. Okay now I have to get a LinkedIn Creator too. Won’t be easy but let’s find this out together. Another Chance that a lazy Guy like Me can proof you don’t need to hustle all the Time.

You just need smart Systems… Let’s build one…

#Twitter-Box: 🧮 Solving your Hook Problems…🪝 

In a Time where the Attention Span is a declining Resource, grabbing other People‘s Attention is a valuable Skill. (the Reason why I keep this Section so short for today 🙃)

Therefore, learning to create converting „Hooks“ is a MUST HAVE in your daily Repertoire.

A secret Weapon why your Ideas get through, instead your Colleges One‘s…

This Trick is a true Career 10x‘er or more on the long Run…

So listen up when Nicolas Cole, a Online Writing Mastermind, is posting about this Topic.

And don‘t forget, you learning new Skills by „Doing“…

Link

I know I bore you out with this. But this Tweet shows the Importance of Writing. Writing helps you to bring your Thoughts together and make them „tellable“.

This specific Tip helps you to sell your Projects/Ideas better to Everyone. Your Family, your Friends, your Boss or your Customers…

#Domi's favourite 5 - Random Bundle Edition 📚

Here some cool Reads from last Week:

• BeeHiiv: How Jennifer Chou Scaled to 60,000 Subscribers in Under 1 Year (additional Read to the Public Building Process)

• Medium.com: The Real Purpose of Venture Capital

• Visual Capitalist: The Fastest Growing and Declining Industries in U.S.

• Wired.com: 5 Ways ChatGPT Can Improve, Not Replace, Your Writing

• Entrepreneur.com: After 25 Years in Business and $100 Million in Revenue

Feedback please! Help me to improve for more fun Stuff.

Click on a link to vote:

👍 Yes Domi, will tell my friends about this Issue.

👎 Fuck you Domi, wasted my time reading this.

Meme of the Week

What da F**K… Mark is preparing for the next Round of Twitter vs. Threads 😳😳😳 (Link)

🤣😂 Thanks for reading the 26th Issue.

Please share with your Friends and have an epic Week.