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 Bryan Jurewicz 3

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Lean Startup Revolution

Business Plans Are Dead (Use Business Model Canvas) Steps Before Building Product, Team & Expenses: 1.

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Be Laser Focused On Problem & Solution!

Who Is Customer?

Narrow Value Proposition (Don’t Be Everything For Everyone) 4.

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Create Future Valuation Hypothesis & Work Backward (Target Market x Small % x $Revenue x Valuation Multiple) Build Business Model Canvas Build Financial Projections Estimate Funding Needed Determine Future Ownership %, Potential Valuation & Exit Opportunities Begin Customer Development Iterate/Test/Iterate/Test Pivot?

Begin Building Business Bryan Jurewicz 4

Steve Blank’s Customer Development Alexander Osterwalder's Canvas

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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 Bryan Jurewicz 7

Know Your Revenue Model!

              Products Subscription Freemium Lead Generation Commerce Social Network Marketplace Payments Gaming New Media Search Audio/Video Rental Royalties Bryan Jurewicz

How does your company provide value & earn revenue?

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Customer Development/Acquisition & Business Models From Disruptive Companies Toe-Hold With Initial Killer-App Scale

• • Free Individual professional bios/personal web site; Professional network connections.

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

• 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.

Monetize

• • • Premium subscriptions- 3 levels. (27%) Hiring Solutions: Sell analytics to F2000 HR depts. (41%) Marketing Solutions –Targeted Ads (32%) • • Built trusted brand (product/company) Release more products (4) cross/upsell

Multi Dimensional Biz Models

• • • B2C; B2C2B (online); B2B (offline) Ad Model • • • B2C B2B B2B2C • • • • Free (2GB); Paid monthly subscriptions for 50GB; 100GB, 350+ GB B2C B2C2B 9

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 Bryan Jurewicz 10

What Was Missing/Learned?

 Customer Development  Proven Business Model  Customer Acquisition Channels  Customer Acquisition Metrics  Customer Acquisition Costs  Successful Financial Model  Pricing Bryan Jurewicz 11

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.

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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 Bryan Jurewicz 15

Municipalities Owners Architects Engineers Associations Construction Communication Fragmentation Documents Documents Documents Documents Documents GC GC GC GC GC Subs Subs Subs Subs Subs Subs Subs Subs

Universal Construction Communication Network Subs Municipalities GC GC Export Archive Translators Integrations XML Subs Subs Owners

Bids Documents

Architects Engineers Security Import

Database

Viewers API’s

Qualifications

Email Fax

Messages

GC GC Subs Subs Subs Subs Subs

Customer Validation (Acquisition)

     Prove you can acquire customers without staff/operations.

   Do not prematurely scale!

Founders focused on getting 1 st 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

Search Engine Optimization (SEO) Pay Per Click (PPC) Social Media Email Marketing Press Releases/PR Telemarketing Strategic Partners Direct Mail Enterprise Sales Conferences & Events Banner Advertising Print Ads Bryan Jurewicz 21

One

Common Platform

Tens

Sales Reps & Channels

Hundreds

GC Clients

Thousands

Sub Clients

Hundreds of Thousands

Companies Accessing GradeBeam.com

GB Sales Reps Website Partners Architects Owners Direct GC Sales SEO PPC GC Partner Clients GCs Invited Subs Invited Direct Sub Sales Sub Partner Clients Subs Invited Project Access Planroom Access Millions

Transactions, Insights, Analytics & Client Scalability

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

Channel Strategy Metrics Example

Campaigns

User Contests Pro Sponsorships Strategic Partner Content Providers Digital Advertising - PPC Inbound Marketing - Social Inbound Marketing - Content E-mail Inbound Marketing - Referral

Impressions

23,400,000 13,477,000 256,000,000 3,850,000 100,000,000

396,727,000 Interest

819,000 235,844 704,000 59,167 384,616 1,158,290 1,191,663 275,000

4,827,580 Conversion to Member

286,650 82,544 176,000 19,719 192,311 115,829 297,913 41,250 18,347

1,230,563 Subscriber

8,596 2,478 1,760 592 5,770 3,473 8,932 825 735

33,161 $'s Invested

$100,000 $60,000 $10,000 $60,000 $250,000 $22,000 $22,000 $31,084 $22,000

$577,084 Cost/ Member

$0.35 $0.73 $0.06 $3.04 $1.30 $0.19 $0.07 $0.75 $1.07

Cost/ Subscriber

$11.63

$24.21

$5.68

$101.35 $43.33

$6.33 $2.46

$37.68 $29.33

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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 & 1 st 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 Bryan Jurewicz 37

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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 Bryan Jurewicz 39

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:

Backable Team: Visionary, Hacker & Hustler (Ideally been there/done that.) Post MVP Early Production Product Multiple Target Markets Early Product Market Fit Scalability Proven Sales Channels & Success Metrics Vetted Financial Forecast Path To Profitability Funding Needed Use Of Funds Budget Funding Success Milestones & Goals Runway Estimate Pre/Post-money Valuation Estimated Future Funding Needed # of Funding Rounds Potential Exit Strategies Forecasted Enterprise Valuation Calculated Return Multiple Investor Leads, Contacts & Relationships Marketing Documents Bryan Jurewicz 42

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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Thanks!

Questions?

Bryan Jurewicz

Entrepreneur/Executive/Advisor Accelerating Growth, Funding & Exits  How can I help?

 Connect with me…

Resources

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 http://www.OrbitMedia.com/Blog/Marketing-SEO Startup Classes:  Udacity – How To Build A Startup (Steve Blank) https://www.udacity.com/course/ep245  Business Model Generation http://www.businessmodelgeneration.com/onlinecourse Startup Books:  Business Model Generation (Alexander Osterwalder)  Four Steps To The Epiphany (Steve Blank)  Lean Startup (Eric Ries)  Startup Owner’s Manual (Steve Blank) Bryan Jurewicz @BryanJurewicz 45