A house-cleaning service needs $100M in revenue to hit a $100M valuation at 20% margins. Work backward: that's $2M weekly, $300K daily. The real question is whether you can sell enough customers each day to make it work.
Who here would be satisfied with $100 million or less? Okay, great. So then you can more or less toss out all the crazy ideas of like, I need to invent a vacuum cleaner that, that connects to my phone with a camera and whatever else. You just don't need to do that. If you said you want to make $100 billion, then you have to create the next Google. If you want $100 billion, everything— like, if you want $100 million, any business can pretty much get there. And when I say $100 million, I mean enterprise value. If I sell— I'll use the simplest, like I said, house cleaning, right? So if I sell house cleaning and I know the average customer is going to stay with me for 2 years. And I would just look up industry stats. Average customer stays for 2 years and they pay $400 a month. Great. I know the industry averages is 20% net margins. And so for me to make a business that's going to be worth $100 million, then I need to have something that makes $12 million in profit, maybe $15, because the multiples aren't as high. We want to be safe. We'll call it $20 million. So $20 million, that means that's 20%. So I do $100 million in revenue. It's $8.3 per month. It's $2-ish million a week. Like, okay, so I gotta make $2 million a week and then divide by 7, so $300,000 a day. And so then you just back in sales velocity to the $300,000 a day on LTV. And that's pretty much how I derive almost every business model that I come up with. It's just how many do you sell a day? How much are they worth? How much total revenue is that going to create? What's the margin? What's the multiple on that margin? And then that's the business.
