Check your business model before you code

Bill Gurley from Benchmark Capital has written an excellent blog post about valuations of companies based on multiples of revenue. Called "All Revenue Is Not Created Equal", he outlines why some companies' revenues are more valuable than others and how this affects their valuation.

The article is written from the point of view of an investor, but it is also required reading if you are starting or running a business. 


A lot of tech startups seem to focus exclusively on either the technology or the customer. But to build a sustainable business, equal weight needs to be given to the business model. 


It's no good having the best technology and best customers if you can't generate sustainable, defensible revenues. I am constantly surprised by startups that don't set out clearly how they are going to do this before a single line of code is written.

Gurley lists 10 things to look for in measuring the right multiple for valuing a company. You should check your own business model against these to see how it stacks up and if it should be changed.