Alex Hormozi

Number two, the components that drive valuation are outside of that core component of software is going to be gross margin and growth rate.

So how much gross margin do we have and how quickly are we growing?

Now, the third element of this growth rate, which almost always happens at scale, it gets factored in, is going to be revenue retention.

So, of course, you can go from zero to $10 million very quickly because you can just sell a lot of people something, and you'll have high growth rate, not gross margins.

But if the customers are leaving, we have no stickiness.

And this is where many people who come from this world, in the information education world, or services world, or even e-commerce world, they say, oh, this shouldn't be hard.

I can have an infinite backend.

I'll just cobble some stuff together.

I'll get an outsourced developer, and we'll go sell the thing.

The problem is the

this business looks identical to this business, the information business, until you have revenue retention.

Real.

So that becomes the priority in this business.

And

I'm getting ahead of myself.

So I'll tell you how to do that in a second.

So let me tell you what sucks about this because I just told you, oh, the infinite scale, lots of money, huge enterprise value, lots of gross margins.

Why does it suck?

Very slow start.

Founders often quit early.