Rob Walling

Now I want to couch this. It's still early. We funded, I don't know, approximately 45 companies in the past 12 months. And so obviously the failure rate of those would be much lower because they haven't had time to fail. So I don't want to act like for eternity, for the next 10, 20 years, there's going to be a 2% failure rate. But we did start writing checks five years ago.

Now I want to couch this. It's still early. We funded, I don't know, approximately 45 companies in the past 12 months. And so obviously the failure rate of those would be much lower because they haven't had time to fail. So I don't want to act like for eternity, for the next 10, 20 years, there's going to be a 2% failure rate. But we did start writing checks five years ago.

And even among those companies, the failure rate is still extremely low. The other number that I found interesting, and I just confirmed these as of this morning, is that 4% of tiny seed companies have exited, meaning sold for enough cash that tiny seed at least got our money back.

And even among those companies, the failure rate is still extremely low. The other number that I found interesting, and I just confirmed these as of this morning, is that 4% of tiny seed companies have exited, meaning sold for enough cash that tiny seed at least got our money back.

And in some cases, as you've heard with Iran Galperin's exit on this podcast, we received many, many times our money back. But 4% have exited, 2%. have been written off. So there's still a lot of companies in play. And as I said before, it's still early.

And in some cases, as you've heard with Iran Galperin's exit on this podcast, we received many, many times our money back. But 4% have exited, 2%. have been written off. So there's still a lot of companies in play. And as I said before, it's still early.

I mean, we are in the first inning in terms of B2B SaaS taking five years when a traditional startup might take two years because the long, slow SaaS ramp of death just takes a long time for things to unfold. Now, my second takeaway is just how valuable SaaS is. You've heard me say this

I mean, we are in the first inning in terms of B2B SaaS taking five years when a traditional startup might take two years because the long, slow SaaS ramp of death just takes a long time for things to unfold. Now, my second takeaway is just how valuable SaaS is. You've heard me say this

on this show, where I talk about if you're over, say, 2 million in annual recurring revenue, and you're still growing at 40, 50% a year, whatever it is, you can sell at a 4 to 7x multiple. And so this is all loose numbers. Please don't, you know, I get quoted on Twitter saying this stuff, but I'm just trying to give you a general idea. But let's say a 5x multiple.

on this show, where I talk about if you're over, say, 2 million in annual recurring revenue, and you're still growing at 40, 50% a year, whatever it is, you can sell at a 4 to 7x multiple. And so this is all loose numbers. Please don't, you know, I get quoted on Twitter saying this stuff, but I'm just trying to give you a general idea. But let's say a 5x multiple.

So if I add 1000 MRR to my company this month, That is 12K ARR, multiple of that times a 5X, multiple if I were to sell it. And I'm adding $60,000 in theory to my net worth every single month that I had 1K of MRR. So now think about adding 5K of MRR, which many, many tiny C companies are doing. 5K times 12 is 60, times five is $300,000 to the value of that company.

So if I add 1000 MRR to my company this month, That is 12K ARR, multiple of that times a 5X, multiple if I were to sell it. And I'm adding $60,000 in theory to my net worth every single month that I had 1K of MRR. So now think about adding 5K of MRR, which many, many tiny C companies are doing. 5K times 12 is 60, times five is $300,000 to the value of that company.

So I've been talking about how valuable SaaS is for many, many years. There's a reason that I began focusing on SaaS, what, 12? Was it 12, 13 years ago? And part of it's the recurring revenue. Part of it's the cheat codes, the net negative churn. But a big part of it is it's just really, really valuable. And that value can be seen in the profits you take out or it can be seen in the exits.

So I've been talking about how valuable SaaS is for many, many years. There's a reason that I began focusing on SaaS, what, 12? Was it 12, 13 years ago? And part of it's the recurring revenue. Part of it's the cheat codes, the net negative churn. But a big part of it is it's just really, really valuable. And that value can be seen in the profits you take out or it can be seen in the exits.

So A&R coined this term that I really like. It's called the tiny seed millionaire rate. And what it is is of all the companies that are no longer in operation. So this includes those that have sold and those that have been written off, that have shut down. Of all of those, so I told you before, it's 4% exits, 2% written off. So 6% of those companies, 43% of the founders are now millionaires.

So A&R coined this term that I really like. It's called the tiny seed millionaire rate. And what it is is of all the companies that are no longer in operation. So this includes those that have sold and those that have been written off, that have shut down. Of all of those, so I told you before, it's 4% exits, 2% written off. So 6% of those companies, 43% of the founders are now millionaires.

Let that sink in for a minute. I'm not saying 43% of the exited companies made the founders millionaires. I'm saying 43% of all companies that are no longer autonomously operating, meaning they've either sold or they've shut down, 43% of those founders are now millionaires.

Let that sink in for a minute. I'm not saying 43% of the exited companies made the founders millionaires. I'm saying 43% of all companies that are no longer autonomously operating, meaning they've either sold or they've shut down, 43% of those founders are now millionaires.

Now, that doesn't mean TinySeed won in all of those exits, because imagine if we invest at, for round numbers, let's say TinySeed invests at a million dollar valuation or 1.2, whatever it is, and someone sells their company for $2 million and they're a single founder. They are now a millionaire. and TinySeed received whatever it is, not quite 2x back on our money. That's not a home run for us.

Now, that doesn't mean TinySeed won in all of those exits, because imagine if we invest at, for round numbers, let's say TinySeed invests at a million dollar valuation or 1.2, whatever it is, and someone sells their company for $2 million and they're a single founder. They are now a millionaire. and TinySeed received whatever it is, not quite 2x back on our money. That's not a home run for us.