Lectures on Startups at Yerevan Universities – October 2013

(Guest Post by Curtis MacDonald)

Now that the lectures have finished, I’d like to review the key points a bit.  At all three events I broke down the lectures into a basic explanation of startups and the process of value creation, then went into an example using Facebook.  (The slides are available for download if you contact Julia Melikyan.)

Section 1 explains the difference in lifestyle startup (like a restaurant) and a venture startup (like a high-tech, high-growth company).  The stages of this startup of course go from the original idea to the successful exit (where the value is unlocked for the investors and founders), with a wide range of events in between.  We managed to cover i) where the idea comes from, ii) why the idea is not the most important component of the startup, iii) building up the founder team, iv) financing (for Armenia this is probably best done through boot-strapping), v) growth and competition, vi) then value-unlocking (IPO, exit, on-going successful company, etc.

It was great to spend a lot of time with the students on Section 2, looking at Facebook as a concrete example and tracking the value of the company over time and important milestones like launch and revenue generation.  The big take away from that discussion was how quickly the company’s value grew and tracked the number of users, something you only see with social networks.  The investors also showed a lot of nerve by not pressing to hard for the quick exit to Yahoo or forcing the revenue too early.  This was clearly an exceptional case and doesn’t work for many or most companies, but makes for a good case study.

facebook Valuation overtime

Image Credit: Flickr/ User: mushman1970 (CC License)


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