Perspective, Pontification and Propoganda about Entrepreneurship and Venture Capital, brought to you by David Hornik of August Capital.

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Peter J. Cranstone

David,

Congratulations on hitting the 50,000 customers. It's a huge milestone. However I think in the interests of transparency it would also be fair to your readers to add a little more context to this post. Like, what did it cost to acquire 50,000 users and how long has it taken. A quick check on their web sites indicates that it's taken 7 years and over $29 million dollars to achieve this milestone, which equates to close to $600 per customer.

$29 million dollars is a very large sum of money and depending upon the exit strategy (and number of shares currently outstanding) will require a buyer to purchase the company for over $300 million which is outside the current sweet spot range (50m - 150m) for M&A.

All that being said, we may well be signing up for this service soon. It's an excellent idea, one that is sustainable as long as costs stay low and you (PayCycle) continue to extend the brand.

What's interesting from the Entrepreneurs standpoint is that it's taken 7 years and there's still no exit. This is more like reality for Web 2.0 facing businesses. Something which most of the community miss. It's still hard work, nights and weekends.

Cheers,

Peter

Chris (Amateur Traveler podcast)

I am always glad to see good news for PayCycle since I was one of the friends and family round of angle investors.

Chris (Amateur Traveler podcast)

Hopefully I was an acute "angle" investor. Make that an "angel" investor. FIrst day with the new fingers, can't do a thing with them :-)

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