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  • Bottoms-Up!

    No, I am not encouraging you to have a drink right now (but feel free if it’s past Happy Hour in your time zone!) I wanted to briefly point out the difference between a bottom-up and a top-down valuation approach for companies. We run into this topic frequently with company founders who too often rely on the top-down approach. The top-down approach uses a percentage of the overall market size to forecast revenues. For example, if the total market size for your product is $10 billion annually and we forecast to have 2% of that market next year, our revenues would be $200 million. The bottom-up approach is a little more complicated as it translates how we are going to generate revenues into formulas and assumptions. For example, one bottom-up approach is to give every sales pers

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