On October 26, 2016 the ESTEEM class had the pleasure of hearing Notre Dame alum, Tim Connors ‘89, speak on his incredible experience at PivotNorth Capital, an early-stage software-focused venture capital firm based in Menlo Park, California. Before founding PivotNorth, Tim worked for twelve years at Sequoia Capital and U.S. Venture Partners. He conceived and co-founded Spoke.com, helped build C-Cube from a startup into a publicly traded leader in digital video, and has worked closely with many different entrepreneurs in developing their ventures. He also serves on the Board of Advisors of the Gigot Center for Entrepreneurship at Notre Dame. Needless to say, Tim has had an impressive career and was someone we were all looking forward to learning from.
At the onset of the talk, Tim told us about the importance of unit economics in valuing a company. “Success isn’t about the quality of the idea, because any idea can sound good. It comes down to the unit economy. Most companies fail based on unit economics.” Essentially, unit economics employs a reductionist view, looking at revenue and cost associated with a single unit in a business model. It eliminates the masking effect of massive revenues or costs, and speaks to the viability and scalability of a company. For investors, unit economics helps value potential companies, but it also can help hopeful entrepreneurs like myself look carefully at how viable our own ventures might be.
We spent the next hour testing out certain companies’ unit economics and determining how effective or ineffective they were. In addition, we looked at a few ESTEEM students’ startup companies and how viable their unit economics were. As it turns out, a Christmas tree delivery company, founded by our own Davis DeFontes, may have one of the greatest unit economic values of all time. However, it should be noted that we are still fact-checking Davis’s numbers, and I do not personally advise investing quite yet. Sorry Davis.