Google Profiles

Yep, there's lots and lots of places for an online profile, but I just set up my "Google Profile" and found it really easy and kind of fun. One aspect that I like is that Google Profiles aren't explicitly related to other applications such as the case with LinkedIn or Twitter. It's basically a simple landing page for you to show a little about yourself publicly then link to your contact info and other online places.

And given that it's hosted by Google, I'm sure that there's some SEO placement should someone be searching for you.

Here's my profile:
http://www.google.com/profiles/scottsambucci

NPR Interview from May 4

More fun stuff... NPR was looking for some to talk expertly about the national real estate market and the recent March numbers released from the National Association of REALTORS. Instead, they got stuck with me...

Here's a link to the short segment - Scott Sambucci on NPR.

Using Salesforce

I'm in process of migrating to Salesforce.com for our company's CRM. Here's what I know so far:

1. Salespeople there are meticulous during the sales process. I'm hoping this is because they're using Salesforce for their CRM.

2. You can get a user "seat" for about $65/month, and set up billing quarterly, semi-annually, annually, or bi-annually. Bi-annual prepayment gets you a discount.

3. I posted a "user case" on my profile, and received a call from a tech guy within a couple of days. He left me a voicemail because I couldn't take his call. I called him back and left him a voicemail. Another tech guy called me back about an hour later and walked me through the answer to my question. He was clear and thorough.

4. If you are using a contant/registration form on your website and you want to fully integrate Salesforce into your sales processes, you'll need to pull out the contact/webform on your website that exists and replace it with the Salesforce "web-to-lead" form.

That's all for now. Still haven't migrated our contact data over because of the day-t0-day fires, but I'm cautiously optimistic. Would be nice to be able to employ a consultant to handle the migration for us. But seeing that we're paying less that $1500/year, I'm not about to pay $2-3K to have someone come in and do this for us. (Though maybe I should, but cash flow is always the challenge in start-up land...)

No Revenue, Profit or Free Cash Flow? Now what?

In my recent post, I discussed how a firm's value could be determined simply by discounting the total revenue of the firm over a reasonable time period using an appropriate discount rate - the "Discounted Revenue Valuation Model" (DRVM)- because a firm's revenue represents the total benefit received by its customers.

DVRM focuses more on the economic, or intrinsic, value of a firm, not the market value of a firm. Financial markets and investors have shown a propensity to ignore economic valuations, instead valuing firms at artifically higher levels, creating a "market value" that exceeds true "economic value." This is the fundamental issue that I am addressing in these series of posts.

While I think DVRM a good starting point to begin to alter the way we think about firm valuation, practical challenges emerge with using this approach.

From a financial and accounting standpoint, it is possible for a firm's expenses to exceed its revenues. If a firm under evaluation has this condition, then the firm would not be a sustainable enterprise over the long run (assuming no change in the growth rates of revenues relative to expenses over time). So it seems that revenue alone cannot serve as the only indicator or proxy for determining firm value.

Arguably, it would be more responsible to take into account what's left from a firm's revenue after deducting all expenses. This is commonly known as "income" or "profit." Instead of using revenue, one could project a firm's annual income over a reasonable time horizon, determine a discount rate that fairly represents the risk level or opporunity cost of capital for the firm, and reach a new value for the firm. Using this method, there is the implicit correction for expenses incurred by the firm to achieve their revenue.

Even so, there are still problems with using a "Discounted Income Valuation Model." Primarily, accounting rules allow for a firm to claim expenses and revenues that are non-cash events, such as Depreciaton and Amortization on the expense side of things and Accounts Receivable on the revenue side. Therefore, accounting rules show that a firm may show an accounting profit, but may not have positive cash flows.

Cash is king, and anyone who's every been without money when they need will certainly attest to this. This leads us to using annual Free Cash Flows (FCF) to determine a firm's value. Just as we did with our Revenue Valuation Model and Income Valuation Model, we just forecast FCFs through a reasonable time period, discount them back using an appropriate discount rate, and now we have the true "value" of a firm.

Every textbook in basic finance espouses this method for properly determining a firm's value. This line of reasoning - starting with revenues, then using profits, and then using FCF to determine a firm's value - is exactly why textbooks and academics argue that the Discounted FCF Method is the proper technique to value an asset (or firm in this case).

But, here's the big problem -

Most start-ups generally have no FCF, Revenue, or Profit. And if this is the case with Facebook (which does have some revenue, though very little relatively speaking), how can you logically use some variation of the Revenue or FCF Valuation Models to accurately determine the true intrinsic or economic value of a firm?

I would argue that you can't. Throwing out valuations such as 10x revenues or 100x revenues to determine a firm's valuation is an economically unsound practice. There must be a better way to calculate firm valuation outside of some variation from the Revenue or FCF Models.

That's me on IPTV!

My video interview on IPTV on Real Estate Zealot.

Keep in mind that this is my first video interview about Altos Research. This was a one-take deal (i.e. "do-the-best-that-you-can-and-hope-it-comes-out-right") at a Beer for Bloggers session at the recent Inman Real Estate Connect Conference in New York City.

I'm pleased with the outcome. Of course, I am the sales guy at Altos Research, so I should be able to communicate our product the first time, every time....