11.11 / Liverpool Sale and more.
Liverpool Sale
Did you know - No one really makes any money owning a football club, but they only profit from selling it. The sale process of Liverpool club in recent days and the timid interest received confirms the take on such sales. Even though Liverpool is a better managed club. Now, think about the others which are not operated properly and have poor costs metrics.
I read an article on the topic in Bloomberg and was curious to share snippets of it with the audience.
So in order to generate anything resembling a meaningful return, you have to sell the team. That’s why they change hands with such regularity: Half the current teams in England’s top tier Premier League have different owners than they did a decade ago. Clubs are sold with the promise of better earnings tomorrow rather than on the basis of financial stability today.
Read the complete Bloomberg article here.
This brings us to investing aspect of football clubs. Similar to the notion of early meaningful returns from the sale is investing at pre-seed stage of VC. In pre-seed investing a common saying is - it’s about the future and what a startup can do, instead of what a startup isn’t. Pre-seed is the ultimate long term game!
Though, sale of a football club isn’t something new! Recently an old club was sold to Ryan Reynolds (Captain America fame in the Avengers movie series). What they bought has a deep history and culture attached to it. So a lot of people would want them to succeed. Here’s a short snippet from the Forbes article.
“This is the third oldest professional football club on Earth that plays in the oldest international stadium on earth. It is serious business to each and every person. I don't care whether you're five years old in Wrexham or you're 95 years old. There is a passion.
Read more about it and their learnings here.
Pricing Products/Services
I’m always interested in the topic on pricing. Especially for the early stage startups and Founders building from scratch - setting a price is a difficult process.
For some consumer/enterprise startups pricing can be derived from what is existing in the market - for example, one cannot charge USD100 per month for a mail program like Gmail. Or it would be stupid to ask USD10 per month for a new platform similar to Bloomberg. You get the point!
But pricing also depends on the type of consumer. For example: a primarily consumer B2C app (think Twitter) can charge USD8 per month for blue checkmark but not USD80 - as noone would pay for it.
Also for Founders, selling to 1000 consumers is a different mindset and process than selling to 10 customers.
I explored this point in my recent tweet. Results are below.
I also would recommend Founder to read these two articles below on pricing.
From Sequoia . Love the snippet below.
Decoy pricing
These “decoy” packages make other—often more expensive—ones look good by providing a clearly inferior choice. There’s no obvious way to determine whether the online subscription or print-and-online combination is a better value. But compared with the print-only one, the combo is clearly a better deal. The reference point makes people more inclined to pick it.
From YC. Love the snippet below.
Another exercise I like to go with companies when dealing with pricing is help them understand is like, are you in a danger zone? And so what I usually do with my companies is I help have them, sort of, calculate what would their business look like or what is it gonna look like to be a billion-dollar company? And usually, the rule of thumb there is to be doing $100 million a year in sales, in revenue. And so that basically is like at your price that you give, how many customers do you need to have to make $100 million in that year?
Startup Projects
I do a lot of polls and tweets on Startups - Check them all out here
Checkout Startup Fundraising Canvas