Mercor’s early rounds priced in growth, not current revenue

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 28:02

   how did you think about valuation when raising too many people think about valuation through the lens of market comps and revenue multiples and not enough through the lens of what's possible with this company what extraordinary thing can this company achieve especially when you have such meteoric growth and so i'll give you like a couple of revenue numbers in each of our valuations. When we met Victor, we were at $1.5 million in revenue run rate. He gave us the term sheet and we were at a little over $2 million in revenue run rate. So over a hundred X multiple on revenue. He paid 250 as the valuation. I'm sure the benchmark partnership thought that was insane at the time. At the series B, when Fleeces gave us the term sheet, we were at 20 million in revenue run rate. So it was a hundred X multiple on the revenue. But what

2. 28:53

   they saw in talking to customers was the phenomenal experiences that we were creating and that growth that we had was going to continue. And so now we're 25 times larger in revenue scale than we were at the Series B, but in a spot where the business is so profitable that we don't need to go out for financing or spend too much time thinking about financing while we get a lot of offers and interest. Dude, that is hilarious because I obviously met Adarsh and he very kindly let me put in a small check. I had no idea you were at $20 million. I thought you were way bigger. I think we let you put in a small check a little bit later. Because the company, keep in mind, we're growing over 50% month over month. We averaged 54% month over month growth for a while in that time period. And so, it wouldn't shock me if it was a couple months

3. 29:46

   after the round and we were at a meaningfully higher revenue scale. Dude, I'm thrilled. Otherwise, I was massively off to my partnership when I was like, yeah, yeah, yeah, they're way past. They'll be looking at this going, what? Do you need to raise more money then? Again, I am direct to a fault. The rumors of a $10 billion valuation. You're like, if you're a 500 million dude, that's only 20x. And given your growth rate, that would be cheap.

4. 30:10

   It's definitely what I've been thinking about too. We honestly haven't given it much thought. Like we have gotten a bunch of offers from existing investors. We haven't really shared any materials on the business. There's just been sort of like outside indulgence and offers based on that. Is it a nice feeling or is it a, hey, let me just focus and do my work? I think there's parts of both. Like there's parts of it feeling validating, but also parts of it feeling distracting in that we just want to focus on creating phenomenal experiences for our customers and for the experts in our marketplace.

5. 30:44

   But I think that it's likely we'll do a financing soon to answer your question with low dilution, largely because there's a lot of benefits to signaling ourselves as the market leader in our environments and all of the high complexity data that we produce.