Not all revenue is created equal

Bill Gurley surmised 10 properties of good quality revenue but since his post is a) very long and b) focussed on exit valuation multiples, here are the 7 that matter to me:

• Sustainable - good quality moats making it hard for the competition

• Network effects - each new customer adds value to others, meaning viral referral patterns

• Predictability - subscriptions being one of the best examples

• Customer lock-in - it’s hard and/or expensive to move to a competitor

• Gross margin levels - i.e. each dollar sold generates significant +ve cashflow

• No customer dependency - i.e. no customer contributing more than 10% rev

• No partner dependency - your company’s destiny is not tied to another’s management team

I use this to rate the health of revenue regardless of exit plans.