I’ve finally calculated the value of a dollar Sovereign Valley Farm, Chile A few days ago a young entrepreneur came to me with her big idea for a business. This happens a lot, sometimes even 3-4 times per week. And while our selection rate is very low, I pay attention to each and every pitch in our effort to find the real gems, because, in my view, a profitable private business is one of the best assets you can hold. Unlike stocks, the value of a private business (outside of the ‘tech' sector) is generally based on what really counts: profit. Private businesses can do well in both inflation AND deflation; and they aren't subject to the whims of central bankers. It's a tremendous asset class to own, and our team spends a lot of time sniffing out the best deals. Hers was not one of them. I listened patiently as she went through her pitch, and at the end she offered us a special opportunity to buy 20% of her business for $250,000. There was just one problem. She didn't have a business. There were no employees, no team, no product, no prototype, no design, no revenue, no testing, no website, no assets. She didn't even have a company or a bank account. She had nothing but an idea. And based on her calculations, she thought her idea was worth $1 million. (This is what's known as a ‘pre-money valuation'. The ‘post-money' valuation would be $1 million plus the $250,000 investment capital = $1.25MM. We would own 20% of that, or $250k/$1.25MM) Yes, it's true that a great business is the best asset you can own. But as I tell students at our annual entrepreneurship camps, the most important aspect of any business is execution– the ability to turn an idea into a plan and methodically... More