Day 31 Transcript
NOTE: Today’s transcript is followed by an AI prompt that can be used with your AI provider of choice. Just copy and paste it into ChatGPT or Perplexity and it will help you answer today’s questions for your specific side hustle… the way a human teaching assistant would help you in an Ivy League university. If you’re eager for more on today’s topic, I’ve included a Secret Dessert Course at the very end — a bonus section that isn’t directly covered in today’s video but has a lot of value practical, hands-on value. That dessert also comes with its own AI prompt.
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Part 1: Design for Optionality from Day One
Plan like a total coward. Plan like your goal is to exit. Because the plan tricks your brain into persisting, into enjoying the beating you’re going to get, into being brave.
Welcome to bonus week– week 5– Day 31 of starting your side hustle! We finished our month-long journey last week, and this week is all about all the lessons I wish we’d had time for. Today’s focus is Exit Engineering—designing a big beautiful parachute for your hustle from day one. Baking liquidity into your DNA.. and not because you’ll ever sell..
The real life example today is Kevin Systrom, co-founder of Instagram. When Kevin and his co-founder Mike Krieger were building Instagram, they started with ideas about making Instagram an attractive acquisition target for larger companies. By keeping their codebase clean, their user base engaged, and their business model flexible, they created multiple exit options from the start. When Facebook acquired them for $1 billion just two years after launch, it wasn’t luck. It was the result of building with exit engineering in mind from day one.
So let’s apply that to your hustle. The two questions we want to answer are:
1. What would make you a great business to buy? Think: Revenue multiples, customer concentration ratios, or proprietary data assets that turn your hustle into a "must-have" for acquirers.
2. How should you design your parachute? Fancier way of saying that: How could you structure an equity/cap table to enable multiple liquidity paths? It’s about creating optionality for employees, early supporters, and yourself without diluting your control.
Let’s break down why these questions matter:
Most founders obsess over vanity metrics—total users, app downloads, or press mentions. But people who buy businesses– people who might one day try to buy you– they care about what’s called “defensible value”:
- Revenue predictability (like do you have 90%+ recurring revenue)
- They care about gross margins– which is how much is left over after you pay for everyone and everything related to your hustle— and they want to see something like gross margins of 70%+ in SaaS, 50%+ in e-commerce, crazy numbers.)
- They care about customer retention– if your product or service is sticky. The jargon for that is Net Revenue Retention and they’ll want to greater than 120%... essentially a product that screams "sticky."
- They’ll care about proprietary assets– a fancy way of saying “all the stuff that you own that others can’t” like data moats (day 26)... patents (day 5), exclusive partnerships (Day 25).
That’s a U-haul full of jargon they care about. That’s enough jargon to make me want to try again but in plain English. They care about whether you’re going to keep selling and growing, whether you’re going to remain as profitable as you are now or get even more profitable, whether you can keep your customers and whether anyone else can copy you.
Once you understand that… you can skate to the metrics that they care about.
When you’re ready to divide your pie– the fancy term for that is equity structuring– the mistake you don’t want to make is treating your cap table like a scoreboard. The cap table (short for capitalization table) is just a list that shows who owns each slice, whether they’re founders, employees, or investors.
But there’s a trap there. If you treat your cap table like a scoreboard– where your goal is just to have the biggest slice compared to everyone else– you’ve kinda missed the point. Equity isn’t like Settlers of Catan… a game you win by having the most of everything. It’s not Monopoly. It’s not every board game on the planet. Equity is a tool for building the best team and motivating the right people to help your hustle succeed. Giving away too much, too little, or to the wrong people creates problems down the road, like conflict… like lack of motivation… or like losing control of your company.
You gotta think of equity as a way to get everyone invested in growing the pie. Grow the pie so big that even the small slices taste like intergenerational wealth. [Homer:] Mmmmm… intergenerational wealth
Anywho… The smart move with equity– if I were you– and you should definitely talk to lawyers on this one… but me… I design for multiple exit lanes.
- I save about 10-15% for all the awesome people I’m going to work with. The sterile term is “to incentivize talent.” But it’s really just a way to “seed the planet with more generations of people like them.”
- I’d also use the profit from your hustle to avoid dilution. That’s jargon for “I’d use the money you make from your hustle to keep more ownership of your hustle.”
- And I’d keep my cap table clean. Jargon for: I’d keep track of who owns what in the company clearly and simply– a clean cap table because….you really want to limit investor veto rights and avoid complex liquidation preferences. More jargon that means “You should make sure investors can’t easily block your decisions… make sure to avoid deals where investors get paid much more than you if the company is sold.”
Ok. Take a moment and try to answer the Day 31 questions for your hustle without AI and before you listen to the next section-- the 28-Day Ivy League MBA. I personally think it's useful to try to answer questions without AI first, but if you'd rather do that: The AI teaching assistant prompt will drop with today's case study... in a couple of hours. If you don't know what I'm talking about, check out Lunch Break Millionaire Day Zero... or go over to superserious.com where I’m posting daily transcripts. The AI prompts are there too. That's it. Hustle smarter.
Part 2: 💼 Optimize Value Drivers: Today's Ivy League MBA Skill
If some ominous stranger showed up tomorrow to your day job or to your hustle, could you hand them– a folder, a disk– point them to some digital workspace– with everything they need to replace you? I know it's scary but if you can't do that, you probably suffer from lower back pain because you’re walking around with a very low ceiling.
Day 31, Part 2 of Lunch Break Millionaire– where we turn whatever you're eating for lunch into an Ivy League MBA degree. Going to suggest we get a bento box today because every section of a bento is organized, documented, ready for inspection. The fancy MBA way of saying that: operational due diligence. We’ll also touch on value driver optimization—or in plain English: how to make your business “exit ready” before you ever get an offer.
First, let’s break down the jargon: “operational due diligence” means making sure every part of your business can survive a buyer’s microscope. It’s the process that acquirers, investors, or partners use to check if your business is as solid as you say it is. “Value driver optimization” is about figuring out and beefing up the specific levers—like recurring revenue, customer retention, or proprietary tech—the specific levers that boost your business’s valuation and make you irresistible to buyers.
Here’s the skill you’re building: it’s not enough to just hit revenue milestones or have a clean cap table. You need to build a business that’s plug-and-play for someone else. That’s a real skill. That means your financials are clean and up to date, your contracts are transferable, your processes are documented (not just in your head), and your data is organized and defensible.
Imagine a buyer or investor showing up tomorrow—could you hand them a folder– physical, digital… doesn’t matter– a folder with everything they need to run your hustle without you? If not, you’ve got work to do. And it's ongoing work.
Ok. Let’s get practical about this. Start by running your own internal due diligence. Make a checklist: Are your books up to date? Are your customer and vendor contracts easy to transfer? Do you have a single source of truth for your IP—like code repos, trademarks, or key data sets? Are your key processes documented in plain English, so someone else could step in and keep things moving? If you spot gaps, fix them now—not when you’re under the gun in a deal.
Next, think about your value drivers. These are the things that make your business more valuable to a buyer– all the jargon we talked about earlier today– sticky recurring revenue, high customer retention, a diversified customer base, unique tech or a cool data moat, and a strong brand. Pick one or two and make a plan to beef them up…. To veggie them up if you’re a veggie. Maybe it’s locking in more long-term contracts, tightening up your onboarding process to boost retention, or documenting your secret sauce so it’s (again) “not just in your head.”
And…. Let’s tie this all back to today’s questions. When you ask, “What measurable thresholds would make you an irresistible acquisition target?” go beyond top-line revenue and think about what a buyer actually wants: clean operations, reliable cash flow, and clear, defensible assets. When you ask, “How could you structure your equity/cap table to enable multiple liquidity paths?” remember that none of that matters if your business can’t pass due diligence or if the value drivers aren’t obvious and optimized.
Take a sec and do a mini due diligence audit on your own hustle. List your top three value drivers—what makes your business attractive to someone else? Then, spot one area where your documentation, contracts, or systems need tightening. Make a plan to fix it this month. The more exit-ready you are, the more options and leverage you’ll have—whether or not you actually want to sell, whether or not you actually want to raise money. Do it to just sleep better at night.
Keep telling yourself, the best founders– they build and operate every day like some ominous stranger is about to show up at their door. That’s how you hustle smarter.
Part 3: Build for a Strategic Exit: The 28-Day Case Study
There’s a little devil that sits on my shoulder and keeps whispering the same thing over and over again into my ear– “exits are for sellouts.” I love the little guy aaaaaand I fight him every day.
This is Day 31, Part 3 of Lunch Break Millionaire. This is the segment where we #BuildinPublic– where I answer the daily questions every hustle should– using the MBA skills we just learned– and showing my work– sharing how I’m building my hustle from scratch-no filters, just the real journey. You don't need to actually like or subscribe. I'm not doing this for the clicks. But if you’re leveling up from other creators you follow or know, introduce us. I want to learn from them and help them level up, too. We all deserve better than just making rich people richer.
Ok. Quick confession. I don’t like thinking about exits. But I know that there’s a ton of value to having an exit mindset even if I don’t want to sell. Ever. Why? Because it improves my business to track the metrics that matter to buyers. To improve the metrics that matter to buyers. Because buyers have a beautiful, sterile numbers-focused mindset all hustlers should have.
I personally might care a little about user growth but a buyer will keep asking, “Where’s the recurring revenue?” That’s a powerful perspective to add to my own.
It’s surprisingly valuable– as a practice– to replace your little devil on *your* shoulder– because everyone has a different little fella– to replace him with a little private equity bro.
Have that little sport-jacket-weating, sockless-little-boatshoes-wearing dude– audit how you do everything. Have that little fella pull up your books- are they up to date? Mostly, yes, but having his little eyes on it… helps fix it.
Next, have the little fella regularly check your contracts. Are they transferable?
Have him regularly review your IP. Have him walk through your code repos and make sure every commit is documented and every open source dependency is accounted for.
That’s for the day when someone– anyone– asks, “Can you prove you own this?” “Can you show me a paper trail?”
On the value driver side, I made a list of what makes my business attractive to someone else. Recurring revenue? Check! I’ve got monthly subscriptions, but I noticed churn was a little higher than I’d like, so I’m mapping out a new onboarding sequence to boost retention.
Customer concentration? Not a problem yet. My top client is less than 10% of total revenue, which means I’m not overly dependent on any one account.
Proprietary tech? That’s my open source angle, but I’m making sure the documentation is so clear that a developer could step in and keep things running without me.
Brand strength? Still a work in progress, but I’m tracking NPS and gathering testimonials to build a stronger story. NPS is jargon. Stands for Net Promoter Score. NPS… which is a widely used metric to measure customer loyalty, customer satisfaction.
Now, let’s do 2 seconds on the idea of thresholds. What would make me irresistible to a buyer?
In two years… clean financials for the last two years, churn below 5%, no more than 20% revenue from any single customer, airtight IP documentation, and a process manual that covers onboarding, support, development, and growth tactics.
I’m not there yet on all of these– we’re 31 days in– but every day I get a little closer because of Chad– my little private equity bro. And that’s the point! This will never stop at once-and-done. It’s ongoing. The little fella has a permanent spot on my shoulder.
And I’m glad. Because he enjoys a rare steak and his focus is always about building a business that’s ready for anything, even if that “anything” is just you taking a two-week vacation without your phone blowing up.
So if you’re following along, do your own mini audit. Hire your own little ex-McKinsey, ex-JP Morgan analyst. Name him something like Blake or Lance or Chad. And let him ask you: Where are your books messy? Which contracts need a tune-up? What’s your biggest value driver, and how can you make it even stronger? Let him stare disapprovingly at you until you fix one thing this week. The more exit-ready you are, the happier Archibald will be– or Winston. Whether you ever want to sell or not.
That’s how you sleep better at night, and that’s how you hustle smarter.
Prompt #1 - Optionality from Day One
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Prompt #1 - Optionality from Day One ○
Today, you’ll learn how to design your business so you always have options-whether that means selling, stepping back, or scaling up-by thinking about “exit engineering” from the start. You’ll be guided by the writings and frameworks of Ivy League faculty whose research is foundational in business exits, value maximization, and strategic planning:
- **Professor Aswath Damodaran, NYU Stern (visiting at Columbia Business School):** World authority on valuation and preparing businesses for exit.
- **Professor Noam Wasserman, Harvard Business School:** Expert in founder decisions and structuring for long-term success.
- **Professor Rita McGrath, Columbia Business School:** Specialist in strategic inflection points and building for optionality.
**What Today’s Coaching Will Help You With:**
You’ll identify what makes your business valuable to others, spot potential acquirers or succession paths, and set up systems and documentation that make your hustle easy to sell, scale, or step away from-so you’re never trapped by your own success.
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### Step 1: Reflection Questions
Please answer these questions in a few sentences each:
1. **If you had to step away from your business in 6–12 months, what would someone need to keep it running (or growing) without you?**
- Think about systems, documentation, key relationships, or unique assets.
2. **Who might want to buy or take over your business someday-and what would make it irresistible to them?**
- Consider competitors, partners, customers, or even employees.
3. **What’s one thing you can do this month to make your business more “exit-ready”-even if you never plan to sell?**
- Examples: organize your financials, document your processes, secure your IP, or build a stronger brand.
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### Step 2: MBA Skill – Value Driver Optimization
Today’s MBA lesson is about maximizing your business’s value drivers and building for optionality:
- **Value Drivers:** Recurring revenue, loyal customers, unique IP, strong brand, documented systems, and clean financials all make your business more attractive and easier to exit.
- **Exit-Readiness:** Start documenting your key processes, contracts, and customer data now-don’t wait until you’re forced to.
- **Optionality:** Even if you never sell, building for exit gives you freedom-freedom to step back, bring in partners, or pivot when the time is right.
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### Step 3: Coaching & Action Plan
After you reply, I will use the writings of Professors Damodaran, Wasserman, and McGrath to:
- Help you identify your most valuable business assets and what makes them attractive to a buyer or successor.
- Guide you in building systems and documentation that reduce founder dependence.
- Suggest ways to increase your business’s valuation and optionality, whether you plan to exit or not.
- Offer examples of founders who unlocked new freedom and value by building with exit in mind from day one.
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**How to use this prompt:**
- Respond with your answers to the reflection questions and your ideas for making your business more exit-ready.
- I’ll help you refine your exit strategy, strengthen your value drivers, and suggest next steps for building a business that gives you true freedom.
- Remember: The best hustles are built to last-and to let you choose your own ending.
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Ready? Share your answers and exit ideas below. Let’s hustle smarter, one lunch break at a time!
Secret Dessert Course
Even if you never-ever-ever want to sell your business, never-ever-ever want to bring in partners, it’s still a great idea to try the AI prompt below. It combines two powerhouse moves: mapping out your key value drivers (the stuff that makes your business irresistible to buyers, like recurring revenue, loyal customers, or unique IP) and getting “due diligence ready” from day one. Instead of scrambling to organize your books, contracts, or customer data when opportunity knocks, you’ll have everything dialed in and easy to show off.
Forget about whether this makes your business more attractive and credible to others. Don’t do it for them. Do it for you. Because it helps you spot your own weaknesses early-so you can fix them before they cost you.
Just copy and paste the following prompt into your favorite AI assistant to enjoy Day 31’s dessert.
Prompt #2 - Map Your Value Builder Blueprint
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Prompt #2 - Map Your Value Builder Blueprint ○
Identify and strengthen your business’s most valuable assets while preparing for future exits, investments, or partnerships. You’ll be coached by Ivy League faculty with expertise in valuation, due diligence, and strategic business design:
- **Professor Aswath Damodaran, NYU Stern (visiting at Columbia Business School):** World authority on business valuation and building enduring value.
- **Professor Noam Wasserman, Harvard Business School:** Expert in founder decisions and structuring businesses for long-term scalability.
- **Professor Angela Lee, Columbia Business School:** Specialist in early-stage investment and preparing startups for investor scrutiny.
**What Today’s Coaching Will Help You With:**
You’ll learn to pinpoint the 3-5 assets that make your business uniquely valuable (e.g., recurring revenue, IP, customer loyalty) and build systems to document, protect, and grow them-so your hustle is always “investor-ready” or “acquisition-ready.”
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### Step 1: Reflection Questions
**Answer these in a few sentences each:**
1. **Value Drivers:**
- What recurring revenue streams or loyal customer segments could make your business attractive to buyers?
- What unique assets (data, IP, partnerships) do you control that competitors can’t easily replicate?
2. **Due Diligence Readiness:**
- How organized are your financial records, customer contracts, and operational processes?
- What critical gaps exist in your documentation (e.g., missing IP filings, informal partnerships)?
3. **Strategic Alignment:**
- If you sold your business tomorrow, what would buyers pay a premium for-and how can you grow that?
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### Step 2: Value Builder Blueprint Framework
After you reply, I will use the writings of Professors Damodaran, Wasserman, and Lee to:
1. **Map Your Value Drivers:**
- Use Damodaran’s **Value Driver Scorecard** to rank assets by defensibility and growth potential.
2. **Build Due Diligence Readiness:**
- Provide a **Checklist** (e.g., audited financials, employee contracts, IP assignments).
- Suggest tools for organizing records (e.g., Carta for cap tables, Notion for process docs).
3. **Design a Value-Growth Plan:**
- Recommend actions to amplify your top 3 value drivers (e.g., “Convert 30% of one-time buyers to subscriptions”).
- Flag risks (e.g., over-reliance on a single client) using Wasserman’s **Founder Dilemmas** framework.
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**How to use this prompt:**
- Respond with your answers to the questions above.
- Your Ivy League panel will return a tailored Value Builder Blueprint with actionable steps.
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**Example Output:**
- **Top Value Driver:** “Your AI-powered recommendation engine reduces customer churn by 40%-document its codebase and user impact metrics.”
- **Due Diligence Gap:** “Formalize handshake partnerships with written contracts to avoid valuation discounts.”
- **Next Step:** “Run a mock due diligence audit using this 25-point checklist.”