5000 Business Plans 50 Deals 25 Writeoffs

© Christopher Golis 2010 1

5000 business plans, 50 deals,

25 write-offsLessons learnt from 25 years in VC

Chris Golis MA MBA FAICD FAIM

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Agenda

• Who am I?• 5 key lessons• Q&A

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Who am I?

• Graduate of Cambridge, LBS, SIA• Started working in 1967• IT (general manager) Financial Services (VC)• Director of some 30 companies• Neverfail, Scitec/VeCommerce • Nanyang Founder in 1994, raised $140m• Fellow of AICD and FAIM• Author of 3 books

4Christopher Golis 2010

1992

2007

1989

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Who am I?

• Australia’s expert practical EQ• Emotions drive people; people drive

performance. • Workshop attendees:– Recognise the hidden 7 core emotions– Skills self- and social mastery

• www.emotionalintelligencecourse.com

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Lesson #1: Do you have a Sustainable Competitive Advantage (SCA)

• Finished Cambridge 1967• Joined IBM North London working in Welwyn Garden

City• 2 years later joined start-up based in Oxford Circus• Went from this to this•

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Computer Time International Limited

• Sold the night shift on other people’s computers

• 4 major customers• Decided to rent own computer (largest in the

UK)• Employed as systems programmer• Only 2 customers came across• In the tank after 9 months: Undercapitalised?

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Why CTIL was always going to fail

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Successful SCAs

• Cochlear• Resmed• Neverfail SpringWater• CBD printer

“If you don’t have a competitive advantage don’t compete.”

Jack Welch, former CEO General Electric

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Lesson #2 Lease the Pencils

• Dialog International - 1969• Computer timeshare on IBM

computer $8 million capital 50/50

• $2m to set up Dialog UK• 100 terminals• 98 in-house application

programmers• 2 customers• Separate H/0 5 miles away

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Lesson #3 Know the Game 1986

• Founders put in $50K - $50K• Govt. grant of $200K - $250K• Angels put in $500K - $1.5M• 1st VC round $1M - $4M• 2nd VC round $2M - $10M• List raising $10M - $50M

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Visit to 5 of top 10 VCs in USA

• What is VC heaven?• ‘I have 3% of Tandem’

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Funds are raised in stages

-3 -2 -1 IPO 102468

$M

-3 -2 -1 IPO 1

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Founder’s ownership decreases

-3 -2 -1 IPO 10%

20%

40%

60%

80%

-3 -2 -1 IPO 1

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Value of equity increases

-3 -2 -1 IPO 105

10

152025

$M

-3 -2 -1 IPO 1

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www.yahoo.com

• 1994 David Filo & Jerry Yang start web-index• Late 1994 Sequoia Capital $1m for 25% $4m • Early 1995 5 VCs $9m for 20% $45m• Late 1995 Softbank $100m for 30%

$330m• Listed early 1996: $300m for 25% $1.2b• At valuation $100 b what are they worth?• 75% x 80% x 70% x 75% = 30%

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Peg Technologies

Date Who Amount Val. $m

• 1990 Founder $100k $0.1m

• 2/99 SGDCL $0.75m $2.25m

• 12/99 Gowings $3m $18m

& SGDCL

• 6/00 IPO $12m $60m

What is founder now worth?

2/3 x 5/6 x 4/5 = 40/90 = 44% of $60m = $26.7m

Christopher Golis 2010 18http://www.youtube.com/watch?v=WX2METdzjxU

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Entrepreneur’s objective

Shareholdings

Founder49%

Inv 151%

Not this!

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But this!!

Shareholdings

Founder40%Inv1

12%

Inv212%

Inv312%

Inv412%

Inv512%

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Lesson #4 Steve Gilbert’s 3 stages of Entrepreneurship 2002

• Stage 1 – come up with idea & start the business

• Stage 2 – rapidly grow the business• Stage 3 – manage the far flung empire

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Andrew Demetriou

• Best Sports CEO in Australia• Great Stage III manager High IQ High EQ• Had to be replaced as Stage I CEO

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Lesson #5 Grab the gold ring

• 1975 Chris Golis & Lonely Planet• 1980 Gordon Bell & DEC• 1994 Sheridan Forbes & Yahoo

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Australia’s big problems

• Too risky to send the elevator back down• 6σ • Only 2 or 3 markets – need an export strategy

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No Elevators

“If you have done well in your chosen career, it’s your obligation to send the elevator back down. Inspire and give opportunities to others on the way up.” Jack Lemmon as quoted by Kevin Spacey AFR 23 October 2010

• 700 state & federal laws about directors’ liability

• Why I am not a director

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6σ

6σ = 3 in a million

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Population Centres New York-Northern New Jersey-Long Island 19.1 Los Angeles-Long Beach-Santa Ana 12.9 Chicago-Joliet-Naperville 9.6 Dallas-Fort Worth-Arlington 6.4Philelphia-Camden-Wilmington 6.0 Houston-Sugar Land-Baytown, 5.9Miami-Fort Lauderdale-Pompano Beach 5.5Washington-Arlington-Alexandria, 5.5Atlanta-Sandy Springs-Marietta 5.5Boston-Cambridge-Quincy 4.6

Sydney Newcastle Wollongong 5.5 Melbourne -Geelong 4.3

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Q & A

• Why did you choose this seminar before all the others you could have attended this month?

• What was the #1 thing that impressed you in my profile?

• How did you find out about today’s event?

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Call to Action

• Readers are leaders: Buy E&VC• Contact Chris Golis cgolisau@gmail.com• www.emotionalintelligencecourse.com• 1 day workshops:– EQ in Selling: The Most Useful Sales Technique I

have ever used– EQ in Management: Lifting Your Level of Emotional

Intelligence