Мark Phillips "Intoduction to Silicon Valley"

Introduction to

Silicon ValleyMark Phillips

CTO

Silicon Valley

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Distance from San Francisco to San Jose is80 km/50 miles

Sand Hill Road

Silicon Valley – Brief History

• 1891 Stanford University founded by a former Governor of California

• 1939 HP founded by Stanford graduates Bill Hewlett and Dave Packard

• 1950’s Stanford University experienced financial difficulties - leased land to technology companies

• 1951 Stanford Industrial Park established – considered Silicon Valley’s starting point

• 1971 Intel created the world’s first microprocessor (the Intel 4004 Chip)

• 1976 Apple Computer creates the first Personal Computer (Apple – 1)

• 1977 Oracle Founded – IPO in 1986

• 1980 Apple Computer goes public - largest public offering since Ford went public in 1956

• 1984 Cisco Founded - IPO in 1990

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Silicon Valley – Brief History cont.• 1995 Netscape goes public one year after founding – at

US$1.96 billion, the largest IPO in history

• 1995 Yahoo Founded - IPO in 1996

• 1995 eBay Founded - IPO in 1998

• 1998 Google Founded - IPO in 2004

• 2000 Stock Market (NASDAQ) crashed

• 2001 Lohika Founded - Private

• 2003 LinkedIn – IPO in 2011

• 2004 Facebook – IPO expected in May, 2012

• 2006 Twitter Founded - IPO in 2013?

• 2011 HP now a global company with ~350,000 employees and revenues of US$127 billion

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1995-2000: Venture capital boom and the Internet/dot-com bubble.

IT and BioTech Companies

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Top Public IT Companies Rank by Revenue (2010)

Largest VC-Funded Biotech Deals in Silicon Valley

(2010)Company VC Funding # of

Investors

Relypsa Inc 70,000,000 6Solazyne, Inc 60,000,000 11

Pacific Biosciences 59,000,000 2Pacific Biosciences 50,000,000 2

Incline Therapeutics 43,000,000 7Pearl Therapeutics 37,500,000 4

Achaogen, Inc 35,360,900 8CardioDx, Inc 34,565,000 4iPierian, Inc 28,470,400 9

VeraCyte, Inc 28,000,000 4

Company Revenue (US$ millions)

Employees (total)

Hewlett Packard 127,158 324,600Apple 76,283 46,000Intel 43,624 82,500

Cisco Systems 42,361 63,465Oracle 34,479 108,800Google 29,321 32,467

Applied Materials 10,386 13,900Synnex 9,179 10,000eBay 9,156 17,700

Sanmina-SCI 6,503 48,000AMD 6,494 11,000Yahoo 6,325 13,700

Symantec 6,048 18,600Aglient 5,750 18,500SanDisk 4,827 3,469NetApp 4,785 11,800

Juniper Networks 4,093 8,772Adobe 3,969 9,117Intuit 3,554 8,700Nvidia 3,543 6,029

Founded in last ~15 years and employ ~75% of Silicon Valley IT workers.

VC Firms – Overview and

Structure• Venture capital (VC) firms typically finance early stage and

growing companies organized as partnerships:

• General Partners

• Limited Partners

• VC firms are very selective and look to fund growing companies that have promising technology and high growth potential

• With their investment, the VC firm owns significant equity in the company. Liquidity (IPO or acquisition) after 3 to 7 years .

• VC firms create funds with a specific investment focus – i.e. a particular industry or stage of growth

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How does VC funding work?

• Seed/Angel -

• Series A (First Round) -

• Series B (Second Round) -

• Series C (Third Round) - Mezzanine financing -

• Series D (Fourth Round) -

• IPO: Initial public offering or Acquisition

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VC funding is typically categorized as ‘venture rounds’ when certain business milestones are met:

$50K to $500K

$3M to $10M

$10M to $100M

$1M to $3M

$10M to $100M

Top Silicon Valley VC’s• The top 10 VC Firms based on probability of high performance and success:

• Total funding managed by each VC from $135 million to $3 billion.

• Kleiner Perkins (KPCB) was founded in 1972 - the first VC firm to set-up in Silicon Valley.

• Andreessen Horowitz was founded in 2009

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Boom and Bust

• Last 15 years, Silicon Valley has experienced a cycle of relative ‘boom and bust’

• Dot-com bubble started mid-90s and culminated in the NASDAQ crash in early 2000.

• Silicon Valley still one of the top technology centers in the world.

• From 2000 onwards, VC financing gradually revived, diversification: pharma, energy, biotech, farming etc.

• Last year economy in Silicon Valley is improved. Still not at 2000 height of ~1 million jobs

Lohika Confidential 9

Boom and Bust cont.

Job Market:

The number of jobs still at 1995 level.

Since 1995 population has grown by ~20% and the number of unemployed (~100,000 during the recession) is the highest since 1990.

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VC investment: $100.1 Billion

VC Investment: $7.3 Billion

VC Investment: $21.8 Billion

VC Investment: $29.1 Billion

VC Investment: $21.2 Billion

Life at a Start-up in Silicon Valley

• High tech start-ups range from two person founders raising seed money to VC-backed firms with several hundred people – all have one thing in common, they are always looking for MONEY!!!

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Chaotic

No Structure

Sleep under your desk

Self-

Starter Sense of

Urgency

FlexiblePassion for the business

Not afraid to

fail

Risk-Taker

Creative

Results Oriented

‘Company-First’ mindset

Smart

Team Player Takes Responsibility

Office may be a garage, basement or extra bedroomLow pay but

equity in

company

Potential for big

pay-off if successful

Long Hours

Sleepless nights

Fun, open, unstructured work environment

Beer and

Pizza