Fractal Labs @ the Norwegian Venture Capital Conference - June 2014

NORWEGIAN VENTURE CAPITAL CONFERENCE.the playbook for david dating goliath and the psychology of numerology

@fractal-labs

@nicholasheller

Trondheim, Norway | June 2014

PARTNER. xxx

ME. Co-founder and CEO of Fractal Labs

DATA. Lower barriers to company creation; innovative crowd financing; exponential growth of data.

● 34% (and growing) of data in the digital universe is useful

● but only 7% is tagged

● and only 1% is analysed

Source: Mary Meeker, KPCB, Internet Trends 2014

UNDERSTANDING GIANTS.There are methods, motivations and metrics to the madness.

Source: Eddie Izzard, Death Star Canteen, YouTube

Build1

Buy2

Partner3

Invest4

BUILD. Keeping the intellectual property in-house as a valuable strategic asset.

● there is always a resource trade off

● the strategic payoff is high

● don’t forget to dogfood and iterate metric to keep in mind >> short term revenue versus long term strategic objectives

BUY. Acquire talented teams; intellectual property; or market share.

● human resources are the engine

● speed and focus matter

● story tell with data

metric to keep in mind >> cost of building in-house versus acquisition cost per head

PARTNER. Support the ecosystem and cement a position in the market.

● ecosystem development is paramount

● be cautious of changing tides

● understand partner’s metrics and motivations

metric to keep in mind >> opportunity cost of resource allocation

xxxINVEST. Venture groups are increasingly using quantitative investment tools in the private market.

● data driven decisions

● metrics matter

● timing is everything

examples of data driven investors >> include Google Ventures, Andreessen Horowitz, Greylock Capital

UNICORN CLUB. Shoot for the stars, and you might hit the moon.

● 8 of 30 european unicorns are Nordic

● average Nordic valuation $3b v $3.6b in the US

● Skype $8.5b, King Digital $5.1b, Spotify $4b, Rovio Entertainment $4b, Supercell $3b, Just-Eat $2b, Klarna $1.2b, Mojang $1b

Source: The Nordic Web, June 2014

Source: Inc, December 2011

Length of Time Since Customer Registration

0%

% o

f U

sers

Ret

urn

ing

Mo

nth

ly

10%

20%

30%

40%

50%

1 Year 2 Year 3 Year

DATA. Different business models have different key-performance-indicators.

● longer term success metrics

● customer lifetime value

● evernote.com example

● 110% revenue growth in the last 12 months

Source: Tomasz Tunguz, March 2014

STRATEGY.Cash is king, and different kingdoms require different coffers.

● box.com example

● profitability is -136%; burn rate is ~10x industry average;

average customer value is $3,653, industry median is $59,600

CASH IS KING. Accurate forecasting and cash management equates to greater success.

● financial literacy is a must

● 7 engineers; ~$70k burn rate

● capital efficiency prolonged company life; provided enough time to be acquired

● Early stage start-up example

FRACTAL LABS. Infrastrastructure and tools for data driven decisions.

● business simulation

● adaptive KPIs

● performance benchmarking

● predictive analysis

● actuals vs budget

● company scoring

● red flags

fractal-labs.com

@fractal-labs

@nicholasheller

THANK YOU