the startup process (img cc flickr user karlequin) dan gould vp, technology fox interactive media
the startup process
(img cc flickr user karlequin)
dan gouldvp, technologyfox interactive media
you
here
startup
change the world
build something
make money
(lots of easier ways)
(img cc flickr user noelleandmike)
(img cc flickr user casasroger)
need you
value
about:me
entrepreneur
corridor
failed
good
social interfacesmachine learning
do
something
janitorial functions
engineering
marketing
people
$$$
resources
idea
why?
metric: do you know your goal?
(boolean)
idea
matters? yes
> execution? no
100% * 100% = 100% 90% * 90% = 81%100% * 0% = 0%
cc flickr user cayusa
people with problems
nichenichenichenicheniche
nichenicheniche
niche
metric: can you show me your ideal user?
mission
dumb
"To scout pro!table growth opportunities in relationships, both internally and externally, in emerging, mission inclusive markets, and explore new paradigms and then !lter and communicate and evangelize the !ndings."
"To serve the world's most engaged community." (AOL 2006)
A Computer on Every Desk and in Every Home
(1975)
The World On Time
Organize All the World’s Information
people
!rst 5-10==
don’t compromise
a -> ab->cc->d
metric: did i hire someone better than myself?
incentivize
options
rough post-Series A
CEO 5-10%
COO 2-5%
VP 1-2%
(Ind) Board .5-1.5%
Director 0.3-1.2%
Lead Eng 0.5-1%
5+ exp Eng .33-.66%
Mgr, Jr Eng 0.1-0.33%
vesting
+ acceleration, etc
founders too
milestones
come up with a series of milestones and
break down tasks to get there
e.g.,product design done!rst customer test
beta ready
prioritize relentlessly
types
right
consulting
lifestyle
cash"ow
50% of $1Mor
5% of $20M
venture-backed
(img cc flickr user omnidirectional)
(img cc flickr user willie_901)
for most:VC==wrong
(but it’s what I’m going to talk about)
fundraising
sex
(img cc flickr user irlandainquieta)
self ?3Fs 10-100K
angel 200K-1Mvc (series a) 1-8Mvc (series b) 5-25M
mezz 25+MIPO $lots
(some typical amounts)
friends & family
(img cc flickr user martin_hartland)
angels
successful entrepreneursretired execs
professional angels“trailblazers”angel groups
sophisticated
risk / reward
equity
$500K per engineer -$250K per MBA
Guy Kawasaki’s rule of thumb:
(said for series a in a better market)
convertible
disappearing in this marketdisappeared
75% warrant coverage
50% discount
10% per month warrant coverage
(last deals i saw for conv angel roundsw/1st-time entrepreneurs in this market
before they stopped)
20-30% discount in good market
vc
pensions, endowments
carry
“sure bets”
success:20 investments
13 "op/sideways5 2-3X2 10X
10Xes pay
only 10X potential
1000 plans250 initial pitches12 due dilligence6 investments
(img cc flickr user protoflux)
(img cc flickr user bargas)
angelportfolio
entrepreneuradvisorlawyer
CS profs
advisors
advice <-> $
pitch
practice
10
1 hour:20 mins - VC late20 mins - pitch20 mins - questions
team
elevator pitch
revenue model
customer acquisition
competition/barriers
amount
milestones
customer traction
1-page exec sum
deal
Company Value
$2M
Company Value
$2M
Cash in the bank
$1M
Company Value
$2M
Cash in the bank
$1M
}$3M
100%
Your Share
before
= $2M
33%
67%
Your Share VC Share
after
= $2M
(but you did give up a bunch of rights)
eventual sizediscounted for time,
risk, dilution
people riskmarket risk
execution riskcompetition risktechnology riskfinancing risk
competition
(img cc flickr user ohadby)
preferred sharesvetoes over sales/stock iss
liquidation preferencesboard seats
protective provisionsratchetsetc.
(img cc flickr user millzero)
!nancing = work
success!=!nancing
success=pro!ts
pro!tsproducts & sales
cc flickr user davestfu