the startup process
dan gould vp, technology fox interactive media
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you
here
startup
change the world
build something
make money
(lots of easier ways)
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need you
value
about:me
entrepreneur
corridor
failed
good
social interfaces machine learning
do
something
$$$ idea
janitorial functions
people
marketing resources engineering
why?
metric: do you know your goal?
(boolean)
idea
matters? yes
> execution? no
100% * 100% = 100% 90% * 90% = 81% 100% * 0% = 0%
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people with problems
niche
niche
niche
niche
niche
niche
niche
niche
niche
metric: can you show me your ideal user?
mission
"To serve the world's most engaged community." (AOL 2006)
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."
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 -> a b->c c->d
metric: did i hire someone better than myself?
incentivize
options
CEO COO VP (Ind) Board Director Lead Eng 5+ exp Eng Mgr, Jr Eng
5-10% 2-5% 1-2% .5-1.5% 0.3-1.2% 0.5-1% .33-.66% 0.1-0.33%
rough post-Series A
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 $1M or 5% of $20M
venture-backed
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for most: VC==wrong
(but it’s what I’m going to talk about)
fundraising
sex
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(some typical amounts)
self ? 3Fs 10-100K angel 200K-1M vc (series a) 1-8M vc (series b) 5-25M mezz 25+M IPO $lots
friends & family
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angels
successful entrepreneurs retired execs professional angels “trailblazers” angel groups
sophisticated
risk / reward
equity
Guy Kawasaki’s rule of thumb:
$500K per engineer -$250K per MBA
(said for series a in a better market)
convertible
disappearing in this market disappeared
(last deals i saw for conv angel rounds w/1st-time entrepreneurs in this market before they stopped)
75% warrant coverage 50% discount 10% per month warrant coverage
20-30% discount in good market
vc
pensions, endowments carry
“sure bets”
success: 20 investments 13 op/sideways 5 2-3X 2 10X
10Xes pay
only 10X potential
1000 250 12 6
plans initial pitches due dilligence investments
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angel portfolio entrepreneur advisor lawyer CS profs
advisors
advice <-> $
pitch
practice
10
1 hour: 20 mins - VC late 20 mins - pitch 20 mins - questions
team
elevator pitch
revenue model
customer acquisition
competition/barriers
amount
milestones
customer traction
1-page exec sum
deal
Company Value
$2M
Cash in the bank
$1M
Company Value
$2M
Cash in the bank
$1M
Company Value
$2M
}
$3M
before
100%
= $2M
Your Share
after
33%
= $2M
67%
Your Share
VC Share
(but you did give up a bunch of rights)
eventual size discounted for time, risk, dilution
people risk market risk execution risk competition risk technology risk financing risk
competition
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preferred shares vetoes over sales/stock iss liquidation preferences board seats protective provisions ratchets etc.
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nancing = work
success!= nancing
success=pro ts
pro ts products & sales
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