9.04.2013

Who Am I?

• Charleston SC Native• Have been a part of several startups • Worked as an architect at Apple (OSX) and Microsoft (a bunch of

stuff)Skewlz: Umiami, Berkley, Stanford, UC

Davis Livermore

Agenda

• What?• Why?• How?• When?• Next?

“A great building must begin with theUnmeasurable must go through Measureable means when it is beingdesigned and in the end must beUnmeasurable.”~Louis Kahn

What is a StartUp?

What is a StartUp?

25 hours a day8 days a weekEveryday is Wednesday

What is a Startup?

“A startup is an entrepreneurial driven organization that is continually searching for a repeatable and scalable business model” ~ Mark Babbitt

WOW – An Idea!

• Guess what?

– SO DOES EVERYONE ELSE.

WOW – An Idea!

– A real time chat/msgr with 140 char limit (interest/intent graph)• Dydadic Relationships

WOW – An Idea!

– A search engine based upon summing probability distributions over hyperlinks

•PR(A) = (1-d) + d(PR(t1)/C(t1) + … + PR(Tn)/C(Tn)

WOW – An Idea!

–Affinity Graph that allows you to connect friends based upon network theory:

•(if A~ B) then (B~A) and (if A~B and B~C then A~C)

WOW – An Idea!

“Ideas are cheap. That’s not where the value is in tech. Turning it into a company or into a product, that’s how you create value.”

~ Kevin O’ Conner, Double Click Co-Founder

WOW – An Idea!•  • “No one cares about your idea. Literally, no one, except

maybe you cares about your idea.Your belief that someone is going to steal your idea is an illusion based upon the bias of your own perspective. Besides, ideas are completely worthless. Execution is what matters.”

~ Kyle Tibbits, Cofounder @HoverApp Marketing @ThisLife (Acquired by @Shutterfly)

WHY?!

• Here are some reasons NOT to do it:

– You want to help people - there are a number of worthy charitable organizations & causes out there

WHY?!

• Here are some reasons NOT to do it:

– You want to be as rich as the Facebook guy or some other rich person.

WHY?!

   Here are some reasons NOT to do it:

– You want a job where you get to hang out with your engineering friends -- form a hacker's club•“aka – brogrammers club”

WHY?!

   Here are some reasons NOT to do it:

– You want a small business to support a nice lifestyle for you and your family• you know your buddy's IT shop nets $2M a year. 

»Whoo Whee!

WHY?!

   Here are some reasons TO do it:

– You've always wanted to build your own company from the ground up -- you were that kid selling lemonade

WHY?!

   Here are some reasons TO do it:

– You've been working on an idea you are passionate about that may make revenue and you've gotten some smart people interested in doing it with you

WHY?!

   Should You?– Willing to devote 100% for 0-5 years?

•Everything you do revolves around moving NewCo forward:–Take Care of you and others–Cut out all extraneous BS–Willing to live on reduced income etc

Should You ?!

– Passionate?•Do you lay in bed thinking about it?

•Stay up trying to code the idea?•You are synchronous with the product

   Should You?!

– Love to hear NO?•That’s basically EVERYDAY.

– HONEST WITH YOURSELF?•You will find out fast if you are BS’ing

WHY?!

“You MUST be able to step on their throats and let SOMEONE ELSE clean up the roadkill”~ Mark Cuban

Steps

– Secure domain name– Familarize yo’sef with corp docs and

process– Get a great lawyer that caters to startups– Form company (c-corp)– Have a notional aspect of domain space

and tech space

Steps

– Educate yourself on funding– Read Brad Felds book and

Founders at Work blog– -The Four Steps to The Epiphany by

by Steve Blank

Steps

– Start working VC network

– Do not form a board of directors– Iterate on everything code/ideas/money– Raise round while scaling– Close the round and keep raising– Go to 50 customer leads present

hypothesis

Steps

– OH yea …

–Minimum

–Viable

–Product

–M V P

MVP

– MVP IS:

– The BASIC features that allows a ‘product’ to be deployed

MVP

– MVP IS NOT:

– A minimal product•The point is to reduce iteration in selling and verification

MVP

– MVP IS:

– Do it the cheapest way •Its throw away•If you don’t have a crew in tow

–Use a contract shop!–Offshore is getting REALLY good

MVP

Three T’s

•A Ranked list:–Talent – Who ?–Tech – How ?–Timing – When ?

Talent

• AKA THE CREW

• A great team will turn a grade B idea into • a grade A idea

• (Also companies buy startups for the team)

Talent

• AKA THE CREW– At least TWO founders:

•One Operational or Business •Other technical

Talent

Talent

• Some words on Co-Founders– Get a great co-founder. This is too

hard to do alone. – If you're not technical but have good

domain knowledge in something you're passionate about:• get a technical co-founder. 

Talent

• Some words on Co-Founders– Spend time up front learning if you

can trust this person because you will have to trust them, with everything. 

– Second only to your spouse or partner, this is one of the most important relationships you will have.

Talent

• AKA THE CREW– Initial team needs to be a mix:

•Nowadays KILLER front end and User Experience

•Backend just as important•Some type of Stats or ML knowledge is good too

•iOS/Android

Talent

• AKA THE CREW

• No one really cares where the crew presides as long as they are cohesive

• We can thank GIT folks for this &• The Valley churn

Talent

• “The only mistakes I regret are people mistakes.” ~ Brad Feld

• “Steve hires the best people.” ~ Bill

Talent

• Create Advisory Board– Knowledge of funding process– Domain expertise– Track record of building startups– Able to listen to crying for hours– They are like dating and BOD is like

Marriage 

Talent

• Create Advisory Board

– They are NOT there to build stuff for you or raise money

– Bounce ideas or just listen – Make connections

Tech

• We know it We LOVE it…– Sorry we cannot just code we have to THINK– Nowadays no one really cares about the

tech– Framework coding has ushered in a new era– Patents are still important

•REALLY Novel algorithms and methods

Tech

• Languages:– Javascript, C++, JAVA, Python, R, Scala,

Clojure• Backends:

– Polygot persistance rulez•NoSQL and Graph Dbs

• Android & iOS• Django, Flask, Code Igniter, SymFony

Tech – Which DB?

More Than Code• Import numpy as np• Import pynmf• from numpy.linalg import norm• from time import time• from sys import stdout

• def DoMyStartup (V,Winit,Hinit,tol,timelimit,maxiter):• """• (W,H) = DoMyStartup(V,Winit,Hinit,tol,timelimit,maxiter)• W,H: output solution (exit matrix)• Winit,Hinit: initial startup state• tol: value whereas you cant take it anymore (tolerance)• timelimit, maxiter: limit of time and iterations• #MajikHappens here… (eg rapid gradient descent to exit)

• return (H, grad, iter)

Timing

• Everything in life is timing– Time is money ~ Money is Time– Kill bad ideas fast and furious– Apply to all incubators– Apply to all angel venture lists– Start prototyping - yesterday

Process Stuff

• Ya gotta do it to make it– C-Corp Filing– NDAs– Offer Letters– One Pager– CAP Table– Pitch Deck

C-Corp Filing

– Ok for some I can hear the groans Why not an LLC?

– I am continually asked by VCs of whom I make intros:•Are they Del Corp C

–Just get the 250.00 and do it

CAP Table

– This is who has what equity and at what price– Equity is the name of the game in a startup– Must be VERY simple

•Allows you and others to put in various amounts of money raised and address dilution

•Lists types of stock and outstanding shares

Funding

Funding

Convertible Note

– Standard method for early stage– Angels understand it, good for

friends/family– Converts to institutional round

stock

Kickstarter

– Great for pre-orders– Great for “good cause companies”– Can and cant be dilutive

Priced Equity Round

– It is possible– It is the best mode for fast scale– Makes it VERY easy for Series A

Organic

– Obviously the least dilutive– Self funded yields really good

results •Series A

– Usually takes a little longer to scale

On Funding

– Get enough to complete customer validation

– Or at least MVP– Know the market: read blogs books

toilet paper rolls – everything– As a coFounder know the terms and

terminologies – IT IS YOUR COMPANY

On Funding

– Nothing gets a VC F R O T H I N G

–Like..–Traction or a Corp Deal !!!!

That’s a “B” folks…

Non Disclosure Agreement

– Or NDA:•Have one and attempt to have everyone sign it

•VCs wont so don’t•Board members/advisors/janitors•Although I have never seen anyone enforce one

Offer Letters

– There are various types•Above all do not make it complicated!•Complicated equals legal crap•Legal crap equals time•Time equals money

•You don’t have any of the above

One Pager

– This document is your faceplate•Discusses company snapshot•Founders•Industry•Business •Accountants•Current Investors•Market and Product•Logo and Address

The Pitch Deck

– Know it love it sleep with it– Important items (8-10 slides):

•Team up front•Opportunity – Why your doing it•Market•What makes you novel•Competition•Amount of ask

Last words on Docs

– Please do not get fancy or make them overly complicated.

– You don’t have time.•Most who have done this before are not going to screw you

•They are in it to make money with a team as well as change the world

•If you run into someone who grinds on these items – Drop them.

Now what?

– Test your idea•If its consumer then talk to “regular” people

about it

•If they don’t get it in two sentences or less refine the idea or explanation

•If its B2B make sure a corp ASKS for it… –Or a close variation

Now what?

– Test your idea•Prototype – liquid code - MVP•Backend or heavy laden systems take

deeper research–Enterprise etc

•Kill it early if its not working

Now what?

Test your idea

–Test early and often–Do not fall in love with tech–Fall in love with company–Do Customer validation through prototype

Now what?

Test your idea

–Make some mockups (iMocks is killer) –Also wireframes via a great Ux person–Get feedback fast and hard

I T E R A T E

Someone Loves Me!• OK so lets say you raised 50k:

• Get incorporated• Set up a HQ in an Epicenter• Buy a domain if you haven’t• Get a lawyer• Get a team hopefully for equity – Or Offshore IT• Think simple.• Go Big.

Someone Loves Me!

• When speaking with other angels VCs: Two sentences or less Be prepared to give pitch • (e) subject: email from ted tanner (no

canned emails)• If you are getting traction be choosy• Your lead investor is important

More Than Code

GO BIG OR GO HOME

• You are what you build• Think BIG – bigger seperates the average

from cutting edge• Watch pennies - except for talent• Iterate Iterate Iterate• Love to hear NO

GO BIG OR GO HOME

• FOCUS FOCUS FOCUS FOCUS• Listen to your customer• Market your company and products• Simplicity is key: everything you do must

reduce friction• Sell something legal

GO BIG OR GO HOME

• Fail Once Fail Many– WTF?– Yea guess what - Everyone fails– As a matter of fact if you haven’t failed and

tried again you’re not trying hard enough– In The Valley its expected

thoughts

• Do not Panic and you may live…• Busy is not productive. You are your company• Culture = if you have to talk about it…• Lifestyle is what others do… You create

the impossible…

thoughts

Thank you for Y O U R time!

@tctjr