1. Turning your idea Into a business A new recipe for success Dave Moskovitz Chairman, WebFund dave@webfund.co.nzTwitter: @davemosk Mob: 027 220 2202

2. Agenda Background The old recipe for humble pie A new recipe for sweet success Getting the resources you need What is your idea really worth? Discussion 3. WebFund engineers start-up success by cultivating ideas, people and resources as well as providing incubation, seed capital, strategic advice, governance, access to networks, technical know-how, and plenty of hard yakka.Do you have what it takes to be our next investment? 4. Background Why am I here? 5. The Old Recipe Ingredients: You, an idea, a garage, some family members, some friends Method: 1.Scribble idea on back of napkin.2. While working your day job, stay up really late every night refining your idea to where you think it's really killer. 6. The Old Recipe 3. Move into garage to build prototype.4. Get opinions from family members and friends they think it's cool.5. Get Dad to invest $30k to build a better prototype.6. Get his second ex-wife's mate to help out with the legals. 7. The Old Recipe 7. Keep adding features to your product for a year so it's exactly as you'd like it.8. Get your mate from high school to help you on some evenings when he can spare the time.9. Appoint your unemployed sister as sales director; she puts up a naff web page trying to sell your product online. 8. The Old Recipe 7.Live off the money you're getting from GST refunds.8. Go into liquidation.9. Christmas is an unmitigated disaster. Result: Humble Pie, Serves one.Garnish liberally with whakam, bathos, and a sprinkling of tears 9. Why did it fail? Single point of failure Free of the confines of strategy Under-resourced Lack of professional input No focus on customers or market Execution too slow 10. Warning The new recipe for sweet success ishigh-risk ,potentially expensive,and ALWAYS involves a lot of work doing things you don't enjoy. 11. The New Recipe Ingredients: You, an idea, a vision, a plan, a team, customers, support networks, dogged determination, hard yakka,investors, the world. Preparation time: 5-10 years Serves: everyone 12. The New Recipe 1. Find astructural inefficiency in society that really bugs you. 13. The New Recipe 2.Scribble a solutionon the back of a napkin, and back it up with a couple of pages onwho might buy itandhow you will reach them. 14. The New Recipe 3.Researchexisting solutions, and figure out ways to make your solutionalot betterthan the others. 15. The New Recipe 4.Visualisehow you mightscalethis intoa global businessand develop anelevator pitchto explain this to the world. 16. The New Recipe 5.Identify key peoplewho might want to buy your product, an golearn as much as you canfrom them. 17. The New Recipe 6. Now that you have a product, some potential customers, and a vision,Draw upa business plan.Enroll in theActivateprogram (or equivalent) if you need help. 18. The New Recipe 7. Find aco-founder , andbuild a teamaround you of clever enthusiastic andhard-workingpeople.Some grey hair a bonus. 19. The New Recipe 8. Build and work your ownnetworksto findexperienced people(eg professionals) who might be able to help you. 20. The New Recipe 9. Build aMinimum Viable Product keep itreally simple , no frills. 21. The New Recipe 10.Get out of the buildingand talk more to your prospective customers.Ask them directly what would make them want to buy your product.Refer http://steveblank.com/ 22. The New Recipe 11.Iterateyour product and business asquicklyas you can tomeet customer expectationsasmeasuredby theirbehaviour .Refer http://startuplessonslearned.com/ 23. The New Recipe 12.Map out and exploit all of your available resources.Max out your credit card, work extra hours at your day job, and do whatever it takes show that you can get to cash-flow positive. 24. The New Recipe 13. Talk toAngel Investorsearly.Ask them directly what would make them want to invest;see if theyknowanyone with experience in your subject area, andget to know themreally well. 25. The New Recipe 14.SELL SELL SELL andLEARN LEARN LEARN 26. The New Recipe 15. Keepadaptingto everything you learn. 27. The New Recipe 16. Go back and talk to your Angel Investor friends again whoalready know you well .Secure investment . 28. The New Recipe 17.Scale . 29. The New Recipe 18. Refine your business so it's amust-have acquisitionfor a large multinational . 30. The New Recipe 19.Sell your businessfor a big premium . 31. The New Recipe 20.Repeat . 32. Getting resources If you pay peanuts, you get monkeys. Sources of funding

• Yourself

33. Your customers => Organic cash flow

34. Friends, Family, Fools 35. The Gummint 36. Banks 37. Angels 38. VC / Private Equity 39. What investors look for

• Angels: Ability to make 30x ROI

40. An experienced team (success, failure)

41. A sexy idea 42. A globally scalable business model 43. Market validation 44. Sales capability 45. Barriers to competition 46. Hygiene 47. What entrepreneurs should look for in an investor

• Track record

48. Reputation

49. Familiarity with your space 50. Networks 51. Ability to add value 52. Personality match 53. What is your idea worth? By itself, an idea is worthless 54. What is a company worth? Economically, it's only worth what someone will pay for it. Financially, it's only worth a multiple of the free cash flow it can generate, less a risk factor. Emotionally, it may be worth a lot more than either, causing its worth to become a lot less than either. 55. Success is not guaranteed

• Most start-ups fail

56. Some will become lifestyle businesses

57. 1 in 10 will be really successful 58. Summary It's really hard work, could take 10 years, and even then most start-ups fail. But with a world-beating idea combined with passion, energy, commitment and the right team and resources, you can change the world. 59.