10.22.2011

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?

What is a StartUp?

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 graph)

– A search engine based upon summing probability distributions over hyperlinks• PR(A) = (1-d) + d(PR(t1)/C(t1) + … +

PR(Tn)/C(Tn)– 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)

WHY?!

• Here are some reasons NOT to do it:

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

– 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

WHY?!

   Here are some reasons NOT to do it:– You want a small business to

support a nice lifestyle for you and your family and you know your buddy's IT shop nets $2M a year. 

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 what you believe to be a great idea that will make money and you've gotten some smart people interested in doing it with you

– PASSION.

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

WHY?!   Should You?

– Take NO for an answer?• That is basically all that happens

– Passionate?• Do you lay in bed thinking about it?• Stay up trying to code the idea?

– Are you honest with yourself?• Otherwise you and everyone else will find out –

pronto.

Steps

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

process– Get a great lawyer– Form company (c-corp)

Steps

– Educate yourself on funding– Read Brad Felds book and Founders at

Work blog– 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

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 and EXIT

• (Also companies buy startups for the team)

Talent

• AKA THE CREW– At least TWO founders:

• One Operational or Business • Other technical

– Initial team needs to be a mix:• Nowadays KILLER front end and User Experience• Backend just as important• Some type of DataScience

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

• “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 

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

More Than Code• from numpy import *• 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: tolerance for not being able to 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– Convertible Note– CAP Table– Pitch Deck– Biz Plan

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

Convertible Note

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

friends/family– Converts to institutional round stock– Get enough to complete customer

validation– Know the market: read blogs books toilet

paper rolls - everything

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• Board of Directors• Logo and Address

The Pitch Deck

– This is the focus– Know it love it sleep with it– Important items:

• Team up front• Opportunity – Why your doing it• Market• What makes you novel• Competition• Amount of ask• 8-10 slides

Business Plan

– While not that important in a seed/angel round

– Will come in handy to help you figure out what the hell your making and how to make money.

– Nowadays no one really reads them.

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. They are not focused on the correct items.

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

Now what?

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

deeper research•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

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• 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

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

• .

• Thank you for your time.• @tctjr