My Mistakes.Some advice from a well-worn

path.

Startup Camp Montreal #7January 20, 2011

Perry Evans

I’m not a startup junkie.

I just reject working for someone else, or working on someone else’s ideas.

I could stop anytime.

If only I could turn off those little voices inside my head.

I hope I can help you deal a little better with your little voices.

Been where, done what? Led raising of $80M in capital $1.5B cumulative investor value creation

Closely, Inc.– A personal angel network– 7-person team– Collaborative work space– A pristine cap table <insert angelic voices>

I started late on start-ups…

Marketing Mgr. for consumer trial.• Home shopping• Home banking• Online yellow pages• Interactive games

Product Management, Enhanced Communication Services

• Envoy 100• iNet 2000• Displayphone

VP/GM New Media• CD-ROM & Apple Newton• Travel, Local Directory

Behind every success…

• I left MQ pre-IPO to do my own thing, leaving 2% unvested equity. – 12 months later MQ exited to AOL for $900M, all vesting accelerated.

• I exchanged a 6-month old 2-person start-up for 4% of a $80M public company. – I agreed to lock up my shares for 12 months: $6 > $24 > $2

• I let a company shift from a product business into a services-driven business: customer driven, easy revenue– Reduced exit value and narrowed choices

• I bought into the strategy of growth via acquisition– In most cases, this is an excuse for not fixing your current business

• I didn’t force a shift from platform to application stack when a golden opportunity presented itself

Failure and success are intertwined.

Indecision and success are incongruent.

Missed opportunity is the biggest tragedy

To some degree your start-up

idea is fatally flawed.

Failure is imminent.

An entrepreneur’s job is to fix the idea and convert it into value.

START-UP DEVELOPINGVALUE

ACHIEVED

the path to failure is on the exact same terrain as the path to success

Equipment for the journey

Your navigation dashboard

Adapting to the elements

ADAPTNAVIGATEEQUIP

People Are Your Equipment

• The single biggest lever to value creation

• Balance “known teams” and critical knowledge

• Quality of attitude trumps• Share values

EQ

UIP

The [overlooked] Inner Circle

You will have moments of:• doubt & fear• personal exposure

You have to fearlessly lead the team, you are afraid to show weakness to investors, where do you turn?

Build your inner circle:

Mentors, Advisors, Independent Board Members

EQ

UIP

Your capital structure will determine the quality of your exit.

The terms of EVERY round impact your choices on the next one.

Take a moment of time to sanity test the relationship before you take money.

Disconnect the capital from the person

on the other side of the table.

Don’t be embarrassed by what you don’t know. Don’t sign until you understand.

Love your lawyer.

Capital EquipmentE

QU

IP

Your Value Navigation Dashboard

• A large share of start-up decisions are “off map”, unintentionally

• Document the assumptions you’ve made that drive your value creation– Build your value dashboard, record

your proxies– Write it on a piece of paper, and

attach it to your monitor– Circle the 2-3 things you (down

deep) worry about the most– Ruthlessly test and evaluate their

achievement• Connect it to your resource

priorities– Convert proxies to data

NA

VIG

AT

E

Consumers will check-in in great

numbers when the right discount

offers are available.

Proxies• Existing stats on check-in growth

• People love deals, see GroupOn

• The network effect of critical mass

Test: • Observe, track behavior at a dozen

actual restaurants when deals are present

• Iterate on how consumers get to know,

dive into characteristics of best

performance

• Refine and optimize

Resource Connection

• Define sweet spots for product priority

What if results don’t impact check-in

behavior?

NA

VIG

AT

E

CustomersCompetitors

Market ActionsInvestors

Adapting to the Swirling ElementsA

DA

PT

Stubbornness and passion are not the same.

Proving yourself right is the enemy of value creation.

Center your team on agility.

Ears are the most attractive start-up body part.

AD

AP

T

Fast Failure & Pivoting

• Make mistakes early, cheaply

• Listen very closely– Absorb the input– Gather as much data as you

can for your value dashboard before you ask for money

• Don’t follow blindly, customer research is one very critical signal, but not the only one.

AD

AP

T

Pivoting

A medicine for chest pain, sildenafil, was ineffective in treatment during the market trial, and exhibited certain side effects.

AD

AP

T

the incredible [& annoying] rightness of venture capital

Extract yourself, think for your business.

As annoying as it can be: listen, learn, adjust

They may not know your business, but you often ARE missing something. Usually it’s on a critical value driver

- Attractiveness of market- How you fit in the food chain- Ill-conceived go-to-market blueprints- Unproven or incomplete team- Exit visibility or practicality

AD

AP

T

Homework?

• Audit yourself: – Check your equipment– Sketch out your value dashboard– Check how well your resources and priorities map to

your value drivers– How well are your equipped for the journey

• How well have you de-risked the deal for your investors?

Connect Anytime:

Follow: twitter.com/perryevansEmail: perry.evans@gmail.com