chuck eesley stanford university · the highest likelihood of having an exit (hoetker 2007; norton...
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Chuck Eesley Stanford University
Copyright © 2010 by the Board of Trustees of the Leland Stanford Junior University and Stanford Technology Ventures Program (STVP). This document may be
reproduced for educational purposes only.
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Presentation skills Market size
– Some (perhaps many) of you may need to look for a new idea/opportunity
Advertising is not the only (or the best) business model!
Get out of the building – Talk to customers (hint, 10 is not enough) – Talk to partners, distributors, advertisers, anyone else
who plays a role in your business model
Competitive analysis Domain name taken? For OEP, draw the business model
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Presentation skills Market size
– Some (perhaps many) of you may need to look for a new idea/opportunity
Advertising is not the only (or the best) business model!
Get out of the building – Talk to customers (hint, 10 is not enough) – Talk to partners, distributors, advertisers, anyone else
who plays a role in your business model
Competitive analysis Domain name taken? For OEP, draw the business model
© 2003 Mark P. Rice, Babson
First Half: Idea Versus Opportunity
Next Steps: Realities of Business
Operations
A. Team … Recruiting
B. Compensation … Rewards
C. Culture … Norms
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Internal Issues and trade-offs:
When to hire? Experience versus passion and energy? Motivation and character traits versus qualifications?
Founders, CEO and VPs Designers, Developers,
“Architects” and Managers of Products & Services
Sales and Marketing Operations and Administration Others?
External Issues and trade-offs: How to find and select? How best to manage?
Board Of Directors Investors Advisory Boards Professional Services and Suppliers Others?
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• Status Determined by Contributions to Improving Culture and Increasing the Value of the Company
• Rewards Tend to Be Value-Enhancing such as Stock Options (Equity Ownership)
Definition “A strong system of informal rules that spells out
how people are to behave most of the time”
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The “A” Team – Not just competent – Don’t hire B players – Not just your roommates
Sources – Stanford – VC’s – Professors – Professional Network
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Wily Technology Case
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Founder and CEO of New Relic, Inc. Founder and CEO/CTO of Wily Technologies Board Member Pano Logic Entrepreneur-in-Residence, Benchmark
Capital Senior Software Engineer at Apple Coding since the Commodore Vic 20 (3583
bytes of RAM)
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Events, conditions and founder characteristics precipitating a replacement
Search process involved Founder’s negotiations with the Board over
candidate characteristics Importance of culture Whether the founder should remain with
the company and in what role after succession
How involved the founder (and top management) should be in the search process
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Employees (%) M&A or IPO (%)
Idea assets (outside of Biotech/chem)
4.5 16.6
Contracting Exp. w/o VC 11.9 159
Contr. Exp. present, adding idea assets
8.2 87.8%
Idea assets present, adding contracting
14.9 20x
Interaction effects for idea assets in weak appropriation environments are strongest for firms with the highest likelihood of having an exit (Hoetker 2007; Norton et al., 2004). It is weakest for those at
very low or very high probabilities.
The interaction effect for idea assets and contracting experience is strongest for those at a moderate likelihood for an exit event.
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“ The myth that any given entrepreneur is a rugged individualist, who toils alone, can often be demolished by just asking to look at his or her calendar. Nearly always, the majority of his or her time will be spent as part of a group -- at meetings with the management team, board meetings, project team meetings, customer and partner meetings, and so on.
As such, knowledge about leading a group, being a constructive group member, the dynamics of healthy versus destructive groups, and designing – or repairing – groups so that they function well should be a central component of entrepreneurship education.”
Source: Tom Byers, Heleen Kist and Bob Sutton
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Khosla on Teams Larry and Eric on Teams
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Thank you Lew!
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• Cash Salary and Bonus Benefits
• Equity Common Stock Plans
(Incentive Stock Options Have Favorable Tax Rates)
Vesting Schedule and Stock Budget
Tax Implications (IRS in USA) and Security Laws (SEC in USA)
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1. Develop Sense of Teamwork 2. Understand Personalities of Key People 3. Develop Open Internal Communication 4. Remain Open to Ideas from Anywhere 5. Be the Customer 6. Be Willing to Experiment 7. Include Creative and Unusual People 8. Address the Autonomy Balance
Reference: Collins & Lazier, Beyond Entrepreneurship
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