henk kleynhans
TRANSCRIPT
Lifting the Venture Capital Skirt
Looking under the hood and kicking the tires
- Henk Kleynhans
- founder
- CEO CTO
- 3 parts
- - my past
- - my (short) VC experience
- - Venture Capital Aptitude Test
- my past
- student
- financial aid
- UCT
- internet junkie
- internet junkie
- YouTube, I
- 2003
- wifi
- adsl
- becoming mainstream
- ADSL cost R1200 per month
- Capped at 3GB usage
- SHARE
- adsl
- wifi
- $
- looked far and wide
- SHARE
- the problem was
- time
- big problem
- movies
- slow down
- hit my cap
- only what they eat
- NOT how much time they take to eat it
- simply didn’t exist
- So...
- I decided to
- build it!
- scratch my own itch
- solve a problem
- broadband
- share
- neighbours
- $$$
- laptop- cheap- convenient- no modems- no line rentals- no contracts
- end-users
- end-users == Skyrovers
- start their own Skyrove hotspot
- virally
- spread affordable and convenient internet access
- income
- 100s
- 1000s
- small entrepreneurs
- around the world
- ?
- who does NOT think
- this was a brilliant idea?
- just a BIG IDEA
- competition
- Big Ideas
- National Innovation Competition
- my buddy Al
- marketing student
- this thing called
- a Business Plan!
- Al was busy writing his thesis
- “If you want something done...
- ask a busy man!”
- worked days and nights
- this thing called:
- Market Research!
- & a thing called...
- Financial Projections!
- VERY CLEARLY
- VERY CLEARLY
- by Year 2
- 100 Million Dollars
- Dr Evil Picture
- i’m not joking!
- business plan
- brilliant
- world-changing
- earth-shattering
- paradigm-shifting
- business plan
- fancy event
- 3rd place winners
- 2nd place winners
- So...
- clearing a path to the stage
- ...
- someone else won!
- cried a little
- hugged each other
- moved on...
- and on!
- market research
- financial projections
- we were onto something big!
- looking for funding
- raised $20,000
- overseas investor
- hired first programmer
- launched 2006
- raised a million 2007
- 9500 20,000 customers
- 300 600 hotspots
- 8 employees
- Honours or Masters Degrees
- except for me...
- community
- largest Hotspot network
- continent
- 2005
- Top ICT Entrepreneur
- Business Report / Enablis
- 2006
- TT100 Minister’s Award
- Most Promising Emerging Enterprise
- 2008
- Mail & Guardain
- 200 Young South Africans
- You Must Take To Lunch
- Department of Science and Technology
- trip to Germany
- (thank you Minister)
- overseas investors
- proved
- young South Africans
- leaders in innovation
- technology
- commercialization
- but
-
- Rotterdam
- Berlin
- Vancouver
- Silicon Valley
- part 2
-
- My meandering VC experience
- have raised SOME money
- failed to raise MUCH more
- first investor: Silicon Valley
- $20,000
- 3 year period
- but get shares upfront
- upside
- family member
- R100k
- venture capital
- mentor capital
- zero money
- flirted with big VC
- term sheet
- pulled out last minute
- when principal left
- *phew*
- got lucky
- (or smart)
- found investor
- zero bullshiitake
- “gets it”
- one bar
- WILLs and WON’Ts
- will NOT accept an offer
- gives majority board control
- to minority shareholder
- I know my market and my product better
- I will NOT accept an offer
- for more money than I need
- especially in tranches
- = stock options
- I will not accept VC before
- 2-minute noodle profitable
- I will
- phone the founders
- BEFORE
- serious talks with any VC
- I will
- GRILL the VC at first presentation
- portfolio companies
- successes
- experience
- I will not...
- pay for Due Diligence costs
- spending time with you...
- is more expensive to me...
- than it is to you!
- I will not...
- give shares to “Mentor Capitalists”
- will work harder for you
- give better advice
- keep your interests at heart
- if it puts its money
- where its mouth is
- part 3
- the Venture Capital Aptitude Test
- (credit to Guy Kawasaki)
- “You know you’re in a bubble when young people get into VC”
- “VC should be your last job, not your first.”
- “When you’re young, you should work 80 hours a week to create a product or
service that changes the world. You should not sit in board meetings
listening to an entrepreneur explaining why she missed her numbers while you
read mail on a Blackberry and intermittently spew forth gems like:
- ‘You should partner with MySpace! I can also introduce you to some of the
losers in our portfolio’
- entrepreneurs
- aspirant VCs
- existing VCs
- 3.1 Work Background
- Engineering
- plus 5 points
- understand technology
- does it defy the laws of physics?
- Sales
- plus 5 points
- introduce a product and
- sell it
- “sales fixes everything”
- Management Consulting
- minus 5 points
- Investment Consulting
- minus 5 points
- Accounting
- minus 5 points
- 3 worst backgrounds
- Consulting, Banking, Accounting
- Management Consulting
- “implementation is easy,
- insights are hard”
- opposite is true in startups
- Investment Banking
- “everything can be reduced to
- cells on a spreadsheet”
- P/Es
- Build companies for JSE, not customers
- do deals, don’t build companies
- accounting
- belief that history not only
- repeats itself...
- but it predicts the future
- financial models are almost totally irrelevant because there’s no financial
wizardry involved in making a good product and selling the heck out of it.
- MBA
- minus 5 points
- upside
- tools and knowledge may help
- e.g. 25% of $1.6 billion
- is $400 million
- downside
- hollow arrogance of someone
- who’s never been tested
- 3.2 The Right Stuff
- (First Hand Experience)
- you may have been in the right places
- but have you been
- KICKED
- in the right places?
- kicked in the groin by
- major, long-lasting economic downturn
- plus 1 point
- worked at a successful startup
- plus 1 point
- worked at a failed startup
- plus 3 points
- you’ll understand 3 things:
- 1. how hard it is to achieve success
- 2. world doesn’t owe you a thing
- 3. what it’s like to be fired or laid off
- worked at a public company
- plus 1 point
- (know the end goal, warts & all)
- held a CEO position
- plus 2 points
- fantasy experience out of your system
- won’t try and run startup from a board position
- been an angel investor...
- with your OWN money
- plus 2 points
- understand the responsibility of investing other people’s money
- 3.3 Necessary Knowledge
- Can you answer the following questions for entrepreneurs?
- How do I...
- introduce a product with no budget?
- plus 2 points
- How do I...
- determine if there really is a market demand for my product?
- plus 1 point
- What do I do...
- if customers hate our first product?
- plus 1 point
- How do I...
- get Walt Mossberg to return my call?
- plus 2 points
- How do I...
- get to the folks who run DEMO?
- plus 1 point
- How do I...
- get a plug in TechCrunch?
- plus 2 points
- How do I...
- dominate a segment with 5 competitors doing essentially the same thing?
- plus 2 points
- How much...
- time, energy & money
- should I spend on patent protection?
- plus 1 point
- What do I do now...
- if I bet on the wrong architecture for our product?
- plus 2 points
- What kind of...
- people should I hire?
- Young, old, proven, unproven, cheap, expensive, local, remote?
- plus 1 point
- How do I...
- get them to leave their jobs
- without throwing money
- plus 2 points
- How do I...
- tell my friend that he cannot
- be CFO
- just because he’s a co-founder?
- plus 2 points
- How do I get...
- the Buyer at Incredible Connection
- to return my call?
- plus 1 point
- How do I...
- handle a customer who wants to send back his purchase for a full refund?
- plus 1 point
-
- How do I ...
- fire people?
- plus 2 points
- How do I ...
- lay people off?
- plus 2 points
- tally up...
- 40 points or more
- start your own fund!
- 35 to 39 points
- call Sequoia, Kleiner, Perkins
- let them know you’re available...
- 25 to 34 points
- send your resume to
- 2,000 VCs
- and pray
- 24 points or less
- work until you score more
- and in the meantime
- fly kulula
- fly kulula
- bottom line...
- only become a VC
- after having the shit kicked out of you
- stand out from all the other
- full-of-**it artists
- who entered VC when they were young
- you’ll be really able to help
- your portfolio companies
- which is what VC is all about
- .
- Henk Kleynhans
- www.skyrove.com
- 0861 ROVERS
- Blog: www.geekrebel.com