silicon valley start-up from idea to liquidity event
DESCRIPTION
Silicon Valley Start-up from Idea to Liquidity Event by Zarko MaletinTRANSCRIPT
about
Liman –
DRŽAVA!
about
- Born and Raised in Novi Sad
- GTZ Largest Consultancy in Germany
- Cambridge MBA Stanford
- Heading Investment and Investment Banking Arm
of the Largest hi-tech Center in the Valley with over 380 start-ups.
- Personally Working with over 60 start-ups
Coordinating relationship with:
--180 VC Firms
--150 Large Hi-tech Corporations
--350 Angel Investors and 6 Angel Groups in the Valley
me
about
Silicon Valley Start-up
from
Idea to
Liquidity Event
flip flops
silicon valley
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stanford and/or nice weather
silicon valley
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2 bedroom & $1M
silicon valley
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sand hill vs. wall street
silicon valley
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giants
silicon valley
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social networking map
silicon valley
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really…
silicon valley
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center of the world
silicon valley
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4.9%
2.9%
5.2%
8.0%
1.5%
4.4%
USA EU World
World ICT sector growth
2008-2009 2011Source: EITO, Forrester
More than
40% of the
US and
about 30%
of global
Venture
Capital
More than
75% of the
US
Venture
Capital
invested in
the Silicon
Valley
start-ups
or?
silicon valley
How do you make
a billion dollars in two years?
a billion $ in 551 days?
before
after
lots of buzz no business model
Free photo sharing program launched in October 2010 that allows users to take a
photo, apply a digital filter to it, and then share it on a variety of social
networking services, including Instagram's own.
Kevin Systrom, 28-year-old
Mike Krieger (co-founder)
Launch Date: March 2010
Funding:$57.5M
iPhone, iPad, iPod Touch, Android
Distributed via the iTunes App Store and Google Play
Acquired: $1 billion
Revenue: $0.
$500/month & forced vacate
the team
Kevin Systrom
•Stanford University in 2006 with a BS in Management Science & Engineering.
•No formal computer-science training. Side projects, he says, help him learn code.
•Intern at Odeo that later became Twitter.
•Two years at Google Corporate Development team.
Mike Krieger
•joined later
•Brazilian-born 25-year-old engineer
•worked at Meebo
•Stanford University where he studied Symbolic Systems with a focus in Human-
Computer Interaction.
•While in university, he actually worked on a photo-sharing project for a class.
•Interned at Microsoft's PowerPoint.
burbn
•2009, Foursquare beginning popularity
•An iPhone app that would combine elements of Foursquare with elements of
Mafia Wars (Zynga)
•HTML5 check-in project Burbn on mobile photography
•HTML5 latency issues
•Photography category super saturated.
•Hipstamatic no social.
•Scotch no filters buggy.
over cocktails
•$500k from both Baseline and Andreessen Horowitz.
•“Focus on being really good at one thing.“
•Adding the photo feature was by far the most popular.
•Scrap Burbn almost entirely in order to build an entirely new app.
•Eight weeks to build
•10,000 users within hours
•end of the first week of the company's launch, Instagram had been downloaded
100,000 times
•middle of December, the community had grown to a million users.
$20m post
•February 2011, a group of investors led a Series A financing of $7 million.
•Led by Adam D'Angelo—an early casual advisor of Systrom, who'd founded
Quora—Jack Dorsey, Chris Sacca, Baseline Ventures, and Benchmark
Capital, valued the company at $20 million.
•Other investors doubled down Andreessen Horowitz would ultimately bet
against the company.
•It took Picplz six months and two platforms to reach 100,000 users. Instagram
acquired that many users within the first week.
•“We were a little bit stuck,” Mr. Horowitz recalled. “He did a pivot into a company
we’d already invested in.”
•4 employees, San Francisco.
•No permanent Web address
27 million users
•February 2011, 1.75 million members, uploading 290,000 photos per day.
•January 2012, the company had 15 million registered users.
•By March, that number jumped 27 million.
•Demurred from adding premiums to generate revenue.
•$0 revenue.
•Series B: April 2012,
•Sequoia Capital, Thrive Capital, Greylock Partners, Benchmark Capital, and
Baseline Ventures. Four full days later—those investors enjoyed a 100% return
on their investments
•Zuckerberg noted that Facebook was "committed to building and growing
Instagram independently“
•Facebook Needs Strong Mobile Leadership. Facebook is not a small company. It
employs thousands of talented engineers and product managers. From the
outside, it looks like the company could benefit from some strong oversight on its
various mobile initiatives
about
Silicon Valley Start-up
from
Idea to
Liquidity Event
not about:
from Idea to liquidity event
-Outsourcing companies
-Service companies
-"Feature" vs. "Companies"
-International Start-ups (with International HQ)
-"I want to learn English" Companies
-"I know code and I am looking for a job or gig"
ingredients
from Idea to liquidity event
Idea
Market
Advisers
Business
Funding
a Good Exit
Team
Luck
idea
•BIG
•Pain Point
•Your Own Problem
•Something One is Obsessed with
•Very well informed about the space
•Experience in the space
from Idea to liquidity event
market
•Big Market
•Underserved or Undiscovered Market
•Traction
•Some Traction
•Some Customers
•Hockey-stick
•Barriers to Entry
•Viral Growth
advisers
•Friends
•Referral
•Equity Based
•Paid Board Members
•Attorneys
•Investors
•"Entrepreneurs in Residence"
•Investment Bankers
•Brokers/Dealers
•Large Investment Banks
from Idea to liquidity event
business
•Persuasion and Selling skills
•Listening Skills
•Networking Skills
•Presentations Skills
•Marketing Skills
•Strategic Thinking
•Guts to Give up on "Your Baby"
•Focus
•Promotion
•Staged Approach
•Lean Start-up
•Minimum Winning Game
from Idea to liquidity event
Investors
•Money in Exchange for Your Equity
•Confused with the Real Goal
•Smart Money
•Connections
•Board
•Vested Interest
•A Lead investor
•A Tier 1 VC
•Previous Experience
with the Investor
•2-3X-12X
from Idea to liquidity event
where is it coming from?
•Own or family money
•Some Savings or a Credit Card
•Seed round
•Convertible Notes (Loan)
•Bridge
•Angels
•Accredited (Sophisticated) Investors
•MicroVC or a Super Angel
•VCs (Seed, Series A, Series B.... )
•Strategic Investors
•Corporate Venture Arms
(Strategic or Financial)
•Venture Lenders
•Private Equity
from Idea to liquidity event
Securing Resources while Keeping Ownership
•General Partnerships
•Limited Partnerships
•Partners
•Managing Directors
•Senior Associates
•Associates
•Analysts
•Decision Makers
•Partnership Meeting
•Term Sheet
•Negotiation Process
•Extremely Relevant and
•Extremely Irrelevant Stuff
•Ownership of Your Company
•Ownership of the VC
•Ownership of the future Employees
•(Options Pool)
• Due Diligence Process
•Money in the Bank
from Idea to liquidity event
superstars and “hurdle mentality”
"This is Not a Job for Individuals Who Have an Issue with Making Decisions in the
Environment of the Uncertainty"
Hellen Keller:
“Security is mostly a superstition. It does not exist in nature, nor do the children of
men as a whole experience it.
Avoiding danger is no safer in the long run than outright exposure.”
Bessemer Anti-portfolio
"Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer
Cowan’s college friend rented her garage to Sergey and Larry for their first year. She tried to introduce
Cowan to “these two really smart Stanford students writing a search engine”. Students? A new search
engine? Cowan asked her, “How can I get out of this house without going anywhere near your garage?”
BVP had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. BVP's
Neill Brownstein called it "outrageously expensive."
from Idea to liquidity event
exits
Acquisition
•Talent Acquisition
•Neutralizing Competition
•IP Acquisition
•Asset and Equity Sale
•Strategic Acquisition
•Financial Acquisition
•Depends on Acquirer
The right timing. The right market. The right place.
Rules you know about multiples, comparable benchmarks just buckle under the
pressure of momentum.
IPO
•Rare
•Private to Publicly Traded Companies
•Significant and Stable Revenues
•Investment Banks
Selling to General Public
•Benefits and Downsides of
Running a Public Company
from Idea to liquidity event
team
•Greed
•Ambition
•Hassling
•Guts to Leave your Family & a Stable Job Behind
•Hard Work
•Passion
•Drive
•Sacrifice
•Team Work - Complementary
and if Possible Old Friends
•Experience in the Space
•IPO
•Great if Formal Education
•Drop-Outs
from Idea to liquidity event
being local and immigrant
•Trust
•Familiarity and Predictability
•Control and Security
•Visa or a Passport
•Good Language Skills and Lingo
•Language
“Almost 350 out of every 100,000 immigrants create a new business every month,
versus 280 out of 100,000 native-born U.S. adults, according to Kauffman
Foundation, an entrepreneurship and education research group.”
“Immigrants are more likely than native workers to choose self-employment 5.1%
vs 3.7% native-born citizens.” Source: Census Current Population Survey
microdata files, September 2010–August 2011.
“An outstanding characteristic of these immigrant entrepreneurs is their courage
to take risks. In Massachusetts, immigrants, who make up only 14% of the state’s
population, founded 61% of its new businesses in 2008.” Babson
Entrepreneurship Monitor
from Idea to liquidity event
immigrants
eBay France Pierre Omidyar 1995
Garmin Taiwan Min Kao 1989
Google, Inc. Russia Sergey Brin 1998
LinkedIn France Jean-Luc Vaillant 2003
NVIDIA Taiwan Jen-Hsun Huang 1993
PayPal Ukraine Max Rafael Levchin 1998
Sun Germany/India Bechtolsheim and Khosla 1982
WebEx India Subrah S. Iyar 1997
Yahoo! Inc Taiwan Jerry Yang 1994
YouTube Taiwan Steve Chen 2005
Andrew Grove
Country of origin: Hungary
Claim to fame: Co-founder, Intel
Sergey Brin Country of origin: Russia
Claim to fame: Co-founder,
Bechtolsheim and Khosla
Country of origin: Germany and
India
Claim to fame: Co-founders, Sun
Microsystems
from Idea to liquidity event
luck
end
Luck Prefers-Prepared Mind!
zarkomaletin