1
How to de-risk
entrepreneurial
ventures
Including an examination of Vivint Wireless, a startup ISP (supported by a large...
2
Luke Langford is the Chief Operating Officer of Vivint Wireless and the Director of Strategy for
Vivint.
He joined Vivin...
3
Who are you?
4
• Risk and entrepreneurship
• A model for categorizing risk
• How to track and test risks
• How Vivint is doing this wit...
5
Are you:
a risk taker
or
a risk mitigator?
6
A failure: Guaranteach
7
Risk
Value
Value
Risk
Risk 1
Development of website
1
2
Risk 2
Develop different teaching
styles users will appreciate
3...
8
Motion
Detectors
Remote
Access
Smoke
Detectors
Glass Break
Detectors Carbon
Monoxide
Detectors
Motion
Detectors
Lighting...
9
$2.0
$4.5
$9.9
$15.0
$20.7
$27.3
$34.3
$42.6
1999 2006 2007 2008 2009 2010 2011 2012 2013
0
10
20
30
40
50
RMR
$ in mill...
10
DSL Normal
Cable
Fast Cable Other
Wireless
Vivint
Wireless
Speed 1.5 – 40
Mbps
20-50 Mbps 100+ Mbps 5-15 Mbps 50 Mbps
P...
11
What must be
true…?
(for this to work)
12
Key learning this week, by assumption
Critical assumptions
Confidence
change this
week
Overall confi-
dence Learned thi...
13
That sounds easy…
so why don’t most
people do it?
14
Cognitive dissonance is uncomfortable
15
How you can do
better than most
16
Test early, test often.
(the number of network engineers Vivint Wireless had for the first
six months after we had payi...
17
Don’t spend too much time on your model
After a certain point, your model only gets better because of what
you learn in...
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Vivint Wireless How to De-Risk a New Venture & Build a Better ISP - Luke Langford

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Vivint Wireless How to De-Risk a New Venture & Build a Better ISP - Luke Langford

  1. 1. 1 How to de-risk entrepreneurial ventures Including an examination of Vivint Wireless, a startup ISP (supported by a larger company) as a case study
  2. 2. 2 Luke Langford is the Chief Operating Officer of Vivint Wireless and the Director of Strategy for Vivint. He joined Vivint just after the Blackstone acquisition of Vivint closed at the end of 2012 with the mandate to put an innovation process in place and identify new billion dollar business opportunities. In 2013 he piloted Vivint’s entry into the internet service provider business and has been leading Vivint Wireless since. Prior to joining Vivint, Luke worked at Zynga doing product management and Innosight – Professor Clayton Christensen’s consulting firm – helping Fortune 100 companies identify and pilot growth businesses. He has a BA in Chemistry from Harvard, where he graduated in 2007 with advanced standing. He also holds an MBA from Harvard Business School, where he graduated in 2012 as a Baker Scholar. Who am I?
  3. 3. 3 Who are you?
  4. 4. 4 • Risk and entrepreneurship • A model for categorizing risk • How to track and test risks • How Vivint is doing this with our Wireless ISP division • How I failed to do this in a previous entrepreneurial venture and why many entrepreneurs do this poorly • What else is on your minds? What I plan on talking about today
  5. 5. 5 Are you: a risk taker or a risk mitigator?
  6. 6. 6 A failure: Guaranteach
  7. 7. 7 Risk Value Value Risk Risk 1 Development of website 1 2 Risk 2 Develop different teaching styles users will appreciate 3 Risk 3 Develop process for cost effectively producing videos at scale 4 Risk 4 Customers will pay for YouTube-like quality 5 Risk 5 Customers can be acquired through online channels, scalably 6 Risk 6 Interface will be navigable, appeal to target customers 4 Risk 4 Customers will pay for YouTube-like quality 6 Risk 6 Interface will be navigable, appeal to target customers 5 Risk 5 Customers can be acquired through online channels, scalably 1 Risk 1 Development of website 3 Risk 3 Develop process for cost effectively producing videos at scale 2 Risk 2 Develop different teaching styles users will appreciate The Wrong Way to Tackle Risk: Addressing risk as it occurs The Right Way to Tackle Risk: Identifying important risks early and addressing them first Deal-killer risk Path-dependent risk Source: “Beating the Odds When You Launch a New Venture” by Matthew J. Eyring and Clark G. Gilbert, Harvard Business Review, May 2010 How you should think about risk
  8. 8. 8 Motion Detectors Remote Access Smoke Detectors Glass Break Detectors Carbon Monoxide Detectors Motion Detectors Lighting Control Smart Thermostat Automatic Door Locks Surveillance Video Key Fob Small Appliance Control Recessed Door Sensors Solar panelsWireless internet Vivint panel Security Energy management Home automation Solar Wireless (internet) Vivint mobile app What Vivint does
  9. 9. 9 $2.0 $4.5 $9.9 $15.0 $20.7 $27.3 $34.3 $42.6 1999 2006 2007 2008 2009 2010 2011 2012 2013 0 10 20 30 40 50 RMR $ in millions Expansion into Canada 2006 2010 2011 Company rebrands itself as “Vivint” Goldman Sachs increases credit facility to $440 million Goldman Sachs provides initial credit facility ($75 million) 2000 - 2005 Todd Pedersen founded APX Alarm Dealer for ADT, Monitronics, Security Networks 2012 Vivint completes its millionth install Blackstone acquires Vivint for 2.1B 2009 Company launches energy management offering Company launched Home Automation Services Company launched GoControl Panel Vivint launches a residential solar offering 2013 Vivint is named to Forbes “Most Promising Companies” list Equity investment by Goldman Sachs, Jupiter Partners, and Peterson Partners Company opens Research & Development and Innovation Center Vivint history and milestones Vivint soft launches residential internet offering, using proprietary wireless technology
  10. 10. 10 DSL Normal Cable Fast Cable Other Wireless Vivint Wireless Speed 1.5 – 40 Mbps 20-50 Mbps 100+ Mbps 5-15 Mbps 50 Mbps Price per month $30 $40-60* $105+ $40-50 $55 Slowing at peak times? Less Lots Lots Lots Less To grow Vivint, it needs an internet service to bundle with its solar and home automation offerings
  11. 11. 11 What must be true…? (for this to work)
  12. 12. 12 Key learning this week, by assumption Critical assumptions Confidence change this week Overall confi- dence Learned this week Cost to serve customer is less than $##.##month (incl. data, support, maintenance of network, depreciation of equip, etc) • Routers have been source of customer disconnects, will re-examine whether we want to install them so often Customer creation cost averages: $### or lower • (no near learning this week) One network cell can cover at least ### homes (network cell = # fiber terminus, # macro hubs, ## microhubs, ### customers) • We have met several vendors of GIS software who believe they can help us automate validation of this assumption on large scale We can achieve a ##% take rate in neighborhoods we cover • (neighborhood recently deployed) met this criteria Network equipment give reliable, fast service (at least ##Mbps at peak, high uptime) • Survey returned many small issues; these should be solvable; Weather will have minimal impact on service • (no new learning here) Customers will be willing to pay $##/month for our service (40-50 Mbs) • RMR remains less than ##; should get higher once we force more control on sales team Customers will switch • (no new learning this week) 1 in # will agree to ong-term easement on home for our equipment in exchange for $##/month off • This continues to be relatively easy, though it can be time consuming (takes a few days for people to think about it Competition will not be able to lower prices enough to convince consumers to stop switching • (no new learning this week) We can work with municipalities and utilities and other scaling partners to get rights for equipment to be placed in appropriate locations, and do so timely • Met an additional utility that has a telecom division to host sites like our fiber terminii and macrohubs Period from mm/dd – mm/dd/yyyy
  13. 13. 13 That sounds easy… so why don’t most people do it?
  14. 14. 14 Cognitive dissonance is uncomfortable
  15. 15. 15 How you can do better than most
  16. 16. 16 Test early, test often. (the number of network engineers Vivint Wireless had for the first six months after we had paying customers) (this was too long, but better to have done it this way than to have waited six months to test until we had a network engineer!)
  17. 17. 17 Don’t spend too much time on your model After a certain point, your model only gets better because of what you learn in the real world. So: limit your excel time

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