http://www.michaelrwolfe.com
michaelrwolfe
michael.wolfe@stanfordalumni.org
Innovation as applied to early
stage startups
Our journey today
This is the story of a successful
B2B Silicon Valley startup
launching a new product into
a new market.
...
I've seen the story many
times
As a founder, exec, or
advisor to a bunch of
startups
!
The same recipe doesn’t
works twice...
Let me take you back to
2002
The economy wasn’t so hot
"e-business"
is still new
Companies still reasoning
about risks and
opportunities
Enter our intrepid band of
tech dudes
Joseph Ansanelli, CEO!
• Multi-time founder/CEO, Apple, product
management and marke...
Kevin’s experience leads him
to an insight
Companies spend a great deal of
money keeping bad guys out of their
network
• F...
A kernel of an idea
Build software that allows
companies to prevent the loss of
confidential data from the inside
It might seem obvious now
• Legal risk
• Reputational risk
• Regulatory
compliance
• And other Truly Bad
Things
!
But was ...
Did we do this?
1. Raise venture capital
2. Hire some engineers
3. Build the product
4. Hire marketing and
sales people
5....
It doesn’t work that way
The graveyards
are full of startups
with products that
customers
"should have
wanted"
It usually goes wrong
Too early - there will be a market, but not yet
Too late - competitors already addressing the
proble...
The industry has gotten
smarter about this
Growing recognition that startups are completely different
than established bus...
A startup is an experiment
• Form hypothesis
• Find fastest/cheapest
way to validate
hypothesis
• Test and measure
• Adjus...
I will walk through our:
Questions
What were the most important questions we had to
answer
!
Validation
How we got the ans...
Question #1:
!
Do companies care about the
loss of confidential data
enough to invest in this market?
Careful before you say "yes"
When is the last time you sent an encrypted email?
Pre-product validation
• Get meetings with potential customers
• Interview them on their problems and desired
solutions
• ...
Getting the meetings
• Work your personal network
• LinkedIn, Twitter, comment
threads, blogs
• Put up a landing page, dri...
Getting them to respond
• Be clear it is not a sales call
• Flatter them - you want their feedback and
advice
• Entice the...
Running the meeting
• Listen, listen, listen
• Don't try to "sell" your solutions
• Ask open-ended questions
• Bring scree...
Sample questions
• “Talk us through your top priorities and
projects”
• “Tell us about your existing infrastructure”
• “Ha...
What we heard
"This is something
we'd seriously
consider"
"We have been
building homegrown
solutions to address
this"
"We ...
Takeaway:
!
It is never too early to talk to
customers.
!
If you can’t reach customers now, why
do you think you can reach...
Then we raised money
• We raised a $5M series A financing
based on this feedback.
• Normally you’d raise later than this, b...
Oh, we also named the
company
Next Question:
!
What customer segments care
the most about the problem?
Which verticals?
• Technology
• Oil and Gas
• Entertainment
• Financial services
• Manufacturing
• Automotive
What tier?
Start at large companies!
Larger budgets
Most public scrutiny
Largest amount of data to
protect
“Name brand” re...
What we learned
The strongest feedback came from
large companies in regulated
industries
In this market, the larger compan...
What we did
Laser focus on large companies in regulated
industries, primarily protecting customer data
De-emphasized the r...
Takeaway:
!
Focus, focus, focus
!
If you try to help everyone,
you will help no one
!
This means losing business
!
And tha...
Next Question:
!
What kinds of data do
customers care the most about
protecting?
Data types
• Employee data?
• Customer data?
• Intellectual property?
• Strategic plans?
• Financials?
How we found out
• Built trust with prospects
• Spent time with them as they walked us through
actual internal breaches an...
What we did next
We pivoted away from an
earlier idea - tagging
emails and documents
We focused instead on
one that could ...
Next Question: what threat do
companies care the most about?
• Data escaping via outbound
email
• Data escaping via web po...
Do they want block incidents
or simply monitor + notify?
Block!
Prevent the incident from
happening
Avoid cost of the inci...
Our minimum viable product
We did Not
Focus on data loss
Malware, anti-porn, URL
monitoring
Focus on customer data
Documen...
What happened next
• Responded to an RFP from
Bank of America
• Focused and won the deal
• ~$500K, over time grew to
sever...
Takeaway:
!
The “minimum viable product” can often
be way more minimal than you think.
!
Do a few things, and do them righ...
Example MVPs
• Created an “explainer video”
demoing the product, got > 100K
signups, didn’t ship product until 18
months l...
Would you
ship a phone
without cut
and paste?
Other things we learned
• Opportunity to sell high - to the CSO/CIO level
• Bring in experienced enterprise sales reps
• P...
This sure helped
Expanded to more verticals
Added products
We obsessed about
Team - Putting tons of time and
money into recruiting, and removing
bad hires
Training and team building...
Grew and grew
2003 - $500K in bookings, 1 customer
2004 - $3.5M, 7 customers
2005 - $13.5M, 30 customers
2006 - $27M, Euro...
FTW
Key takeaways
• Validate, validate, validate
• Build your product with customers. Seek face
to face meetings, not just met...
http://www.michaelrwolfe.com
michaelrwolfe
michael.wolfe@stanfordalumni.org
Questions?
Lecture on Innovation at Startups at ESADE
Upcoming SlideShare
Loading in...5
×

Lecture on Innovation at Startups at ESADE

957
-1

Published on

Published in: Business, Economy & Finance
0 Comments
3 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
957
On Slideshare
0
From Embeds
0
Number of Embeds
6
Actions
Shares
0
Downloads
14
Comments
0
Likes
3
Embeds 0
No embeds

No notes for slide

Lecture on Innovation at Startups at ESADE

  1. 1. http://www.michaelrwolfe.com michaelrwolfe michael.wolfe@stanfordalumni.org Innovation as applied to early stage startups
  2. 2. Our journey today This is the story of a successful B2B Silicon Valley startup launching a new product into a new market. ! I will talk about how we validated the idea, designed the solution, and how we successfully grew and exited the company.
  3. 3. I've seen the story many times As a founder, exec, or advisor to a bunch of startups ! The same recipe doesn’t works twice, but patterns emerge
  4. 4. Let me take you back to 2002
  5. 5. The economy wasn’t so hot
  6. 6. "e-business" is still new Companies still reasoning about risks and opportunities
  7. 7. Enter our intrepid band of tech dudes Joseph Ansanelli, CEO! • Multi-time founder/CEO, Apple, product management and marketing Kevin Rowney, CTO! • Security Architect, Netcentives Michael Wolfe, VP Engineering! • Several startups, Entrepreneur in Residence at Benchmark Capital
  8. 8. Kevin’s experience leads him to an insight Companies spend a great deal of money keeping bad guys out of their network • Firewalls • Intrusion detection • Anti-malware But insiders who has access to the network can easily take data out of it • Via email, chat, web posts • Via thumb drives, DVDs, or laptops • Either accidentally or maliciously
  9. 9. A kernel of an idea Build software that allows companies to prevent the loss of confidential data from the inside
  10. 10. It might seem obvious now • Legal risk • Reputational risk • Regulatory compliance • And other Truly Bad Things ! But was it then?
  11. 11. Did we do this? 1. Raise venture capital 2. Hire some engineers 3. Build the product 4. Hire marketing and sales people 5. The product flies off the shelves 6. IPO!
  12. 12. It doesn’t work that way The graveyards are full of startups with products that customers "should have wanted"
  13. 13. It usually goes wrong Too early - there will be a market, but not yet Too late - competitors already addressing the problem, or customer has workaround or internal solution Not a "top 3" priority for the customer Building the wrong feature set Product can’t be built or is delayed! Pricing, messaging, and distribution never figured out
  14. 14. The industry has gotten smarter about this Growing recognition that startups are completely different than established businesses
  15. 15. A startup is an experiment • Form hypothesis • Find fastest/cheapest way to validate hypothesis • Test and measure • Adjust, «pivot» if needed
  16. 16. I will walk through our: Questions What were the most important questions we had to answer ! Validation How we got the answer to each of those questions ! Learnings What we learned and how we adjusted
  17. 17. Question #1: ! Do companies care about the loss of confidential data enough to invest in this market?
  18. 18. Careful before you say "yes" When is the last time you sent an encrypted email?
  19. 19. Pre-product validation • Get meetings with potential customers • Interview them on their problems and desired solutions • Show them mock-ups, examples, anything tangible that will get them talking • Ask for follow-up meetings, repeat
  20. 20. Getting the meetings • Work your personal network • LinkedIn, Twitter, comment threads, blogs • Put up a landing page, drive traffic, gather names • Cold call, email, twitter - be persistent ! Requires "hustle" and may be painful or uncomfortable
  21. 21. Getting them to respond • Be clear it is not a sales call • Flatter them - you want their feedback and advice • Entice them with the opportunity to work with a cutting edge company - more interesting than their usual meetings • Meet them anywhere, anytime • Ask for a short amount of time - they’ll give you more if they are interested
  22. 22. Running the meeting • Listen, listen, listen • Don't try to "sell" your solutions • Ask open-ended questions • Bring screenshots/slides/mockups - get their reaction • Close them on another meeting
  23. 23. Sample questions • “Talk us through your top priorities and projects” • “Tell us about your existing infrastructure” • “Have you experienced this problem” • “How are you solving this problem today” • “Force rank the following capabilities” • I'll show you some prototypes - give me your reaction” ?
  24. 24. What we heard "This is something we'd seriously consider" "We have been building homegrown solutions to address this" "We are talking about this problem at the board level" "We’d try it if you built it. Put us on your beta list"
  25. 25. Takeaway: ! It is never too early to talk to customers. ! If you can’t reach customers now, why do you think you can reach them later? ! Build the company alongside a few key customers.
  26. 26. Then we raised money • We raised a $5M series A financing based on this feedback. • Normally you’d raise later than this, but we already had firms predisposed to give us money. • Today it would be typical for a company to get much further along before raising a round • Cloud computing and low-cost distribution channels allow companies to get much further along before raising
  27. 27. Oh, we also named the company
  28. 28. Next Question: ! What customer segments care the most about the problem?
  29. 29. Which verticals? • Technology • Oil and Gas • Entertainment • Financial services • Manufacturing • Automotive
  30. 30. What tier? Start at large companies! Larger budgets Most public scrutiny Largest amount of data to protect “Name brand” references ! ! Start small, build up! Less demanding Shorter sales cycle More innovative Gain experience before going big
  31. 31. What we learned The strongest feedback came from large companies in regulated industries In this market, the larger companies were more, not less innovative Drivers were regulatory and reputational risk. “Keep me off of the front page of the WSJ”
  32. 32. What we did Laser focus on large companies in regulated industries, primarily protecting customer data De-emphasized the rest and even ignored some smaller companies that came to us ready to buy This focus meant we would lose deals that weren’t in our sweet spot
  33. 33. Takeaway: ! Focus, focus, focus ! If you try to help everyone, you will help no one ! This means losing business ! And that’s OK
  34. 34. Next Question: ! What kinds of data do customers care the most about protecting?
  35. 35. Data types • Employee data? • Customer data? • Intellectual property? • Strategic plans? • Financials?
  36. 36. How we found out • Built trust with prospects • Spent time with them as they walked us through actual internal breaches and their costs • We showed them several kinds of policies and got their reactions to each • Found that almost everything they talked about had to do with consumer PII (personally identifiable information)
  37. 37. What we did next We pivoted away from an earlier idea - tagging emails and documents We focused instead on one that could identify and protect large databases of consumer data Contrarian move - at the time DRM was the next new thing
  38. 38. Next Question: what threat do companies care the most about? • Data escaping via outbound email • Data escaping via web posts / web mail • Data escaping via FTP, P2P networks, other internet file transfer • Data escaping via thumb drives, DVDs, and lost laptops
  39. 39. Do they want block incidents or simply monitor + notify? Block! Prevent the incident from happening Avoid cost of the incident Provide assurance to customers ! Monitor! Less disruptive Less expensive Allows education and policy changes in response to incidents
  40. 40. Our minimum viable product We did Not Focus on data loss Malware, anti-porn, URL monitoring Focus on customer data Documents, intellectual property, financials Email only Webmail, thumbdrives, FTP Monitoring only Endpoint blocking Tools for remediation Simply logging them Great reporting Reporting as afterthought Focus on large companies Sell to anyone with money Some competitors did “more“ but ended up losing
  41. 41. What happened next • Responded to an RFP from Bank of America • Focused and won the deal • ~$500K, over time grew to several million • Needed to promise several near-term features to win the deal • Made them referencable and a champion
  42. 42. Takeaway: ! The “minimum viable product” can often be way more minimal than you think. ! Do a few things, and do them right. ! Customers will want more, but if you are solving an important problem, they will be patient.
  43. 43. Example MVPs • Created an “explainer video” demoing the product, got > 100K signups, didn’t ship product until 18 months later • Went to shoe shops, took pictures of shoes, put online. When people ordered, went back to shop to get shoes. • Started with one plane and one route. Perfected their system and then expanded
  44. 44. Would you ship a phone without cut and paste?
  45. 45. Other things we learned • Opportunity to sell high - to the CSO/CIO level • Bring in experienced enterprise sales reps • Partners were not a large factor - we had to evangelize/sell ourselves • Employees with security experience often did not do well in the company
  46. 46. This sure helped
  47. 47. Expanded to more verticals
  48. 48. Added products
  49. 49. We obsessed about Team - Putting tons of time and money into recruiting, and removing bad hires Training and team building - constant trainings and company events Transparency - everyone at the company had access to almost all information Customer success - making them reference able and our champions Planning and forecasting - quarterly replans, goals and objectives
  50. 50. Grew and grew 2003 - $500K in bookings, 1 customer 2004 - $3.5M, 7 customers 2005 - $13.5M, 30 customers 2006 - $27M, Europe office 2007 - $50M, 175 employees !
  51. 51. FTW
  52. 52. Key takeaways • Validate, validate, validate • Build your product with customers. Seek face to face meetings, not just metrics • Seek focus • Get an MVP to market as quickly as possible and then iterate! • Obsess about people
  53. 53. http://www.michaelrwolfe.com michaelrwolfe michael.wolfe@stanfordalumni.org Questions?
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×