Your SlideShare is downloading. ×
John Callahan May 15 2008
Upcoming SlideShare
Loading in...5

Thanks for flagging this SlideShare!

Oops! An error has occurred.

Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

John Callahan May 15 2008


Published on

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

No notes for slide


  • 1. Shelter from the storm: Starting up without venture capital John Callahan Technology Innovation Management Carleton University May 15, 2008
  • 2. Blood on the Tracks - Bob Dylan (1975) • An album “about heartache, anger and loneliness” Shelter from the Storm: I was burned out from exhaustion, buried in the hail, Poisoned in the bushes an' blown out on the trail May 15 2008 Slide 2
  • 3. Two points • Technical entrepreneurs have a limited repertoire of business models (with or without VC $$) • Doing without VC $$ is getting easier (and more necessary) May 15 2008 Slide 3
  • 4. ew N Technical entrepreneurs are romantics with a limited repertoire of business models • Standard approach – Develop a neat product – Let the product pick the customer • Consequences – Economic free fall during product development – Need for venture capital • New technical entrepreneurs are romantics – Success is more than just financial reward • Dominant role models have used the standard approach – Terry Matthews, Newbridge – Other role models • Rob Hall, • Out of IBM service operations, HP purchase of EDS May 15 2008 Slide 4
  • 5. Coming out of a corporation the standard approach makes real sense – BUT! • Executives provide resources • Development team executes • No revenues during product development • The standard approach is what you are used to – You do what you really know about BUT! • Choose a business model, don’t assume one – Have a startup team with diverse business experience – Be patient for growth and impatient for profits May 15 2008 Slide 5
  • 6. Entrust and Versign – one business, two business models May 15 2008 Slide 6
  • 7. Doing without VC $$ – Stay above the grey zone cumulative cash flow do it yourself time - $1M grey zone - $5M VC territory May 15 2008 Slide 7
  • 8. Staying above the grey zone is getting easier (and more necessary) • Software as a service (SaaS) • Cloud computing • Abundant electronic manufacturing • Open source – Cheaper to bring OS product to market – Cheaper to use internally • Internet contacts with customers – Blog style marketing – Direct feedback May 15 2008 Slide 8
  • 9. Just delaying need for VC $$ is useful • A startup needs to find a fit between the right customer and the right offer • A startup seldom knows what the fit is right away • Two stages in a startup – Before the fit – learning, adjustment – After the fit – planning, execution • Many advantages to getting financed after the fit – VCs want extraordinary returns not learning – Easier to align VC and founder incentives after the fit – Company culture gets set while low on $$ – Remember that the marginal resource has the power May 15 2008 Slide 9