INTRODUCTION TO STARTUPS
(AND WHY YOU SHOULD START ONE TODAY!)
UQ IDEA Network
19 August 2013
Colin Kinner
© 2013 Spike Innovation
@ColinKinner
Background
© 2013 Spike Innovation
@ColinKinner
WHAT IS A STARTUP?
© 2013 Spike Innovation
@ColinKinner
Startup = young, high growth company
Technology startup = startup in which
technology...
© 2013 Spike Innovation
@ColinKinner
Global growth potential
High growth potential,
national / global focus
Modest
growth,...
© 2013 Spike Innovation
@ColinKinner
NOT Scalable
Costs
Revenues
$
time
© 2013 Spike Innovation
@ColinKinner
Scalable
$
Costs
Revenues
time
© 2013 Spike Innovation
@ColinKinner
WHY DO A STARTUP?
© 2013 Spike Innovation
@ColinKinner
Disruption
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
Massive global markets
April 2012
700 million registered users
40 million concurrent ...
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
Low barrier to entry
“Heavy”
software
“Light” software
/ apps
1980’s 1990 2000 2010
N...
© 2013 Spike Innovation
@ColinKinner
Australian startup founders by educational background
University of New South Wales
University of Technology Sydney
Univer...
© 2013 Spike Innovation
@ColinKinner
WHY DO A STARTUP NOW?
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
WHAT MAKES A GOOD STARTUP?
Team
© 2013 Spike Innovation
@ColinKinner
Is the VC a pig or a chicken? >
© 2013 Spike Innovation
@ColinKinner
A real problem that
needs to be solved
© 2013 Spike Innovation
@ColinKinner
A compelling
solution
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
A painkiller, not a vitamin
A large global market
© 2013 Spike Innovation
@ColinKinner
A viable business model
Customer Acquisition Cost
(CAC)
Lifetime Value of Customer
(L...
© 2013 Spike Innovation
@ColinKinner
Daily deals sites. . .
Helping merchants sell stuff
at below cost
to low-value custom...
MVP
© 2013 Spike Innovation
@ColinKinner
Validation
Does the problem exist?
Does your idea solve the problem?
Does anyone care?
© 2013 Spike Innovation
@ColinKinner
Competitive advantage
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
Ability to scale
© 2013 Spike Innovation
@ColinKinner
(Enterprise is HOT)
© 2013 Spike Innovation
@ColinKinner
Ability to pitch
© 2013 Spike Innovation
@ColinKinner
HOW TO COME UP WITH A
GOOD STARTUP IDEA
© 2013 Spike Innovation
@ColinKinner
1. Notice things that suck, and think of ways
to make them better.
2. If something bu...
© 2013 Spike Innovation
@ColinKinner
What makes a good startup idea?
• You understand the problem
• You can think of a bet...
© 2013 Spike Innovation
@ColinKinner
Startup idea #9:
- Online community for neighbourly
interactions
- Peer-to-peer shari...
© 2013 Spike Innovation
@ColinKinner
Startup idea #16:
- Crowdsource professional photography
- Unlock the millions of ima...
© 2013 Spike Innovation
@ColinKinner
NDAs
© 2013 Spike Innovation
@ColinKinner
HOW DO I GET STARTED?
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
Fireside chat with Stephen Phillips
10 Sept 2013
Microsoft Innovation Centre
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
Innovation Centre
© 2013 Spike Innovation
@ColinKinner
FUNDING FOR STARTUPS
© 2013 Spike Innovation
@ColinKinner
Where do startups raise money?
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
© 2013 Spike Innovation
@ColinKinner
Angel investment activity per capita
968
$84
Number of angel
investors per million of...
© 2013 Spike Innovation
@ColinKinner
Availability of venture capital
Australia $4.09 ($90m total in 2012)
Australia 2012 O...
© 2013 Spike Innovation
@ColinKinner
WHERE CAN I FIND MORE INFO?
paulgraham.com
Brisbane
© 2013 Spike Innovation
@ColinKinner
Just do it
© 2013 Spike Innovation
@ColinKinner
Thank you
Colin Kinner
email colin@spikeinnovation.com.au
www.spikeinnovation.com.au
...
© 2013 Spike Innovation
@ColinKinner
Interested in helping kids learn to code?
Sign up as a mentor!
Intro to startups - and why you should start one today (UQ IDEA Network)
Intro to startups - and why you should start one today (UQ IDEA Network)
Intro to startups - and why you should start one today (UQ IDEA Network)
Intro to startups - and why you should start one today (UQ IDEA Network)
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Intro to startups - and why you should start one today (UQ IDEA Network)

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  • CurrentDirector, Spike InnovationMentor - River City Labs, PushStart, Commercialisation AustraliaAdvisory board, CohortpayPastCEO, iLab IncubatorCommercialisation - UQ, QUTHead of Funds Management, Imperial College LondonBSc(Hons) – chemistry (UQ)MBA (Deakin)
  • Question: How many of you plan to do a startup?
  • Can anyone think of an example?
  • Can anyone think of an example?
  • Software is eating the world – Marc Andreesen – Founder of Netscape. Now partner at Andreesen Horowitz
  • Skype Founded in Sweden in 2003Acquired by Microsoft in 2011 for $8.5 billionIt’s not just about digital businesses. . . Although internet presents a major opportunity that startups are aggressively tackling.There are 2.3 billion internet users globally. This represents a potential market of 2 billion customers that’s just as accessible from Brisbane as it is from Silicon Valley.Nearly 30% of internet users are in China and India – and still only 37% of the population is online.
  • Also Exit opportunitiesFit with portfolioAbility to add value
  • More important than product or marketYour objective is to show the investor that your team is backableRecognise gaps and have a plan to bring on a co-founder if neededCommon pitfall: Listing 8-10 people when most are in fact part-time / have day jobsSole founder  strong correlation with failure
  • What’s the point??The pig is truly committed, whereas the chicken is merely an interested party. Investors like to back pigs – ie. entrepreneurs who are truly and completely committed to the outcome of their venture, have a lot at stake, and have no fallback.Signs that an entrepreneur is fully committed:You’ve quit your day job to work full-time on your startup before it is funded or has revenuesSome or all team members have moved cities to wherever makes most sense for the businessFounders have put meaningful amount of their own money into the venture
  • Consumer internet / social businesses are an exception. . . what problem was facebook solving??
  • Eric Schmidt’s “toothbrush test”
  • Low CAC comes from Low touch sales and High conversion ratesHigh CLVC comes from Recurring revenues,Product cross-selling / upselling or Upgrades
  • Andrew Mason – ex-CEO of GrouponBUT – Groupon’s market cap is $4 billion
  • Bing Gordon (Kleiner Perkins) : The new "critical mass" standard for VCs is you have 10 million users Angels will have lower expectations
  • Do you have any secret sauce?Proprietary IP?Exclusive relationships?Unique capabilities?First mover advantage?
  • Talk about complex sales, especially for enterprise.
  • Enterprise is popular among investors because:High value per customerIf the problem is real they don’t mind spending big money to solve itLess cluttered than consumer internetBusiness models tend to be more rational and less about customer whim
  • Intro to startups - and why you should start one today (UQ IDEA Network)

    1. 1. INTRODUCTION TO STARTUPS (AND WHY YOU SHOULD START ONE TODAY!) UQ IDEA Network 19 August 2013 Colin Kinner
    2. 2. © 2013 Spike Innovation @ColinKinner Background
    3. 3. © 2013 Spike Innovation @ColinKinner WHAT IS A STARTUP?
    4. 4. © 2013 Spike Innovation @ColinKinner Startup = young, high growth company Technology startup = startup in which technology is central to the product or service being provided
    5. 5. © 2013 Spike Innovation @ColinKinner Global growth potential High growth potential, national / global focus Modest growth, domestic focus Lifestyle / micro-business Potentialvalueofcompany <$1m $1-5m $5-100m >$100m Number of companies Scalable startups
    6. 6. © 2013 Spike Innovation @ColinKinner NOT Scalable Costs Revenues $ time
    7. 7. © 2013 Spike Innovation @ColinKinner Scalable $ Costs Revenues time
    8. 8. © 2013 Spike Innovation @ColinKinner WHY DO A STARTUP?
    9. 9. © 2013 Spike Innovation @ColinKinner
    10. 10. Disruption
    11. 11. © 2013 Spike Innovation @ColinKinner
    12. 12. © 2013 Spike Innovation @ColinKinner Massive global markets April 2012 700 million registered users 40 million concurrent users 8 million paying users $860 million annual revenues
    13. 13. © 2013 Spike Innovation @ColinKinner
    14. 14. © 2013 Spike Innovation @ColinKinner Low barrier to entry “Heavy” software “Light” software / apps 1980’s 1990 2000 2010 Networking infrastructure Computer hardware Processors $20m <$100k$50m$50m$100m Capital required
    15. 15. © 2013 Spike Innovation @ColinKinner
    16. 16. Australian startup founders by educational background University of New South Wales University of Technology Sydney University of Sydney University of Melbourne Macquarie University Monash University Australian Graduate School of Management University of Wollongong RMIT University Swinburne University of Technology Queensland University of Technology Australian National University Curtin University of Technology University of Western Australia University of Adelaide Index: University of New South Wales = 100
    17. 17. © 2013 Spike Innovation @ColinKinner WHY DO A STARTUP NOW?
    18. 18. © 2013 Spike Innovation @ColinKinner
    19. 19. © 2013 Spike Innovation @ColinKinner
    20. 20. © 2013 Spike Innovation @ColinKinner WHAT MAKES A GOOD STARTUP?
    21. 21. Team
    22. 22. © 2013 Spike Innovation @ColinKinner Is the VC a pig or a chicken? >
    23. 23. © 2013 Spike Innovation @ColinKinner A real problem that needs to be solved
    24. 24. © 2013 Spike Innovation @ColinKinner A compelling solution
    25. 25. © 2013 Spike Innovation @ColinKinner
    26. 26. © 2013 Spike Innovation @ColinKinner A painkiller, not a vitamin
    27. 27. A large global market
    28. 28. © 2013 Spike Innovation @ColinKinner A viable business model Customer Acquisition Cost (CAC) Lifetime Value of Customer (LVC)
    29. 29. © 2013 Spike Innovation @ColinKinner Daily deals sites. . . Helping merchants sell stuff at below cost to low-value customers they will probably never see again
    30. 30. MVP
    31. 31. © 2013 Spike Innovation @ColinKinner Validation Does the problem exist? Does your idea solve the problem? Does anyone care?
    32. 32. © 2013 Spike Innovation @ColinKinner Competitive advantage
    33. 33. © 2013 Spike Innovation @ColinKinner
    34. 34. © 2013 Spike Innovation @ColinKinner
    35. 35. © 2013 Spike Innovation @ColinKinner Ability to scale
    36. 36. © 2013 Spike Innovation @ColinKinner (Enterprise is HOT)
    37. 37. © 2013 Spike Innovation @ColinKinner Ability to pitch
    38. 38. © 2013 Spike Innovation @ColinKinner HOW TO COME UP WITH A GOOD STARTUP IDEA
    39. 39. © 2013 Spike Innovation @ColinKinner 1. Notice things that suck, and think of ways to make them better. 2. If something bugs you, it might also bug 100 million other people. 3. Some of those people might pay for a better solution.
    40. 40. © 2013 Spike Innovation @ColinKinner What makes a good startup idea? • You understand the problem • You can think of a better solution • You can build the solution • Few others realise it’s worth doing Live in the future, then build what's missing. Paul Graham, Y Combinator
    41. 41. © 2013 Spike Innovation @ColinKinner Startup idea #9: - Online community for neighbourly interactions - Peer-to-peer sharing of resources - Discounts on travel-intensive service providers tradies - Monetise via subscription and advertising
    42. 42. © 2013 Spike Innovation @ColinKinner Startup idea #16: - Crowdsource professional photography - Unlock the millions of images sitting on pro photographers’ hard drives (ie. not searchable) - Advertisers Corporates post briefs to photographers who can submit existing images
    43. 43. © 2013 Spike Innovation @ColinKinner NDAs
    44. 44. © 2013 Spike Innovation @ColinKinner HOW DO I GET STARTED?
    45. 45. © 2013 Spike Innovation @ColinKinner
    46. 46. © 2013 Spike Innovation @ColinKinner
    47. 47. © 2013 Spike Innovation @ColinKinner Fireside chat with Stephen Phillips 10 Sept 2013 Microsoft Innovation Centre
    48. 48. © 2013 Spike Innovation @ColinKinner
    49. 49. © 2013 Spike Innovation @ColinKinner
    50. 50. © 2013 Spike Innovation @ColinKinner Innovation Centre
    51. 51. © 2013 Spike Innovation @ColinKinner FUNDING FOR STARTUPS
    52. 52. © 2013 Spike Innovation @ColinKinner Where do startups raise money?
    53. 53. © 2013 Spike Innovation @ColinKinner
    54. 54. © 2013 Spike Innovation @ColinKinner
    55. 55. © 2013 Spike Innovation @ColinKinner
    56. 56. © 2013 Spike Innovation @ColinKinner
    57. 57. © 2013 Spike Innovation @ColinKinner
    58. 58. © 2013 Spike Innovation @ColinKinner
    59. 59. © 2013 Spike Innovation @ColinKinner Angel investment activity per capita 968 $84 Number of angel investors per million of population Amount invested by angels nationally (A$ per capita per annum) Sources: HALO Report, Angel Resource Institute, Angel Capital Association, Angel Investment Network, AAAI members 14 $0.95 91 $5.70 AU NZ AU NZ
    60. 60. © 2013 Spike Innovation @ColinKinner Availability of venture capital Australia $4.09 ($90m total in 2012) Australia 2012 Olympic Games preparation $14.10 ($310m total) Melbourne Cup bets $9.09 ($200m total) $ VC invested per capita $3,945Silicon Valley Sources: US National Venture Capital Association, European Private Equity and Venture Capital Association, Israel Venture Capital Research Centre, AVCAL, NZVCA, UN New Zealand This is a big problem This is a big opportunity
    61. 61. © 2013 Spike Innovation @ColinKinner WHERE CAN I FIND MORE INFO?
    62. 62. paulgraham.com Brisbane
    63. 63. © 2013 Spike Innovation @ColinKinner
    64. 64. Just do it
    65. 65. © 2013 Spike Innovation @ColinKinner Thank you Colin Kinner email colin@spikeinnovation.com.au www.spikeinnovation.com.au @ColinKinner http://au.linkedin.com/in/colinkinner
    66. 66. © 2013 Spike Innovation @ColinKinner Interested in helping kids learn to code? Sign up as a mentor!

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