What is a Startup and Why Should You Start One Now? QUT IDEA Network 1 Sept 2014
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What is a Startup and Why Should You Start One Now? QUT IDEA Network 1 Sept 2014

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Colin Kinner's talk to the QUT IDEA Network

Colin Kinner's talk to the QUT IDEA Network

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  • Current
    Director, Spike Innovation
    Mentor - River City Labs, PushStart, Commercialisation Australia
    Advisory board, Cohortpay
    Past
    CEO, iLab Incubator
    Commercialisation - UQ, QUT
    Head of Funds Management, Imperial College London
    BSc(Hons) – chemistry (UQ)
    MBA (Deakin)
  • Skype
    Founded in Sweden in 2003
    Acquired by Microsoft in 2011 for $8.5 billion

    It’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.

  • Software is eating the world – Marc Andreesen – Founder of Netscape. Now partner at Andreesen Horowitz

  • Low CAC comes from Low touch sales and High conversion rates
    High CLVC comes from Recurring revenues, Product cross-selling / upselling or Upgrades

  • Also Exit opportunities
    Fit with portfolio
    Ability to add value
  • More important than product or market
    Your objective is to show the investor that your team is backable
    Recognise gaps and have a plan to bring on a co-founder if needed
    Common pitfall: Listing 8-10 people when most are in fact part-time / have day jobs
    Sole 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 revenues
    Some or all team members have moved cities to wherever makes most sense for the business
    Founders have put meaningful amount of their own money into the venture
  • Andrew Mason – ex-CEO of Groupon
    BUT – 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
  • Talk about complex sales, especially for enterprise.

  • Enterprise is popular among investors because:
    High value per customer
    If the problem is real they don’t mind spending big money to solve it
    Less cluttered than consumer internet
    Business models tend to be more rational and less about customer whim
  • Don’t aim to create the perfect canvas – spend 20 minutes and then get out of the building to test your assumptions.
  • The Validation Board is all about learnings – what can you learn by conducting experiments?


Transcript

  • 1. INTRODUCTION TO STARTUPS (AND WHY YOU SHOULD START ONE TODAY!) IDEA Network QUT 1 Sept 2014 @ColinKinner
  • 2. Background © 2014 Spike Innovation @ColinKinner
  • 3. WHAT IS A STARTUP? © 2014 Spike Innovation @ColinKinner
  • 4. A company that's confused about (1) what its product is, (2) who its customers are, and (3) how to make money Startup = © 2014 Spike Innovation @ColinKinner
  • 5. A startup is a temporary organisation. . . designed to search for a repeatable and scalable business model. © 2014 Spike Innovation @ColinKinner
  • 6. Startup = growth © 2014 Spike Innovation @ColinKinner
  • 7. NOT Scalable © 2014 Spike Innovation @ColinKinner Revenues Costs $ time
  • 8. NOT Scalable © 2014 Spike Innovation @ColinKinner Revenues Costs $ time
  • 9. Scalable $ © 2014 Spike Innovation @ColinKinner Revenues Costs time
  • 10. © 2014 Spike Innovation @ColinKinner
  • 11. Which type of business? Lifestyle business Social venture © 2014 Spike Innovation @ColinKinner Buyable startup Scalable startup Small business
  • 12. WHY DO A STARTUP? © 2014 Spike Innovation @ColinKinner
  • 13. Massive global markets © 2014 Spike Innovation @ColinKinner
  • 14. Massive global markets © 2014 Spike Innovation @ColinKinner April 2012 700 million registered users 40 million concurrent users 8 million paying users $860 million annual revenues
  • 15. © 2014 Spike Innovation @ColinKinner
  • 16. Low barrier to entry Networking infrastructure Computer hardware Processors Capital required © 2014 Spike Innovation @ColinKinner “Heavy” software “Light” software / apps 1980’s 1990 2000 2010 $100m $50m $50m $20m <$100k
  • 17. © 2014 Spike Innovation @ColinKinner
  • 18. © 2014 Spike Innovation @ColinKinner
  • 19. Years to reach $1 billion annual revenue © 2014 Spike Innovation @ColinKinner
  • 20. Reproduced with kind permission of Peter Lewis and the Newcastle Herald
  • 21. WHY DO A STARTUP NOW? © 2014 Spike Innovation @ColinKinner
  • 22. © 2014 Spike Innovation @ColinKinner
  • 23. © 2014 Spike Innovation @ColinKinner
  • 24. WHAT MAKES A GOOD STARTUP IDEA? © 2014 Spike Innovation @ColinKinner
  • 25. 1. Notice things that suck, and think of ways to make them better. 2. If something bugs you, it might also bug a lot of other people. 3. Some of those people might pay for a better solution. © 2014 Spike Innovation @ColinKinner
  • 26. 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 © 2014 Spike Innovation @ColinKinner
  • 27. Startup idea #16: - Crowdsource professional photography - Unlock the billions of images sitting on pro photographers’ hard drives (ie. not searchable) - Advertisers post briefs to photographers who can submit existing images © 2014 Spike Innovation @ColinKinner
  • 28. Disruption © 2014 Spike Innovation @ColinKinner
  • 29. © 2014 Spike Innovation @ColinKinner
  • 30. © 2014 Spike Innovation @ColinKinner
  • 31. A viable business model Customer Acquisition Cost (CAC) © 2014 Spike Innovation @ColinKinner Lifetime Value of Customer (LVC)
  • 32. WHAT MAKES A GOOD STARTUP? © 2014 Spike Innovation @ColinKinner
  • 33. Team
  • 34. > © 2014 Spike Innovation @ColinKinner
  • 35. A real problem that needs to be solved © 2014 Spike Innovation @ColinKinner
  • 36. A compelling solution © 2014 Spike Innovation @ColinKinner
  • 37. © 2014 Spike Innovation @ColinKinner
  • 38. Daily deals sites. . . Helping merchants sell stuff at below cost to low-value customers they will probably never see again © 2014 Spike Innovation @ColinKinner
  • 39. Validation Does the problem exist? Does your idea solve the problem? Does anyone care? © 2014 Spike Innovation @ColinKinner
  • 40. Ability to scale © 2014 Spike Innovation @ColinKinner
  • 41. Enterprise is HOT © 2014 Spike Innovation @ColinKinner
  • 42. THE LOCAL STARTUP ECOSYSTEM © 2014 Spike Innovation @ColinKinner
  • 43. © 2014 Spike Innovation @ColinKinner
  • 44. © 2014 Spike Innovation @ColinKinner
  • 45. © 2014 Spike Innovation @ColinKinner
  • 46. PRACTICAL TIPS © 2014 Spike Innovation @ColinKinner
  • 47. NDAs © 2014 Spike Innovation @ColinKinner
  • 48. In need $250,000 from investors to hire a developer to build a prototype. . . © 2014 Spike Innovation @ColinKinner
  • 49. USEFUL RESOURCES © 2014 Spike Innovation @ColinKinner
  • 50. © 2014 Spike Innovation @ColinKinner paulgraham.com Brisbane
  • 51. © 2014 Spike Innovation @ColinKinner
  • 52. PROBLEM List the top 1-3 problems 1 3 4 2 EXISTING ALTERNATIVES List how these problems are solved today SOLUTION Outline a possible solution for each problem Lean Canvas KEY METRICS List the key numbers that tell you how your business is doing UNIQUE VALUE PROPOSITION A single, clear, compelling statement about why customers will buy your product HIGH-LEVEL CONCEPT One-line description of your business (eg. YouTube = Flickr for videos) 8 © 2014 Spike Innovation @ColinKinner UNFAIR ADVANTAGE What advantages do you have that can’t be easily bought or copied 9 CHANNELS List your path to customers CUSTOMER SEGMENTS List your target customers and users EARLY ADOPTERS List the characteristics of your ideal customers COST STRUCTURE List your main fixed and variable costs 5 REVENUE STREAMS List your sources of revenue 7 6 www.leanstack.com
  • 53. © 2014 Spike Innovation @ColinKinner
  • 54. © 2014 Spike Innovation @ColinKinner
  • 55. © 2014 Spike Innovation @ColinKinner www.udacity.com/course/ep245
  • 56. jfdi © 2014 Spike Innovation @ColinKinner
  • 57. © 2014 Spike Innovation @ColinKinner
  • 58. Thank you Colin Kinner email colin@spikeinnovation.com.au www.spikeinnovation.com.au @ColinKinner http://au.linkedin.com/in/colinkinner © 2014 Spike Innovation @ColinKinner