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Best Strategy Is Speed (Startup2Startup May 2008)
 

Best Strategy Is Speed (Startup2Startup May 2008)

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"SPEED: The Ultimate Startup Weapon", presented by Mike Cassidy to Startup2Startup entrepreneur dinner (May 2008)

"SPEED: The Ultimate Startup Weapon", presented by Mike Cassidy to Startup2Startup entrepreneur dinner (May 2008)

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    Best Strategy Is Speed (Startup2Startup May 2008) Best Strategy Is Speed (Startup2Startup May 2008) Presentation Transcript

    • Speed As THE Primary Business Strategy Mike Cassidy
    • Speed Brings Great Advantages
      • Rapid product rollout/updates makes it extremely difficult for competitors to gain traction against you (2 weeks vs. 18 months)
      • Rapid success builds strong team morale (which leads to more success)
      • Rapid success generates more PR (which leads to more revenue, strategic partnerships, key hires, etc.)
      • Fast growth drives higher company valuations when fundraising or using equity for strategic deals
      June 3, 2009 Confidential and Proprietary
    • Typical Start-up Timeline? June 3, 2009 Confidential and Proprietary Explore ideas 3 months? Raise money 3 months? Hire core team & open office 2-3 months? Build product 12 months? Initial marketing / awareness-building / early customers 3-6 months? “ Launched” = 23-27 months?
    • Lightning Speed Start-up Timeline June 3, 2009 Confidential and Proprietary Explore ideas 2 wks Raise money 1 day Hire core team & open office 2 wks Build product 3 months “ Launched” = 4 months
    • Example 1: Stylus Innovation
      • Stylus Innovation: Computer telephony software
      • Entrenched competitors
        • Owned 95% of market with DOS-based tools
        • 300 customers/year per competitor
      • Visual Voice
        • 1st Windows based tool, Visual Basic custom control
        • 3,000 shipped in 1st year
        • Dominant market player within 6 months of Visual Voice launch
      June 3, 2009 Confidential and Proprietary Sold 2 years after launch for $13M (10,000x founders investment)
    • Example 2: Direct Hit
      • Direct Hit: Internet search engine
      • Entrenched competitors
        • Owned 95% of market (AltaVista, Excite, Infoseek, Lycos, Yahoo)
        • Used traditional text-based inverted index algorithms
      • Direct Hit
        • 1st search engine based on tracking user voting (like Digg, YouTube, etc.)
        • Provided search for AOL (ICQ), Microsoft, Lycos, etc.
        • AOL deal within 5 months of company start
      June 3, 2009 Confidential and Proprietary Sold 500 days after launch for $500 million
    • Example 3: Xfire
      • Xfire: Instant messenger for PC videogamers
      • Entrenched competitors
        • Owned 95% of market (AIM, Yahoo Messenger, MSN Messenger)
        • Focused on traditional IM (not gaming)
      • Xfire
        • 1st IM to track and connect videogamers
        • Grew virally from 100 users to 3 million in 2 years
        • Dominated market segment within 5 months of “Xfire” start
      June 3, 2009 Confidential and Proprietary Sold just over 2 years after launch for $110 million
    • Speeding Up All Parts of Startup
      • Fundraising
      • Opening an office
      • Hiring
      • Getting new employees started
      • Product development
      • Business development
      • Marketing/PR
      • Changing direction
      June 3, 2009 Confidential and Proprietary
      • Fundraising
      June 3, 2009 Confidential and Proprietary
    • Speed and Capital
      • Stylus: $1,500 initial capital; no VC
      • Direct Hit: $1.3M (DFJ) – through launch, HotBot, AOL, Apple spent $400K; through MSN, Lycos spent another $600K
      • Xfire: $1M Series A
      June 3, 2009 Confidential and Proprietary Biz school: Single, consistent strategy; not “ lowest cost and best customer service,” etc.
    • Raising VC Money Quickly
      • What are the best ways to raise VC money quickly?
      June 3, 2009 Confidential and Proprietary
    • Four Keys to Raising VC Money Quickly
      • Raise when conditions in your favor
        • Direct Hit Series A: 1998, portals growing rapidly
        • Direct Hit Series B: as AOL deal is closing
        • Direct Hit Series C: as MSN/Lycos deals are closing
        • Xfire Series C: Social networking “hot”, steep growth curve established
      • Get all decision makers in room
      • Synchronize timing of competing VC offers
      • Bring “if/then” contracts with customers to your VC meeting
      June 3, 2009 Confidential and Proprietary
      • Opening an Office
      June 3, 2009 Confidential and Proprietary
    • Every Day, Every Hour, Every Minute Counts June 3, 2009 Confidential and Proprietary 4/21 8:15am pitch DFJ; 4:30pm get term sheet; dev team gives notice at current jobs 4/22 Fly back to Boston 4/23 Negotiate lease on office space; order Dell computers 4/24 Order network software, phone system, office alarm system, DSL, office LAN/phone wiring 4/27 Incorporate, set up bank account, Paychex, desks/chairs 4/28 Source control software, property insurance 4/29 Hardware arrives, set it up 4/30 Set up LAN, phones, desks 5/4 Open office, first day team has been hired, have C++, email, PC, LAN, payroll, etc. (13 days after term sheet received)
      • Hiring
      June 3, 2009 Confidential and Proprietary
    • Think Speed in Everything You Do
      • Experience level:
        • Stylus : 4 sr. product managers (5+ years) -> CEO, VP Eng, VP Mkt, VP Sales
        • Direct Hit : 5 th product manager ->VP Eng; 10 year dev; 15 year dev
        • Xfire : 10 year dev; 10 year dev; 10 year dev
      • Known talent:
        • Stylus : 13 out of first 15 had worked with before
        • Direct Hit : 12 out of first 15 had worked with before
        • Xfire : 2 out of first 3 top devs came from absolutely trusted source
      • Close:
        • Group huddle during last interviewer
        • Offer letter ready before interviewee arrives
        • Make offer on same day
      June 3, 2009 Confidential and Proprietary
      • Getting New Employees Started
      June 3, 2009 Confidential and Proprietary
    • Speed Starts the First Day a New Hire Arrives
      • What do YOU do when a new employee comes on board?
      June 3, 2009 Confidential and Proprietary
    • Speed Starts the First Day a New Hire Arrives
      • Before the first day
        • Give her material to read the day she accepts the job
        • Give mundane “first day” paperwork before arriving
      • First day
        • Absolutely have desk, phone, email account, etc., set up in advance
        • Absolutely have goals/projects/deliverables written down; give to new hire immediately
      June 3, 2009 Confidential and Proprietary Set tone for speed
      • Product Development
      June 3, 2009 Confidential and Proprietary
    • Which Is Faster?
      • A. Incremental development. Build 1 module/feature at a time and then launch. Add features as you go. Figure out over time what features users want and then try to add them.
      • OR
      • B. Spec your product CAREFULLY. Make sure you do great customer research! Hit the market with a rich, compelling product because you only get ONE first impression. If the product is lame, people will never come back.
      June 3, 2009 Confidential and Proprietary
    • Journey of a Thousand Miles Begins with a Single Step
      • Stylus Innovation
        • Visual Voice 1.0 let people build a 2-line IVR system
        • Added digital 32-line capability within 6 months (plus fax, a dozen other features)
        • 3.5 months from “go” to launch
      • Direct Hit
        • Patented algorithm included two dozens variables (time spent at a URL, related searches, time of year)
        • Launched with small subset of this feature set
        • 3.5 months from “go” to launch
      • Xfire
        • Launched with 2 features: presence detection and 1-click join
        • Added a new feature every 2 weeks 1st year and every 3 weeks 2nd year
        • 3.5 months from “go” to launch
      June 3, 2009 Confidential and Proprietary
      • Business Development
      June 3, 2009 Confidential and Proprietary
    • Biz Dev Deals – Fast or Never
      • “ Probability of a deal ever closing declines by 10% each day it doesn’t close”
      • Use calendars/maps with “limited supply”
        • Sponsorships for July, Aug, and Oct already sold…
        • Map of USA with certain regions already controlled by competitors
      June 3, 2009 Confidential and Proprietary
      • Marketing/PR
      June 3, 2009 Confidential and Proprietary
    • Fastest Way To Get the Word Out?
      • PR is faster than Marketing
      • Stylus
        • No marketing budget
        • Editorial in CT Mag (including cover)
      • Direct Hit
        • No marketing budget (until Q4 ’99)
        • Cover of Industry Standard
      • Xfire
        • No marketing budget
        • Extensive coverage in Fortune, CNN, GameDaily, Forbes, WSJ, USA Today, Marketwatch, Wired, Red Herring, SJ Mercury, etc.
      June 3, 2009 Confidential and Proprietary
      • Changing Direction
      June 3, 2009 Confidential and Proprietary
    • If Something Is Broken, Fix It - Immediately
      • Stylus Innovation
        • Original name = “Dial-a-Fish”
        • Changing the way Americans shop for groceries, with $1500 in capital
        • Decision to change to Visual Voice took less than 2 weeks
        • Once decided, 100% of company effort immediately shifted
      • Xfire
        • Original name = “Ultimate Arena”
        • Play to win $$
        • Decision to change to Xfire took less than 2 weeks
        • Once decided, majority of company effort immediately shifted
      June 3, 2009 Confidential and Proprietary