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Startup 2.0: A Silicon Valley Story (July 2010)

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slides from my talk on Silicon Valley startups at Parque Explora in Medellin, Colombia (July 2010).

slides from my talk on Silicon Valley startups at Parque Explora in Medellin, Colombia (July 2010).

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  • 1. Startup 2.0: A Silicon Valley Story Engineering Better Startups with Incubators, Metrics & Iterative Development Dave McClure ( @DaveMcClure ) US Tech Delegation July 2010 - Medellin, Colombia
  • 2. Overview
    • Venture Capital = Fewer, Smaller Funds (<$100M)
    • Platforms = Distribution + Monetization (not Technology)
      • Search (Google)
      • Social (Facebook, Twitter)
      • Mobile (Apple, Android)
    • Incubators = Many Small Experiments (most FAIL)
  • 3. Silicon Valley Investor Ecosystem True Ventures First Round Capital Benchmark Sequoia Angels & Incubators ($0-10M) “ Seed” Funds ($10-50M) “ Small” VC Funds ($50-250M) “ Large” VC Funds (>$250M) Y-Combinator TechStars SoftTech (Clavier) FloodGate (Maples) Felicis (Senkut) SV Angel (Conway)
  • 4. More & Smaller Acquisitions
    • Mature Internet Platform Co’s:
      • GOOG, MSFT, YHOO, EBAY, AOL, AMZN, AAPL, INTU, ADBE, Fbook
    • Lots of Users, $$$
    • Outsourcing Innovation
    • Lots of M&A (but small)
    • Great for Angels & Entrepreneurs
    • Not so Great for (big) VCs
  • 5. Platforms 2.0 Search, Social, Mobile, Inbox, Media
  • 6. Web 2.0: Good Times.
    • # Users, Bandwidth = Bigger .
    • Startup Costs = Lower .
    • Transaction $ Growing = Better .
    • Building Product => Cheaper, Faster, Measurable
    • Getting Customers => Easier, More Predictable
    • Product & Market Decisions Based on Measured User Behavior
    R.I.P. *BAD* TIMES
  • 7. Platform Viability Successful Platforms have 3 Things: 1) Features 2) Users 3) Money Users . . Money Features Growth Profit Profitable Growth Nirvana
  • 8. Distribution Platforms
      • Customer Reach: 100M+
        • Search : Google (SEO/SEM)
        • Social : Facebook, Twitter, LinkedIn
        • Mobile : Apple (iPhone, iPad), Android
        • Media : YouTube/Video, Blogs, Photos
        • Email/IM : Google, Yahoo, Microsoft
  • 9. Web 2.0 Business Model
    • 1) Existing Business Ideas
    • 2) Web 2.0 Technology
      • Facebook (Connect), Twitter
      • SEO/SEM, Blogs, Email
      • E-Commerce & Payments
    • 3) Get Customers, Make Money
  • 10. Startup Incubators Lots of Hot, Cool, Web 2.0! (+ lots of FAIL, too.)
  • 11. Startup 2.0: “Lean Investor” Model
    • Method : Invest in many startups using incremental investment, iterative development. Start with lots of small experiments, filter out failure, and expand investment upon success… ( Rinse & Repeat) .
    • Incubator : $0-100K (“ Build & Validate Product ”)
    • Seed : $100K-$1M (“ Test & Grow Market ing Channels” ”)
    • Venture : $1M-$10M (“ Maximize Growth & Revenue ”)
  • 12. Incubator 2.0: Fast, Cheap, FAIL
    • Incubators growing in popularity, acceptance
    • Supportive ecosystem for startups (angels, VCs)
    • Efficient use of investment capital ($0-100K)
    • High fail rate (60-80%) => large initial sample size
  • 13. Incubator 2.0: Education, Collaboration
    • Emphasis on education, access to shared resources
    • Success based on common platforms, physical proximity, open & collaborative environment
    • Success based on fast fail, iteration & feedback
    • Incremental investment; high-risk, but high-reward
  • 14. fbFund REV
    • fbFund REV : Facebook “Social” Incubator: invest in startups, apps, websites based on Facebook platform & Facebook Connect.
    • 22 startups @ ~$35K each ($850K total)
    • 3 month program: Technology, Design, Marketing, Business topics
    • Success: ~8 startups funded >$500K