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Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010
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Presentation to Larry Lenihan's NYU Entrepreneurship Class April 2010

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Learning from Failure

Learning from Failure

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  • Roger - great presentation. You should write up your remarks as well.

    Aligns nicely w/ Steve Blank, Eric Ries' notions; http://nyti.ms/cFc1I3

    My sense is that many startups devote too little attention to the customer's problem(s) they're solving, focusing instead on the product (especially if they're a technology co), which increases the failure rate. Curious whether you see this in Big Data and if so thoughts on avoiding?
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  • 1. Learning from FailureAn Insider’s View of What NOT to do orHow to Create a Successful Start-up
    Roger Ehrenberg
    IA Venture Strategies
    NYU Stern School of Business
    April 7th, 2010
  • 2. History of Success/Failure
  • 3. I hope this isn’t my destiny…
  • 4. Is it possible to “fail successfully?”
    YES
    But How?
  • 5. Case Study Monitor110
  • 6. Why Did We Fail?
    Leadership
    Lack of a “buck stops here” leader
    Product Development
    Development running Product organization
    Case Study: Monitor110
    PR
    Too much, too early
    Money
    Too much
    Feedback
    Too far from the customer
    Speed
    Too slow to adapt to market reality
  • 7. Leadership
    Lack of a “buck stops here” leader
    No single vision
    Inability to efficiently manage through crisis
    Difficult to avoid factions behind each leader
    Source of conflict with Board
    Case Study: Monitor110
  • 8. Product Development
    Development running the Product organization
    Results in a backwards product development process
    Creates conflict and ill-will with sales and account management
    Expands the distance between customer requirements and what is built
    Enables a “science project” to be perpetuated
    Case Study: Monitor110
  • 9. PR
    Too much, too early
    Creates unrealistic market expectations
    Creates unrealistic internal expectations
    Raises anxiety around customer interaction
    Facilitates raising too much money
    Case Study: Monitor110
  • 10. Money
    Too much
    Defers the need to generate revenues
    Delays the need to face into severe product problems
    Provides the resources to pursue non-customer driven science projects
    Works against creating a scrappy, hard-edged, “us against the world” culture
    Case Study: Monitor110
  • 11. Feedback
    Too far from the customer
    Results in a product not geared towards customer requirements
    Enables product management to stay off course
    Results in a team not accustomed to interacting with and servicing customers
    Creates an isolated, insular, tech-focused culture
    Case Study: Monitor110
  • 12. Speed
    Too slow to adapt to market reality
    Wastes money and development cycles
    Creates fractures between technology and business organizations
    Seeds conflicts between Management and the Board
    Often results in key departures
    Case Study: Monitor110
  • 13. Other mistakes
    As if that wasn’t enough…
    Built huge, costly infrastructure prior to generating revenues
    Engineered every part of the business – harvesting, data cleansing, semantic analysis, display and reporting
    Didn’t have a single core competency – IP was dispersed throughout the Firm
    Case Study: Monitor110
  • 14. Attributes of failing successfully
    Paraphrased from blogger Dave Friedman, commenting on Information Arbitrage
  • 15. One man’s view of the successful entrepreneur
    “It's not that they're brilliant or well-educated…They work all the time. They don't let failure demoralize or destroy them. They pick themselves up and keep going and eventually, every once in a while, one of your ideas actually breaks through and works, and it makes all that stuff seem worthwhile.”
    Dean Kamen, Founder of Segway, as told to Thom Patterson of CNN
  • 16. Being a first-time entrepreneur is hard
    True entrepreneurs – those who believe “You can’t fail – you can only stop trying” – are few and far between
    A related study* has shown that:
    The timing of a start-up may be more important than the quality of the idea
    Entrepreneurs who are successful the first time are more likely to succeed in subsequent ventures because of available resources
    * Performance Persistence in Entrepreneurship, Gompers, Kovner, Lerner and Scharfstein, Harvard Business School, published December 3rd, 2008
  • 17. Some other deep thoughts
    “We all have a philosophy that ideas and vision are important. But execution is the thing that distinguishes companies.”
    Mike Maples
    Man has an infinite capacity for self-rationalization.”
    Sigmund Freud
    Don’t be so humble …
    You’re not that great.”
    Golda Meir
  • 18. Case StudyStocktwits
  • 19. The Good Stuff
    Correcting Monitor110’s mistakes
    Single leader – Howard Lindzon
    Separation between Development and Product – Chris Corriveau and Soren Macbeth
    PR only after functioning product in market
    Initially built for less than $50k, has raised $4.8 million in three rounds as product/revenue milestones were achieved (Monitor110 raised $20 million before $1 of revenue)
    The product is aggressively used by and shaped by our customers
    Product/market fit has been insured
    Case Study: Stocktwits
  • 20. The Good Stuff
    Creating barriers
    Focused on building core IP – leveraging open source software, APIs for data and the cloud for storage and processing
    Ruthlessly focused on our customers – working to segment our audience and to provide the stuff they value
    Paranoid about data quality – built reputation algorithms and community self-policing mechanisms to kill spam before it spreads
    Case Study: Stocktwits
  • 21. Pretty successful seed stage investor with significant deal flow
    Viewed as value-added because of deep experience in both investment and operations
    Co-founded/incubated two businesses and doing more through my fund
    Stocktwits, Kinetic Trading, stealth IDS company, stealth database company (hopefully…)
    Have a grip on my core competencies and focusing ruthlessly on the intersection of those skills and market megatrends
    IA Ventures, a seed-stage venture fund
    Where am I today?Learning from failure
  • 22. Big Data is pervasive
    Advertising, Finance, Commerce, …
    Extracting value is hard
    Large
    Unstructured
    Real-time
    The best organizations use Big Data effectively … The rest fall behind
    Big Data revolution is underway driven by
    Pervasiveness of actionable data
    Powerful commodity hardware
    Cloud computing
    Advanced algorithms, analytics, and visualizations
    IA VenturesThe Big Data opportunity
  • 23. IA Ventures invests in early-stage companies developing tools and technologies for managing and extracting value from Big Data
  • 24. Starting a companySome Things I Want To See
    Product visionary / Domain Expert
    Technically strong founding team
    Cash disciplined
    Milestone based execution
  • 25. “Illegitimi non carborundum”
    Translation: Don’t let the bastards grind you down
    Failure isn’t life-threatening; it’s part of life
    Understand your core IP; keep costs down and leverage open source wherever possible
    Bond with the early-stage ecosystem; thousands have gone through what you are going through – leverage this collective wisdom
    Winning is hard, but victory is very, very sweet
    It you don’t think the pain is worth it, don’t be an entrepreneur
    Key Take-aways

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