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[TEC event] 'Start-up King' Mike Cassidy: How to build 4 successful companies in a row
 

[TEC event] 'Start-up King' Mike Cassidy: How to build 4 successful companies in a row

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Mike Cassidy at TEC (http://www.tecglobal.org/tec_20110112) ....

Mike Cassidy at TEC (http://www.tecglobal.org/tec_20110112) .

Mike Cassidy is a legendary Silicon Valley serial entrepreneur that has co-founded, served as CEO, and led 4 (four!) consumer Internet companies to market leadership and successful acquisitions (over $600m in total):

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    [TEC event] 'Start-up King' Mike Cassidy: How to build 4 successful companies in a row [TEC event] 'Start-up King' Mike Cassidy: How to build 4 successful companies in a row 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 dealsOctober 23, 2010 Confidential and Proprietary
    • Typical Start-up Timeline? Explore Raise Hire core Build Initial marketing / ideas money team & open product awareness- office building / early customers 3 months? 3 months? 2-3 months? 12 months? 3-6 months? “Launched” = 23-27 months?October 23, 2010 Confidential and Proprietary
    • Lightning Speed Start-up Timeline Explore Hire core ideas team & open office Raise Build money product 2 wks 1 day2 wks 3 months “Launched” = 4 monthsOctober 23, 2010 Confidential and Proprietary
    • Example 1: Stylus InnovationStylus 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 launchSold 2 years after launch for $13M (10,000x founders investment)October 23, 2010 Confidential and Proprietary
    • Example 2: Direct HitDirect 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 Sold 500 days after launch for $500 millionOctober 23, 2010 Confidential and Proprietary
    • Example 3: XfireXfire: 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 Sold just over 2 years after launch for $110 millionOctober 23, 2010 Confidential and Proprietary
    • Example 4: RubaRuba: Recommendation Engine Based on Your Friends’ Recs Entrenched competitors Facebook, TripAdvisor, Yelp, etc. Ruba Started focused on recs for services (car mechanic, locksmith, etc.) targeted at moms Morphed to travel recommendations 1 million visitors to site before acquisition Sold less than 2 years after launch to Google 1st Q after acquisition, GOOG up $17BOctober 23, 2010 Confidential and Proprietary
    • Speeding Up All Parts of Startup Fundraising Opening an office Hiring Getting new employees started Product development Business development Marketing/PR Changing directionOctober 23, 2010 Confidential and Proprietary
    • FundraisingOctober 23, 2010 Confidential and Proprietary
    • Speed and CapitalStylus: $1,500 initial capital; no VCDirect Hit: $1.3M (DFJ) – through launch, HotBot, AOL, Apple spent$400K; through MSN, Lycos spent another $600KXfire: $1M Series ARuba: Only raised Series A, no follow-on rounds before acquisition Biz school: Single, consistent strategy; not “lowest cost and best customer service,” etc.October 23, 2010 Confidential and Proprietary
    • Raising VC Money QuicklyWhat are the best ways to raise VC money quickly?October 23, 2010 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 meetingOctober 23, 2010 Confidential and Proprietary
    • Opening an OfficeOctober 23, 2010 Confidential and Proprietary
    • Every Day, Every Hour, Every Minute Counts 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)October 23, 2010 Confidential and Proprietary
    • HiringOctober 23, 2010 Confidential and Proprietary
    • Think Speed in Everything You DoExperience level: Stylus: 4 sr. product managers (5+ years) -> CEO, VP Eng, VP Mkt, VP Sales Direct Hit: 5th product manager ->VP Eng; 10 year dev; 15 year dev Xfire: 10 year dev; 10 year dev; 10 year dev Ruba: 10 year dev (Google tech lead for Chrome); 10 year devKnown 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 Ruba: 4 out of first 4 had worked with or came from trusted sourceClose: Group huddle during last interviewer Offer letter ready before interviewee arrives Make offer on same day October 23, 2010 Confidential and Proprietary
    • Getting New Employees Started October 23, 2010 Confidential and Proprietary
    • Speed Starts the First Day a New Hire ArrivesWhat do YOU do when a new employee comes on board?October 23, 2010 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 Set tone for speedOctober 23, 2010 Confidential and Proprietary
    • Product DevelopmentOctober 23, 2010 Confidential and Proprietary
    • Which Is Faster?A. Incremental development. Build 1 module/feature at a time and thenlaunch. Add features as you go. Figure out over time what featuresusers want and then try to add them. ORB. Spec your product CAREFULLY. Make sure you do great customerresearch! Hit the market with a rich, compelling product because youonly get ONE first impression. If the product is lame, people will nevercome back.October 23, 2010 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 Ruba Launched first version 3.5 months after company start Changed course and launched new product 2.5 months laterOctober 23, 2010 Confidential and Proprietary
    • Business DevelopmentOctober 23, 2010 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 competitorsOctober 23, 2010 Confidential and Proprietary
    • Marketing/PROctober 23, 2010 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. Ruba No marketing budget Quickly ramped to 10,000 Twitter followers/Facebook fans Got promoted by NTA (National Travel Agent association)October 23, 2010 Confidential and Proprietary
    • Changing DirectionOctober 23, 2010 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 Ruba Original name = “FriendsTips” then “Kudo” Decision to change to Ruba took less than 1 month Once decided, 100% of company effort immediately shiftedOctober 23, 2010 Confidential and Proprietary
    • Direct Hit: $500 million in 500 days 4/98 Series A ($1.3M on $2.6M pre) 5/98 Opened doors 6/98 HotBot deal 8/98 Launch Direct Hit service on HotBot 9/98 AOL deal, Apple deal 10/98 Series B ($2M on $23M pre) Q1 99 HotBot goes from Most Popular button to Default Results Q2 99 Lycos deal, Microsoft deal Q3 99 Series C ($26M on $100M pre) Q4 99 Launch destination website 1/00 Sold for $500MOctober 23, 2010 Confidential and Proprietary