I updated this presentation for a lecture I gave at Stanford last weekend. I added a few"quick start" slides upfront: What should you do first when you have an idea for a new business: recruit a board of advisers and a co-founder. Elton Sherwin July 31, 2014

1. Why Are Some Entrepreneurs Doomed to Failure?
Elton B. Sherwin
University of San Francisco
2014

2. Do’s and Don'ts
•Getting Started
•Superbasics
•Your Career and Leadership Skills
•Tips
•Two Common Fundraising Mistakes
•Advice From Hollywood

3. Starting a New Business

4. Steps #1 and #2
•Recruit Board of Advisors
–3 to 8 people, informal
–1 x-Founder, 1 technology, 1 marketing, 1 industry
–Coffee/lunch once a month
•No contracts, no group meetings
•CoFounders
–1 or 2 people
–Passionate, but with different skills

5. Avoid Kamikaze Co-founders
Some people enjoy
•Making life hard
•Cheating
•Lying
•Breaking the law
•Gossiping
•Withholding information
Any ONE of these will cause you great pain

6. Don’t Start a Business with People You Don’t Like

7. Work with People You Like
•You will be spending a lot of time with them
•Successful founding teams like each other 80% of the time

8. Think Baseball, Not Tennis
Entrepreneurship is Not a Solo Sport
Takes a team to refine the product
–The idea is important, BUT
–Original idea is rarely the winning product
One person is rarely great at:
–Finance, Marketing, Product management and technology
MSG: Build a Team First

9. Your Roster
Season One
If no one joins your team:
think about
joining someone else's team
Advisors (minimum: 3)
___ Industry expert
___ Technology expert
___ Finance/legal expert
___ Sales/marketing expert
___ Founder, another company
___ Someone famous
Co-founders (minimum: 1)
___ Technology
___ Marketing/Product management
___ Finance/Administration

10. Tips for Finding Your Dream Team

11. Back to Starting Your Own Team
Season One
Advisors (minimum: 3)
___ Industry expert
___ Technology expert
___ Finance/legal expert
___ Sales/marketing expert
___ Founder, another company
___ Someone famous
Co-founders (minimum: 1)
___ Technology
___ Marketing/Product management
___ Finance/Administration

12. Your Roster
Season One
Season Two
Advisors (minimum: 3)
___ Industry expert
___ Technology expert
___ Finance/legal expert
___ Sales/marketing expert
___ Founder, another company
___ Someone famous
Co-founders (minimum: 1)
___ Technology
___ Marketing/Product management
___ Finance/Administration
Board of Directors (min: 2)
___ Rich person
___ Rich person
___ Someone loyal to you
___ Someone loyal to you
Early employees
___ Developers
___ Product management
___ Admin/Office manager

13. Work on Things You Are Interested In
•It is not all about profit.
God gave you interests and passions for a reason

14. Research the Competition
I see entrepreneurs who have not Googled their business ideas or don’t know who their competitors are

15. It Is Shocking!
I see entrepreneurs who have not Googled their business ideas
•Sometimes invent a wheal 20 years after someone else.
•Don’t know about other’s failures
•Don’t know about other’s successes
•Don’t know who is friend or foe
•Miss opportunities to partner
Forget to use

16. Research the Competition
•Investor presentations
•Customer presentations
•Videos
•Marketing materials
•Open jobs
•Technical presentations & white papers
•All documents ending with: .pdf; .ppt; and .mp3

17. Summary of Getting Started
•Work with people you like to work with and who aren’t pathological
•Work on stuff you are interested in
•Research the competition
•Recruit:
–Board of Advisors
–Cofounder

18. SuperBasics of Business
Sometimes even experienced people forget

19. Need Customers
Before you build your business ask prospective customers:
•If we build this product/service would you buy it?
•How much would you pay?

20. Early Customers
Early customers:
•Difference between success and failure
•Clarify goals
•Credibility with investors
•Fund development

21. Make Money
•Positive gross margin (usually above 40%)

22. SuperBasic Summary
Find Customers
Make Money

23. Your Career and Leadership Skills
•Work in a restaurant before you start one
–Run a restaurant before you buy one
–Join a team before you start one (usually)
•Write down your best idea every day
–In Notes or Dropbox
•Try different jobs
–Which position is right for you: Coach, pitcher, second base or right field? Which is right for you?
–Babe Ruth started as a pitcher
•Join a winning team

24. Two Common Fundraising Mistakes

25. “Uncompelling”
PowerPoint Presentations
No compelling reason to invest

26. Look at the Outline in The Silicon Valley Way
The complete business plan presentation is attached in the appendix and
all The Silicon Valley Way worksheets are available on Slideshare

27. No Elevator Pitch
•Start with an elevator pitch
–VCs make up their minds in the first 30 seconds
–The first three sentences really matter
–Don’t start with Bios
•It should be COMPELLING
–One to three sentences
–Practice it everywhere
–When people offer to invest in the grocery store checkout line: You have a compelling story

28. Examples of Effective First Sentences
“GE has asked us for 1,000 units and we are here today to raise money for our…”
“Our applet is currently one of the ten most downloaded applications on the iPhone…”
“In our lab we have successfully used sunlight to create hydrogen and…”

29. Should You Raise Money?
•Not every business should be financed by venture capital
•Some businesses should be “bootstrapped”
•Hard to be successful with low margin business

30. Advice from

31. Americans Watch 16,000 hours of Television (before college)

32. We Learn
On a great team:
•Everyone is an extrovert
•Everyone interrupts
•Everyone talks without thinking

33. Leaders
•Take bold action
–Risk everything daily
•Plan on the fly
–Group decisions are a waste of time
•Do it all themselves
–Do it their way
•Don’t tell anyone the plan
•Ignore the law

34. American Leadership “Training”
Risk everything
Do it yourself
The law is irrelevant

35. •Risk everything
•Do it yourself
•Ignore the law

36. The ABC’s of Success
A.Think boldly – be innovative
B.Take frequent, small steps
–Minimize risk
–Be frugal
C.Play well with others
For more information, see: Len Schlesinger, Action Trumps Everything

37. Success
Product Idea
Founding Team
– Experience
– Skills
– Teamwork
– Leadership
Myth
90%
10%
Reality
30%
70%

38. Myth
All about having great idea
Reality
Joining or assembling the right team

39. Conclusion
•Focus on more than the idea
–Usually 6 to 50 companies have similar ideas
•Thoroughly research “competitors”
–Consider joining a winning team
•Don’t let failure discourage you
–Winners have lots of failures
–Failures get discouraged and give up
•Be reluctant to borrow money
–Personally and professionally

40. Next Steps

41. Research the Competition
•Investor presentations
•Customer presentations
•Videos
•Marketing materials
•Open jobs
•Technical presentations & white papers
•All documents: .pdf; .ppt; mp3, etc.

42. •Recruit Board of Advisors
–3 to 8 people, informal
–Don’t need a group meeting; no contract
–1 x-Founder, 1 Tech pro, 1 marketing type
–Coffee/lunch once a month
•CoFounders
–1 or 2 people
–Passionate, but with different skills

43. Appendix