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Startuplandia Unplugged - How to do a Startup

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Thoughts in graphics from a 7x tech startup founder on how what makes a startup tick, what's needed to raise money, and how startups ecosystems evolve and thrive.

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Startuplandia Unplugged - How to do a Startup

  1. 1. StartupLandia Unplugged “We each have a choice in life: work for somebody, or start something.” - Neal Dikeman “Anyone can be an expert on anything, given 5 years.” - Bill Salathiel, PhD
  2. 2. Concerned that your startup is not flying or your town is weak on startups? Let’s explore what makes a startup tick
  3. 3. Start with the problem statement So, you want to build a startup or attract startups to your town? You need to understand how startups and startup herds evolve StartupLandia Unplugged is a brief storyboard on the key elements of a startup herd from a 7x founder
  4. 4. Herd Herds are just an aggregation of individual startups. Herds evolve and move fast – customer interest, competitor progress, and investor demand. To build or compete in a Herd, you have to move fast, or evolve, too.
  5. 5. Startup Herd 101 Founding a Startup To understand how to build an ecosystem, you need to understand the elements that make a single company a) able to launch and aggregate capital, b) able to successful Startup Herd How Does a Startup Herd Thrive? • In the Tier 1 startup markets • Public - private partnership and nonprofit has a huge role in education, infrastructure, and R&D • Startup Herd handles company formation, and ecosystem, capital
  6. 6. Money follows teams, Exits drive repeats. Teams hunt the next big problems and big ideas and big customer demand, How Startups and Herds evolve There is always capital for good deals Money and technology does not make a good deal, people and problems do
  7. 7. Sectors get Disrupted By Themes To create new Industries IoT Blockchain Machine Learning The Next Big Thing Themes and Trends are Frustratingly Fast – launching in overlapping waves as short as 9-15 months
  8. 8. Software is eating the world has yet to be proven untrue … and is dangerous to bet against. Software Force multiplier for almost all markets
  9. 9. Underneath, most hubs and trends are the story of just a couple of founders Netscape Virginia/Dotcom Amgen / Genentech  Biotech SF Amazon  Seattle Intel  Portland Dell  Austin Tesla  EVs First Solar  Cleantech Uber  Mobility Twitter  San Francisco Grubhub/Groupon Chicago Apple Smartphone Facebook Social
  10. 10. Launching Launching is not actually about Lean Startup or delivering results – that’s what Winning is about – Launching is about doing what it takes on limited resources to aggregate enough people and cash resources to take a shot on goal.
  11. 11. What matters to launch a startup: • People • Problem in a Big Market • Technology • In that order, then everything else • and if you only get one, pick people, they can find the other 2 Go Technology Problem People Go Customer Traction/ Validation Fundable Go
  12. 12. What makes a fundable "deal"  and Accelerating demand, traction, validation and investor interest while you raise Full team that's either experienced and successful in other startups, or beginning of career, unproven but displays lightning fast results, command of its problem, and coachable like a sponge Sexy as hell technology/innovation that just resonates and knocks the key barrier to adoption Customer and user traction on whatever is built/demonstrated so far Clear path to make money and scale in a VBM (Very Big Market) Fundable
  13. 13. Houston, we have a problem What you think you Need What you actually NeedI need money To hire people To build product To grow revenues  I have a team That has customers For the tech we’ve built I need money To deliver my growth faster
  14. 14. A startup can go lightning fast, very big, on very little -- lack of capital is rarely the real culprit Very little cash and time is actually needed to launch a successful startup if the team knows what they are doing . Good ones can go big, fast. Everyone starts small. Google - $25 mm in total venture capital to build a company bigger than Shell in barely a decade •Averaged c. $300K seed investment and 9-12 months to reach a $3-$10 mm A round  e.g. •Zenergy (GridEdge): $300K to $300 mm in 30 months in superconductors •Smart Wires (GridEdge): $300K  $10 mm A round in 15 months  lab to field in 330 days My own startups - 7x founder of startups that raised cum >$250 mm in venture capital
  15. 15. 3 skills required in the founding team It always seems to take 3 – 3 who understand or can learn how to translate skills to a startup environment Built around a CTO who is just short of genius. A rainmaker in sales, and A CEO who's got game
  16. 16. People first  • If the founders can't pull an A team, there is no startup, and he/she/they are no founder
  17. 17. Key message to launch
  18. 18. Winning Building a business that can win is not always the same as doing what you need to do to get the A round and launch. Once Launch is done, you have enough resources to make a go – now you have to deploy them to build product, make happy customer, grow, scale, and get more resources
  19. 19. You need critical mass of startup talent in your tent to compete. Young is ok, experienced but new to StartupLandia – not so much. • other successful startups, and • top flight technical graduate/undergraduate programs, and top flight MBA programs • venture funds Great founder talent tends to be early to mid career, and tends to comes from 1 of 2 places: • serial entrepreneurs in other startups, and • venture firms, • But big company with no startup or tech experience is always risky Great startup talent in general comes from a range of places
  20. 20. A startup's culture is usually pretty set in the first couple of years – by the first few hires - and your culture is your life. Advisors,board,incubators,consultants etcarereallyjustacommodity(butwe allpretendtheyaddvalue). Great founders, leaders, sales people, engineers, matter most Advisors, Board, Lawyers etc Incubator/ Accelerator
  21. 21. It’s fast rough and tumble Startup world is not nice Ideate, test, aggregate resources, build deliver or fail and try again Premium on speed – up or out If you are talking about the same things 9 months from now, you’re already dead “Baptism by fire” “Vulture capitalist” “Up or out” “Root hog or die” “What have you done for me lately” “The only constant is change” … Pick your favorite aphorism … But don’t stand still If you talk “Fail Fast” and “Lean Startup” be ready to walk the walk
  22. 22. Your stuff has to be new and good Content is still king Vision matters. Tech delivers. Metoodoesnotusuallywin asfirstmoveradvantagesarereal
  23. 23. It’s the Product Stupid • Product - what you build and how you take it to market, is as important as the technology in most cases, even in high science tech like life sciences and energy. • If it isn’t going fast or well – look to the product - you generally need Product Management/Channel/ Product Marketing expertise so bad you can taste it.
  24. 24. Speed kills • Startups ideas come in waves, aka the “herd mentality”  catching waves matters, leading waves wins, chasing waves is death • The lifecycle of the early stage window and investable front end of a theme or wave in venture tends to be short - 36-60 months max • What investors are talking about now, is what they invested in LAST year • A fund commits most of its capital in < 36 months • A startup has 12-24 months between raises • That’s why call it burn rate • Often massively parallel can catch from behind as fast as you can add engineers • You need to measure your actions in days and weeks – and build speed into your team
  25. 25. The only way to kill a startup is to run out of And if you have one, you can usually get the other … ergo, the only way to kill a startup is to run out of BOTH people and cash … - Raise cash when you can, as much as you can – your business is good enough to win, you’ll - Never stop recruiting people and raising cash - Pay attention to burn rate/time - Hire from the top down, not bottom up – get exec people who know how to raise cash and get more people - Get Chiefs who will work like Indians first, not Indians or Chiefs who need to have Indians to work People or Cash. .
  26. 26. Bigger stakes, better field • The lean startup "cookbook" and proliferation of • low cost tech and scaled VC + • competition, grant, social, corporate, ICO, accelerator and catalyst sources of seed money •  has changed the startup marketplace for the better and lowered the cost of startup entry • Enabling hubs and leveling the playing field • This hasn't changed the rules, just upped the prize and the stakes. • The unicorn phenomenon has accelerated the upping. Lean startup "cookbook" Seed Capital The unicorn phenomenon Leveled Playing Field
  27. 27. Massively parallel R&D/ commercialization vs stage gate style Startups win by going massively parallel on R&D and product development, at the right moment – when they’ve found the pain point, figured out the right product, and nailed the go to market. … But we train our scientists and engineers and project teams on stage gate, then teach them Lean to fix it … Then wonder why they get run over and caught from behind by Agile and Massively Parallel Component DevP1 R&D P2 R&D 1a 1b 1c 2a Mfg Engineering Component Dev Pilot Data 2b Pilot Engineering
  28. 28. Startup resource & skills math c. 50/50 split between $ to get tech/product developed and ready for market and $ to get tech into market and sold Meaning finished R&D is just 1/8th the resource battle 0 20 40 60 80 100 Startup Resource 12.5 37.5 50 Prototypical Startup Resource Allocation R&D Product/Mfg Customer Facing/GTM Resource allocation usually correlates to skills, plans and valuation e.g. if you overspend R&D/underspend Product/Go to Market in a growth/product play, you’ll struggle If you starve R&D/IP in a tech heavy play, you’ll get caught
  29. 29. Key message to win
  30. 30. Author Neal Dikeman 7x Cofounder and Seed Investor in startups that raised over $250 mm, 3 continents CEO, CFO, Chairman, VP, Board, multiple times over On team @ 9 startups Investor in 15+ tech deals, Advisor on a dozen others, 2 IPOs, multiple M&A Jane Capital, Globalgate, Shell, etc. @ 6 startups achieved >$100 mm in <5 years, 3 as founder Exp includes: Zenergy (IPO), Yellowpages.com (AT&T), BlockShield (IPO), Smart Wires (private) 11+ Sectors: Web, SaaS, Cloud, Solar, Superconductors, Smart Grid, Networking, Controls, Fuel cells, Electronics, Cleantech 6 Years Big Corporate Shell Corporate Venture/ Bankers Trust in Investment Banking Advisor to $1 Bil + in CVC at Meridian Energy Ltd, Macquarie, ConocoPhillips, et al 1st company founded in San Francisco, age 25 Bachelor’s Texas A&M Top industry writer/speaker and analyst in cleantech Lived in Houston, NY, SV, and San Francisco

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