Speed As THE Primary Business
Strategy Mike Cassidy

Speed Brings Great Advantages <ul><li>Rapid
product rollout/updates makes it extremely difficult for competitors to gain traction against you (2 weeks vs. 18 months) </li></ul><ul><li>Rapid success builds strong team morale (which leads to more success) </li></ul><ul><li>Rapid success generates more PR (which leads to more revenue, strategic partnerships, key hires, etc.) </li></ul><ul><li>Fast growth drives higher company valuations when fundraising or using equity for strategic deals </li></ul>June 3, 2009 Confidential and Proprietary

Typical Start-up Timeline? June 3,
2009 Confidential and Proprietary Explore ideas 3 months? Raise money 3 months? Hire core team & open office 2-3 months? Build product 12 months? Initial marketing / awareness-building / early customers 3-6 months? “ Launched” = 23-27 months?

Lightning Speed Start-up Timeline June
3, 2009 Confidential and Proprietary Explore ideas 2 wks Raise money 1 day Hire core team & open office 2 wks Build product 3 months “ Launched” = 4 months

Example 1: Stylus Innovation <ul><li>Stylus
Innovation: Computer telephony software </li></ul><ul><li>Entrenched competitors </li></ul><ul><ul><li>Owned 95% of market with DOS-based tools </li></ul></ul><ul><ul><li>300 customers/year per competitor </li></ul></ul><ul><li>Visual Voice </li></ul><ul><ul><li>1st Windows based tool, Visual Basic custom control </li></ul></ul><ul><ul><li>3,000 shipped in 1st year </li></ul></ul><ul><ul><li>Dominant market player within 6 months of Visual Voice launch </li></ul></ul>June 3, 2009 Confidential and Proprietary Sold 2 years after launch for $13M (10,000x founders investment)

Example 2: Direct Hit <ul><li>Direct
Hit: Internet search engine </li></ul><ul><li>Entrenched competitors </li></ul><ul><ul><li>Owned 95% of market (AltaVista, Excite, Infoseek, Lycos, Yahoo) </li></ul></ul><ul><ul><li>Used traditional text-based inverted index algorithms </li></ul></ul><ul><li>Direct Hit </li></ul><ul><ul><li>1st search engine based on tracking user voting (like Digg, YouTube, etc.) </li></ul></ul><ul><ul><li>Provided search for AOL (ICQ), Microsoft, Lycos, etc. </li></ul></ul><ul><ul><li>AOL deal within 5 months of company start </li></ul></ul>June 3, 2009 Confidential and Proprietary Sold 500 days after launch for $500 million

Example 3: Xfire <ul><li>Xfire: Instant
messenger for PC videogamers </li></ul><ul><li>Entrenched competitors </li></ul><ul><ul><li>Owned 95% of market (AIM, Yahoo Messenger, MSN Messenger) </li></ul></ul><ul><ul><li>Focused on traditional IM (not gaming) </li></ul></ul><ul><li>Xfire </li></ul><ul><ul><li>1st IM to track and connect videogamers </li></ul></ul><ul><ul><li>Grew virally from 100 users to 3 million in 2 years </li></ul></ul><ul><ul><li>Dominated market segment within 5 months of “Xfire” start </li></ul></ul>June 3, 2009 Confidential and Proprietary Sold just over 2 years after launch for $110 million

Speeding Up All Parts of
Startup <ul><li>Fundraising </li></ul><ul><li>Opening an office </li></ul><ul><li>Hiring </li></ul><ul><li>Getting new employees started </li></ul><ul><li>Product development </li></ul><ul><li>Business development </li></ul><ul><li>Marketing/PR </li></ul><ul><li>Changing direction </li></ul>June 3, 2009 Confidential and Proprietary

<ul><li>Fundraising </li></ul>June 3, 2009 Confidential
and Proprietary

Speed and Capital <ul><li>Stylus: $1,500
initial capital; no VC </li></ul><ul><li>Direct Hit: $1.3M (DFJ) – through launch, HotBot, AOL, Apple spent $400K; through MSN, Lycos spent another $600K </li></ul><ul><li>Xfire: $1M Series A </li></ul>June 3, 2009 Confidential and Proprietary Biz school: Single, consistent strategy; not “ lowest cost and best customer service,” etc.

Raising VC Money Quickly <ul><li>What
are the best ways to raise VC money quickly? </li></ul>June 3, 2009 Confidential and Proprietary

Four Keys to Raising VC
Money Quickly <ul><li>Raise when conditions in your favor </li></ul><ul><ul><li>Direct Hit Series A: 1998, portals growing rapidly </li></ul></ul><ul><ul><li>Direct Hit Series B: as AOL deal is closing </li></ul></ul><ul><ul><li>Direct Hit Series C: as MSN/Lycos deals are closing </li></ul></ul><ul><ul><li>Xfire Series C: Social networking “hot”, steep growth curve established </li></ul></ul><ul><li>Get all decision makers in room </li></ul><ul><li>Synchronize timing of competing VC offers </li></ul><ul><li>Bring “if/then” contracts with customers to your VC meeting </li></ul>June 3, 2009 Confidential and Proprietary

<ul><li>Opening an Office </li></ul>June 3,
2009 Confidential and Proprietary

Every Day, Every Hour, Every
Minute Counts June 3, 2009 Confidential and Proprietary 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)

<ul><li>Hiring </li></ul>June 3, 2009 Confidential
and Proprietary

Think Speed in Everything You
Do <ul><li>Experience level: </li></ul><ul><ul><li>Stylus : 4 sr. product managers (5+ years) -> CEO, VP Eng, VP Mkt, VP Sales </li></ul></ul><ul><ul><li>Direct Hit : 5 th product manager ->VP Eng; 10 year dev; 15 year dev </li></ul></ul><ul><ul><li>Xfire : 10 year dev; 10 year dev; 10 year dev </li></ul></ul><ul><li>Known talent: </li></ul><ul><ul><li>Stylus : 13 out of first 15 had worked with before </li></ul></ul><ul><ul><li>Direct Hit : 12 out of first 15 had worked with before </li></ul></ul><ul><ul><li>Xfire : 2 out of first 3 top devs came from absolutely trusted source </li></ul></ul><ul><li>Close: </li></ul><ul><ul><li>Group huddle during last interviewer </li></ul></ul><ul><ul><li>Offer letter ready before interviewee arrives </li></ul></ul><ul><ul><li>Make offer on same day </li></ul></ul>June 3, 2009 Confidential and Proprietary

<ul><li>Getting New Employees Started </li></ul>June
3, 2009 Confidential and Proprietary

Speed Starts the First Day
a New Hire Arrives <ul><li>What do YOU do when a new employee comes on board? </li></ul>June 3, 2009 Confidential and Proprietary

Speed Starts the First Day
a New Hire Arrives <ul><li>Before the first day </li></ul><ul><ul><li>Give her material to read the day she accepts the job </li></ul></ul><ul><ul><li>Give mundane “first day” paperwork before arriving </li></ul></ul><ul><li>First day </li></ul><ul><ul><li>Absolutely have desk, phone, email account, etc., set up in advance </li></ul></ul><ul><ul><li>Absolutely have goals/projects/deliverables written down; give to new hire immediately </li></ul></ul>June 3, 2009 Confidential and Proprietary Set tone for speed

<ul><li>Product Development </li></ul>June 3, 2009
Confidential and Proprietary

Which Is Faster? <ul><li>A. Incremental
development. Build 1 module/feature at a time and then launch. Add features as you go. Figure out over time what features users want and then try to add them. </li></ul><ul><li>OR </li></ul><ul><li>B. Spec your product CAREFULLY. Make sure you do great customer research! Hit the market with a rich, compelling product because you only get ONE first impression. If the product is lame, people will never come back. </li></ul>June 3, 2009 Confidential and Proprietary

Journey of a Thousand Miles
Begins with a Single Step <ul><li>Stylus Innovation </li></ul><ul><ul><li>Visual Voice 1.0 let people build a 2-line IVR system </li></ul></ul><ul><ul><li>Added digital 32-line capability within 6 months (plus fax, a dozen other features) </li></ul></ul><ul><ul><li>3.5 months from “go” to launch </li></ul></ul><ul><li>Direct Hit </li></ul><ul><ul><li>Patented algorithm included two dozens variables (time spent at a URL, related searches, time of year) </li></ul></ul><ul><ul><li>Launched with small subset of this feature set </li></ul></ul><ul><ul><li>3.5 months from “go” to launch </li></ul></ul><ul><li>Xfire </li></ul><ul><ul><li>Launched with 2 features: presence detection and 1-click join </li></ul></ul><ul><ul><li>Added a new feature every 2 weeks 1st year and every 3 weeks 2nd year </li></ul></ul><ul><ul><li>3.5 months from “go” to launch </li></ul></ul>June 3, 2009 Confidential and Proprietary

<ul><li>Business Development </li></ul>June 3, 2009
Confidential and Proprietary

Biz Dev Deals – Fast
or Never <ul><li>“ Probability of a deal ever closing declines by 10% each day it doesn’t close” </li></ul><ul><li>Use calendars/maps with “limited supply” </li></ul><ul><ul><li>Sponsorships for July, Aug, and Oct already sold… </li></ul></ul><ul><ul><li>Map of USA with certain regions already controlled by competitors </li></ul></ul>June 3, 2009 Confidential and Proprietary

<ul><li>Marketing/PR </li></ul>June 3, 2009 Confidential
and Proprietary

Fastest Way To Get the
Word Out? <ul><li>PR is faster than Marketing </li></ul><ul><li>Stylus </li></ul><ul><ul><li>No marketing budget </li></ul></ul><ul><ul><li>Editorial in CT Mag (including cover) </li></ul></ul><ul><li>Direct Hit </li></ul><ul><ul><li>No marketing budget (until Q4 ’99) </li></ul></ul><ul><ul><li>Cover of Industry Standard </li></ul></ul><ul><li>Xfire </li></ul><ul><ul><li>No marketing budget </li></ul></ul><ul><ul><li>Extensive coverage in Fortune, CNN, GameDaily, Forbes, WSJ, USA Today, Marketwatch, Wired, Red Herring, SJ Mercury, etc. </li></ul></ul>June 3, 2009 Confidential and Proprietary

<ul><li>Changing Direction </li></ul>June 3, 2009
Confidential and Proprietary

If Something Is Broken, Fix
It - Immediately <ul><li>Stylus Innovation </li></ul><ul><ul><li>Original name = “Dial-a-Fish” </li></ul></ul><ul><ul><li>Changing the way Americans shop for groceries, with $1500 in capital </li></ul></ul><ul><ul><li>Decision to change to Visual Voice took less than 2 weeks </li></ul></ul><ul><ul><li>Once decided, 100% of company effort immediately shifted </li></ul></ul><ul><li>Xfire </li></ul><ul><ul><li>Original name = “Ultimate Arena” </li></ul></ul><ul><ul><li>Play to win $$ </li></ul></ul><ul><ul><li>Decision to change to Xfire took less than 2 weeks </li></ul></ul><ul><ul><li>Once decided, majority of company effort immediately shifted </li></ul></ul>June 3, 2009 Confidential and Proprietary