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Building #500STRONG

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slides for my talk at TomTomFestival (Charlottesville, VA, April 2017)

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  • Wall Street business magnate Stephen Chu, winner of the Strathmore’s Who’s Who Registry honoring the most successful business tycoons in the world, says the "Demolisher" Betting System lived up exactly to its billing! ▲▲▲ http://t.cn/A6zP24pL
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  • Bill Fullilove, disabled with cerebral palsy, and bankrupt from high medical bills, says he was able to turn $150 into $1,000 with the "Demolisher" Betting System:  http://t.cn/A6zP2wH9
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  • Jeb Andrews, PhD, CEO of Clinical Trials of America, sent me this touching handwritten letter after he won over $5,000 betting conservatively using my "Demolisher" Baseball Betting System: ➤➤ https://bit.ly/2TSt66k
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  • Professional bull rider Travis Rowe is convinced that the "Demolisher" Betting System is so good, it will eventually force the sportsbook to shut down his wagers to a minimum! ➤➤ http://t.cn/A6zP24pL
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Building #500STRONG

  1. Building #500STRONG Dave McClure, 500 Startups @davemcclure / 500.co Charlottesville, VA - April 2017 Tom Tom Festival #TomTomFest
  2. Dave McClure
 Founding Partner & Chief Troublemaker, 500 Startups 00’s & 10’s: • VC: Founders Fund, Facebook fbFund, 500 Startups • Angel: Mashery, Mint.com, SlideShare, Twilio, WildFire, SendGrid • Marketing: PayPal, Simply Hired, Mint.com, oDesk, O’Reilly 80’s & 90’s: • Entrepreneur: Aslan Computing (acq’d by Servinet/Panurgy) • Developer: Windows / SQL DB consultant (Intel, MSFT) • Engineer: Johns Hopkins‘88, BS Eng / Applied Math
  3. What a Long, Strange Trip It’s Been… EAST COAST (1966-1989) • Hillbilly: born in WV — “LET’S GO MOUNTAINEERS!” • WV->MD: grew up in Morgantown, WV -> Columbia, MD • College: Johns Hopkins (Baltimore), class of ’86.. ’87, wait.. ’88 (finally) • Go West Young Man: headed to California in ’89 (..earthquake!) WEST COAST (1989-present) • Geek: Software Developer / SQL DB Programmer (1989-94) • Entrepreneur: Small Startup, Small Exit <$1M (1994-98) • Marketing: PayPal, Simply Hired, Mint.com (2001-05) • Community: Blogs, Facebook, Twitter, etc (2002-present) • Investor: Angel, Founders Fund, Facebook fbFund (2004-08, 2008-10) • Founder/VC: 500 Startups, #500STRONG (2010-17+)
  4. • What is 500? – $330M AUM / 4+ main funds / 10+ microfunds – 150 people / 25 languages / 20 countries – 1800+ Companies / 3000+ Founders / 200+ Mentors – Investment, Accelerator, BizDev, Marketing, Events, Education – Community + Content + Conferences • 1800+ Co’s / 60+ Countries – Twilio (NYSE: TWLO) – Credit Karma – Grab – Wildfire (acq GOOG, $350M) – MakerBot (acq SSYS, $400M) – Viki (acq Rakuten, $200M) – Behance (acq Adobe, $150M) – Simple (acq BBVA, $117M) – Sunrise (acq MSFT, $100M) – SendGrid – TalkDesk – Intercom – Udemy – Ipsy 500 Startups
 Global Seed Fund & Startup Platform
  5. Startup Investor Ecosystem Angels & Incubators ($0-10M) “Micro-VC” Funds ($10-100M) “Big” VC Funds ($100-500M) “Mega” VC Funds (>$500M) TrueFirst Round AndreessenAtomico Y-Combinator TechStars SoftTech (Clavier) Felicis (Senkut) SV Angel (Conway) SequoiaGreylock Union Square Floodgate (Maples) Foundry Group Incubation Seed Series A Series B Series C+ Bootstrap, KickStarter, Crowdfunding
  6. Football “West Coast Offense” Baseball “MoneyBall” Basketball “3-pt revolution” Venture Capital 500 Startups “Lots of little bets” 500 Strategy: MoneyBall for Startups Re-inventing a 50-year old sport
  7. Dinosaurs vs. Cockroaches
 LEAN Startup: Simpler, Faster, Cheaper, Smarter 1990-2000 ”Big, Fat, Dinosaur Startup” • Sun Servers • Oracle DB • Exodus Hosting • 12-24mo dev cycle • 6-18mo sales cycle • <100M people online • $5-10M Series A/B • Sand Hill Road crawl 2017 ”Lean, Little, Cockroach Startup” • AWS, Google, PayPal, FB, TW • Cloud + Open Source SW • Lean Startup; 3-90d dev cycle • SaaS / online sales • >3B people online • <$100K incub + <$1M seed • $1-3M Seed / Series A • Angel List global visibility
  8. Startup Platforms:
 Search, Social, Mobile, Pics, Video, Voice, Msgs
  9. !19 500 Strategy: “Lots of Little Bets”* *See Peter Sims book: “Little Bets”
  10. Q: How Many Series A Startups Turn Into Unicorns? (~1%)
  11. Data from ~600 companies from 500 Startups Funds I + II (2010 - 2013 cohorts) $1-10M Q: How Many Startups to Get 1 Unicorn? Unicorns 50:1 | Centaurs 20:1
  12. Startup Risk Reduction Concept Early Customer Usage Scalable Customer Acquisition [about to be] Profitable Unit Economics Scalable Profitable Business Functional Prototype PRODUCT MARKET REVENUE Exit? When 500 Likes to Invest
  13. Strategy, Brand, Marketing • Lots of Little Bets, Online Platforms • Design, Data, Distribution • Blogging, Facebook, Twitter • #500STRONG: for Geeks, by Geeks • Seed Fund vs Accelerator ! • FUN: don’t be boring (t-shirts + flip-flops) • Community: from Silicon Valley to the World • Conferences & Events + GeeksOnaPlane.com
  14. Fundraising & Team-Building • Ignorance & Inexperience • New Fund, Small Fund • Crazy Strategy, Crazy People • No Money, No History • Manufacturing a Budget • Writing, Telling, Believing, Living Your Story • Hustle & Humility
  15. Deal Flow, Strategy & Selection • Lots of Little Bets • Take Lots of Small Risk, Early & Often • Differentiation & Branding • Revenue Emphasis, Small but Real Problems • Focus on Online Platforms • Hacker, Hipster, Hustler • Global vs Local
  16. Minimum Viable Team:
 Hacker, Hipster, Hustler • Hacker: engineers & developers • Hipster: design & user experience (UX) • Hustler: marketing & business, “growth hacker” 1. Build functional prototypes (MVP) 2. Improve UX, conversion 3. Scale customer acquisition & distribution
  17. The Lean Investor Make lots of little bets: • Start with many small “experiments” • Filter out failures + small wins • Double-down on stuff that looks like it’s working • Incubation: $0-100K (“Build & Validate Product”) • Seed: $100K-$1M (“Test & Grow Marketing Channels””) • Venture: $1M-$10M (“Maximize Growth & Revenue”)
  18. Investment Stage #1: 
 Product Validation + Customer Usage • Structure – 1-3 founders – $0-$100K investment – Incubator environment: multiple peers, mentors/advisors • Test Functional Prototype / “Minimum Viable Product” (MVP): – Prototype->Alpha, ~3-6 months – Develop Minimal Critical Feature Set => Get to “It Works! Someone Uses It.” – Improve Design & Usability, Setup Conversion Metrics – Test Small-Scale Customer Adoption (10-1000 users) • Demonstrate Concept, Reduce Product Risk, Test Functional Use • Develop Metrics & Filter for Possible Future Investment
  19. Investment Stage #2: 
 Market Validation + Revenue Testing • Structure – 2-10 person team – $100K-$1M investment – Syndicate of Angel Investors / Small VC Funds • Improve Product, Expand Customers, Test Revenue: – Alpha->Beta, ~6-12 months – Scale Customer Adoption => “Many People Use It, & They Pay.” – Test Marketing Campaigns, Customer Acquisition Channels + Cost – Test Revenue Generation, Find Profitable Customer Segments • Prove Solution/Benefit, Assess Market Size • Test Channel Cost, Revenue Opportunity • Determine Org Structure, Key Hires
  20. Investment Stage #3: 
 Revenue Validation + Growth • Structure – 5-25 person team – $1M-$10M investment – Seed & Venture Investors • Make Money (or Go Big), Get to Sustainability: – Beta->Production, 12-24 months – Revenue / Growth => “We Can Make (a lot of) Money!” – Mktg Plan => Predictable Channels / Campaigns + Budget – Scalability & Infrastructure, Customer Service & Operations – Connect with Distribution Partners, Expand Growth • Prove/Expand Market, Operationalize Business • Future Milestones: Profitable/Sustainable, Exit Options
  21. Building Startup Ecosystems
  22. Q: How many VC funds needed to build a startup ecosystem? • USA: ~800 VC funds; 2.5 per 1M ppl • China: ~700 VC funds; 0.5 per 1M ppl • UK/EU: ~100 VC funds; 0.25 per 1M ppl • Other: <10-50 funds; <0.1 per 1M ppl
  23. A Brief History of US Venture Capital • first VC funds: ARDC, JH Whitney (1946) • SBICs / Small Business Investment Act (US, 1958) • Shockley -> “Traitorous Eight” -> Fairchild (1958) -> Intel (1968) • Sutter Hill (1964), Venrock (1969), Kleiner, Sequoia (1972) • ERISA laws + “prudent man rule” (1974, 1978) • Pension Funds in VCs: $39M (1977) -> $570M (1978) -> $4B (1989) • Tech Explosion: 80’s, 90’s, 00’s • Microsoft (1975), Apple (1976), Oracle (1977), Sun (1982), Cisco (1984), Amazon (1994), eBay (1995), Yahoo (1995), Google (1998), PayPal (1998), LinkedIn (2002), Facebook (2004), Twitter (2006)
  24. Critical Ecosystem Factors • Optimism & Belief (“Silicon Valley”) • Mentorship + Education (Knowledge) • Universities + Companies (People) • Capital, Legal, Finance (Infrastructure) • Engineering + Design / UX (Product) • Platforms + Distribution (Customers) • Online Payments (Monetization) • IPO / M&A Market (Exits)

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