Independent Call Girl Number in Kurla Mumbai📲 Pooja Nehwal 9892124323 💞 Full ...
Silicon Valley 2.0: Lots of Little Bets (Jakarta, June 2013)
1. Silicon Valley 2.0
Lots of Little Bets +
Beating the “Series A Crunch”
Dave McClure
http://500.co
(@DaveMcClure)
GeeksOnaPlane Indonesia
Jakarta, June 2013
http://slideshare.net/dmc500hats
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. 500 Startups
Global Seed Fund & Startup Accelerator
• What is 500?
– ~$70M under management
– 25 people / 12 investing partners
– Locations: SV, NYC, MEX, BRZ, IND, CHN, SE asia
– 1000+ Founders / 200+ Mentors
• 500+ Portfolio Co’s / 30+ Countries
– Wildfire (acq GOOG, $350M)
– Twilio
– SendGrid
– TaskRabbit
– MakerBot
– Viki (SG)
– Flyer.IO (SG/SV)
– 9GAG (HK)
– PicCollage (TWN)
– Cubie (TWN)
– Pop (TWN)
– Payroll Hero (PI/Canada)
– TwitMusic (PI)
4. 500 Startups: Global Seed Fund
Over 100+ startups outside US, in 35+ countries
• Q4/12 added: Germany, Korea, Peru; + Russia, Turkey, Ghana in Q2/13
• Priorities in 2012: Brazil, Mexico, India
• Priorities In 2013: China, SE Asia, MENA, Eastern Europe
5. Silicon Valley 2.0:
Lots of Little Bets
aka “MoneyBall for Startups”
• VC Evolution: Physician, Scale Thyself (Aug 2012)
• MoneyBall for Startups, 500 Startups Investment Thesis (Jul 2010)
6. Changes in Tech Startups
• LESS Capital required to build product, get to market
– Dramatically reduced $$$ on servers, software, bandwidth
– Crowdfunding, KickStarter, Angel List, Funders Club, etc
– Cheap access to online platforms for 100M+ consumers, smallbiz, etc
• MORE Customers via ONLINE platforms (100M+ users)
– Search (Google)
– Social (Facebook, Twitter)
– Mobile (Apple, Android)
– Local (Yelp, Groupon, Living Social)
– Media (YouTube, Pinterest, Instagram, Tumblr)
– Comm (Email, IM/Chat, Voice, SMS, etc)
• LOTS of little bets: Accelerators, Angels, Angel List, Small Exits
– Y Combinator, TechStars, 500 Startups
– Funding + Co-working + Mentoring -> Design, Data, Distribution
– “Fast, Cheap Fail”, network effects, quantitative + iterative investments
7. Daft Punk Lean Startup:
Simpler, Faster, Cheaper, Smarter
1. Startup Costs = Lower.
2. # Users, Bandwidth = Bigger.
3. Transaction $$$ = Better.
Building Product => Cheaper, Faster, Better
Getting Customers => Easier, More Measurable
Iterative Product & Marketing Decisions
based on Measured User Behavior
8. Lean Startup, Lean VC
Customers, Metrics, Iteration.
Invest BEFORE Traction;
Double Down AFTER.
10. Angel* List: It Rocks.
• Startups & Investors
• Activity & Metrics
• Platform & APIs
• *ps – not just for Angels, or USA
11. 11
500 Strategy: “Lots of Little Bets”*
1) Make lots of little
bets pre-traction,
early-stage startups
2) after 6-12 months, identify
top 20% performers and
double-down higher $$$
3) conservative model assumes
-5-10% large exits @20X ($50-100M+)
-10-20% small exits @5X ($5-50M)
*See Peter Sims book: “Little Bets”
12. Early-Stage Investment 101:
Incremental Risk Reduction
• 1st
Mtg: Crazy, Idiots, Liars or Crooks?
• Product: does it work? (crappy, not perfect)
• Market: are people using it? (not their mom)
• Revenue: will people pay for it? (just a few)
• Growth: how will it/they scale? (online? offline?)
• Finance: what will it cost?
– Q1: cost to get a customer?
– Q2: how & when do you make money?
13. Bet on Singles, Not HomeRuns.
(Look for Ichiros, Not Barry Bonds)
14. The Lean VC:
Lots of Little Bets, Incremental Investment
Method: Invest in lots of startups using incremental
investment, iterative development. Start with many
small experiments, filter out failures, and expand
investment in successes… (Rinse & Repeat).
• Incubator: $0-100K (“Build & Validate Product”)
• Seed: $100K-$1M (“Test & Grow Marketing Channels””)
• Venture: $1M-$10M (“Maximize Growth & Revenue”)
15. Investment Stage #1:
Product Validation + Customer Usage
• Structure
– 1-3 founders
– $25-$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
16. 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
17. 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
20. Before & After 2 Dot-Com Crashes
Daft Punk Startup: Simpler, Faster, Cheaper, Smarter
Before 2000
•Sun Servers
•Oracle DB
•Exodus Hosting
•12-24mo dev cycle
•6-18mo sales cycle
•<100M people online
•$1-2M seed round
•$3-5M Series A
•Sand Hill Road crawl
•Big, Fat, Dinosaur Startup
After 2008
•AWS, Google, PayPal, FB, TW
•Cloud + Open Source SW
•Lean Startup / Startup Wknd
•3-90d dev cycle
•SaaS / online sales
•>3B people online
•<$100K incub + <$1M seed
•$1-3M Series A
•Angel List global visibility
•Lean, Little, Cockroach Startup
21. Crunch Good? Crunch Bad?
• Series A bar higher: $1M revenue, 1M active users,
10M downloads, 100% YoY growth
• Lots of Incubation / Seed startups will “fail”
• BUT: Fail Budget = $50-$500K, not $5M+
• Many “failed” startups = ramen-profitable, small
acquisition, or MBA alternative (<$100K)
• Series A/B VCs have lots to choose from
• Overall, founders / market getting smarter
• More focus on customers, problems, revenue
• Many die, some survive (1-5x), a few thrive (20x+).
24. Web 2.0 Business Model:
KISS (“Keep It Simple, Stupid”)
• 1) Re-invent Web 1.0 Businesses
– Make a Website, a Widget, an App
– Sell Stuff (Transactions, Subscriptions, Affiliate)
• 2) add Web 2.0 Technology
– Search, Social, Mobile, Local, Media, Comm
– Google, Facebook/Twitter, Apple/Android, YouTube
– Email, SMS, Ecommerce / Payments
• 3) Get Customers, Make Money
– Distribution, Distribution, Distribution
– (Customer Acq’stn Cost) vs. ($Rev. Per Customer)
– Low CapX + Profitable Web Businesses
25. Startup Incubators & Metrics
Lots of Little Bets. Most FAIL.
(but a few succeed :)
26. Incubator 2.0: Fast, Cheap, FAIL
• Incubators = supportive startup ecosystem (+ angels, VCs)
• Efficient use of investment capital ($0-100K)
• High fail rate (60-80%) => large initial sample size
27. Incubator 2.0:
Education, Collaboration, Iteration
• Success based on:
– MANY, small experiments
– common platforms, customers, problems & solutions
– physical proximity, open/collaborative environment
– Domain-specific mentors & expertise
– fast fail, iteration, metrics & feedback loop
• Incremental investment; high-risk, but high-reward
28. Minimum Viable Team:
Hacker, Hipster, Hustler
• Hacker: engineers & developers
• Hipster: design & user experience (UX)
• Hustler: marketing & business, “growth hacker”
1.Build functional prototypes
2.Improve UX so people convert
3.Scale customer acquisition & distribution
29. Product, Market, Revenue
• Product: assess functional use, improve design/UX
• Market: test usage, distribution channels
• Revenue: test cust acq cost, revenue, timing of both
• Pitch: Work on Pitch, Help Find Co-Investors, etc
30. fbFund REV
fbFund REV: Facebook “Social” Incubator: invest in startups, apps,
websites based on Facebook platform & Facebook Connect.
• 22 startups @ ~$35K each (< $1M total)
• 3 month program: Technology, Design, Marketing, Business topics
• Success: 8 startups raised $500K –> 5 Series A -> 3 Series B (+ 3 small exits)
• Wildfire Interactive acquired by GOOG for $350M (>50X)
32. Most Businesses
Suck @ Innovation.
• They Don’t Know Technology.
• They Don’t Know How to Code.
• They Don’t Know SEO or SEM.
• They Don’t Know Email Marketing.
• They Don’t Know Social, Video, Local, Mobile.
• They Don’t Know Good Design or UX.
• They Don’t Know How to Cut & Paste.
• They Don’t Know How to Use PayPal.
33. Most Things Suck.
• But, We Can Easily Make Most Things Better.
• Tech + Web = Reduced Overhead Costs.
• Search + Social Platforms = Better Marketing.
• Copy Existing Business Model = Reduced Risk.
• FOCUS = Make ONEthing / SOMEthing Better.
35. You Don’t Have to be Tony Stark
• Just Copy/Use the Stuff that Tony Stark Makes.
– Tip: Most People Won’t Notice U Aren’t Tony Stark.
• Copy/Use 99% All The Amazing Stuff Out There.
• Innovate on the other 1%.
• Innovate 1% More Every Month.
• Then Kick Back and Have a Beer.
37. Formula 4 Awesome:
Notice Things That Suck. Make Them Suck Less.
• Most Offline Businesses Are Inefficient. (Web 1.0, Web 0.0)
• Lots of Overhead, Crappy UX, Crappy Marketing.
• Copy Their Business Model (It Already Makes $$$).
• Reduce Overhead Cost (Be a Scrappy Startup).
• Increase Marketing Efficiency (Do Online Marheting).
• Copy/Integrate 99% Awesome Stuff (aka Tech)
• Innovate on the Remaining 1%.
• Keep Innovating 1%. Every Month
39. Global Trends
• Growth of Global Languages (see MyGengo.com)
– 1B+ speakers: Mandarin, English
– 300-500M+ spkrs: Spanish, Arabic
• Smart Device Proliferation
– mobile, tablet, TV, console, etc
• More Young, More Old ($$$) Users Online
• More Bandwidth, More Video, More Social, More Mobile
• Wealthy Chinese + Indian, Web + IRL Globetrotters ($$$B)
• Acceleration of Global Payment, E-Commerce
• Dramatically Reduced Cost: Product Dev, Customer Acqstn
• Global Distribution Platforms
– US/EU: Apple, Facebook, AMZN, GOOG (Search, YouTube, Gmail, Android), Twitter
– Asia: Baidu, Tencent, Alibaba, Sina, NHN, Yahoo-J, Softbank, Rakuten, DeNA, Gree
40. Thanks
• Questions / More Info?
– http://500.co (our company)
– http://500hats.com (my blog)
– https://angel.co/500startups (our fund)
– Khailee Ng, 500 Startups SE Asia (@Khailee)
– Dave McClure, 500 Startups USA (@DaveMcClure)