Starting Starups 2008

Agenda Introduction (some Shameless Bragging) Change “The only Universal Constant” I agree with: Charles Darwin Albert Einstein Abraham Maslow Knowledge & Technology Starting Startup’s Markets and Marketing Putting a Team Together Business Plan basics  2008 George T. Haber All rights reserved Page 2

About myself In Motion with Love and Emotion Born in Romania, Oradea Rock & Roll and Disco Studied Israel, Haifa Technion Bs.EE Living in USA, California Founder & CEO George Haber 1993 – 1997 CompCore Multimedia Video and DVD $70M M&A with Zoran 12/1997 1997 – 2000 GigaPixel 3D Graphics (visual communication) $186M M&A with 3Dfx 03/2000 2000 – 2005 Mobilygen H264 Video (Low Power Video) $33M M&A with Maxim 10/2008 2005 CrestaTech RF and Software (SDR)  2008 George T. Haber All rights reserved Page 3

About myself In Motion with Love and Emotion Board Member Public Companies (NASDAQ) : Zoran 3Dfx InterVideo Board Member Private Companies Class Data Systems Acquired by CISCO InterAKT Acquired by Adobe Romania Avangate Romania BitDefender Romania Lucid 3D Israel NoBug Romania Investments Silicon Spice Acquired by Broadcom $1.2B Magma Design IPO in 2001 Kagor Networks Acquired by Juniper $67M Aristo M&A with Monterey Design  2008 George T. Haber All rights reserved Page 4

Change The only Universal Constant Change is everywhere and in everything actually it’s the Only Universal Constant What is Possible now was Impossible in the past Impossible now may be Possible in future Change is Driven by: Evolution (or Devolution) Revolution Disruptive Technology (Accidents)  2008 George T. Haber All rights reserved Page 5

Evolution Cost, Performance, Quality Pushing the limits of what is Possible Improving and fine-tuning the platforms fine- Cheaper, Faster, Better etc… The Big Companies become bigger ! Intel (CPU Mainframes -> PC -> Mobile) Audio (from scratched to digital surround) Turn Tables -> CD Radio -> AM-> FM -> Digital Radio -> IPod AM- Video (from not so good to perfect) Aerial TV -> Cable TV -> Digital TV -> HDTV Video Tape -> Video CD -> DVD  2008 George T. Haber All rights reserved Page 6

Revolution New ideas create new realities Breaking the limits of what’s Possible Creating new platforms and technologies The Big Companies brake up! Breaking up Monopolies Bell IBM Microsoft Stone Age -> Bronze Age -> Industrial Age -> Information Age Software Sold -> Licensed -> For Free  2008 George T. Haber All rights reserved Page 7

Disruption WOW & Accidents Destroying the “Old” rewriting the rulers Breaking the rules of the game The Big Companies in denial ! Yahoo Organizing the Internet’s Chaos Amazon Buying Books OnLine Ebay Sell and Buy anything anywhere Skype Free Phone Google Making money on Relevance YouTube Content Distribution FaceBook New ways to socialize  2008 George T. Haber All rights reserved Page 8

Darwin is right Thriving on Change = adopt or die ;) Surfing on Change = Resilience, Respect, Luck, Intuition, Strategy and Humility Timing is crucial => Crossing the Chasm Too Early (No Market, No Competitors) In time (Perfect Market, Few Competitors) Too Late (Why bother ?) Resilience + Luck or Strategy + Tactics Be prepared for errors and disaster Prepare for worst and hope for the best When faced with problems focus on Action and predict the Reaction May the “Force be with you”  2008 George T. Haber All rights reserved Page 9

Einstein is correct! E=mc2 E=mc2 True for organization and people • E = Energy • m = Mass of knowledge (Education & Experience) • c = Speed of reaction (Leadership & Attitude) Hire only the best 1. Leadership and Attitude 2. Relevant Experience  2008 George T. Haber All rights reserved Page 10

Maslow's Hierarchy of Needs Survival, Safety, Desire, Status, Progress Self Progress: Create, Learn, Propel Innovate, Teach Others Ego Status: Importance, Image, Self Esteem Aesthetics, Recognition, Prestige Desire & Understand Desire: Understand, Accept, Social Belonging Belong to Successful Team Safety & Security Safety: Peace, Order, Laws, Order, Laws, Limits Limits, Financial Security Existence & Physical Survival Survival: Life, Food, Health, Sleep etc.  2008 George T. Haber All rights reserved Page 11

Knowledge thru the ages Communications and Speed Knowledge & Platform & Client Historic Period Bits Propagate Knowledge Platform Client Stone Age 1 100K Years Survival Rocks Cave Man Dark Ages 1K 100 Years Stories Verbal & Stone Small Groups Stories The Nobles Middle Ages 10K 10 Years Papyrus Folklore Clergy News Papers Industrial Elite Information Industrial Age 100K 1Year Morse Code Military News Radio Working Class News Papers Industrial Post Industrial 10M 100 Days Radio Consumers Propaganda TV Data Scientists Information Age 1G 1 Day Computers Entertainment Professionals Media Rich Computers Everyone!! Web Based 100G 1 Minute Data Mobile Everywhere!! The future is Green => Energy efficient Self sustainable living  2008 George T. Haber All rights reserved Page 12

Technology Capture, Create, Process, Store & Deliver Knowledge like everything else is: Created Shared Consumed Technology helps capture, process, store and deliver Knowledge on Platform to Client Computers are a Platform Hardware (body) Software (soul) Knowledge is quality, not quantity size, location irrelevant few resources can create a lot of $$$  2008 George T. Haber All rights reserved Page 13

Haber’s Law “If something can be done in Software it will” Wireless Communication Demodulation HD Video Communication Video Audio 1995 2000 2005 2010  2008 George T. Haber All rights reserved Page 14

Why start a StartUp ? It’s the best thing one can do Simple “in theory” ;) IDEA for a PRODUCT or SERVICE LEADERSHIP and ATITUDE to make it DISCIPLINE and APTITUDE to stay focused on EXECUTION Creating value from ideas is an amazing journey and a Godly feeling More fulfilling than anything else Better than SEX and lasts a loooot longer ;)  2008 George T. Haber All rights reserved Page 15

Why not? Survival of the Strongest & Fastest Very hard work many sleepless nights Huge stress on every aspect of life Lots of pressures and isolation from family, friends and social life 10% Survive the first few years 2% are Big successes IPO or M&A 5% go on in some “Corporate Coma” Very few companies get out of this The worst possible outcome  2008 George T. Haber All rights reserved Page 16

What is your Business ? Essential for your survival The most important question to answer Focus on markets and clients not technology Ice Blocks -> Refrigerators Few companies realize what business they are in! Candles -> Light Bulb -> LED’s Main Frames -> PC -> Cell Phones OS -> Browser Record player -> iPod  2008 George T. Haber All rights reserved Page 17

Who Cares ? Define Market and Client Those who care are your clients!! How many “caring Clients” = TAM How much do they care = ARPU If you have to Evangelize you are in trouble Markets need a very powerful incentive to change “Client and Market is right” until proven otherwise People and companies are self-interested self- If you do not provide the solution your competitor will Should only sell what you can deliver Not everything you build can be sold  2008 George T. Haber All rights reserved Page 18

The “Unfair Advantage” Essential for success The key for long term survival and success Unfair Advantage can be: Technology Marketing Sales Channels Engineering Manufacturing Personal charm & Resilience Financial Strengths Etc….  2008 George T. Haber All rights reserved Page 19

Market and Marketing Is Marketing Sales & Advertising? In large Corporations separate functions In StartUp's everyone must be involved Legal Manufacturing Sales Market Research Product Specification QA Marketing PR Product Planning Business Development Accounts/Finance R&D HR  2008 George T. Haber All rights reserved Page 20

Holistic Marketing Strategic analysis 1) Who is involved? CUSTOMERS CORPORATION COLLABORATORS MARKET SPACE 2) How can we define relevant market space? POTENTIAL 3) What potential opportunities are emerging OPPORTUNITIES from the market space? BUSINESS 4) What business capabilities and infrastructure INVESTMENT are required? CUSTOMER CORE COLLABORATIVE FOCUS COMPETENCIES NETWORK  2008 George T. Haber All rights reserved Page 21

Resources Planning Tactical planning Market and Clients (ROI)=ARPU / Cost Team and Competency Engineers to create (Energy) Management and Corporate Culture for (Focus) (Focus) Money = to make it happen (Funding) Money is difficult to find when needed :( Money is plenty if you don't need it :) Balance between Greed and Fear  2008 George T. Haber All rights reserved Page 22

Leadership You have it or you don't ! Leadership is the sum of two virtues: Competence (your specialty, skills, know-how) know- Authenticity (your identity, character, education) The best leaders operate in four dimensions Vision => Predict the future Reality => Make sure it’s possible (No Madness) (No Madness) Ethics => Make it happen ethically (No Crime) (No Crime) Courage => It is going to be hard (Survival) (Survival) The challenge is to have these contradictory modes of thinking and behaving at once  2008 George T. Haber All rights reserved Page 23

How to Fund it? It takes money to make money Funding Strategy = Getting money from: Smart Money => Investors, VC’s Self Funding => Bootstrap Colored Money => Clients, Corporate Partners Stupid Money => Credit Line, Bank Loans This is what the Business Plan is all about Company and Market 4 - 6 slides Product and Competitors 4 - 6 slides The Financial Plan 3 - 7 slides The world is always changing and so should your plan and Strategy  2008 George T. Haber All rights reserved Page 24

Business Plan 1) Company and Market Mission Statement Company's business (should fit on a business card) The Company Basic facts (year established, # of employees, location, major milestones, …) Team Background of management and founding team Board composition Market What problem is the company going to solve Trends, historic and projected Market size Product match to market needs and shifts  2008 George T. Haber All rights reserved Page 25

Business Plan 2) Product and Competitors Product and Technology Product description Development schedule Differentiation Price point Go to Market Strategy Sales channels Partnerships Customers Competition Competitors and positioning Barriers of Entry How does the company intends to keep its advantage over the competition  2008 George T. Haber All rights reserved Page 26

Business Plan 3) The Financial Plan ROI Cost of acquisition ARPU Cost of support / renewal Projected cash flow Product Pricing strategy Current balance sheet Projected head count by functional area Historic and projected P&L Optimistic Pessimistic The Deal Cap table Amounts raised before and now Valuation asked  2008 George T. Haber All rights reserved Page 27

Management Measured by results Managers are ultimately measured by results depth of their convictions, strength of their commitment -- and the power of their results Have leaders who can keep everyone moving in the same direction, at a sustainable pace The leader must be the one to grab the flag and charge up the hill with everyone following. A good leader is one who can ensure that others will take the over the flag and continue to charge  2008 George T. Haber All rights reserved Page 28

Attitude We all chose our attitude Attitude is the ability to manage conflict (polarity). In every aspect of life, polarities are inevitable they are in the nature of things. How we act, how we respond what separates greatness from mediocrity Greatness comes with recognizing that our potential is limited only by how we choose to use our freedom, how persistent and resolute we are - in short, by our attitude. attitude. Talent, Education, Family and Financial Privileges are different for everyone. But we all have the capacity and the duty to be great in what we do. We are all free to choose and change our attitude. attitude.  2008 George T. Haber All rights reserved Page 29

Corporate Culture Keeping it together People must be included in decisions and process Success tied to willingness and ability to take ownership Companies depend on people. You can't ignore it or try to get around it Don't ask people to set their egos aside for the good of the team. Feed their egos. Give each person an area in which to excel, and you'll find that you have a team that really pulls together. Make one person team leader of communications, another the team's leader of technology, a third the client-services leader etc… client-  2008 George T. Haber All rights reserved Page 30