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Start up in Silicon Valley


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Start up in Silicon Valley

  1. 1. Trends and Patterns: Observations for Silicon ValleyChris Burry, SVP StrategyUS Market Access Center
  2. 2. Trends and Patterns: Observations from SVOne Person’s View….• One of the great things about working in Silicon Valley…  Ask five people for their opinion on something  You get 7 different answers  All of which are right. I have a front-row seat… but also know that if I could predict the future…. I would be on Wall Street
  3. 3. A quick introduction: Who is Chris Burry?Serial Entrepreneur  1st Company founded when I was 13 years old. Sold when I was 18 for $1,000 USD (which seemed like a lot…)  2nd Company founded in 1982 – Application development for the Apple IIe and IBM PC. Sold in 1984  3rd Company co-founded in 1991 – Early CRM company. Sold in 1993 to EDS  4th Company co-founded in 1999 – Today has 10,000+ people; $1B+ in annual revenue  5th Company co-founded in 2010 – Stay tuned….
  4. 4. A quick introduction: Who is Chris Burry?A Consultant  10 years in national politics working for Al Gore and others  5 years at EDS  4 years at Andersen Consulting (now Accenture)  9 years at Avanade (1st on the ground in multiple countries)  2 years with the US Market Access CenterGlobal Citizen  Lived in the US, UK, France and FinlandNot a marketing guy….
  5. 5. A quick introduction: What is the USMAC?The US Market Access Center  Founded in 1995 by San Jose State University  Non-profit that helps non-US companies expand globally with a focus on Silicon Valley  800+ companies helped in the last 17 years  60+ current resident entrepreneurs  40+ non-resident clients  90+ mentors in ICT/Web/Cleantech  Active programs in Asia, Europe and Latin America
  6. 6. Trends and Patterns : Level of ActivityAfter the Internet Bubble  The over-all energy and activity level was way down  Angel and venture funding was almost zero  Many people lost their jobsToday  Everywhere you go from San Francisco to San Jose there is an incredible amount of energy and activity  Competition for the best talent has returned  Investing is back… but still uneven
  7. 7. Trends and Patterns : SV is still “It” in the USFrom Startup Data Trends
  8. 8. Trends and Patterns : SV is still “It” in the USFrom Startup Data Trends
  9. 9. Trends and Patterns : What’s HotThe obvious  All things mobile (including NFC)  Social media  GamingNot so obvious  Healthcare (software and devices)  Education (gamification of education is interesting)  Big data  Consumerization of the enterprise
  10. 10. Trends and Patterns : Scaling FastCompanies are “Getting Big Fast”  HP Decades  Google 10 years  Twitter 4 years  Groupon 1 yearScale or die?  For many companies, almost no barrier to entry for competitors (how many Groupon clones are there?)  Scale / adoption key factor in funding
  11. 11. Trends and Patterns : GlobalizationIn Silicon Valley today  54% of startups are founded by individuals who were not born in the US  Almost every startup has at least 1 non-US citizenBorn-global companies  University connections are key enabler  They blend and blur the distinction between the developed and developing world  Social media plays a role here
  12. 12. Trends and Patterns : GlobalizationInvesting  More US venture funds are seeking opportunities to fund outside of the US  More non-US venture funds are being created (but Silicon Valley is still the center)  These non-US venture funds appear are seeking opportunities in the US and outside the US  Greater willingness to fund “remotely”  BRIC’s having an increasing impact
  13. 13. Trends and Patterns : GlobalizationInvesting  More US venture funds are seeking opportunities to fund outside of the US  More non-US venture funds are being created (but Silicon Valley is still the center)  These non-US venture funds appear are seeking opportunities in the US and outside the US  Greater willingness to fund “remotely”  BRIC’s having an increasing impact
  14. 14. Trends and Patterns : Lean StartupsLean Startup Model Changing Business Creation  Agile Development meets Customer Development  Truly understanding the customer is key  Assume you know nothing  Fast iteration  Constant testing and validation  Let the customer decide  Always learn
  15. 15. Trends and Patterns : Lean Startups• Entrepreneurs have a unique ability to create their own reality• I like to call this a “Reality Distortion Field” (RDF)• There is a real risk that your personal RDF makes you believe that your customers value what you are selling more than they do
  16. 16. Trends and Patterns : Lean Startups• We have all seen the Reality Distortion Field in Action  We are going to be bigger than Google in 2 years  The size of the market is HUGE… we will only capture .05% of the market and make $1B  And my all time favorite…. We are losing $.02 on every transaction but we will make it up on volume Your Business Model, won’t work if it is not grounded in reality Lean Startup Methods keep you in reality
  17. 17. Trends and Patterns : Lean Startups• Applying the principles of the Lean Startup, you can bring the voice of the customer into the process• The “Measure” and “Learn” phases of the cycle create natural points for inclusion of input from the customer But be careful you don’t bring in your own RDF
  18. 18. Trends and Patterns : Lean Startups• How do you know if people will buy what you are selling?  Are there are real people who want to buy from you?  Do they have money to spend  Do they have a real problem (need, or want)?  Are they are willing to pay you to make their problem go away? If customers won’t pay to make their problem go away, you don’t have a business
  19. 19. Lean Startups: A Great Example• Mobile Gaming Company Business Model  Attract very larger number of users  Relatively low Average Revenue per User and lower lifetime value of user  Requires them to capture and hold the user’s attention to keep them in the app• What was needed  Needed to find a way to limit investment in games that won’t hold attention  Focus resources on the ones that will
  20. 20. Lean Startups: A Great Example• Finding a new way of thinking about mobile gaming  Pattern analysis shows that games go viral in the first 14 days, or they don’t go viral at all  “Fast to Die” – if a game doesn’t show signs that it is going viral during the beta… pull the plug. Don’t waste any more time on the product.  The customer is telling you that they don’t like it• Does it work?  $5m+ raised  50m+ downloads since in less than 3 years
  21. 21. Trends and Patterns : Required ReadingIn 2011, researchers at Stanford and UC Berkeley released theStartup Genome Report to understand why startups succeed or fail.Four types of companies identified.• The Automizer: Self-service, consumer-focused offerings that often automate a process. Examples of Automizers include Google, Dropbox, Mint, Groupon and Zynga.• The Social Transformer: The Automizers, these startups offer self- service and consumer-focused products but operate in ‘winner takes all’ markets and typically offer products that give customers a new way to interact with others. Examples include Facebook, Twitter, eBay, Skype, Airbnb, Flickr, LinkedIn and Foursquare.
  22. 22. Trends and Patterns : Required ReadingTypes of Companies (continued)• Integrator: These enterprise-focused startups target the SME market and look for early monetization, often transferring innovations from consumer products into the enterprise market. Integrators include PBworks, Uservoice, Kissmetrics, Zendesk and GetSatisfaction.• The Challenger: Challengers operate in the enterprise market with high customer dependency and a repeatable sales process. Look to Salesforce, Oracle, MySQL, Redhat and Yammer for examples of this type of startup.
  23. 23. Trends and Patterns : Required ReadingOne of the key factors examined in theStartup Genome Report’s research wasthe role of mentors.• Data from 650+ startups was analyzed, including 160 funded companies• Fundraising across the four stages of development in their model was examined• The role of mentors was one factor examined and the message is clear… No mentors = no money raised when needed to scale
  24. 24. Trends and Patterns : In closing• Questions? (To answer in advance, I don’t have an opinion on the Facebook IPO.• Comments?• Care to share your own experiences? (Good and bad)• Happy to talk one-on-one with anyone
  25. 25. San Francisco Palo AltoLet’s Connect San Jose Our Headquarters US Market Access Center 10 South Third Street, 3rd Floor San Jose, CA 95113 @usmarketaccess Contact for the Nordic Region Adiba Cremonini Vice President International Relations Groups – US Market Access Center Phone +1 (917) 767 0077 Email