Starting a company is a life-changing event that brings together a breadth of experiences and emotions. This talk overviews the 5 stages of startups and discusses why a good idea does not necessarily result in a good product, and why a good product does not necessarily result in a company. It also provides a hands-on example of my own experience as an early-stage startup COO. Here’s the deal: to succeed, a company needs more than a good idea. It must solve a real market need, and execute that good idea really well. To this, you need to add a great team behind the idea to ensure that the right decisions are made along the way. And let’s not forget capital, which is essential to make everything come together and push the venture ahead. Finally, the business must be able to scale up for the company to succeed in the long term.

1. 101 ON
STARTUPS
CAROLINA PINART
@ CTTC | MARCH 8, 2017

2. OUTLINE
WE’LL TALK ABOUT COMMON STARTUP QUESTIONS
▸ What is a startup? How is it different than a “company”?
▸ How do people come up with good ideas?
▸ What’s involved in starting up a business?
▸ How do people raise capital?
▸ Why do so many startups fail?
▸ What is being in an early-stage startup like?
2

3. A LITTLE BIT ABOUT ME 3
Mentor & Board Member
Chief Operating Officer
Gl. Head Remote Patient Mgmt.
Director Institutional Relations
Researcher
STARTUPS
CORPORATE INNOVATION
RESEARCH Head of Connected Car
Technology Consultant

4. WHAT IS A STARTUP?
EVERYONE HAS THEIR OWN DEFINITION OF STARTUP
▸ Organization wise: A temporary organization
designed to search for a repeatable and
scalable business model*
▸ People wise: An emotional roller coaster that
can either result in massive failure or success
4
* Source: Steve Jobs

5. WHAT IS A STARTUP?
STARTUPS ARE NOT ALL ABOUT APPS: 2 BARCELONA EXAMPLES
5
▸ Spin off from UAB research
▸ 40+ cryptography patents
▸ #1 in their industry
ULTRA SECURE ONLINE VOTING BUSINESS INTEL FOR ONLINE MEDIA
▸ Split off from Wuaki.tv
▸ Complex algorithms and analytics
▸ #2 in their industry (soon to be #1)

6. THE 5 STARTUP STAGES
Idea
Concept
Commitment
Validation
Scaling
6

7. THE 5 STARTUP STAGES
Idea
7
Potentially scalable idea for a big enough market

8. HOW DO YOU KNOW IF AN IDEA IS POTENTIALLY BIG AND SCALABLE?
YOU DON’T KNOW IF AN IDEA IS BIG, BUT YOU CAN KNOW IF IT ISN’T
▸ Very few businesses invent a market for their products or
services. Most fill market gaps with standout offerings
▸ 3 red flags about business ideas:
▸ The (niche) market is too small
▸ It doesn’t solve a real problem or need
▸ It doesn’t scale well
8

9. THE 5 STARTUP STAGES
Idea
Concept
9
Clear and meaningful target and direction

10. HOW DO YOU CONCEPTUALIZE?
CONCEPTUALIZE = HYPOTHESIZE ON BASIC QUESTIONS
▸ What is the problem or need that your idea solves?
▸ Who has this problem? How big is this market?
▸ How does your idea solve the user’s problems/needs?
▸ How are you going to make money?
▸ Who are your competitors? How do you compare?
▸ …
10

11. HOW DO YOU CONCEPTUALIZE?
BUSINESS CANVAS: A TOOL TO CONCEPTUALIZE
11

12. HOW DO YOU KNOW IF AN IDEA IS POTENTIALLY BIG AND SCALABLE?
CUSTOMER DEVELOPMENT: A WAY TO VALIDATE CONCEPTS
12

13. THE 5 STARTUP STAGES
Idea
Concept
Commitment
13
Founding team and resources for MVP
MVP: Minimum Viable Product

14. HOW DO YOU BUILD A SOLID (SMALL) TEAM?
BUILD A TEAM = PUT TOGETHER THE RIGHT SKILLS
UX: User Experience
BUSINESS SKILLS
DEVELOPMENT SKILLS
YOU
Define and estimate the market
opportunity, and create investor deck
Build the initial product and hire more
(great) developers
UX SKILLS
Identify and understand target users,
and build the experience they want
Have the idea
14

15. HOW DO YOU BUILD A MINIMUM VIABLE PRODUCT?
MVP COMES FROM "BUILD-MEASURE-LEARN" APPROACH
▸ MVP: The smallest thing you can do to prove a set of
hypotheses about a business idea (Lean Startup)
▸ In reality, most startups start off with more than MVP’s:
▸ “Minimum Lovable Product”: Product with all features
that cannot be sacrificed but still fits in the budget
▸ Iterations: "Release early, release often” (Agile)
MVP: Minimum Viable Product
15

16. THE 5 STARTUP STAGES
Idea
Concept
Commitment
Validation
16
Initial traction, i.e. user growth and/or revenue

17. HOW DO YOU MEASURE TRACTION? 17
“GROWING YOUR BUSINESS WITHOUT TRACKING YOUR MARKETING
PERFORMANCE IS LIKE DRIVING WITH BOTH HANDS OVER YOUR EYES”
Aware Consider Convert Become Loyal Advocate
Hiten Shah, Kissmetrics's Co-founder

18. THE 5 STARTUP STAGES
Idea
Concept
Commitment
Validation
Scaling
18
Clear, growing and measurable traction

19. HOW DO YOU GROW?
SOLVE A REAL PROBLEM WITH ENOUGH CAPITAL
▸ Product already retains users
▸ Identify levers that are attracting
users, then crank things up
▸ Target: top of the funnel growth
GREAT PRODUCT/MARKET FIT INVESTMENT &/OR REVENUE
▸ Staff the organization
▸ Customer acquisition costs
▸ Infrastructure and day-to day
operations costs
19

20. HOW DO YOU GROW?
EXAMPLE: DROPBOX’S GROWTH (BACK IN 2009)
▸ DropBox: Cloud file sharing & storage service. Valuation: $10B
▸ Lever 1: Simplicity
▸ Product dead simple to use, on any device
▸ Super simple signup and product explanation (video)
▸ Lever 2: Space (MB)
▸ Virality: refer a friend, get free space
▸ Tie in social media: free space for spreading the word
20

21. STARTUPS PIVOT
UNTIL THEY FIND
THEIR BUSINESS
MODEL

22. FAMOUS PIVOTS
COMPANIES NOW VALUED AT BILLIONS OF DOLLARS
▸ YouTube was meant to be
a dating site: people
uploaded videos of
themselves talking about
the partner of their dreams
▸ Twitter started as a group
messaging service of
podcasting network Odeo

23. HOW YOU RAISE FUNDS TO KICK OFF AND GROW?
DIFFERENT CAPITAL SOURCES DEPENDING ON MATURITY
▸ Self Funding / “Bootstrapping”
▸ Investment:
▸ Friends and Family
▸ Seed
▸ Debt, aka Bank Loans
23
▸ Growth / “Early Stage”
▸ Expansion

24. AN EXAMPLE OF SPLITTING THE PIE 24
50% 50%
15%
5%
40% 40%
10%
13.5%
4.5%
36% 36%
SELF FUNDING SEED
Co-founder 1 Co-founder 2 Option pool Uncle Angel investor
Uncle invests $10K,
gets 5% equity
FRIENDS & FAMILY
Angel invests $100K,
gets 10% equity
$50K $200K $1,000K
Co-founders
invest the same

25. WHY DO SO MANY STARTUPS FAIL?
Percentage of surveyed startups that indicated that failure reason. Source: Forbes, March 2016
25
42% 29% 23%
No market need Run out of cash Not the right team
TOP REASONS

26. LET’S SEE AN EXAMPLE 26

27. CASE STUDY: ZABCAB
ZABCAB IS AN AMERICAN NEXT-GENERATION TAXI
SERVICE FOR PEOPLE WHO DON’T USE UBER
27

28. CASE STUDY: ZABCAB
* To a better taxi service. Sources: US Government data and ZabCab survey to 1,000+ taxi users.
TAXI RIDES / YEAR
760M $15 86%
AVERAGE FARE RIDERS WOULD SWITCH*
A $10B MARKET OPPORTUNITY IN THE U.S.
28

29. POINT A POINT B
29COMPETITOR LANDSCAPE

30. POINT A POINT B
30COMPETITOR LANDSCAPE
Drive own car

31. POINT A POINT B
Drive someone else’s car
31COMPETITOR LANDSCAPE
Drive own car

32. POINT A POINT B
Take public transportation
Drive someone else’s car
32COMPETITOR LANDSCAPE
Drive own car

33. COMPETITOR LANDSCAPE
POINT A POINT B
Drive own car
Take public transportation
Drive someone else’s car
Be driven
33

34. PIVOTS
INITIAL IDEA: MAKE TAXIS DISCOVERABLE. A $3B MARKET
▸ In big US cities, taxi drivers waste at least 40% of their time
cruising the streets looking for customers
▸ Taxi riders have to walk to main avenues to find cabs
▸ Solution: Give drivers and riders a bird’s eye view
34

35. 3 PIVOTS TO FIND PRODUCT/MARKET FIT
35
LAUNCH 1
Broadcast location to
give bird’s eye view
PIVOTS

36. 3 PIVOTS TO FIND PRODUCT/MARKET FIT
36
LAUNCH 1
Broadcast location to
give bird’s eye view
NYC regulator locked down
all ride apps: re-group and
go for nationwide model.
PIVOTS

37. 3 PIVOTS TO FIND PRODUCT/MARKET FIT
37
LAUNCH 1 LAUNCH 2
Broadcast location to
give bird’s eye view
Prearrange taxi rides
fast and in one tap
NYC regulator locked down
all ride apps: re-group and
go for nationwide model.
PIVOTS

38. 3 PIVOTS TO FIND PRODUCT/MARKET FIT
38
LAUNCH 1 LAUNCH 2
Broadcast location to
give bird’s eye view
Prearrange taxi rides
fast and in one tap
Most taxi users are not ready
for apps. The ones who are,
are moving to Uber/Lyft.
PIVOTS

39. 3 PIVOTS TO FIND PRODUCT/MARKET FIT
39
LAUNCH 1 LAUNCH 2 LAUNCH 2+
Broadcast location to
give bird’s eye view
Prearrange taxi rides
fast and in one tap
Add phone call to
prearranged taxi rides
Most taxi users are not ready
for apps. The ones who are,
are moving to Uber/Lyft.
PIVOTS

40. 3 PIVOTS TO FIND PRODUCT/MARKET FIT
40
LAUNCH 1 LAUNCH 2 LAUNCH 2+
Broadcast location to
give bird’s eye view
Prearrange taxi rides
fast and in one tap
Add phone call to
prearranged taxi rides
Most taxi users dislike
the ride experience,
can’t go to Uber and
would switch to a
better taxi service.
PIVOTS

41. 3 PIVOTS TO FIND PRODUCT/MARKET FIT
41
LAUNCH 1 LAUNCH 2 LAUNCH 2+ LAUNCH 3
Broadcast location to
give bird’s eye view
Prearrange taxi rides
fast and in one tap
Add phone call to
prearranged taxi rides
Offer e2e, next
gen taxi service
Most taxi users dislike
the ride experience,
can’t go to Uber and
would switch to a
better taxi service.
PIVOTS

42. (HOPEFULLY) THE SWEET SPOT
WAIT A MINUTE, YOU SAY TAXI RIDERS CAN’T GO TO UBER?
42
Sources: US Government data. Pew Research Center survey, May 2016.
HAVE NO CREDIT CARD
29% 85%
HAVE NEVER USED UBER
AMERICAN ADULTS

43. CAPITAL RAISES
NOW FUNDRAISING TO PROVE E2E MODEL IN
43
SELF FUNDING SEED GROWTH SEED SEED
Cumulative investment
Build end to end
service MVP
LAUNCH 1
LAUNCH 2
LAUNCH 2+
LAUNCH 3
Market test
e2e MVP

44. TRYING TO APPLY LEAN STARTUP CONCEPTS
AGILE, DATA-BASED CUSTOMER DEVELOPMENT PROCESS
44
Build Strategy Get Insights Adjust Strategy
PLAN
DESIGN
LAUNCH

45. ON MEASURING MARKETING PERFORMANCE
INSIGHTS: DATA COLLECTION AND ANALYSIS
45
Aware Consider Convert Become Loyal Advocate
▸ Who’s interested? Why?
▸ What’s working? What’s not?
▸ How can we move people further
along the funnel?
▸ What’s the cost per conversion? And value?
▸ What are the most effective channels?
▸ How are people liking our service? What’s missing?
▸ How can we move people further along the funnel?

46. EXAMPLE OF AGGREGATED ANALYTICS
Miami Ft Lauderdale Burlington
Acquired Activated
Miami Ft Lauderdale Burlington
Acquired Activated
HotelsConsumers
46
Source: ZabCab data using own database, Mixpanel and Google Analytics
-33% -55%
ON MEASURING MARKETING PERFORMANCE

47. 47
EXAMPLE OF INDIVIDUAL ANALYTICS
Source: ZabCab real-time dashboard
ON MEASURING MARKETING PERFORMANCE

48. MY PERSONAL TAKEAWAYS
EARLY-STAGE COO = CONSTANT JUGGLING
▸ Typically, early-stage COO’s do the most important things
the company hasn’t hired for yet
▸ Then they hire or delegate to someone in their place, and
move on to the next important thing
▸ In my case: Product, Operations,
Marketing, Business Strategy,
Financial Models
48

49. MY PERSONAL TAKEAWAYS
NAIL IT, THEN SCALE IT. AND IN THE MEANTIME…
49
▸ Good ideas are everywhere. Execution is everything.
▸ Build-measure-learn. Not perception: data.
▸ Hire slow, fire fast. And hire better than you.
▸ Know your market like the back of your hand.
▸ If you’re not passionate about it, move on.

50. WRAP-UP 50
EXCITED? SCARED?

51. DON’T WORRY
ABOUT FAILURE;
YOU ONLY HAVE TO
BE RIGHT ONCE.
Drew Houston
Dropbox Co-Founder & CEO