- Mike Slinn is an expert in evaluating blockchain and technology companies through technical due diligence to assess risks and opportunities for investors and startups. - He has extensive experience advising companies on technology strategy, product development, and organizational structure to prepare them for investment or acquisition. - His evaluations are tailored to each company and situation, and can range from quick assessments to multi-week engagements involving on-site reviews and written reports with recommendations.

1. Evaluating Blockchain
Companies
Mike Slinn
August 29, 2018
Global Big Data Conference
Santa Clara, CA

2. Technical Due Diligence

3. Companies and Products
“Is This Real?”

4. See Me in Our Booth
• I will be in the Micronautics Research booth
• Most of today
• Please talk to me there!

5. About Mike Slinn
• Distinguished engineer
• Electrical Engineering degree
• Author of go-ethereum walkthrough
• Contributor to Ethereum Java and Scala libraries
• Operates ScalaCourses.com
• Author of EmpathyWorks (artificial personality)
• Expert witness
• Twitter: mslinn

6. Key Facts about Mike Slinn
• Focuses on generating business value by
applying people, process and technology
• Wrote 3 books on distributed computing
• Created hundreds of online lectures on
advanced computing concepts
• Uses many computer languages (“polyglot”)

7. Prior Assessment Work
• I have been performing technical due
diligence for investors since 1985.
• I have helped prepare companies for
acquisition and investment since the early
90s; resulting in sales to IBM, Microsoft, NBC
Interactive and AltaVista (later purchased by
Yahoo!).

8. Risk, commissions, uniqueness, scales
About This Presentation

9. Who Commissions Evaluations?
• Investors - Interested in a new technology or a
startup’s implementation/approach.
• CEO – Vulnerability assessments and action
plan.
• Startups - Grooming themselves for investment
or acquisition.
• Competitors – Probing for weaknesses or
potential acquisition.

10. Risk
• I investigate and report on risk when
performing technical due diligence.
• Identify the factors in play, and those that are
lacking, for the present state of the company
being assessed.

11. Each Company Is Unique
• I do not use a one-size-fits-all approach for
evaluations.
• Investors can ask me to address specific
concerns that they may have.
• I focus on technology product companies; I
do not assess service firms, for example, or
consulting firms.

12. Each Evaluation Is Unique
• Some are for self-assessment
• Some are done with the knowledge and
cooperation of the company being evaluated
• Some are done in secret, without cooperation
• Some are done undercover (with senior
management approval)
• Ethics are important in this work!

13. I Do Not Do
• Security audits
• Valuations (where dollar values are assigned)
- but I work with accountants who do
• Endorsements

14. Small-Scale
Assessments

15. Quick Sanity Check
• "Is this project real?“
• Proceed one day at a time
• Daily reports
• Appropriate for $25,000+ investments

16. Key Person Vulnerability Mitigation
• Assess impact of loss of key technical person
• Recommend a mitigation plan
• Execute or oversee plan

17. Scala Effectiveness Assessment
• 5 days
• Is Scala being used effectively?
• Standards and best practices
• Unrecognized or underestimated problems
• Suggestions for your technical strategy for
the F/OSS world that Scala comes from.
• “You Moved Us Forward 8 Months!”

18. Large-Scale
Assessments

19. General Outline of Activities
• Funded initial assessment
• Present written report
• Discusses his findings and optional next
steps
• I can act as an advisor, interim CTO, or
interim VP Engineering

20. Preparing for Investment or Sale
• Help building a winning technical team
• Establishing just the right amount of process
• Streamlining the technical architecture
• Help define product roadmap

21. Typical Deliverables (Report)
• Are the people, processes and technology
appropriate for the development stage of the
technology company?
• Can the engineering team consistently deliver
quality results on time and on budget?
• Is the management team effective?

22. Subject Stages
• Idea only
• Technical standard
• Fundamental research done
• Initial implementation
• First rewrite / first pivot
• Scaling
• Integration
• Professional Services

23. Idea only
• White paper but no implementation or
prototype.
• Too early for a technical evaluation.

24. Technical standard
• Produced by a standards body.
• Implementation is important

25. Fundamental research done
• This is the earliest stage for a detailed
evaluation of a product company or technical
standard.
• Process normally does not exist yet
• The team consists of only a few key people at
this stage.
• Customer engagement is very important, but is
often completely lacking.

26. Initial implementation
• A VC’s dream: first mover advantage.
• Usually the company can describe what they
are building, but the reasoning behind why a
customer might want it is weak.
• I care about the communication between
product management, such as it might
manifest, and engineering.

27. First rewrite / first pivot
• Attrition of key people is a commonly
experienced risk for startups at this stage.
• This might be a good thing, or not.
• Sometimes investors or the board of
directors will engage me to assess and
strategize potential attrition.

28. Scaling
• Addressing this problem requires data and
a focus on operations.
• This is the time to add instrumentation and
to analyze the resulting data so operations
can be optimized.
• A dedicated operations team is often set
up when scaling becomes an issue.

29. Integration
• Another desirable problem to have, if
customers and business partners clamor
for integration with a startup’s products.

30. Professional Services
• In the early days of a startup, engineering
might perform custom work for the initial
customers.
• This is in general not desirable, and
professional services should be carved out
from engineering early on.

31. And Opportunities
Common Issues

32. Excessive Management
• The kiss of death: many impressive-
sounding titles for prestigious managers,
but few or no direct reports who have
authority to do things.
• However, when it is time to introduce
middle managers, it should be done
properly.

33. Yet Another X
• Problems and opportunities should be well-
known when creating a product that
competes with incumbents.
• Central question is often “can the product be
significantly better for a specific application?”
• These assessments generally cost less,
because they can be quite focused.

34. Security Cannot Be Retrofitted
• Secure systems can only be designed that
way from the start
o Trying to secure an existing platform can only give
marginal improvements
• Need orders of magnitude of improvements
to smart contract security
o Not possible without a fresh start

35. Sample Special Assignment
• The investors brought me in.
• The board, investors, CEO, and CFO knew of
my assignment, but VP level and below did
not
• initialAssessmentNeutered.docx
• observationsNeutered.docx

36. Thank you!
Mike Slinn
mslinn@micronauticsResearch.com
650-678-2285