The document outlines the agenda for a presentation on web startups. It discusses defining web startups, the lean startup methodology including customer development and agile software development. It covers web and mobile application product development processes. It also discusses equity financing, incubation programs, and startup marketing strategies.

1. Allan Chao
Startup V8
allan@StartupV8.com
San Francisco SBA 2011

2. Introductions
 Who you are
 What you do
 What’s your Startup Idea?

3. The Agenda
 Why?
 Defining “Web Startups”?
 Risk and Reward
 Lean Startup Methodology
 A new kind of model
 Customer Development
 Agile Software Development
 Web Application Product Development
 Web apps
 Mobile apps
 Equity Financing and Incubation
 Angel Investors and Venture Capitalists
 The pitch system
 Startup Marketing
 Pre-alpha, alpha, closed beta, beta, launch

4. Web Startups… What are they?
 Web
 Websites, Mobile apps, Tablets
 Infrastructure
 Software as a Service
 Startups
 New and unproven business model
 = New way of solving an existing problem
 Disruptive innovation = disrupts the existing market

5. Big and Famous Web Startups
 Amazon.c (1994)
 Ebay (1995)
 Googl (1998)
 Paypal (1998)
 Wikipedia (2001)
 LinkedIn ( (2003)
 Facebook (2004)
 YouTube (2005)
 Twitter (2006)

6. Literally Thousands More

7. Risk and Reward
 Literally thousands of web startups…
 Lots of direct competitors for every idea…
 Very few startups break even…
 Even fewer become very profitable…
 But those that are extremely successful… (over 1,000:1)
 change the world (or at least their industry)
 make MEGA $$$$$$$$$$$$ (via IPO or Acquisition)

8. How to Be Successful?
 The idea is worth $0.00 = nothing
 Execution is everything!!
 What does that mean? How do you “Execute”?
 Business Plans vs. The Lean Startup
 Business Plans = Plan and Pray
 Lean Startup = Release and React
 Lean Startup
 Low overhead, low costs
 Agile Software Development
 Rapid customer-centric development

9. The Lean Startup (Eric Ries)
 A methodology/philosophy of building
startups
 1. Use of free and open source software
 Groupon was started as a wordpress blog
 2. Agile Software Development
 Release as frequently as possible
 Iterate development as quickly as possible
 3. Ferocious customer-centric rapid
iteration
 Customer Development Process
 Build a minimum viable product – launch fast!
 Learn from your users/customers

10. Customer Development Process
 Customer Discovery = Understanding your customers
 Customer Validation = Develop a Repeatable Sales Process with
early evangelist buyers
 Customer Creation = Scaling your customers from few to many
 Company Building = Rebuild your company’s organization and
management. Re-look at your mission

11. Customer Discovery

12. Customer Validation

13. Customer Creation

14. Company Building

15. Software Product Development
 Creating the Minimum Viable Product (MVP)
 Functional Requirements
 Wireframes
 Graphic Design
 Code
 Content (Copywriting, Social Media accounts, analytics, etc.)
 Deploy (aka Release)

16. Functional Requirements
 Questions to answer
 What customer problem
does this product solve?
 What are the customer
use cases?
 How will the customer
use this product to solve
his problem?
 How will the product
make money?

17. Sitemap

18. Wireframes

19. Graphic Design

20. Code
 HTML, CSS, Javascript, Jquery, Node.js, Django,
python, Ruby on Rails, PHP, .NET, Java, ….

21. Content
 Every single screen
 Instructions to the user
 Search-Engine-friendly content
 Long tail keywords
 Content Uniqueness
 Any emails that are sent?
 Blog posts?
 PR releases?
 Analytics tools

22. Traditional Software Development

23. Agile Software Development
 Start Small
 Minimum Viable
Product
 Iterate quickly
 Track user data
 Flexible software
 Release frequently
 Cycle weekly or every
two weeks

24. WebApp Product Development
 Scale development with your business
 Do *NOT* invest $ thousands up-front without customers
 Initial MVP: Something **Very Simple** = $5000 - $15,000
 Groupon started with a Wordpress blog
 Orders were done by email (no online form)
 After market is validated, invest in custom software
 Expensive and time consuming
 Specialist coders
 Nearly infinite depth of programming skills required
 HTML, CSS, Javascript
 Node.js, php, python, .NET, Java, AJAX, Ruby on Rails, etc.

25. MobileApp Product Development
 Similar process to Web application development
 Costs more: average prototype costs
 1-3 screens: $5,000-$10,000
 5-15 screens: $10,000-$20,000
 “fully featured” app: $20,000+
 Each platform is independent:
 iOS (iPhone)
 Android
 BlackBerry
 Windows Mobile
 Cheap hack: build a web-app that looks like a native app

26. Equity Financing
 Goal = Give away significant ownership of your
company to raise money and bring on talent.
 Founders
 Very generally, founders start with an equal split 50-50
or 33-33-33
 More complicated ways to calculate… google “founder
equity calculator”
 Experienced co-founders will laugh at you if you think
the “idea” is worth significantly more: e.g. 80-20.
 Capitalization tables to predict effects of dilution
 Employees expect to get vesting stock

27. Equity Rounds
 Friends and Family $50-250k
 Angels up to $1 M
 Super angels up to $2.5 M
 VCs Series A $3+ M
 Normally 2-3 rounds… ABC exit.
 Rounds DEF = “cramdown” rounds… bad terms
 The one goal of investors is to exit. $$$$$

28. Equity Financing caveats
 Takes a long, long, long time to raise money.
 Very involved process
 Prepare to spend money to raise money
 Preparation workshops
 Preparing Presentations
 Flights to investors
 Dinner
 Beware of losing your company
 Term sheets must be reviewed by your lawyer!

29. Alternative Financing
 Crowd Funding
 Kickstarter.com
 Rockethub
 Competitions / Grants
 Solo Funding
 Bank loans unlikely
 Second mortgage
 Credit cards!!??
 Start eating ramen noodles 

30. Incubation
 Programs that help entrepreneurs get started on their
projects in exchange for 5-10% equity
 Very small seed capital ($20,000)
 Networking and relationship building
 Presentations to angel investors
 Application based… very competitive (internationally)

31. Incubator Examples
 Incubators
 Y-combinator (Mountain View, CA)
 Techstars (Boulder, CO)
 Excelerate Labs (Chicago, IL)
 Graduates of Incubators
 Dropbox
 Scribd
 Reddit
 Justin.tv
 Posterous

32. Startup Marketing
 Marketing Strategy
 Publicity when you want it, not
as a random event
 Publicity after you know what
your business is about
 Popular Startup news
 Techcrunch
 Crunchbase
 Engagdet
 Venturebeat
 Mashable
 Digg

33. Thank you!
 After you complete the evaluation forms,
 please pick up my business card at the back of the room.
Allan Chao
Startup V8
allan@StartupV8.com