1. Speed As THE Primary Business Strategy
Mike Cassidy

2. Speed Brings Great Advantages
Rapid product rollout/updates makes it extremely difficult for
competitors to gain traction against you (2 weeks vs. 18 months)
Rapid success builds strong team morale (which leads to more
success)
Rapid success generates more PR (which leads to more revenue,
strategic partnerships, key hires, etc.)
Fast growth drives higher company valuations when fundraising or
using equity for strategic deals
October 23, 2010 Confidential and Proprietary

3. Typical Start-up Timeline?
Explore Raise Hire core Build Initial marketing /
ideas money team & open product awareness-
office building / early
customers
3 months? 3 months? 2-3 months? 12 months? 3-6 months?
“Launched” = 23-27
months?
October 23, 2010 Confidential and Proprietary

4. Lightning Speed Start-up Timeline
Explore Hire core
ideas team & open
office
Raise Build
money product
2 wks 1 day2 wks 3 months
“Launched” = 4
months
October 23, 2010 Confidential and Proprietary

5. Example 1: Stylus Innovation
Stylus Innovation: Computer telephony software
Entrenched competitors
Owned 95% of market with DOS-based tools
300 customers/year per competitor
Visual Voice
1st Windows based tool, Visual Basic custom control
3,000 shipped in 1st year
Dominant market player within 6 months of Visual Voice launch
Sold 2 years after launch for $13M (10,000x founders investment)
October 23, 2010 Confidential and Proprietary

6. Example 2: Direct Hit
Direct Hit: Internet search engine
Entrenched competitors
Owned 95% of market (AltaVista, Excite, Infoseek, Lycos, Yahoo)
Used traditional text-based inverted index algorithms
Direct Hit
1st search engine based on tracking user voting (like Digg, YouTube, etc.)
Provided search for AOL (ICQ), Microsoft, Lycos, etc.
AOL deal within 5 months of company start
Sold 500 days after launch for $500 million
October 23, 2010 Confidential and Proprietary

7. Example 3: Xfire
Xfire: Instant messenger for PC videogamers
Entrenched competitors
Owned 95% of market (AIM, Yahoo Messenger, MSN Messenger)
Focused on traditional IM (not gaming)
Xfire
1st IM to track and connect videogamers
Grew virally from 100 users to 3 million in 2 years
Dominated market segment within 5 months of “Xfire” start
Sold just over 2 years after launch for $110 million
October 23, 2010 Confidential and Proprietary

8. Example 4: Ruba
Ruba: Recommendation Engine Based on Your Friends’ Recs
Entrenched competitors
Facebook, TripAdvisor, Yelp, etc.
Ruba
Started focused on recs for services (car mechanic, locksmith, etc.) targeted at
moms
Morphed to travel recommendations
1 million visitors to site before acquisition
Sold less than 2 years after launch to Google
1st Q after acquisition, GOOG up $17B
October 23, 2010 Confidential and Proprietary

9. Speeding Up All Parts of Startup
Fundraising
Opening an office
Hiring
Getting new employees started
Product development
Business development
Marketing/PR
Changing direction
October 23, 2010 Confidential and Proprietary

10. Fundraising
October 23, 2010 Confidential and Proprietary

11. Speed and Capital
Stylus: $1,500 initial capital; no VC
Direct Hit: $1.3M (DFJ) – through launch, HotBot, AOL, Apple spent
$400K; through MSN, Lycos spent another $600K
Xfire: $1M Series A
Ruba: Only raised Series A, no follow-on rounds before acquisition
Biz school: Single, consistent strategy; not
“lowest cost and best customer service,” etc.
October 23, 2010 Confidential and Proprietary

12. Raising VC Money Quickly
What are the best ways to raise VC money quickly?
October 23, 2010 Confidential and Proprietary

13. Four Keys to Raising VC Money Quickly
Raise when conditions in your favor
Direct Hit Series A: 1998, portals growing rapidly
Direct Hit Series B: as AOL deal is closing
Direct Hit Series C: as MSN/Lycos deals are closing
Xfire Series C: Social networking “hot”, steep growth curve established
Get all decision makers in room
Synchronize timing of competing VC offers
Bring “if/then” contracts with customers to your VC meeting
October 23, 2010 Confidential and Proprietary

14. Opening an Office
October 23, 2010 Confidential and Proprietary

15. Every Day, Every Hour, Every Minute Counts
4/21 8:15am pitch DFJ; 4:30pm get term sheet; dev team gives notice at
current jobs
4/22 Fly back to Boston
4/23 Negotiate lease on office space; order Dell computers
4/24 Order network software, phone system, office alarm system, DSL,
office LAN/phone wiring
4/27 Incorporate, set up bank account, Paychex, desks/chairs
4/28 Source control software, property insurance
4/29 Hardware arrives, set it up
4/30 Set up LAN, phones, desks
5/4 Open office, first day team has been hired, have C++, email, PC,
LAN, payroll, etc. (13 days after term sheet received)
October 23, 2010 Confidential and Proprietary

16. Hiring
October 23, 2010 Confidential and Proprietary

17. Think Speed in Everything You Do
Experience level:
Stylus: 4 sr. product managers (5+ years) -> CEO, VP Eng, VP Mkt, VP Sales
Direct Hit: 5th product manager ->VP Eng; 10 year dev; 15 year dev
Xfire: 10 year dev; 10 year dev; 10 year dev
Ruba: 10 year dev (Google tech lead for Chrome); 10 year dev
Known talent:
Stylus: 13 out of first 15 had worked with before
Direct Hit: 12 out of first 15 had worked with before
Xfire: 2 out of first 3 top devs came from absolutely trusted source
Ruba: 4 out of first 4 had worked with or came from trusted source
Close:
Group huddle during last interviewer
Offer letter ready before interviewee arrives
Make offer on same day
October 23, 2010 Confidential and Proprietary

18. Getting New Employees Started
October 23, 2010 Confidential and Proprietary

19. Speed Starts the First Day a New Hire Arrives
What do YOU do when a new employee comes on board?
October 23, 2010 Confidential and Proprietary

20. Speed Starts the First Day a New Hire Arrives
Before the first day
Give her material to read the day she accepts the job
Give mundane “first day” paperwork before arriving
First day
Absolutely have desk, phone, email account, etc., set up in advance
Absolutely have goals/projects/deliverables written down; give to new hire
immediately
Set tone for speed
October 23, 2010 Confidential and Proprietary

21. Product Development
October 23, 2010 Confidential and Proprietary

22. Which Is Faster?
A. Incremental development. Build 1 module/feature at a time and then
launch. Add features as you go. Figure out over time what features
users want and then try to add them.
OR
B. Spec your product CAREFULLY. Make sure you do great customer
research! Hit the market with a rich, compelling product because you
only get ONE first impression. If the product is lame, people will never
come back.
October 23, 2010 Confidential and Proprietary

23. Journey of a Thousand Miles Begins with a Single Step
Stylus Innovation
Visual Voice 1.0 let people build a 2-line IVR system
Added digital 32-line capability within 6 months (plus fax, a dozen other features)
3.5 months from “go” to launch
Direct Hit
Patented algorithm included two dozens variables (time spent at a URL, related
searches, time of year)
Launched with small subset of this feature set
3.5 months from “go” to launch
Xfire
Launched with 2 features: presence detection and 1-click join
Added a new feature every 2 weeks 1st year and every 3 weeks 2nd year
3.5 months from “go” to launch
Ruba
Launched first version 3.5 months after company start
Changed course and launched new product 2.5 months later
October 23, 2010 Confidential and Proprietary

24. Business Development
October 23, 2010 Confidential and Proprietary

25. Biz Dev Deals – Fast or Never
“Probability of a deal ever closing declines by 10% each day it
doesn’t close”
Use calendars/maps with “limited supply”
Sponsorships for July, Aug, and Oct already sold…
Map of USA with certain regions already controlled by competitors
October 23, 2010 Confidential and Proprietary

26. Marketing/PR
October 23, 2010 Confidential and Proprietary

27. Fastest Way To Get the Word Out?
PR is faster than Marketing
Stylus
No marketing budget
Editorial in CT Mag (including cover)
Direct Hit
No marketing budget (until Q4 ’99)
Cover of Industry Standard
Xfire
No marketing budget
Extensive coverage in Fortune, CNN, GameDaily, Forbes, WSJ, USA Today,
Marketwatch, Wired, Red Herring, SJ Mercury, etc.
Ruba
No marketing budget
Quickly ramped to 10,000 Twitter followers/Facebook fans
Got promoted by NTA (National Travel Agent association)
October 23, 2010 Confidential and Proprietary

28. Changing Direction
October 23, 2010 Confidential and Proprietary

29. If Something Is Broken, Fix It - Immediately
Stylus Innovation
Original name = “Dial-a-Fish”
Changing the way Americans shop for groceries, with $1500 in capital
Decision to change to Visual Voice took less than 2 weeks
Once decided, 100% of company effort immediately shifted
Xfire
Original name = “Ultimate Arena”
Play to win $$
Decision to change to Xfire took less than 2 weeks
Once decided, majority of company effort immediately shifted
Ruba
Original name = “FriendsTips” then “Kudo”
Decision to change to Ruba took less than 1 month
Once decided, 100% of company effort immediately shifted
October 23, 2010 Confidential and Proprietary

30. Direct Hit: $500 million in 500 days
4/98 Series A ($1.3M on $2.6M pre)
5/98 Opened doors
6/98 HotBot deal
8/98 Launch Direct Hit service on HotBot
9/98 AOL deal, Apple deal
10/98 Series B ($2M on $23M pre)
Q1 99 HotBot goes from Most Popular button to Default Results
Q2 99 Lycos deal, Microsoft deal
Q3 99 Series C ($26M on $100M pre)
Q4 99 Launch destination website
1/00 Sold for $500M
October 23, 2010 Confidential and Proprietary