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Hadi and Ali Partovi

Is my Idea a Winner?

• Can you explain customer need in 1 or 2 sentences?
• Does the idea/business scale?
• Are you creating added value? What would’ve people lost without you?
• If you’re dependent on 1 supplier or customer, they have you by the balls.
• Will users recruit other users?
  • Viral marketing.
• Will value increase when customer’s increase?
  • Social networking
• Are you passionate about the idea?
  • Can you hang on when things go downhill?

Do’s

• Listen to your customers and and identify with them.
  • Do it personally.
  • Have everyone do customer support at one point.
• Rank top problems and your top people.
  • Assign these problems to the right people.
  • Use effective delegation.
• Cut spending where you can. Make frugality and profitablity a part of the culture.
  • For example, don’t buy paper clips and paper cups. Reuse ones on incoming documents and have people bring in their own cups.
• Move quickly and make decisions fast.
  • Avoid committees.
  • Avoid 12-month development projects and delegate decision making.
• Have a strong CEO.
  • This person should be a salesperson and a good speaker.
• Focus. Have 1 main idea. Do this 1 idea well.
• Hiring great people is critical. Put this at the top of your list.

Don’ts

• Don’t be distracted by the press. Don’t make decisions to get press.
  • Goals of PR – recruiting and strategic partnerships.
• Don’t take the company culture for granted. Don’t let politics set in. Keep and set the culture while you’re small.
  • As the company grow, there will be a tendency to introduce politics into the culture.
• Don’t be greedy in negotiations. Don’t go for the perfect deal. A deal is better than no deal.
• Don’t ignore your gut feeling about an employee or candidate.
  • Recommendations and resume aren’t the only judgment factors. Fire people if they’re not in the right position.

Rahoul Seth

Financing for Start-ups

• Funding – Bring business partner(s).
• Finding the right business partner will bring professional advice from experience.

• Potential investors known people and can advise you.
• “Smart money” wants you to succeed. This is why you should get VC funding. If you make money, they make money.

Financing comes in stages

• Seed – Need to first figure out strategy, cash requirement, and market requirements
• First – Get a beta product, “go to market” plan.
• Second – Road map to growth and profit.
• Third – Expand business. Risk taken out.
• Mezzanine – Working capital needed for liquidity event
• IPO – Have liquidity for investors

Type of Investment

• Debt – Borrow $, pay back with Internet.
• Equity – Sell share of company. Investors make money from liquidity
  • Common stock – founders (stock), employees (options)
  • Preferred stock – Investors (stock and warrants). Preference over common at liquidity events. Don’t give this out early on.
  • Goal for founders should be to retain 5-10% shares of the company.



• Dilution

Liquidity Events

• acquisition – most likely outcome
• IPO – high risk in today’s legal environment

Debt Financing

• Fixed assets – hardware/software
• security deposits
• working capital – only after company is profitable

Mitch Kapor

“It doesn’t matter where you start, it’s that you started.”

• People Culture
  • More inviting work places. People feel there contributions are respected and will make a change.
  • Not always true – startups have more inappropriate conduct.

Common Dynamics

• Valuing face-time more than productivity.
• People have trouble getting information to do their job.
• Reliance on rumor mill as best source of information.

Meritocracy

• Talent vs. “People like us”
• Research shows diverse teams are more innovative.

What can you do?

• Take culture seriously. Every action/inaction sends a message.
• Walk the walk yourself. Do as you say and set an example.
• Hold people accountable for their actions. If you don’t, it may harm company morale.

Entrepreneurs and Investors

• Experienced investor knows more than young entrepreneur.

Alignments of Interests

• Investors can be great partners.
• Interests can and do diverge.
• Issues
  • Who is CEO?
  • Unanticipated events? - Investors may decide their interests differ from yours.
  • Stay private, sell, merge or go public?

Trust matters a lot with the person you’re taking money from.

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