Entrepreneurship 101 – May 23, Entrepreneurship 101 – May 23, 20162016

R. Paul Singh –

CEO, Startup Strategies (Helping Startups in the Art of Start and Scaling)

Entrepreneur & Educator (Have founded 5 companies with one going public and other three acquired)

rpaulsingh

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8 Steps To A Startup Journey8 Steps To A Startup Journey

Readiness and IdeationReadiness and Ideation

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New Revenue

Why do you want to be an Entrepreneur?

What are the components of a Startup?

Where do ideas come from?What kind of a startup are you building?

EmployeeSmall BusinessOwner

Entrepreneur

Why Do You Want To Be An Why Do You Want To Be An Entrepreneur?Entrepreneur?

How long can you go without a check?

Startup = 3xPassion +2xPerseverance Startup = 3xPassion +2xPerseverance +1xPracticality+1xPracticality

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Perseverance

Practicality

Where Do Ideas Come From?Where Do Ideas Come From?

What Kind Of A Startup Are You What Kind Of A Startup Are You Building?Building?

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New Revenue

Comparing The 3 Types Of Comparing The 3 Types Of StartupsStartups

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New Revenue

Insurance Cost-Savings New RevenueSecurity, Compliance

Cheaper &/or Faster

Create new revenue opportunities for target customers/users

Got to buy one of everything - CYA

Must fit into existing way of doing things

Rethinking existing tasks & simplifying it

Easiest to penetrate

Most difficult to penetrate

First mover advantage

Difficult to scale

Cost of sales highest

Difficult to get started but then easier to scale

Palo Alto Networks, FireEye, Mobile Iron

Many Storage Companies

Uber, FB, Salesforce, Hadoop, Docusign

Which Company Do You Prefer?Which Company Do You Prefer?

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Of

Of

Control stays with you

Control lies with the investors

Time To Think About Founding Time To Think About Founding TeamTeam

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New Revenue

Should I go lonely and for how long?

How many founders?How about my best friends and or family?

What skills should we have in the founding team?

How do you divide equity?How does equity work in the company lifecycle?

Number of FoundersNumber of Founders

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New Revenue

It is always lonely at the top

1+1 can be 11

How many is a crowd?

Types of FoundersTypes of Founders

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New Revenue

How to Divide Equity Between How to Divide Equity Between FoundersFounders

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New Revenue

Least ConfrontationalLeast Confrontational

Both @ Similar LevelStarted at about the same timeSame level of commitment

Doesn’t need to be divided equallyDoesn’t need to be divided equally

One was working for over a yearOne is way more seniorOne can increase value significantly

3Ws of Product Value 3Ws of Product Value PropositionProposition

Link to Videos on various topics:http://www.indtvusa.com/video-on-demand/vod-tie/tie-institute-r-paul-singh/

Know Thy CustomerKnow Thy Customer

Segmenting & Finding your Segmenting & Finding your CustomersCustomers

Market Sizing – Top Down but with Market Sizing – Top Down but with SegmentationSegmentation

Source: http://lsvp.com/2011/03/16/how-to-estimate-market-size/

Why you - Where to Why you - Where to Start?Start?

Where is your Elephant?Where is your Elephant?

BA

C

One More thing – from DilbertOne More thing – from Dilbert

Some Examples – Zoom.UsSome Examples – Zoom.Us

Some Examples – Dropbox.ComSome Examples – Dropbox.Com

Some Examples – Box.ComSome Examples – Box.Com

Validation ProcessValidation Process

Validating the ideaFirst Step in ValidationGet out of the officeTime for MVPDefinitionProcessHow to decide features

Now that you have an Now that you have an ideaidea Let us Validate Let us Validate

Time to do some serious web surfingHow do customers solve this problem today?What kind of competitors exist? Do you know their product inside out?Some products lend well to placing some ads and creating landing pages to see the response

Some products can even be sold before they are ever built.

Check https://www.entrepreneur.com/article/233408

First Step in Validation is First Step in Validation is EasyEasy

Time To Get Out Of The Time To Get Out Of The Office To ValidateOffice To Validate

Time To Get Out Of The Time To Get Out Of The Office To ValidateOffice To Validate

Find your targeted customersDo they perceive the problem to be as big as you thought?

Are they willing to pay and how much?

If not priced really low, would they have the budget

Time to now validate with an MVP

What is an MVP?What is an MVP?

“The minimum viable product (MVP) is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort”

Eric Ries Lean Startup Methodology

What is not an MVP?What is not an MVP?

MVP Is Really a ProcessMVP Is Really a Process

Credit to Andrew Floyd over at http://blog.b60apps.co.uk/selecting-the-right-features-for-a-minimum-viable-product-mvp

How To Decide Features Of MVPHow To Decide Features Of MVP

Taken from Primož Škerget Medium Article

Getting Your First Getting Your First CustomersCustomers

Understanding Sales CycleFinding SuspectsGetting ready for first customer meeting

How to qualify suspectsFrom customers to referenceshttp://

For more details watch videos onwww.indtvusa.com/video-on-demand/vod-tie/tie-institute-r-paul-singh/

Understand Sales ProcessUnderstand Sales Process

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Suspects

Prospects

Customers

References

Qualification Wall

Follow-up Wall

Love Wall

Finding Suspects Finding Suspects

HOTWell Known

Your Address BookYour Customer’s Social NetworksGet Out Of The Office ◦Trade Shows, Conferences, Meetups

In-bound Marketing

How to get the first meeting – It is How to get the first meeting – It is all in the Messageall in the Message

Great Subject makes Suspects open messages◦Save xy% with our◦Special offer◦How would you like to….◦Would like your feedback on….

Focused Body will get a better response◦Short focused content focusing on one thing at a time

◦Put yourself in customer shoes◦Be very clear on the action you want – seek a meeting

Getting ready for your first Getting ready for your first customer meetingcustomer meeting

Online presentations are harder – Why?Make Suspects feel important – Add their logo, ask about their problem, how they do it todayHave as little content on each slide as possible◦Don’t use power point as teleprompter◦Too much content causes distraction◦Don’t try to make every point in first meeting

Slides are the least important part of presentation

Is this Suspect Qualified?Is this Suspect Qualified?

From Prospects to Customers From Prospects to Customers Tact, Time, Follow up, SupportTact, Time, Follow up, Support

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Suspects

Prospects

Customers

References

Qualification Wall

Follow-up Wall

Love Wall

Crossing Follow-up WallCrossing Follow-up Wall

How many & who are involved?

From Customers to ReferencesFrom Customers to References

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Suspects

Prospects

Customers

References

Qualification Wall

Follow-up Wall

Love Wall

Crossing Love WallCrossing Love Wall

Love should be built into the productRed carpet welcome, on-time supportCan you buy love?Now that you got love – what to do with it?

One More thing – from DilbertOne More thing – from Dilbert

FundingFunding

Are you ready to give up control but grow with or without you?

How much money to raise and when?Crowd fundingSeed RoundFirst Round or Series ADilution is something you must add to your vocabulary

Founder’s, Investors and Company may not always have the same interest

Funding – Understand Funding – Understand Alternatives and RequirementsAlternatives and Requirements

Are you ready to give up control but grow with or without you?

How much money to raise and when?Crowd fundingSeed RoundFirst Round or Series ADilution is something you must add to your vocabulary

Founder’s, Investors and Company may not always have the same interest

Seed FundingSeed Funding

• Usually <$1.5M• Convertible Vs Priced• Friends & Family• Professionals who do Seed - Angels• Super Angels or Small Funds• Presentation needs vary• What will you be able to show@the end of Seed Funding

Crowd FundingCrowd Funding

• Kickstarter• Indiegogo• gofundme• Beware of Fees • From 4-5%+3% • Become Marketing

• Angel List• CircleUp – B2C• Fundable• Jobs Act – May 16• $1M no audit • $2M audit

Incubators Vs AcceleratorsIncubators Vs Accelerators

• Mentorship• Usually no Cash• No equity• Long time• University or CorporateSponsorship • May come with Coworkingspace

• Mentorship• Usually some cash• Some equity 3-7%• Short term classes• YCombinator• TechStars• TiE LaunchPad• Google LaunchPad

All VCs Are Not EqualAll VCs Are Not Equal

Getting Ready For Your Funding Getting Ready For Your Funding PitchPitch

Remember 3Ws – Who, What and WhyTraction is a keywordGo to market trumps manyHow much money do you need & why?Pitch Deck – 8 to 12 slidesExecutive Summary – 1 to 2 Page

Some Go to Market BasicsSome Go to Market Basics

<$500$500 To$1,000

$1,000 To$5,000

$5,000+

CAC = 3 to 6 Months of RevenueAnnual Vs Monthly

How Does Equity Work?How Does Equity Work?

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Founder 150 Shares

Founder 250 Shares Just the Founders

Founder 150 Shares

Founder 250 Shares

Adding EmployeeOption Pool @20%

Option25 Sh

Convertible Debt Raised from Angels @ 25% Discount

How Does Equity Work?How Does Equity Work?Series A Raised $5M at $5M Pre-MoneySeries A Raised $5M at $5M Pre-Money

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F150

Did Founders lose or gain?

F1 owns 20% of the company & $2M worth of equity

CommonStock

PreferredStockVs

F250

O25

Investors Shares125

How Does Equity Work?How Does Equity Work?Series B Raised $25M at $100M Pre-Series B Raised $25M at $100M Pre-

MoneyMoney

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F150

Did Founders lose or gain?

F1 owns 16% of the company & $26M worth of equity

SeriesA

SeriesBVs

F250

O25

Investors Series A125

What Is Needed At This Stage?What Is Needed At This Stage?

Some Thoughts on GrowthSome Thoughts on Growth

Focus on getting your sales process rightBuild a team as passionate as youSet a company culture with core set of valuesGet an experienced operations executive if you don’t have such a person in the teamNot enough time to go into details

Understand Exit ScenariosUnderstand Exit Scenarios

Most companies get acquired◦Some for technology and people◦Some for early sales and new markets/customers

◦Some for their growthIPO was very entrepreneurs’ dreamWhat do your investors want?Don’t just get rich, make others rich too

8 Steps To A Startup Journey8 Steps To A Startup Journey

Zig Ziglar