Part 2 - Entrepreneurship - Lessons From My 20s by Ryan Allis
Short Description
This is part two of “Lessons from My 20s” a 1200+ slide presentation I created for my 30th birthday on every...
Description
Lessons from my 20s
Part II:
entrepreneurship
ABOUT THIS PRESENTATION
THIS presentation can be found Online at www.hive.org/20s
PART 2 TOPICS PART 2 “ENTREPRENEURSHIP” INCLUDES SECTIONS ON
Entrepreneurship The big opportunities Leadership Business Planning PRODUCT DEVELOPMENT Innovation
Venture Capital Marketing Building systems BUILDING A TEAM STRATEGY & EXECUTION Steps to get started
Lessons from my 20s
PART II, Section 1
Purpose-driven entrepreneurship
A definition
Entrepreneurs (n.)
Individuals who build organizations which scalably & sustainably
solve human problems
How Will you Use Your one Wild and Precious Life? Choosing Your PROBLEM
Be a purpose-driven entrepreneur
entrepreneurship Is about solving problems
And creating value
For humanity
The virtuous cycle of purpose-driven entrepreneurship
An entrepreneur can bring immense value to humanity by building a For-purpose Business that earns money that can be used to reinvest in more opportunities that
make the world better
Common traits of entrepreneurs Initiative Drive toward efficiency Bias toward action Ability to take feedback Tolerance for stress Determination Decisiveness Courage Ability to deal with failure
Perserverence Creativity Ability to learn quickly Ability to plan Ability to delay gratification Drive to achieve Ability to prioritize Ability to build a team Ability to inspire & lead
A quote
“Both a sparkplug & catalyst the entrepreneur is at once the driving force behind production and the agent who combines the other resources in what is hoped will be a profitable venture” - McConnell and Brue in Economics
Understand the system
THERE IS AN ENTIRELY DIFFERENT WORLD OUT THERE—A WORLD OF PROSPERITY & UNLIMITED WEALTH You can enter this world IF YOU ARE AWARE IT EXISTS AND YOU WORK HARD
Understand the system
TO ENTER THIS WORLD YOU MUST UNDERSTAND HOW THE SYSTEM OF ENTREPRENEURSHIP
WORKS
Understand the system
THERE ARE THREE WAYS TO BUILD WEALTH THROUGH ENTREPRENEURSHIP THROUGH A SALARY, THROUGH DIVIDENDS, and through THE SALE OF
STOCK YOU OWN
Impacting Billions of lives
So HOW CAN YOU IMPACT THE LIVES OF OVER
ONE BILLION PEOPLE?
Impacting Billions of lives
WELL YOU NEED TO BE WORKING ON A
BIG PROBLEM!
Solving big problems
Big Problems are actually
BIG opportunities!
Solving big problems
TOO MANY PEOPLE ARE FOCUSED on TOO SMALL OF A PROBLEM!
Two key steps many aspiring entrepreneurs miss
There are two critical First steps for any entrepreneur
THE Two Steps to success in entrepreneurship
First you must find A problem that you Passionately want
to solve
THE Two Steps to success in entrepreneurship
Next devote your life to building the Team that will solve That problem better than Any other group of humans
That has come before
Step 1: Find a really big problem you are passionate about solving.
Step 2: Devote your life to building the team that best solves the problem
THE Two Steps to success in entrepreneurship
As an entrpreneur If you aren’t solving A problem worth dedicating 20 years of your life to You won’t be able to make it
Through the hard times ahead
THE Two Steps to success in entrepreneurship
A problem Worth dedicating your life to Is often called a
“wicked problem”
To find your problem, you must create your purpose
The problem you wish to solve Must deeply align with the Life Purpose you created
in part 1!
How to do it
work on solving a big Problem aligned with your
purpose
Choosing your sector
Once you find the problem You wish to solve then Find
The most effective sector To work within to solve it
Choose your angle of attack
The most common ways to solve big problems: 1. 2. 3. 4. 5. 6. 7. 8. 9.
build a purpose-driven business Join a purpose-driven business build a non-profit Join a non-profit Join a government agency Run for political office Become a scientist/researcher Invest in companies solving the problem Convene people who are solving the problem
Choosing your sector
Much of this part of the presentation is about
building a purpose-driven business
Be a purpose-driven entrepreneur
In many cases, you can Make the most scalable impact
On the world By building a For-profit business that is Socially minded
Example for-profit impact companies
Why Build a for-profit social business vs. a non-profit? Easier to raise funding to scale Ability to use stock options Ability to invest in a more experienced team Better compensation Faster Feedback cycle directly from customers Ability to subsidize lower income customers Ability to invest in R&D
Choosing your sector
Here is a map of social And economic impact by sector created by Max Marmer in a 2012 HBR article called “Transformational entrepreneurship”
A Map of societal and economic impact Economic) Impact) Exploitative Entrepreneurship
Harmful Small Businesses
High Growth Entrepreneurship
Contributory Small Businesses
Transformational Entrepreneurship
Work here in the green!
Social Entrepreneurship
Societal) Impact) Harmful Non Profits
Ineffective Non Profits
Transformational Non Profits
Look into b Corps
Invest in companies solving big problems
Another angle is to work At investment funds That invest in companies that are Solving big human problems
Venture funds investing in solving big problems
Impact investing leaders
Determining Your PATH IN YOUR Twenties Explore widely to find what makes you come alive Create your life purpose statement
Determine the big problem you want to solve
Decide on sector you want to work in to solve the problem
Government Elected
Appointed
Non-Profit Join Existing
Start New
Business Join Existing
Start New
Don’t a be a cog
Becoming a highly specialized cog in a meaningless machine
Is no way to live a life
What most people do
What most people do is focus on a specific Type of job & specialize on a profession
Don’t do that
What most people do
Don’t specialize on a niche profession Specialize on a
problem
WHAT YOU SHOULD DO
Instead of specializing on a specific job role Specialize on a specific human problem that you are
Dedicated to solving
Live an unleashed life
When you’re spending your years focusing on A really big human problem you end up living a
LIFE of purpose
Live an unleashed life
And when you’re naturally excited by the Work that you do you end up attracting more
Positive and capable people
Live an unleashed life
THIS process creates a self-reinforcing virtuous Cycle leading to greater fulfillment, meaning,
And happiness
Find your mission
FIND A MISSION THAT YOU ARE DEEPLY PASSIONATE ABOUT AND BUILD A BUSINESS TO PURSUE THE heck OUT OF IT
Your motivation
SPEND TIME THINKING AND MEDITATING ON YOUR RAISON D’ETRE AND FIGURE OUT WHAT CONSTITUTES THE CORE MOTIVATIONS FOR WHAT YOU DO AND
What you stand for
Entrepreneurship
BEING AN ENTREPRENEUR IS NOT FOR EVERYBODY. BUT IF YOU FIND IT’S FOR YOU AND YOU CAN FIND A WAY TO SUCCEED, it can be
EXTREMELY REWARDING.
Entrepreneurship
BECOMing A SUCCESSFUL ENTREPRENEUR IS NOT EASY YOU MUST HAVE PERSISTENCE DEDICATED, TENACITY & THE ABILITY
TO DEAL WITH ADVERSITY
What it takes
Entrepreneurship is doing Something others won’t for
10 years so you can do what Others can’t for the Rest of your life
The big opportunities
Next we’ll look at some of the biggest opportunities
In the world right now To build a business That makes a huge impact
A quote
“Entrepreneurship is about passion following a dream and changing the world with plenty of craziness along
the way.” - Jeffrey Bussgang, Flybridge
Lessons from my 20s
PART II, Section 2
The big opportunities
A quote
“I don’t skate to where the puck is. I skate to where the puck is going.” - Wayne Gretzky
An innovation Timeline
To put everything Into perspective here is A timeline of innnovation
An innovation timeline
Farming (15,000 Yrs Ago)
Trade (20,000 Years Ago)
Ships (6000 Years Ago)
Cities Form (6000 Years Ago)
Money (5,000 Yrs Ago)
The Wheel (5,500 Yrs Ago)
Abacus (5,000 Yrs Ago)
Iron (5,000 Yrs Ago)
The Alphabet (3800 Yrs Ago)
Written Language (4900 Yrs Ago)
Steel (2400 Yrs Ago)
The Legal System (3,800 Yrs Ago)
Water Power (2200 Yrs Ago)
Key innovations From 0 to 1800
Gunpowder 850
Paper 105
Movable Type 1040
Compass 950
Microscope 1590
Printing Press 1450
Telescope 1608
Electricity 1600
Binary Numbers 1697
Steam Power 1690
Engine 1712
Smallpox Vaccine 1796
19th century innovation timeline
Battery 1800
Light Bulb 1800
Internal Combustion Engine 1823
Telegraph 1809
Anesthesia 1846
Electromagnet 1825
Telephone 1860
Petroleum 1859
Electrical Grid 1880
Periodic Table 1869
Automobile 1885
Vacuum Tube 1883
Semiconductors 1896
Radio 1897
20th century innovation timeline
Airplane 1903
Quantum Physics 1900
Television 1926
Penicillin 1928
Transistor 1947
DNA 1953
Satellites 1957
Organ Transplants 1964
Manned Space Flight 1961
Nanotechnology 1959
Microprocessor 1971
The Internet 1969
Genetic Engineering 1973
Cell phones 1973
World Wide Web 1991
1978 GPS
Carbon Nanotubes 1991
21st century innovation timeline
Lab Grown Organ Transplants 2000
Smartphone 2007
Human Genome Map 2001
Quantum Computer 2012
?
?
?
?
?
It’s now your opportunity to create the future
?
The Biggest opportunites for millennials
Here are the fields needing Great entrepreneurs between
2015-2050
The Biggest opportunites for millennials Energy & Environment
Health & Wellness
Financial Access
Food & Water Engineering Education
Computing
Energy & Environment
Solar Energy
Wind Energy
Biofuels
Sustainable City Planning
Food & Water
Synthetic Food Production
Vertical Farming
AgTech
Water Desalination
Education
Cloud Education
Low Cost Schooling
Leadership Training
Network Building
Health & Wellness
Synthetic Biology
Brain Mapping
Optogenetics
Personalized Medicine
Reverse Aging
Bionic Eyesight
Low Cost Sanitation
Mindfulness Training
Engineering
Clean Transportation
Self-Driving Cars
Robotics
Space Exploration
3D Printing
Nanotechnology
Long Life Batteries
Low Cost Housing
Financial Access
Mobile Banking
Frontier Market Finance
Digital Currency
Digital Wallets
Computing
Quantum Computing
Converged Smartphones
Data Storage on DNA
Artificial Intelligence
Contact Lens Smartphones
Natural User Interfaces
Government 2.0
Cybersecurity
Climate Engineering
Wearable Computers & HUDs
The Internet of Things / Cloud Devices
Mobile Software
The Biggest Opportunities of Our Generation Energy & Environment Solar Energy Advanced Batteries Biofuels Climate Engineering Sustainable City Planning
Food & Water
Synthetic Food Production Agricultural Technology Vertical Farming Water Desalination
Education
Cloud Education Low Cost Schooling Leadership Training Network Building
Health & Wellness Synthetic Biology Brain Mapping Optogenetics Reverse Aging Personalized Medicine Bionic Eyesight Low Cost Sanitation Mindfulness Training
Engineering
Clean Transportation Self-driving Cars Robotics Space Exploration 3D Printing Nanotechnology Long Life Batteries Low Cost Housing
Financial Access Mobile Banking Frontier Market Finance Payment Processing Digital Currency Digital Wallets
Computing Quantum Computing Converged Smartphones Data Storage on DNA Artificial Intelligence Contact Lens Smartphones Natural User Interfaces Government 2.0 Cybersecurity Wearable Computers Implantable Computers The Internet of Things Mobile Software
The Mobile Cloud
Beautiful & Easy Mobile Cloud Services are
REVOLUTIONIZING EVERYTHING
The Reimagination of nearly everything Books$ Cameras$ Cars$ Channel!Changing$ Check!Out$ CiPzen!AcPon$ CommunicaPon$ Contact!Management$ Doctors!Appointments$ Event!Planning$ Fashion$ Food!Delivery$ Fitness$ Funding$ Global!Outsourcing$ GPS$ Groceries$ InformaPon!Storage$ Job!Searching$ Knowledge$ Lending$ Locks$
1994$
Printed! Film!&!Development! Self:owned! Remotes! Cash!Register! Faxes,!Calls! Postal!Mail,!Fax,!Landlines! Rolodexes! Phone!Call! Mail!&!Telephone! Expensive!BouPques! Phone!Call! Gym! Friends!&!Funding! Plane!travel! Not!available!to!consumers! Local!store! Storage!Cabinets! Fairs!&!Resumes! Encyclopedia!Britannica! Banks! Deadbolts!
2014$
Kindle,!iPad,!Nook! Device:Integrated,!Synced!to!Cloud! GetAround,!Zipcar,!LyF,!Uber! Hand!Gestures! Square!+!Tablet! Change.org! Smartphones,!Email,!SMS,!Facebook,!TwiVer,!WhatsApp,!SnapChat! Connect,!Google!Contacts! ZocDoc,!One!Medical! EventBrite,!Facebook!Events,!YPlan! RentTheRunway,!Gilt! GrubHub,!Munchery,!Sprig,!Spoonrocket! Nike!FuelBand,!FitBit,!Jawbone!Up,!Basis! Kickstarter,!Fundable,!Indiegogo! Crowdflower,!Exec,!ODesk,!Elance,!Guru,!SmarterWork,!Freelancer! GPS!on!your!smartphone! Amazon!Fresh,!Instacart! DropBox,!Box,!Google!Drive,!SkyDrive! LinkedIn,!Hired! Wikipedia,!KhanAcademy,!CodeAcademy,!Udemy,!Coursera,!iTunes!U!! LendingClub,!Prosper,!Kabbage,!LendUp! Lockitron!
The Reimagination of nearly everything 1994$
2014$
Direct!mail,!phone!book,!billboards! Blockbuster! CasseVes!&!CDs! Television,!Radio,!&!Newspaper! Notepads! Landlines! Photo!Albums! Phone!Book! In:house! Word!of!Mouth! Hand:created! Mall! Pens!&!Fax! Bar,!Alumni!Reunion! Post:its! Classifieds! Cable!&!Bunny!Ear!Antennas! Buy!them!at!a!bookstore! Analog! Radio! Leather! Swatch!&!Rolex!
Paid!search,!social!ads,!mobile!ads! Ne[lix,!Amazon,!iTunes,!YouTube,!Hulu! SpoPfy,!Rdio! TwiVer,!Flipboard,!PrismaPc! Evernote,!Google!Docs! Smartphones! Facebook,!Flickr,!500px! HandyBook,!Angie’s!List! Quirky! Yelp! Pinterest! Amazon,!eBay! Docusign,!EchoSign! Facebook,!Instagram,!Google+,!LinkedIn! Trello,!Asana! TaskRabbit,!Zaarly,!Zirtual! HuluPlus,!Ne[lix,!Apple!TV,!iTunes,!Amazon!Fire!TV! Chegg,!Amazon!Textbook!Rental! Nest! Waze,!Google!Maps! Google!Wallet! Pebble,!Basis!!
Maps$ Printed! MarkePng$ Movies$ Music$ News$ Note!Taking$ Phones$ Picture!Storage$ Plumber$ Product!Design$ Reviews$ Scrapbooks$ Shopping$ Signatures$ Social!Network$ Task!Management$ Tasks$ Television$ Textbooks$ Thermostats$ Traffic:InformaPon$ Wallets$ Watches$
Google!Maps,!Bing!Maps!
The Reimagination No longer do we need A car, A music collection, A video collection
Everything is now available on-demand For an asset-light lifestyle
The Reimagination
SOON EVERY GOVernment service will be delivered
VIA THE MOBILE CLOUD
The Reimagination
You can monitor your Heart rate and sleep via your
Android WATCH
The Reimagination
You can now check your Blood sugar via smart
Contact lenses
The Reimagination
Every device will be connected As the internet of things
explodes
Lessons from my 20s
PART II, Section 3
Authentic leadership
Leadership
A leader is a person who is committed to something
bigger than themselves
Leadership
An authentic leader is Someone who has aligned Their personal purpose with
their professional purpose
Leadership
Sadly, way too many people Have never taken the time To create their
Personal purpose
Leadership
Even those who do have Personal purpose, so rarely Make it their full time
Professional pursuit
BE a rare duckling
Be the RARE DUCKLING And actually make your Purpose your full time
Professional pursuit!
BE a rare duckling
It may be harder in the Short run, but in the long run You’ll be more passionate
And create more impact (And if you do it right, earn much higher financial compensation too)
The Authentic Leader! personal purpose!
=!
professional purpose!
The Inauthentic Leader personal purpose!
≠!
professional purpose!
INspiration
How can you possibly expect To inspire A team to greatness If you yourself aren’t working On your purpose with your Full time efforts
The obvious
You think your team won’t be Able to tell whether you’re a Passionless corporate shrill Or lit up on fire
WITH ENERGY??
When your personal purpose is what you work on daily, work becomes greatly enjoyable—no matter the challenge.!
The je ne sais quoi of leadership
The way great leaders get that “Je ne sais quoi” quality about them Is from their deep commitment To creating something that makes the
World better
The je nais se quoi
Imagine the insatiable energy And Charisma you will have When you’re actually working On what you’re passionate about
With your full time effort
Fear?
So what are you afraid of?
Failure?
Fear?
what you should really fear isn’t FAILUre What you should really fear is the Regret you’ll feel when you’re 80 having
never given it a try
Leadership
An authentic leader Hires missionaries
Not mercenaries
Leadership
You can’t be a leader until you know
why you’re leading
Authentic Leaders Know Why & Where They Are Leading
Authentic leaders are vulnerable and open with their team and share their struggles!
Authentic leaders inspire a team to move mountains to achieve the mission.!
Authentic leaders paint a clear vision and communicate it succintly, visually, and repeatedly.
!
Leadership
NEARLY SUPER-HUMAN feats Are possible when a team is DEEPLY passionate about
their MISSION
Advice on authentic leadership
Here are Six thoughts on becoming An unleashed high-integrity
leader
Find a mission that you are deeply passionate about and build a business to make the world you envision real
If you want to have the persistence to build a great business work on solving a problem that you are passionate about that aligns with your life purpose
Don’t begin the effort of building a company if you’re not deeply passionate about the problem you are trying to solve
Too many startups try to solve problems they’re not actually passionate about solving
Building a company is hard. If you’re deeply passionate about solving the problem you’ll get through the years of sacrifice.
Once you’ve determined the change you seek build a company that sustainably creates that change at scale.
Lessons from my 20s
PART II, Section 4
Business planning
Business planning
SOME ENTREPRENEURS choose not to create a plan at all And just start working
On a prototype or Minimum viable product
Business planning
I find that it’s helpful to at least create a short slide deck or exec summary To ensure you know what you’re building & What problem you’re Solving before you start building
What’s in your deck?
1. PROBLEM you’re solving 2. PRODUCT & TECHNOLOGY 3. your recent traction 4. MARKET & COMPETITION 5. TEAM 6. revenue model 7. FINANCIAL PROJECTIONS
In the first two slides…
CLEARLY ILLUSTRATE THE PROBLEM YOU ARE SOLVING HOW YOU ARE SOLVING IT
AND FOR WHOM
Product section
SHOW PICTURES OF A PROTOTYPE OR WIREFRAMES & MOCKUPS MAKE YOUR SPECIFIC SOLUTION
EASILY VISUALIZED
Product section
SHARE YOUR PRODUCTION TIMELINE AND KEY MILESTONES TOWARD INITIAL PRODUCT DELIVERY AND DISCUSS FUTURE PRODUCTS AND SERVICES
Financials section
ADDRESS THE FOLLOWING IN YOUR FINANCIAL PROJECTIONS REVENUE ASSUMPTIONS COST ASSUMPTIONS Revenue by Month COST BY MONTH BY CATEGORY NET INCOME BY MONTH BY CATEGORY TIME TO BREAKEVEN FUNDS NEEDED TO REACH NEXT MILESTONE TOTAL EXPECTED FUNDS NEEDED
Example 60 month financial projections $1,500,000 $1,000,000 $500,000 $0 ($500,000) ($1,000,000) ($1,500,000) ($2,000,000) ($2,500,000)
0!
6!
12! Revenue
18!
24!
30!
Expenses
36!
42!
Net Income
48!
54!
60!
Financials section Here’s a REALLY BASIC Example annual financial PROJECTION Revenue! Expenses! Net Profit!
2015! 18,127! 103,408! -85,281!
2016! 50,984! 118,539! -67,555!
2017! 143,401! 139,017! 4,384!
2018! 403,340! 287,553! 115,787!
2019! 1,134,461! 640,004! 494,457!
your financial projections Should list out expenses by major categories (Labor, Marketing, Servers, OFFICE SPACE, etc.)
Answer these questions in your deck ! ! ! ! ! ! ! ! !
What problem are you solving? Why are you passionate about solving that problem? Who’s on your team? What is their background? WHAT IS THE NEED FOR THE PRODUCT? What is your revenue model / cost per unit? WHAT IS THE SIZE OF THE MARKET? WHAT WILL IT COST TO PRODUCE THE PRODUCT? WHO IS YOUR TARGET CUSTOMER?
Questions you may wish to answer in your deck
! WILL YOU NEED TO ACQUIRE ANY IP? ! WHAT ROLES WILL YOU FILL IN THE FUTURE? ! WHAT ARE YOUR FUTURE PRODUCTS features? ! HOW MUCH IS NEEDED TO REACH BREAKEVEN? ! WHAT ARE YOUR ANNUAL Revenue PROJECTIONS? ! WHAT ARE YOUR ANNUAL COST PROJECTIONS? ! WHAT ARE YOUR ANNUAL PROFIT PROJECTIONS?
INcorporating
Before you start operating it’s important to
INCORPORATE
INcorporating
THE BENEFITS OF INCORPORATING MUCH LOWER TAXES LIABILITY PROTECTION BEING TAKEN SERIOUSLY ABILITY TO OPEN A BANK ACCOUNT ABILITY TO HIRE EMPLOYEES ABILITY TO RAISE INVESTMENT
INcorporating
TO INCORPORATE YOURSELF YOU JUST NEED TO KNOW THE NAME OF THE COMPANy THE STATE YOU WISH TO INCORPORATE IN
THE NUMBER OF SHARES TO CREATE THE INITIAL OWNERSHIP OF THOSE SHARES
INcorporating
IN THE U.S. you can start a S Corp C Corp LLC BENEFIT CORP
Most firms that plan on raising capital are Delaware C Corporations
INcorporating
IN CHOOSING A LAW FIRM LOOK AT REPUTATION & REFERENCES START-up EXPERIENCE INTRODUCTION TO INVESTORS IPO EXPERIENCE PARTNER CHEMISTRY
INcorporating
ONCE INCORPORATED YOU’ll RECEIVE YOUR ARTICLES OF INCORPORATION SET OF BYLAWS SET OF STOCK CERTIFICATES
INcorporating
THEN YOU CAN GET AN EMPLOYER IDENTIFICATION NUMBER FROM THE IRS (YIPEE!) AND OPEN A BANK ACCOUNT
Early equity is based on
1. How far along firm is when you join 2. Your position in the company 3. Amount of capital you invest 4. What you negotiate
Equity Rules of THumb Time
Pre-founding
Year 1
Time of Joining
Pre-Seed
Post Seed
CEO
55%
40%
20%
15%
10%
8%
COO
15%
15%
10%
5%
3%
2.50%
CFO
12%
10%
7%
4%
2.50%
1.50%
CTO
12%
10%
7%
4%
2.50%
1.50%
SVP Level
N/A
7.50%
5%
3%
2%
1%
VP Level
N/A
4%
3%
2%
1%
0.50%
Manager
N/A
1.50%
1%
0.50%
0.25%
0.10%
Sr. Engineer
5%
1.50%
1%
0.50%
0.25%
0.10%
Engineer
3%
0.75%
0.50%
0.25%
0.10%
0.05%
Staff Member
1%
0.30%
0.20%
0.10%
0.05%
0.03%
Investors
0%
10%
30%
30%
45%
45%
Year 2
Year 3
Year 4
Post Series A
Year 5+
Post Series-B
AS TIME CONTINUES, RISK REDUCES, CAPITAL IS RAISED & VALUE IS CREATED THUS LESS EQUITY iS PROVIDED THE LATER YOU JOIN
Lessons from my 20s
PART II, Section 5
Product Development
The core human desires
Great products fulfill one or more Of the 10 core human desires 1. Safety / security
6. Impressing others
2. Health / survival
7. Communicating / connecting
3. Earning money
8. New experiences
4. Finding a partner
9. Finding meaning
5. Learning
10. Comfort & relaxation
The 7 characteristics of a great product 1. 2. 3. 4. 5. 6. 7.
Fulfill 1+ core human desire Easy to use Beautiful design Highly effective at stated purpose 4x or more markup over costs Recurring purchase/supply needed An easy to remember name
The characteristics of a great product
GREAT PRODUCTs BRING JOY to people and
Smiles TO FACES
The characteristics of a great product
GREAT PRODUCTs ARE SIMPLE ON THE OUTSIDE
AND POWERFUL ON THE
INSIDE
What is product management?
PRODUCT MANAGEMENT IS THE PROCESS OF DEFINING And prioritizing WHAT You’RE BUILDING
What is product management?
Good product management Is driven by a vision Of the way the world
Should be
What is product management?
Good product management Takes into account lots of Metrics and feedback But ultimately should be
Vision-driven
The right type of Product manager
YOUR GOAL IS TO BE HERE ON THE SPECTRUM OF PRODUCT MANAGERS “The green zone” Design by Committee hell
Open to feedback and data but driven by a strong vision of the way the world should be.
Maniacal dictator design
What is product management?
YOU WANT TO BE SLIGHTLY RIGHT OF CENTER WITH PM
It is better to have a strong vision And be slightly maniacal Then be unsure about the change You wish to create in the world
What is product management?
GREAT PRODUCT managers ARE ABSOLUTELY PASSIONATE ABOUT THE CHANGE THEY WISH TO MANIFEST IN THE WORLD
Lessons from my 20s
PART II, Section 6
INNOVATION
What is Innovation?
Innovation (n.)
THE PROCESS OF CREATING SOMETHING NEW THAT MAKES LIFE BETTER
Innovation
INNOVATION IS IMPOSSIBLE WITHOUT PASSION
Innovation
Most companies aren’t Innovative because they Lack passion
Innovation
INNOVATORS SEE THE WORLD AS IT SHOULD BE
Innovation
INNOVATORS BECOME OBSESSED WITH MAKING THE WORLD BETTER
Innovation
INNOVATORS FOCUS INCESSANTLY ON BRINGING VALUE TO MARKET
Solving big problems
SOME PEOPLE BELIEVE THE GOVERNMENT SHOULD PLAY NO
ROLE IN INNOVATION
Solving big problems
THE REALITY IS THAT MANY OF THE BIGGEST INNOVATIONS OF THE past 100 years have COME OUT OF GOVERNMENT PROGRAMS
Solving big problems
EXAMPLES INCLUDE • THE INTERNET • GPS • CT SCANS
Solving big problems
AND ALMOST EVERY DRUG AND MEDICAL ADVANCE IN THE U.S. COMES OUT OF AN NIh FUNDED PROJECT
Solving big problems
Government funding For basic research often comes 10-30 years before
Commercialization is possible
Top MILLENNIAL Innovators At 15 he used carbon nanotube sensors to create a test for pancreatic cancer and won the Intel International Science and Engineering Fair Jack Andraka
Top MILLENNIAL Innovators At 23, she is the CEO of uBeam which is about to launch a device that
beams electricity through the air to charge portable electronics wirelessly Meredith Perry
Top MILLENNIAL Innovators At the age of 18 created a device that could charge a mobile phone in 30 seconds. Won the 2013 Intel Foundation Young Scientist Award. Now a Harvard student. Eesha Khare
Top MILLENNIAL Innovators By 35 he created a public company worth $3B that is bringing internet access to the developing world through wimax wifi networks
Robert Pera
Innovation
HErE ARE FIVE KEYS TO
INNOVATION
Innovation
1
Clearly DEFINE THE PROBLEM you’re trying
To solve
Innovation
2
THROW OUT AS MANY CONSTRAINTS TO YOUR THINKING AS POSSIBLE
Innovation 3
ENSURE THOSE WORKING TO SOLVE THE PROBLEM ARE DEEPLY PASSIONATE ABOUT
SOLVING THE PROBLEM
Innovation 4
BRAINSTORM IN
SMALL GROUPS
Of 3-6 individuals with Diverse perspectives
DESIGN THINKING
Design thinking is one of the Best processes for
innovation
The five step design thinking process
Empathize
Ideate Define
Prototype Test
Key Materials needed for design thinking exericses
1. 2. 3. 4. 5.
Post-its of different sizes/colors Lots + Lots of whiteboard space Whiteboard markers Pens timer
Step 1: Empathize
Great products start with empathy for the customer And deep problem understanding
Step 1: Empathize
The best way to have empathy for your customer is to solve a problem
you personally have
Step 1: Empathize
If it’s not a problem you personally have spend lots of time in the homes and offices
of your customers or users
Step 2: DEFINE
Define the problem very clearly.
“The problem the customer is facing that we are solving is _______________________________. !
Step 2: DEFINE
Define the human impact of solving the problem
“If we solve this problem, what specific differences will it make in the lives of our customers/users: ____________________________. !
Step 3: IDEATE
Ensure those working with you to solve the problem are deeply passionate about
solving the problem!
Step 3: IDEATE
Brainstorm with a group of 3-6 people with
Diverse BACKGROUNDS & skillsets
Step 3: IDEATE
Initially, throw out all Constraints to your thinking
Enter a No Judgment zone
Step 3: IDEATE
Brainstorm individually on post-its in 5-10 minute timed sessions
before sharing
Step 3: IDEATE
Begin by Brainstorm individually on post-its in 5-10 minute timed sessions
before sharing
Step 3: IDEATE
Capture all ideas visually on post-it notes stuck on whiteboards So they are
easily movable
Step 3: IDEATE
Never criticize an idea in the Ideation phase The crazy stuff can lead to
breakthroughs
Step 3: IDEATE
After PUTTING UP ALL THE ideas on the wall refine down to the best by giving each person a few votes
using small post-its
Step 4: Prototype
Quickly prototype 1-3 possible Working solutions to the problem
Paper sketches or wireframes are often sufficient here If it’s a physical product, use a workshop to create a basic version
Step 4: Prototype
Simpler prototypes are OFTEN BEST FOR ALLOWING
RAPID learning and iteration
Step 5: TEST
Now test the prototypes with Actual potential customers See what they think Then make it better
Step 5: TEST
Keep iterating designs & Improving Until you can convince customers To pay for what you’ve built
THE LEAN STARTUP PROCESS
THE LEAN STARTUP PROCESS IS ANOTHER INNOVATION PROCESS
Designed to lead to QUICK LEARNINGS & RESULTS
THE LEAN STARTUP PROCESS
The benefits of the leAn startup method
1. Fast testing + learning 2. Low cost 3. Fail fast and pivot quickly
THE downsides of the LEAN STARTUP PROCESS 1. Often doesn’t allocate enough time to the brainstorming process (go straight from idea to build) 2. Can focus too much on finding “anything that customers will pay for” rather than solving a problem that matters in the world
Lessons from my 20s
PART II, Section 7
VENTURE CAPITAL
Venture Capital
IF POSSIBLE TRY TO GET AS FAR AS YOU CAN WITHOUT RAISING OUTSIDE CAPITAL
Venture Capital
IN THE BEGINNING DO WHATEVER IT TAKES
TO KEEP COSTS LOW
Venture Capital
In a b2b business Focus on getting Revenue from customers
Venture Capital
You’ll have a higher Chance of success if you Get paying customers before raising outside $$ (or at least 10,000+ users)
Venture Capital
The biggest mistake Entrepreneurs make Is raising too much Before they are ready
Venture Capital
AT ICONTACT WE BOOTSTRAPPED
FOR THE FIRST 3 years
Venture Capital
AT CONNECT WE BOOTSTRAPPED
FOR THE FIRST 2 years
What is bootstrapping
Bootstrapping means Operating without
Raising Outside capital
What is bootstrapping
Most companies should Bootstrap for 12-36 mos before they are ready For outside capital
What is bootstrapping
If you don’t have a product Yet, you definitely should Not be raising VENTURE capital (except!in!very!capital!intensive!businesses!like!drug!discovery)!
Test demand before raising money by creating an inexpensive prototype and then improve until customers love your product
Venture Capital
WHERE TO LOOK DEPENDS ON HOW MUCH YOU NEED AND HOW FAR ALONG YOU ARE
The different types of capital available by stage Sources of Funds
$100m
Yes
Yes
Yes
Growth stage VC
Yes
Yes
Yes
Mezzanine debt
Yes
Yes
Yes
Late stage VC
Yes
Yes
Private equity
Yes
Yes
Public markets
Yes
PIPES
Yes
Corporate bonds
Yes
Angel rounds
angellist Is the best place To find early stage Angel investors
The power of angellist
In june 2008 Connect raised $2.8M From investors on angellist Like jason calacanis, brad feld, And scot and cyan banister
The power of angellist
Angels often act in packs So it is useful to secure a Lead Angel investor Who will set the terms Before reaching out widely
Syndicates
Top angels have packs of Other angels who follow them And invest in what they invest in
These are called syndicates
Venture Capital
fundable Is another good place To find early stage Angel investors
entrepreneurshi p!
Convertible notes
A convertible note Is a loan that converts Into equity at your Next raise usually at a discount To the future price
Convertible notes
Most early stage seed Deals in silicon valley Are now done as Convertible notes
The Key Terms of a Convertible note
Amount invested Discount rate Valuation cap Pro rata rights Interest rate
Venture Capital
In a b2b business AVOID RAISING MORE THAN 10x your current ANNUALIZED REVENUE
Venture Capital
So if your current Annual revenue run rate Is $500k Raise up to $5M
Venture Capital
if your current Annual revenue run rate Is just $30k Focus on increasing sales Not raising capital
Venture Capital
If you raise too much Your monthly expenses Will get too far ahead Of your revenue
Venture Capital
And when monthly expenses ExceeD revenue by too much
You go bankrupt
Raising an angel round
For b2b software companies The right Time To RAISE An angel round is when You have a working product AND
At least 5 paying customers
Raising an angel round
For b2C applications The right Time To RAISE An angel round is when You have a working product AND
At least 1000 daily users
Your negotiating power is based on
LEVEL OF NEED FOR THE MONEY YOUR EXPERIENCE YOUR TEAM PRODUCT & TECHnOLOGY COMPETITION OTHER TERM SHEETS QUALITY OF YOUR ADVISORS
The most important investment terms
VALUATION OPTION POOL SIZE LIQUIDATION PREFERENCES FOUNDER REVESTING PREFERRED VETO RIGHTS TYPE OF PREFERRED STOCK BOARD SEATS
" THE HIGHEST VALUATION Isn’T ALWAYS BEST
Factors in Selecting Your INvestors
CHEMISTRY WITH THE PARTNER OPERATIONAL EXPERIENCE CURRENT PORTFOLIO ALIGNMENT PARTNER/FIRM EXIT RESULTS EXECUTIVE RECRUITING ABILITY TERMS OF INVESTMENT
TECH PRE-REVENUE VALUATION GUIDELINES
$1m to $25m PMV depending on Factors like • • • • •
CEO Past exits TEAM EXPERIENCE NUMBER OF USERS NUMBER OF ENGINEERS LOCATION OF COMPANY
X2 if you’re in silicon valley
Pre-Revenue Valuation example
b2c tech COMPANY RUN BY FIRST TIME ENTREPRENEUR with 1 engineer
Pre-Money Valuation: $1m-$3m
Pre-Revenue Valuation example
b2c tech COMPANY RUN BY FIRST TIME ENTREPRENEURS who have been through y combinator with a good idea AND 2 engineers
Pre-Money Valuation: $5M-$10M
Pre-Revenue Valuation example
INCORPORATED tech COMPANY run By experienced CEO with 10 years c-level experience, $100m prior Exit, & 5 engineers
Pre-Money Valuation: $10m-$25m
Raise a Seed round or series A? Typical Seed Round Company
Typical Series A Company
1-10
10-50
6 months-2 years
2-5 years
Traction if consumer
Working product, pre-launch up to 100,000 Daily Active Users
Over 100,000 DAUs
Traction if enterprise
$0 to $50k/monthly revenue
$50k to $500k in monthly revenue
Valuation range in Silicon Valley
$3M to $15M
$10M to $60M
Valuation range elsewhere
$1M to $7M
$5M to $30M
Employees Time since incorporation
post-Revenue Valuation GUIDELINES
AS YOU GO ABOUT FUNDRAISING YOU USUALLY WANT TO CREATE
A COMPETITIVE PROCESS
post-Revenue Valuation GUIDELINES
BUILD a series A FUNDING PROCESS TO ENSURE YOU RECEIVE
MULTIPLE TERM SHEETS
post-Revenue Valuation GUIDELINES
RAISE MONEY only from SMART PEOPLE YOU REALLY LIKE You’LL BE MARRIED to Them FOR THE NEXT
3-10 years
Best venture funds in my opinion Andressen horowitz Sequoia Kleiner perkins accel Benchmark greylock Nea Bessemer Google ventures Founders fund
post-Revenue Valuation GUIDELINES
WAIT TO RAISE your series a UNTIL You HAVE PROVEN MATHEMATICALLY THAT X DOLLARS SPENT BRINGS Y DOLLARS BACK
Ryan’s three rules of entrepreneurship
1. Create products customers love (by overinvesting in UX testing!) 2. Spend 1/3rd of your time recruiting excellent people 3. Don’t raise venture capital until you have proven customer demand
Timing of icontact fundraises Date
Capital raised
Annual revenue
Capital source
Capital type
Pre-money valuation
Post-money valuation
Jun 2003
$5k
$5k
Friend
Loan
N/A
N/A
May 2006
$500k
$1.5m
IDEA Fund
Seed stage
$16m
$16.5m
Jun 2007
$5.3m
$5.5m
Updata
Series A
$27m
$32.3m
Aug 2010
$25m
$38m
JMI Equity
Series B
$100m
$125m
Feb 2012
N/A
$49M
Vocus
Sale of Company
$170M
N/A
Lessons from my 20s
PART II, Section 8
marketing
What is a brand?
A BRAND IS SIMPLY THE AGGREGATEd SUM TOTAL OF EVERY Human BEING’S EXPERIENCE WITH YOUR COMPANY & PRODUCTs
A good brand name
1 or 2 syllables Easily spellable Easily pronounceable
marketing
GOOD MARKETING IS JUST GOOD STORYTELLING ACROSS MULTIPLE MEDIA IN A TRACKABLE AND FINANCIALLY
SCALABLE MANNER
marketing
MARKETING IS GENERATING AN INTERESTED LEAD SALES IS TURNING THE LEAD INTO A CUSTOMER And ACCOUNT MANAGEMENT IS TURNING A CUSTOMER INTO
A LIFETIME EVANGELIZER
marketing
IN TODAY’s WORLD MARKETING STARTS
WITH your PRODUCT
marketing
YOU Can’T SUCCEED MARKETING A CRAPPY
PRODUCT FOR LONG
marketing
SO IF You’re marketing A CRAPPY PRODUCT
STOP
marketing
AND PUT YOUR FUNDS INTO BUILDING A
GREAT PRODUCT
marketing
THEN WHEN YOU HAVE A GREAT PRODUCT
START STORYTELLING
The 6 keys to success with marketing 1. AMAZING WORD OF MOUTH FROM A GREAT PRODUCT 2. KNOWING THE LIFETIME VALUE OF A CUSTOMER 3. A TRACKING SYSTEM THAT CAN TELL YOU COST PER LEAD, cost per customer/user, and CONVERSION RATE PER CHANNEL 4. CONSTANT TESTING OF NEW CHANNELS, CREATIVE, AND FUNNEL PROCESSES 5. GREAT STORYTELLING
Always be testing
10% of your MONTHLY Advertising budget Should be spent on TESTING NEW CHANNELS
Know your CAC
You don’t KNOW YOUR CUSTOMER ACQUISITION COST?
ARE YOU SERIOUS?
Know your LTV
You don’t KNOW YOUR Customer LTV?
ARE YOU SERIOUS?
Know your LTV
ROUGH EXAMPLE DETERMINING WHAT YOU CAN SPEND TO ACQUIRE A NEW RECURRING CUSTomER Recurring Customer
Monthly Revenue
Average Customer Life
Lifetime Revenue
What You Can Spend to Acquire a New Customer
$50
48 Months
$2400
Up to $800
Know your LTV
ANOTHER ROUGH EXAMPLE DETERMINING WHAT YOU CAN SPEND
TO ACQUIRE A NEW CUSTomER Non-recurring Billed Customer
Average Purchase Price
Average Number of Purchases Within 3 Years
3 Year Revenue Estimate
What You Can Spend to Acquire a New Customer
$50
6
$300
Up to $100
Know your LTV
SCALE YOUR AD BUDGET SCIENTIFICALLY BY
TRACKING LEAD ACQUSITION COST & CONVERSION RATE BY ADVERTISING CHANNEL
Online Marketing channels SEO – GOOGLE, YAHOO, BING PPC - GOOGLE Adwords / BING ADCENTER SOCIAL PRESENCE – FACEBOoK, TWITTER, youTUBE SOCIAL ADS – FACEBOOK, TWITTER, Youtube ADS DISPLAY – BANNER ADVERTISING AFFILIATES – CJ & LINKSHARE Review SITES – YELP, CITYSEARCH, GOOGLE LOCAL DAILY DEALS – GROUPon & LIVINGSOCIAL EMAIL FOLLOWUP – iCOntact & MAILCHIMP
MOBILE advertising channels
Facebook CPI Ads
nativex
Twitter CPI Ads
Adcolony
TapJoy
Fyber
ChartBoost
Flurry
Vungle
APPIA
Fiksu
Admob
Offline advertising channels
TELEVISION PRINT ADVERTISING RADIO YELLOW PAGES buses
DIRECT MAIL TRADESHOWS EVENT SPONSORSHIPS BILLBOARDS CAMPUS REPS
Offline advertising channels
THE KEY IS TO TEST ALL OF THE CHANNELS AND TRACK THE ACTUAL RESULTS FROM EACH ONE
To grow your sales & Acquire more customers CALCULATE CPL & COnVERSION RATE BY CHANNEL DETERMINE WHAT YOU CAN PAY PER NEW CUSTOMER TEST NEW ADVERTISING CHANNELS SCIENTIFICALLY CREATE A PREMIUM VERSION OF YOUR PRODUCt TEST DOUBLING YOUR PRICE AND SEE WHAT HAPPENS GET MORE AFFILIATES/DISTRIBUTORS OPEN UP MORE SALES OFFICES OPEN UP MORE RETAIL LOCATIONS BUILD ADDITIONAL PRODUCTS HIRE MORE SALES PEOPLE HIRE SOMEONE TO SELL MORE TO EXISTING CUSTOMERS RAISe CAPITAL AND EXPAND YOUR ADVERTISING
Why most startups fail
1. Co-founder issues 2. Product doesn’t solve a real problem 3. Never charge for product 4. Poor sales and marketing
Icontact revenue growth $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011
Icontact customer growth 70000 60000 50000 40000 30000 20000 10000 0 2003
2004
2005
2006
2007
2008
2009
2010
2011
Connect User Growth six months after launch 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Primary icontact customer acquisition channels
1. Google AdWords 2. Facebook Ads 3. Affiliate Program 4. Banner Ads
Google adwords
Facebook Ads
Doubleclick Ad manager
Commission junction
Track your customers by channel
Set up Google Analytics so you can calculate your customer acquisition cost by marketing channel
Google Analytics
Track your iusers by channel
Set up Mobile App Tracking (MAT) so you can calculate your user acquisition cost by mobile ad network
Unit economics
It is extremely important to Understand the unit economics Of your business
Understanding Unit economics
Unit economics include the lifetime value of Each new customer to your business (LTV) As well as the customer acquisition cost (CAC)
A definition of lifetime value
Lifetime value (n) How much a customer is worth to you in revenue throughout their time as a customer with your company.
Icontact ltv example
Avg. Monthly Rev Per Customer = $50 Avg. Monthly Churn = 3.3% Avg. Customer Life = 30 Months LTV = ?
50 x 33 = $1500
How much to spend on marketing
You can spend about 1/3rd of your LTV in sales and marketing expenses to acquire a customer
If LTV = $1500 Max CAC = $500
Example of calculating cac
CAC = =
Total Sales & Marketing Expenses Total Customers Acquired in a Month $2,000,000 4000
= $500
Sales teams
When should you create a sales team? When your product or service costs over over $500/mo, or $5k total.
Lessons from my 20s
PART II, Section 9
CREATING systems
A quote “Achievement comes to someone when he is able to do great things for himself. Success comes when he empowers followers to do great things with him. Significance comes when he develops leaders to do great things for him. But legacy is created only when a person puts his organization into the position to do great things without him.” -JOHN C. MAXWELL
Systems
SYSTEMS ARE A COLLECTION OF PROCESSES THAT RUN
WITHOUT YOU
Examples of Systems
PERFORMANCE REVIEWS OFFICE FOOD DELIVERY NEW EMPLOYEE TRAINING DOWNTIME NOTIFICATION OPERATIONS REVIEWS PRODUCT FEEDBACK PURCHASE ORDERS FINANCIAL PLANNING PAYROLL CLIENT SATISFACTION VACATION REQUESTS
MARKETING TESTING RFP MANAGEMENT EXPENSE REIMBURSEMENT HARDWARE SETUP TAX DOCUMENTATION LEGAL CONTRACTS 360 FEEDBACK JOB DESCRIPTIONS EXTERNAL COMMUNICATIONS INTERNAL COMMUNCIATIONS ACCOUNTING
Systems
AFTER THE FIRST two years Your success is DETERMINED MORE BY THE PEOPLE YOU HIRE THAN BY YOU SO STOP TRYING TO DO
EVERYTHING
Systems
FOR A BASIC ACCOUNTING SYSTEM WE USE
QUICKBOOKS ONLINE
Systems
BE SURE TO TRACK YOUR BOOKS ACCURATELY
FROM THE BEGINNING
Systems
AND ALWAYS SEPARATE PERSONAL AND
BUSINESS EXPENSES
Systems
Investors don’t Invest in systems
That go home at night!
Systems
To create a great Organization You must Build a system to CULTIVATE GREATNESS In others
systems
ONCE YOU GET pAST 20 EMPLOYEES CONDUCT ANNUAL ONLINE
360° Reviews
systems
MAKE SURE YOUR INCENTIVE STRUCTURE incentivizes
THE RIGHT GOALS
Business lessons Learned
GIVE IMMEDIATE AND SPECIFIC FEEDBACK
MORE OFTEN
Lessons from my 20s
PART II, Section 10
Building a team
Building a team
Make sure you’re PASSIONATE ABOUT WHAT YOU ARE LEADING YOUR TEAM TOWARD ACCOMPLISHING. IF You’RE NOT PASSIONATE ABOUT ACHIEVING THIS GOAL
YOU ARE LEADING THE
WRONG ORGANIZATION
Building a team
SURROUND YOURSELF WITH PEOPLE SMARTER THAN YOURSELF PEOPLE WHO HAVE HIGH INTEGRITY AND PEOPLE PASSIONATE ABOUT
ACHIEVING THE SAME GOAL YOU
ARE PASSIONATE ABOUT
Building a team
ONLY HIRE SOMEONE AS A DIRECT REPORT IF HE OR SHE CAN DO THEIR JOB 2x BETTER THAN
YOU COULD
Building a team
NEVER HAVE MORE THAN
SEVEN DIRECT REPORTS SIX if you have to manage the Board of Directors as well
Building a team
MAKE SURE YOU AND YOUR TEAM ARE COMPLETELY CLEAR ON WHAT YOU ARE TRYING TO ACHIEVE, BY WHEN, the definition of success, and why WHAT you’re trying to achieve
MATTERS IN THE WORLD
Building a team
Many leaders HAVE A VISION But don’t COMMUNICATE IT
Don’t make this mistake
Building a team
PAINT A CLEAR VISION AND COMMUNICATE IT SUCCINTLY, VISUALLY, BROADlY, and REPEATEDLY. KNOW WHERE YOU ARE GOING AND THEN
LEAD PEOPLE THERE
Building a team
YOUR JOB IS TO DEFINE OBJECTIVE SUCCESS FOR EACH OF YOUR DIRECT REPORTS AND THEIR JOB IS TO DEFINE SUCCESS FOR EACH OF THEIR
DIRECT REPORTS
Building a team
INTEGRATE SUCCESS FOR THE INDIVIDUAL TOWARD HIS OR HER OWN LIFE GOALS WITH SUCCESS FOR THE PROJECT
AND THE COMPANY
Building a team
DEFINE SUCCESS QUANTITATIVELY THEN TRACK IT ON A
Real-time MONITOR
Visible to all team members
Building a team
MAKE SURE YOUR TEAM KNOWS THAT TRUE LEADERS MAKE A COMMITMENT TO ENSURING THAT THE PERSON WHO FOLLOWS THEM IS BETTER THAN THEY WERE ASK EACH TEAM MEMBER TO IDENTIFY & TRAIN THEIR Replacement before LEAVING and in exchange YOU WILL NEVER SURPRISE THEM WITH TERMINATION
Building a team
ASK YOUR TEAM TO NEVER LET SOMETHING IMPORTANT
GO UNSAID
Building a team
LISTEN & proACTIVELY SEEK OUT INFORMATION
FROM YOUR TEAM
Building a team
GOOD LEADERS SEEK OUT & ASK FOR UNPOPULAR OPINIONS FROM THEIR TEAM
Building a team
ALWAYS TAKE THE TIME TO EXPLAIN THE MENTAL MATH BEHIND
YOUR DECISIONS
Building a team
IF YOU WANT TO ACHIVE A DIFFICULT GOAL
CREATE An INCENTIVE PRIZE WITH CLEAR GUIDELINES AND PUBLICIZE IT (Why hackathons & XPRIZE work so well)
Building a team
EVERY MEMBER OF YOUR TEAM SHOULD HAVE A SIGNIFICANT PORTION OF THEIR COMPENSATION TIED TO pre-DEFINED COMPANY SUCCESS METRICS
Building a team
TREAT your PEOPLE WITH RESPECT
AT ALL TIMES
Building a team
WORK HARD & ALONGSIDE
YOUR TEAM
Building a team
DON’t be
TOO SERIOUS (Life is short. Have fun with what you’re doing)
Building a team
MAKE SURE EVERYONE KNOWS THEY CAN
TALK TO YOU
ANYTIME
Building a team
BUILD CARING RELATIONSHIPS WITH
YOUR DIRECT REPORTS
Building a team
COMMEND MORE THAN
YOU CRITICIZE
Building a team
CONsCIOUSLY BUILD AN
AMAZING CULTURE
Building a team
create an environment in which Each team Member can do the
Most Inspired work
Of their lives
A startup ceo’s role includes
VISION STRATEGY PRODUCT CREATION FINANCING MEDIA RELATIONS
CULTURE LEADERSHIP TEAM RECRUITING OPERATIONS BOARD RELATIONS
The role of the ceo
As you grow, you’ll hire experienced People for each of the major roles Like sales, marketing, recruiting, HR, engineering, design, operations, product & customer support
You can recruit via
Your c-level team SHOULD BE EXCLUSIVELY
MADE UP OF JEDIS
The role of the later stage ceo
1. 2. 3. 4. 5. 6.
Set strategy & vision Set production direction Recruit & lead senior team Oversee resource allocation Communicate to stakeholders Build a great culture
The role of the ceo
Your role as CEO is not to micromanage It’s to hire people more experienced than you in their areas and provide the
big picture
GREAT CEOS are good at
Public speaking Connecting deeply with team Sharing their passion Raising funding Understanding customer needs
My Favorite interview questions to ask
WHAT ARE YOU PASSIONATE ABOUT? TALK ABOUT SOME OF THE EXPERIENCES IN LIFE THAT HAVE BEEN VERY CHALLENGING WHAT CHANGE DO YOU WANT TO MAKE IN THE WORLD IN YOUR LIFETIME? IF YOU MET AN ALIEN, HOW WOULD YOU DESCRIBE YOURSELF? TELL ME ABOUT YOUR FAILURES TELL ME ABOUT THE GOALS YOU HAVE
You can recruit via
EXISTING EMPLOYEE REFERRALS COMPETITORS linkedin Hired/angelList YOUR INVESTORs’ CONTACTS CORPORATE RECRUITERS PRESS PICKUPS
The best team
THE BEST TEAM MEMBERS ARE OFTEN THE ONES WHO ARE CURRENTLY
EMPLOYED
Let people go who aren’t working out
IF SOMEONE ISN’T WORKING OUT LET THEM GO AND FREE THEM UP TO DO SOMETHING THEY
ARE GOOD AT
Building connection & Familiarity within your team
HERE ARE 4 retreat Exercises that are Worthwhile to do with
Your team
Team Retreat Exercises
Exercise 1: Inner and outer story
ASK each TEAM member TO share: 1. 120 seconds - ACCOMPLISHMENTS and resume (OUTER STORY) 2. 240 seconds – YOUR HIDDEN INNER STORY Deep down inside what do you worry about? What are you insecure about? WHAT HAVE YOU STRUGGLED WITH MOST IN THE LAST 2 years? What are you afraid of BEHIND THE FAÇADE? FOR A SUCCESSFUL EXERCISE, BE SURE TO TAKE THE TIME TO Create a setting of confidentiality and openness to being vulnerable
Exercise 2: the change you wish to make 1. HAVE EACH team member SPEND 5 minutes to think about and then WRITE DOWN in NO MORE THAN 10 words THE ANSWER TO: “what change do you want to make in the world WITH YOUR LIFE?” 2. Then have each person share their 1 sentence with the group 3. THEN have EACH PERSON ONE AT A TIME STAND UP AND ANSWER THE QUESTION “WHY DO YOU DO WHAT YOU DO?” For 4 minutes For a successful exercise • If the speaker finishes talking before the 4 minutes is up, ask them the question again and have them answer it again • Don’t allow any other question to be asked during the 4 minutes
Exercise 3: Pivotal moments
1. HAVE EACH PERSON WRITE DOWN 4 pivotal moments in their life 2. HAVE EACH PERSON SHARE THE 4 pivotal moments and how they handled them and dealt with them with the group FOR A SUCCESSFUL EXERCISE • CREATE AN ENVIRONMENT OF CARE AND CONFIDENTIALITY
Exercise 4: Crucible moments
1. PAIR OFF INTO TWOs IN A QUIET LOCATION 2. HAVE ONE PERSON TAKE 5 minutes to share the story of the most difficult and vulnerable MOMENT IN THEIR LIFE 3. HAVE THE PARTNER ASK EXACTLY 3 follow-up questions 4. THEN SWITCH ROLES FOR A SUCCESSFUL EXERCISE • ALLOT AT LEAST 30 minutes for the exercise as the exercise can bring up difficult emotional situations that require time to process BEFORE THE SESSION CONTINUES
Lessons from my 20s
PART II, Section 11
Strategy & Execution
strategy
Your strategy should be TO BE THE BEST in the world AT ONE THING
So CHOOSE CAREFULLY
strategy
STRATEGY IS THE COLLECTION OF UNIQUE PROCESSES THAT WORK IN UNISON TO ENABLE YOUR FIRM TO BE THE BEST IN THE WORLD
AT ONE THING
strategy
STRATEGY IS ABOUT
TRADEOFFS YOU MUST CHOOSE WHAT NOT TO DO
strategy
STRATEGY INVOLVES CHOOSING TO PERFORM ACTIVITIES DIFFERENTLY
THAN others
strategy
NEVER CREATE STRATEGY IN A ROOM OF MORE THAN
FIVE PEOPLE CHOOSE FIVE
CEO Head of Product Head of Technology Head of Sales Head of Service Head of Marketing Head of OPERATIONS
Operational execution
At your quarterly Planning sessions with your senior team Update your one-page
strategic plan
See an example at: bit.ly/1pagestrategy
Operational execution
BUILD CONSENSUS WITH A SMALL CORE
BEFORE YOU SHARE WIDELY
Operational execution
ONCE YOU ALIGN THE CORE ALIGN THE NEXT LAYER THEN THE NEXT
THEN THE NEXT
Operational execution
WAY TOO MUCH TIME IS SPENT in
MEETINGS
Operational execution
At your company ADOPT a
MAKER’S SCHEDULE See: www.paulgraham.com/makersschedule.html
Operational execution
Engineers and creatives Need at least 4 hour blocks Of Uninterrupted time
To get anything done (so stop overscheduling them in meetings)
Operational execution
At most Have one daily standup meeting In which you actually stand So it takes less than 15 mins
Operational execution
Once your company gets beyond 30 employees hire a COO to keep the trains running on time and to focus on cross department projects & metrics
Operational execution
All creative or technical CEOs Need a really good
Ops Person
Operational execution
Create numerical goals in advance with each of your team members Hold them accountable to the goals
not to methodology!
Operational execution
Hold a quarterly 2-day planning sessions each quarter and an annual 4 day team retreat
Operational execution
ONCE YOU AND YOUR TEAM HAVE YOUR PLAN COMMUNICATE IT in A MEMORABLE WAY WITH VISUAL AND NUMERICAL REINFORCEMENT TO THE FULL TEAM THEN FOCUS ON EXECUTING WITH FANATICal DISCIPLINE & RECOMMUNICATE AND REINFORCE AT LEAST
MONTHLY
Operational execution
HOLD PEOPLE ACCOUNTABLE TO PRE-DEFINED MEASURABLE RESULTS NOT TO THEIR METHODOLOGy AS LONG AS THEY ARE TREATING
PEOPLE WELL
Operational execution
ONCE YOU’RE CLEAR ON STRATEGY DON’T SKIMP ON OPERATIONALIZING THE STRATEGY PLAN TEAMS IN LARGER COMPANIES GET OFF TRACK HERE FIGURE OUT WHAT RESOURCES ARE NEEDED TO ACHIEVE TEAM GOALS AND FIGURE OUT THE METRICS THAT ENABLE THE FOCUS NECESSARY AND TRACK
THEM VISUALLY
Operational execution
Track your key metrics visibly on a
real time dashboard
Operational execution
SHOW results for up to 5 COMPANY-wide goals IN REAL TIME AND ON A MOUNTED AND VISIBLE MONITOR MAKE YOUR RESULTS AND KPIS VISIBLE AND CLEAR BE TRANSPARENT to your full company and
MEASURE what MATTERS
Operational execution
CONSTANTLY be TESTing. As jim collins says FIRE BULLETS TO FIND WHAT WORKS SEE WHAT WORKS THEN FIRE CANNONBALLS
When to hire key team members
Office Manager/EA
10 employees
CFO
20 employees
COO
30 employees
Dir of HR
40 employees
Operational execution
PART OF THE CEO’s JOB IS TO FIND & HIRE PEOPLE WHO CAN DO THEIR ROLES MUCH BETTER THAN THE CEO COULD
Operational execution
WHEN YOU SEE SOMEONE DOING A GOOD JOB
TELL THEM!
Operational execution
THERE IS GREAT POWER IN DEADLINES
CREATE SOME!
What a CEO Does in Year one Team Size 1-3
Key Actions • It’s all you to start. • Incorporate and get an EIN. • Get a bank account. • Find a business partner with a complementary skillset if needed. • Make sure you have $25,000 saved up to get started • Focus on product development and getting something to market that solves a customer need. • Create something of value to others and sell, sell, sell! • Get customer feedback and use it to make your product better.
What a CEO Does in year two Team Size 4-9
Key Actions • Do all you can to enable the company to survive • Build an Advisory Board • Hire your first employees • You should be in charge of product or sales or both • Set up a basic low cost office space
• Outsource your payroll
What a CEO Does in year THREE Team Size 10-25
CEO Role • • • • • • • • • • • • • •
Hire an outside bookkeeper/accountant to produce monthly financial statements by the 20th of the following month Put real time visible dashboards in place Everyone won’t report to you anymore. Start putting managers in place. Figure out your unit economics and consider raising funding to invest in growth. Hold a weekly meeting with either the whole company or all the key operational individuals Hire people more experienced than yourself for the role you are hiring for, even if you have to wait a bit longer to be able to afford them. Keep the organization focused on selling and growing. Put in place an employee handbook Define your values Define your mission and vision Put in place a formal performance review process and ensure a manager conversation and performance review is completed at least every 12 months, including 360 reviews in which peers and staff review their managers. Set up an options plan Install a CRM system
What a CEO Does in year Four Team Size 26-50
Key Actions • • • • • • • • • • • • •
Start a weekly meeting with your Senior Leadership Team, Leadership Team, and Managers Start a weekly meeting with just your Senior Leadership Team Hire a COO, Controller or CFO, a Director of Human Resources, and an Administrative Assistant. Make sure your Controller/CFO begins providing monthly accurate financial statements to you by the 20th of the following month in GAAP format and Managerial format Document your systems and processes in an employee handbook. Set KPIs and have your team report on them weekly. Put in place documented incentive compensation systems. Think about creating systems to ease internal employee communication, like internal wikis, company meetings, external events, and retreats. Start using a One Page Strategic Plan with a quarterly theme. Have formal annual planning meetings to set or communicate both strategy and budgets for the upcoming year. Start investing consciously in shaping your company culture. Start investing consciously in managerial and leadership development courses for your managers and future managers. Hire an Auditor to audit your annual financial statements
What a CEO Does in year Five and six Team Size 51-200
Key Actions • • • • • • • • • • • • •
Define your company’s hedgehog concept (what you can be the best in the world at, what you’re passionate about, what drives your economic engine?) Implement The Five Dysfunctions of a Team Material throughout the organization Launch a formal corporate social responsibility program Start thinking about what new markets your organization can go into the future and figure out what your next product cycle will be Think about what the next big thing will be in your broad industry and position your company to be the leader in it Start top-grading your people and letting go of the bottom 10-20% annually Constantly ask yourself what will be driving revenue growth most in 24 months? Put in place a system that will enable you and your leaders to know everyone’s name Launch an HRIS to automate your human resources functions like talent recruitment, performance management, compensation, and employee training. Implement the Service Profit Chain from Peak Switch to a Big 4 Auditor Launch a Corporate Development Department Hire an Investment Bank If Needed to Evaluate M&A opportunities
What a CEO Does in year SEVEN AND EIGHT Team Size 200+
CEO Role • Consider scaling yourself by separating the organization into different business units with GMs or Presidents • Your role is now divided into five parts, described below. • Set Strategy and Vision • Manage the Senior Team • Communicate with Stakeholders • Oversee Resource Allocation • Build the Culture
Recommend Books on Execution
1. Good to Great by Jim Collins 2. Built to Last by jim collins 3. Execution by Ram Charan 4. Peak by Chip Conley 5. Mastering the Rockefeller Habits by Verne Harnish 6. The Future of Management by Gary Hamel
Lessons from my 20s
PART II, Section 12
the steps to get started
100 Steps in review
1. FIGURE OUT WHAT CHANGE you WANT TO MAKE IN THE WORLD 2. BEGIN RESEARCHING THE INDUSTRY AND COMPETITORs 3. DETERMINE HOW TO CREATE YOUR PRODUCT 4. TALK TO POTENTIAL CUSTOMERS FOR FEEDBACK 5. COME UP WITH NAME FOR YOUR COMPANY/PRODUCT
100 Steps in review
6. BUILD YOUR PITCH DECK 7. CREATE PRO FORMA FINANCIAL PROJECTIONS 8. DETERMINE CAPITAL NECESSARY TO GET TO CASH FLOW POSITIVE 9. GET FEEDBACK ON PITCH DECK FROM ADVISORS 10. FIND A CO-FOUNDER IF NEEDED
100 Steps in review
11. 12. 13. 14. 15.
SELECT A QUALITY CORPORATE LAW FIRM IN YOUR AREA INCORPORATE & OBTAIN AN EIN OPEN A COMPANY BANK ACCOUNT TALK TO YOUR ATTORNEY ABOUT MAKING an 83b election BUILD BASIC PRODUCT PROTOTYPE/Minimum viable product
100 Steps in review
16. CREATE EMPLOYEE AGREEMeNTS FOR EVERYONE 17. CREATE CONFIDENTIALITY AGREEMENTS FOR EVERYONE 18. HOLD INITIAL BOARD OF DIRECTORS MEETING 19. CREATE YOUR RSU/STOck options plan 20. ISSUE STOCK CERTIFICATES
100 Steps in review
21. FUND YOUR BANK ACCOUNT AND ORDER CHECKS 22. DETERMINE IF YOU NEED OUTSIDE CAPITAL TO START 23. RAISE ANY INITIAL STARTUp CAPITAL NEEDED 24. GET A COMPANY DEBIT/CREDIT CARD 25. SET UP YOUR ACCOUNTING SOFTWARE
100 Steps in review
26. SELECT YOUR PAYROLL PROVIDER 27. TRADEMARK THE NAME(S) of your company / Product 28. DESIGN YOUR LOGO 29. CREATE BUSINESS CARDS 30. FIND OFFICE SPACE TO WORK OUT OF
100 Steps in review
31. FURNISH YOUR OFFICE AS NEEDED 32. PURCHASE ANY SOFTWARE/HARDWARE YOU WILL NEED 33. GET WIRELESS INTERNET ACCESS SETUP AS NEEDED 34. OBTAIN A UPC IF YOUR PRODUCT WILL BE SOLD IN STORES 35. DESIGN LABELING/PACKAGING IF NECESSARY
100 Steps in review
36. 37. 38. 39. 40.
FINISH PRODUCT ALpHa/PROTOTYPE GET INITIAL USER/CUSTOMER FEEDBACK ORDER INITIAL INVENTORY OF PRODUCTS IF NEEDED REGISTER YOUR DOMAIN NAME DESIGN YOUR COMPANY WEB SITE
100 Steps in review
41. 42. 43. 44.
INSTALL GOOGLE ANALYTICS ON YOUR WEB SITE IF NEEDED, INSTALL SHOPPING CART ON WEB SITE APPLY FOR MERCHANT ACCOUNT TO ACCEPT CREDIT CARDS SIGN UP FOR EMAIL LIST TOOL like icontact or mailchimp 45. Optimize your web site for search engines & ADD BLOG
100 Steps in review
46. 47. 48. 49.
INSTALL A CRM SYSTEM HIRE INITIAL STAFF AS NEEDED CREATE COMPANY VALUES & MISSION STATEMENT ANNOUNCE PROdUCT LAUNCH TO LOCAL/RELEVENT MEDIA 50. HOLD LAUNCH EVENT & START SELLING
100 Steps in review
51. HIRE A TEAM TO FULFILL ORDERS & PROVIDE CUSTOMER SERVICE 52. START An AFFILIATE OR DISTRIBUTOR PROGRAM 53. BUILD UP AFFILIATES & DISTRIBUTORS 54. SET UP An AD TRACKING SYSTEM 55. TRY CPC/CPI/CPA ADVERTiSING WITH TEST BUDGET
100 Steps in review
56. GET RESULTS FROM THIS ADVERTISING 57. OPTIMIZE AND SCALE AS NEEDED 58. DETERMINE COST OF ACQUISITION A LEAD FOR EACH CHANNEL 59. DETERMINE CONVERSION RATE FOR EACH CHANNEL 60. DETERMINE LIFETIME VALUE OF A CUSTOMER
100 Steps in review
61. Test CPC/CPI/CPA Ads with bigger budget now that you know LTV 62. TEST SOCIAL ADS & DISPLAY ADS & CALCLATE ROI BY CHANNEL 63. SCALE ADVERTISING UNTIL MARGINAL COST = MARGINAL RETURN 64. OPTIMIZE ADVERTISING to bring down CAC 65. COLLECT TESTIMONIALS FROM INITIAL USERS/CUSTOMERS
100 Steps in review
66. CREATE SOCIAL WORD OF MOUTH FOR YOUR PRODUCT 67. CREATE youtube video promoting your product 68. ATTEND AN INDUSTRY TRADE SHOW 69. CONSIDER SELLING YOUR PRODUCT in BULK AT WHOLESALE 70. BRING ON A BOOKKEEPER TO AUTOMATE ACCOUNTING
100 Steps in review
71. 72. 73. 74. 75.
CREATE AN EMPLOYEE DIRECTORY REVIEW YOUR P&L & balance sheet monthly COMPARE INITIAL FORECAST WITH ACTUAL RESULTS HIRE A SALESPERSON CREATE A SALES COMPENSATION PLAN
100 Steps in review
76. 77. 78. 79. 80.
SET UP A COMPANY HEALTH CARE PROGRAM ESTABLISH YOUR VACATION POLICY TEST OFFLINE ADVERTISING CAREFULLY CREATE A COMPANY INTERNAL INTRANET CREATE a digital company handbook
100 Steps in review
81. OPEN UP A CREDIT LINE WITH YOUR BANK 82. CREATE AN OFFSITE WORK POLICY 83. ONCE YOU CAN SHOW $1 in means $4 in revenue, raise capital 84. CREATE A LIST OF FIRMS TO RAISE INITIAL GROWTH FUNDING 85. UPDATE YOUR PITCH DECK
100 Steps in review
86. 87. 88. 89. 90.
BUILD RELATIONSHIPS WITH INDUSTRY BLOGGERS SEEK PRODUCT REVIEWS HIRE AN EXECUTIVE ASSISTANT/OFFICE MANAGER HOLD YOUR FIRST COMPANY RETREAT TAKE CUSTOMER FEEDBACK AND IMPROVE YOUR PRODUCT
100 Steps in review
91. GET CONNECTED TO INVESTORS FROM PEOPLE YOU KNOW 92. HAVE INITIAL GET TO KNOW YOU MEETINGS FOR FEEDBACK 93. UNDER PROMISE AND OVER DELIVER ON RESULTS FOR NEXT 90 DAYS 94. DETERMINE HOW MUCH CAPITAL TO RAISE 95. RETURN TO FIRMS YOU LIKE FOR PARTNER PRESENTATION
100 Steps in review
96. DO 20 partner presentations in 2 weeks 97. Get 2 term sheets 98. NEGOTIATE & SIGN TERM SHEETS 99. COMPLETE DILIGENCE 100. CLOSE ON CAPITAL
Lessons from my 20s
PART II, Section 13
Business lessons
Business lessons Learned
Don’t get stuck In analysis paralysis
Take action NOW!
Business lessons Learned
It is UP TO YOU to GET OUT THERE, DO IT &
TAKE THE INITiATIVE
Business lessons Learned
Don’t be Afraid to
FAIL!
Business lessons Learned
RECOGNITION & PRAISE CAN BE BIGGER MOTIVATORS THAN
Salary & BONUSES!
Business lessons Learned
ALWAYS COMMUNICATE FREQUENTLY & OPENLY TO CUSTOMERS & STAKEHOLDERS DURING NEGATIVE EVENTS
Business lessons Learned
ONCE YOU HAVE 80% OF THE NEEDED INFORMATION MAKE THE CALL
You’ll be better off By ACTING QUICKLY LEARNING & Iterating
Business lessons Learned
WHEN THINGS ARE GOING WELL financially IT IS TIME TO PREPARE FOR Difficult times
Business Lessons Learned
BUILDING A BUSINESS is like MOVING SOMETHING heavy IT TAKES TIME to GET INERTIA GOING. BUT ONCE YOU DO, THINGS CAN MOVE QUICKLY
Business Lessons Learned
HAVE ALL TEAM MEMBERS SHARE THEIR PERSONAL stories
WITH THE TEAM
Business Lessons Learned
WHEN YOU GET TO 30 EMPLOYEES
HIRE A COO
Business Lessons Learned
YOU MAY NOT BE ABLE TO DO EVERYTHING AT ONCE TAKE A LONG-RUN APPROACH & PLAY LIFE LIKE A
LONG-TERM GAME
Business Lessons Learned
IF YOU PRESENTLY DON’T HAVE THE FINANCIAl RESOURCES, THE EXPERIENCE OR A GOOD BUSINESS IDEA, INTERN OR GET A JOB AT A COMPANY YOU ARE PASSIONATE ABOUT AND START BUILDING YOUR NETWORK & experience
Business Lessons Learned
ALWAYS FOCUS ON BUILDING QUALITY & GIVING RELATIONSHIPS WITH
GOOD PEOPLE
Business Lessons Learned
REGARDLESS OF WHAT You’RE DOING MAKE SURE You’RE CONSTANTLY
LEARNING
Business Lessons Learned
TAKE A PROACTIVE ROLE IN PLANNING, GOAL SETTING, &
PERSONAL EVALUATION
Business Lessons Learned
Don’t be afraid to ask for help People are often very willing to HELP YOU IF YOU ASK
GENUINELY
Business Lessons Learned
GET Experience however you can Build your network Have confidence And BE IN IT TO
Help Others
Business Lessons Learned
IF AND WHEN YOU SUCCEED
GIVE BACK
There are many brothers & sisters Who have not been as fortunate
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