10 rules for stanford entrepreneurs in the post-bubble economy january 27, 2004
TRANSCRIPT
10 Rules for Stanford Entrepreneurs in the Post-Bubble Economy
January 27, 2004
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Agenda
• Voltage Security Introduction
• 10 Rules for Post-Bubble Entrepreneurship
• Voltage Security Today
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Voltage Security• Founded in 2002 by at Stanford by Dan Boneh, Matt
Pauker, Rishi Kacker and Guido Appenzeller
• Uses Identity-Based Encryption to solve an old problem:
Secure, yet easy to use encryption
• Funded by top venture capital firms
• Hummer Winblad, Morgenthaler, Menlo Ventures
• Experienced management team
• Sathvik Krishnamurthy – CEO
• Terence Spies (VP Engineering), Wasim Ahmad (VP
Marketing), Joe Jose – (VP Sales)
• Now 30 people and growing...
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Agenda
• Voltage Security Introduction
• 10 Rule for Post-Bubble Entrepreneurship
• Voltage Security Today
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Rule #1: Now is a great time to start a company
• Funding is harder to raise, Valuations are down, Customers are hesitant to spend money…
However:
• It’s easier (but still not easy) to attract good people
• VC’s have less quality deals, more bandwidth
• Costs is down (rent, equipment, salaries…)
• Fewer competitors, less “noise” in the marketplace
• If you survive today, you will do well if economy picks up
Maybe harder to start, but chances of success are higher
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Venture Environment 1995-2003Venture formation decreased dramatically
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1995 1996 1997 1998 1999 2000 2001 2002 2003
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350Investment
# of Deals
Source:PWC/ Thomson Venture Economics/NVCA MoneyTree Survey
• 12 companies funded in Q4 2002,of which 5 were in the software space
• Unemployment in 2002 is at 7.9%, worst in Silicon Valley since national recession of 1983
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Rule #2: Strong Technology is Key (Again)
A Strong Core Technology Provides:
• Unfair Advantage
• Defensibility (needs expertise to replicate, patents)
• Differentiation in the Marketplace
• A potential exit strategy
However: You can’t sell a technology to customers
• Customers buy solutions (or maybe products)
• If you don’t know the difference take MS&E 271
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Related Rules on Core Technologies
• If no one understands your technology, that’s good
• If no one understands the application, that’s bad
• If it is the “next hot thing” in Wired, it’s too late
• Example: Identity-Based Encryption
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Rule #3:
Everything you need to know about High-Tech Entrepreneurship, you can learn at Stanford
• STVP/BASES is probably the best education for starting a
technology Start-Up you can get
• Corollary to Rule #3: Almost everything I knew about
marketing when we started, I learned in MS&E 271
• E-Challenge is a great
for feedback, visibility
and contacts
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Rule #4:
Stanford is a great Resource – Use it!
• Leverage human resources
• Faculty with startup experiences
• BASES E-Challenge
• Great people looking for exciting opportunities
• And don’t forget the facilities
• Great Internet connection
• Great office space!
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Rule #5: Work with people you trust
• Teams breaking down is the #1 cause why Start-Ups fail
• You need a team that works even if things go downhill
• Pick your co-founders and early employees carefully
• Find VCs who share a vision and believe in the team
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Lesson #6: Cheap is beautiful
• Being cheap should be part of the company culture…
• Founders, Management has to lead by example
• Helps future rounds of funding, valuation
• The good news is that we have a recession!
• Auctions for furniture, equipment
• EBay for phones, equipment
• BYOD (Build your Own Desk)
• Rent is cheap… really, really cheap
• Don’t be cheap on people (salaries, benefits, fridge etc.)
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And the strange things you find at a bargain…
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Lesson #7: Mix of Skills, Common Culture
• When hiring, look for skills and team fit
• Most important for early management
• Understanding and respect for each other
• A mix of recent graduates and industry veterans
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Rule #2: Customer focus is easy in theory, but not in practice
Pretty much any company claims “customer focus”
In reality…
• Technology driven companies tend to focus on technology instead
• Core Functionality is everything (if customer needs it or not)
• User experience an afterthought
• Service/Deployment is not even on the agenda
However: You can’t sell a technology to customers
• Talk to customers as muhc as possible
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Agenda
• Voltage Security Introduction
• 7 Lessons Learnt about Entrepreneurship
• Voltage Security Today
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Yesterday’s Security Model
The Enterprise
Security
The Outside World
• In Yesterday’s model –
• “Secure the Perimeter - Secure the Enterprise”
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Today’s Model is More Ad-Hoc
Partners
The Outside World
The Enterprise
Government Agencies
European Division
European Partner
Customers
Security
• Today’s organizations operate as Virtual Hubs for numerous spokes that must
securely communicate and share data on an ad-hoc basis.
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Platform Delivers Secure Flexibility
Voltage IdentityManagement Adapter
Voltage SecurePolicy Suite Key Server Enrollment Server
Voltage SecurePolicy Service Key Service Enrollment Service
Voltage SecureContent Server
Voltage IBE Developer ToolKit
Volta
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ail
Volta
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reFile
Volta
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reIM
Volta
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reV
oice
Volta
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oc Partner enabled Applications
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Who is Voltage Today
• Located in Palo Alto, close to Stanford
• 30+ Employees
• On the front page of Wall Street Journal, business section of NYT
• Voted “Top Ten Technology Companies” by Bank Technology News
• Recently closed second round of funding – backed by Hummer
Winblad, Menlo Ventures, Morgenthaler Ventures
