10 rules for stanford entrepreneurs in the post-bubble economy january 27, 2004

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

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reFile

Volta

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reIM

Volta

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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

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We are hiring! Openings in Engineering, Marketing,

BizDev and Services!

jobs@voltage.com