founding tech co talk

Founding A Tech Startup

by Raj KapoorFounder & Managing Partner, cofounder.co

Venture Partner, Mayfield Fund

Trending Topics : )

• Lessons from Snapfish

• What Investors Look For

• Silicon Valley or Not?

• cofounder.co

The Snapfish StoryRole Models Are Critical – especially early on…

The Snapfish StoryBuild Networks first…sometimes by chance…

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Cable ADSL Total Broadband

Household Internet Connections (M)

The Snapfish Story

Know when to cut the cord…timing does matter

1999

The Snapfish Story

Cofounders are recommended – fill the gaps

Product/Ops

BD/Schmoozing Tech w/ Business

Leadership/Product

The Snapfish StoryEarly – Its 100% Funding, Product, and Recruiting

The Snapfish StoryRaise Money (yes $36M) Whenever You Can….

The Snapfish Solution: Free

Processing

The Snapfish StoryThe Harsh Reality of the Marketplace…

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Projected Snapfish New Customers

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The Snapfish StoryDealing With Failure….

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iVillage

The Street.Com

The Globe

Marketwatch

Priceline

Etoys

Drugstore

Egghead

Ashford

The Snapfish StoryHunker Down, Pivot…and Hope to Catch A Wave

The Snapfish StoryWhen Its Working…Step On It

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The Snapfish StoryAnother Tough But Fortunate Choice…

The Snapfish StoryCapitalize on Luck and Timing…

10 Takeaways from Snapfish1. Don’t Wait for Inspiration – Position So It Falls on Your Head

2. Data Changes and Its Never Enough – Invest In Your Gut

3. Passion is Infectious – You Gotta Really Have It

4. Be Crisp and Confident When Selling

5. Sell What They Want, Not What You Want

6. Hire People Better Than You

7. You’re Always Raising Money

8. Hypothesize, Get To Market Quick, Iterate Often

9. Plan, But Be Open to Change

10. Balance IS Possible (well, sometimes)

What Investors Look For

Waves of Disruption Create Opportunity

Search

UGC

Social Networking

Video

PortalsEcommerce

Mobile

• Connected TVs– Similar to mobile disruption in 2007 with the iPhone

• Professionals Platforms– Individuals become the brands vs organizations

• Services Marketplaces

• E-Commerce as mainline commerce in BRIC

• New Relationship Graphs

• Education Disrupted

Other Big Trends

Disruptive New Media• “Youthful” Founders• Product Driven• Network effects• Viral loops for customer

acquisition• Broad based adoption - 100M+

user scale• Momentum vs Black Swan

Vertical Destinations• Experienced Founders• Execution driven• Marketplace Model• Organic Traffic Advantage • Highly Monetizable Vertical

Two Types of Consumer Businesses

B2B/Infrastructure Criteria• Experienced Internet-focused Team• Pain Killer vs Vitamin• Frictionless deployment

– SaaS, few lines of javascript, widgets, ad tags

• Grass Roots Sales Model– open source, social media, sell to employees– Avoid the CIO

• Provides immediate benefit or cost reduction• Leverages new features of internet

– Data targeting, social, video, RTB, mobile

• Future Platform opportunity vs. “Feature/Tool”• Recurring revenue business

Looking for Great Founders• They know them or know of them WELL via network

• Product/user obsession

• Founders who can code and move quickly

• Deep understanding of business, metrics, and product

• Big vision AND solid execution

• Well connected to get talent, advice, etc

• Demonstrate they know what an A+ Player Looks Like

• Don’t need perfect CEO – but need to be “self aware”

General Tips Pitching VCs• Know your Real TAM – Bottoms Up

– Is $100M revs realistic? – Is VC or Angel funding better?

• Proof Team is Product and Business Savvy• Is there a true competitive advantage vs execution?

– Show network effect or why model is disruptive vs incremental to incumbents

• Map out Serial Risk Reduction• Raise at least 18 months of capital if its early stage• Control The Process and Timing

– Create relationships with VCs well in advance of fundraise– Try to get everyone on same timetable

Silicon Valley Or Not?

The Good

46% of VC dollars in Q2 went to Silicon Valley

(Only 12% went to the second place – here)

The Good

75% of ALL returns in venture are in Silicon Valley

The GoodMindset vs Location

• Change the World vs make a buck

• Pay It Forward vs look out for yourself

• Massive information advantage

• People-driven transactions

• Talent has DNA to Go Big and Scale

• Competition to Push You Hardest

• Product Rules

The Ugly

• Cost of Living

• Talent War

• Relationship-driven*

* unless you have amazing momentum

• Weather….NOT!

The Bottom LineSilicon Valley if….

• You are thinking BIG

• You Like Swimming with SHARKS

• Product/Service Excellence matters

• You Have the Relationships – or – momentum

• You like good weather and wine : )

What’s cofounder.co?

What’s Missing?• Entrepreneurs Looking for help – not just money

• Accelerators, incubators, angels, mentors advisors, VCs

• Time is more precious than capital for the best

• Where do they get time, experience, and deep help?

• 100+ key decisions every year!

Time is Right for a New Model…..

The Solution• Standardize part-time cofounder role

• time and experience for the critical decisions

• Day A Week cadence – 4-5 co’s max• Experienced founder/CEO/investors only• Deep relationships

• capital, talent, partnerships & exits

• Alignment as cofounder vs investor• Minority vesting equity - skin in the game• Join at point of cofounder decision

Long Term Vision

• Build Network of top notch operators/investors

• Some full time, some part-time

• Pool equity to give fund economics

• Take it Global

Angel.co for money - for a partner

Founders I’m Looking For• Awesome in all ways except experience/network

• Evidence of Excellence in your life

• Ambition to create a massive disruptive company

• Strong Desire to be CEO but self-aware

• Product obsessed builders fit best

• Passion for a sector, not wed to a solution

• Started anywhere but move to build co in SV

• Open to spending quality time together first

Thank You!

www.cofounder.cofounders@cofounder.co