Frank H. Levinson, PhD

Small World Group Incubator PTE LTD16 Nanyang Dr., Innovation Center #01-110, Singapore 637722

+65 9118 2794 www.smallworldgroup.com

Some stories, some advice

“Bootstrapping using services/consultingand generating the flywheel effect”

First, a little history ... by telling a few stories

About Me

Raised in Indiana, USA - a more rural state, loves basketball

Worked in family business - men’s retail clothing - business grew strongly in 1970-80s, but failed after 90 years in 1995 due to family and competitive issues

PhD in Astronomy in 1980

Worked for Bell Labs in fiber optic communications

Started Finisar in 1988, today is largest fiber optic component supplier in the world, NASDAQ listed company

Started Small World Group in 2006

Today we are invested in approximately 10 companies

Frank H. Levinson, Ph.D., is the founder and managing director of Small World Group an early stage venture capital and incubator that operates out of Singapore. From 1988 through 2008, he was founder, CTO and chairman of Finisar Corporation, today the world’s largest optical communications subsystems company. Frank is an active venture investor and serves on multiple private small company boards with focus in clean tech and optical systems.

The Perfect Venture – Netek(Netek was the first company I started)

Idea --> Business Plan

Business Plan --> Venture Capital + Strategic Partner --> Raised $2.75M for 35% all in 1984

Money --> Building, People, Activity

Grow Organization --> Management (CFO, VPs)

Disaster --> Got Fired --> Deserved it!!

With Netek, I made all the mistakes that are possible based on Steven Blank’s business and customer development models.

All technology was essentially the same fors Finisar started 4 years later that was very successful.

The Finisar Start

Didn’t like current job!

Quit but they hired me back to do contract engineering!

Had revenue of $6K in month 1, $350K in first year

No business plan. (Ever, even up to IPO)

Had 2nd customer by month 4, third by month 7.

Chose name because I worked at too many big companies and never finished anything

Never had too much money ... just barely enough!

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Finisar Annual Sales

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Contract EngineeringRevenue

Crummy ProductRevenue

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Finisar Revenue & Growth Phases

Today, Finisar is a NASDAQ listed company and it is the largest fiber optic subsystem and component supplier in the world.

The company operates in the USA, Malaysia, Singapore, China, Israel, India and Australia with sales offices everywhere.

Annual sales run rate is approaching USD $1B

Some Advice ... from some lessons learned

You must have confidence you will have many great ideas

! Because you must give away some good ideas in order to gain customers !

! Do not hold ideas too closely, it prevents you from working on new ones

! Develop a culture where new ideas are expected with regularity ! many good ideas every year

! Base all business thinking and projections on this assumption

! The lifetime - today - of even very good ideas is probably less than 3 years. Find ways to license others in markets you won’t access in that time frame.

When bootstrapping ...

What is the relevance of these guys?

Try to see elements in the contract where you want to own the resultant IP or some core technology or component. If you work on systems for others can you identify pieces that

are not core for the customer but maybe for you?

As you build experience ...

We built things like these and then incorporated elements like these into designs like this circuit board. We were paid for the circuit board and its elements including the VHDL on the FPGAs and the embedded S/W.

Early Customer Interaction

Try to have customers from day 1

Customers are people who issue purchase orders to you, who you then send product and upon delivery of product they send money in payment.

Try to work with customers and not just interested parties - governments, partners, etc. It is so easy to see people with interest as customers ... but many are not customers.

Customer money is the best - no dilution, keeps company focused on business and not science projects, loved by VCs and other investors, indicates you are doing something of value.

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3 Crucial Equations ... Beware of OPM!

X !

Every VC has a time table for their investment so if you take their money remember to know when they want it back with profit. Their timetable, their exit and return of capital for their investors may not be the same needs as your markets and customers.

#1 - Venture Capital

As Steven Blank famously has stated, the VC’s goals are to make a large company so that they make a lot of money. Their goal says nothing about your growth, inclusion long term or even your hopes.

There is a crude, funny but all too true joke in the USA - “What are the 3 big lies? #1 - the check is in the mail, #2 - we are from the government and we are here to help. I cannot tell you #3 but you may seek it out on your own.

#2 - Government Money

Every government on earth today is trying to figure out how to harness the power of their entrepreneurs to transform the country more quickly. Their main goal is to get re-elected. Take government money only on your terms. Their KPIs may be achieved just with starting a company and have NOTHING to do with successful growth or exits.

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Choose your partners carefully. I do not recommend friends but rather colleagues. My partner for 20 years is shown above. We are totally different in so many ways. We were never close socially, but I would still take a bullet for him. When it came time for me to leave we both knew it was time.

#3 - F&F Money

Family money can ruin relationships you have to live with for your whole life. You cannot fire them. They believe in you and believe you will be the next Steve Jobs - but 80% of the time you fail ... are you sure they are aware of this key statistic?

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If you ask questions ... There is more we can Unlock!