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Geoff Allen on Startups

Mistakes, Learnings and other Musings

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Attitude First

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Build Companies on Fundamentals

•  Crazy, irrational valuations are anomalies –  For every YouTube and Bebo, there are innumerable

of money-losing, hype-driven failures

•  Just focus on building a great business –  Based on a solid business model with long-term earnings potential

“Built  to  Flip”  

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Use (and love) your Own Offerings

•  Use it as a consumer –  Don’t make excuses for

your own products

•  Don’t be afraid to scrap components –  Nothing is sacred

•  If you don’t who will? –  If you can’t, find someone

who isn’t afraid to be critical

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Don’t (always) Listen to your Customers

•  After all, you’re the entrepreneur –  If they knew better, they would have invented it themselves

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Beware of Glamour

•  “Rock Star” execs –  Trust but confirm

•  Awards are a tactic –  Important, yes – but not the

end goal

•  “Sexy” customers aren’t always great customers –  Be careful what you give

away…It could be the market (precedent)

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Listen to Analysts/Media with a Grain of Salt

•  Again, you’re the entrepreneur –  If you believe an analyst

knows the market better than you do, you’re in real trouble

•  They are called “stories” for a reason –  Write your own

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Be Capital Ef!cient

•  Know your core competency –  Focus, focus, focus on that

•  Make quick, small bets –  Iterate quickly before scaling –  Data wins

•  Invest in Great People

•  Outsource everything else –  HR/Payroll (Administaff),

Hosting (Amazon), Mail/Docs (Google), Bugs/Schedule (Jira/Pivotal), Accounting (Quickbooks Web), 800# (PhonePeople), etc.

•  Capital = stored choices

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Clean Cap Table & Balance Sheet

•  Avoid early pitfalls –  Trading equity for professional

services –  Poor (or no) shareholder

agreements; messy/unclear rights –  Arbitrary ownership stakes –  Lack of documentation –  Lots of individual angels (use an LP)

•  Important to be “investment easy” –  Don’t underestimate the value of

being easy to finance –  Investors have only so much time

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Know that Dilution & Value are not Equal

•  Don’t’ be dogmatic –  The focus is on value

•  Control rests with those who generate success –  This is irrespective of

ownership

•  IPOs are dilutive by nature –  Bring on the dilution!

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Understand your Investors’ Businesses

•  They have investors, too –  They are in a specific asset class – know it

•  They don’t want to run the company –  So don’t fret about it –  Investors want financial leverage,

not to be operators

•  #1 Goal – Keep your interests aligned –  Understand their objectives, expectations,

timelines and capital reserves

•  Not all investors are alike

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Mediocrity leads to “The Living Dead”

•  Indecision is the Enemy –  Slow decision is worse than no

decision

•  Often from unclear bets –  Unmeasurable, murky feedback

•  Failure is a temporary state –  Just another data point

•  “The Living Dead” –  Won’t succeed, but won’t fail

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Be Honest & Open

•  “I don’t know” is OK –  That’s why you have a team

•  You only have one reputation –  The market is ruthless

•  Investors are on your side –  “Good news, bad news, just

give me the news”

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Thank You!