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How to Build a CompanyJanuary 13, 2010

University of Colorado’s New Venture Challenge

Jason Mendelson, Co-Founder and Managing DirectorFoundry Group; Chair, Silicon Flatirons Entrepreneurship Initiative

©2009, Foundry Group LLC, Proprietary and Confidential

Agenda

The idea of this presentation is to give you an all-purpose summary on company building. The workshop presentations later this semester will dive into all of these subjects and more in depth

•How to come up with the right idea for you to pursue•Building a team•Setting up the business•Getting financed•Growing a business•Operating a business•Common mistakes people make•PLEASE INTERRUPT ME. Chances are that you are less boring than I am

2©2009, Foundry Group LLC, Proprietary and Confidential

How To Do It

©2009, Foundry Group LLC, Proprietary and Confidential 3

The Idea

• Pick something that you are passionate about. I mean REALLY passionate

Building a company is tough. If you aren’t in love with your idea going in, you are hosed

If you aren’t scratching your own itch, you probably don’t have a great idea

• Make sure that you are “market,” though

• Consider the competition. Most people skip this step

“We are different”

• Are you really? Assume adjacent companies move toward each other.

• Well funded “non-competitors” usually are

4©2009, Foundry Group LLC, Proprietary and Confidential

The Idea• Is a “non-competitor” really a competitor?

Facebook – generic social network. You decide to create one targeted to musicians / soccer moms, etc.

Competition might not be Facebook, but the time allocated to social networks by your customers. They only have so much. Plus, FB can quickly move to compete, if need be

• Can you make money from it? (and the answer isn’t “advertising”)

• When you talk to your friends, do they get excited about it? (If you don’t have any friends, then you have other issues that I can’t help you with)

• Make sure you don’t have “technology in search of a problem”

• Seriously vet your idea. Remember, people’s incentives are to say “go for it” – it’s not their time and money being wasted

5©2009, Foundry Group LLC, Proprietary and Confidential

Building a Team

• Find a partner (if you can’t, there might be a larger problem)

• Find mentors/advisors (Boulder is great)

• Don’t get taken advantage of

• Be self aware. It’s much more attractive than confidence

• Learn to keep people engaged

6©2009, Foundry Group LLC, Proprietary and Confidential

Setting up the Business

• Incorporate? LLC versus C-corp

• Get your Intellectual Property in order

• Get your employment situation in order

• Watch out for oral promises (yes, you can have an oral contract)

• You get what you pay for with lawyers, but there are tons of resources in Boulder

• Use resources like BDNT, BOCC, ELC, Crash Courses, the Bunker to learn more. Knowledge is power

7©2009, Foundry Group LLC, Proprietary and Confidential

Financing

• Don’t assume that you are going to raise funds

• Do you need financing?

• The earlier you finance the more of the company you will give up

• Be greedy!

• Angel versus VC

• Executive Summaries versus Business Plans. What makes good ones?

Your exec summary is critical

Business plans are for you

8©2009, Foundry Group LLC, Proprietary and Confidential

Growing and Operating a Business

• Constantly check your assumptions. Is your idea still compelling?

• Make sure what you are building will scale

• Be customer focused. Be insane about customer experience

• Don’t be afraid to get help. You don’t know everything

• Find smart tech guys / work in the cloud

• Always think about how you will make money. Even Twitter had a plan….

• Try to leverage others’ platforms / networks if you can

• Be really stingy in hiring non-tech people

9©2009, Foundry Group LLC, Proprietary and Confidential

Some Common Mistakes

• Not taking the set up process seriously enough

Employment

IP

Contractors versus employees

• Not picking the right team. Your first 4-6 hires will determine your fate

• Getting ahead on expenses – hiring ahead of revenue

Keep the team lean and expect some pain. This is good pain

Cash is massively valuable. Treat it as such

• Being a crappy fundraiser

10©2009, Foundry Group LLC, Proprietary and Confidential

Some Common Mistakes

• Not knowing when to quit. Failure isn’t always failure

• Screwing up your one chance at good press

Overpromising and under delivering

Getting “Tech Crunched”

• Not having proper alignment with the management team

Get away / offsites

Vesting

• Thinking marketing and advertising will save you

11©2009, Foundry Group LLC, Proprietary and Confidential

Summary

• Seriously, it’s really that simple

• So have fun. ☺

12©2009, Foundry Group LLC, Proprietary and Confidential

Questions and Answers

Q&A

13©2009, Foundry Group LLC, Proprietary and Confidential

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• CU NVC: why participate? – Entrepreneurial Launch Pad: nothing like doing it; support

through workshops and Crash Courses – Mentors: connect to area’s entrepreneurs – Interdisciplinary experience

• “Intent to Compete” forms are due January 20 (necessary for mentor assignment)

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Upcoming Events

Workshop-Your Business Concept: Product and Service Offering, Page Moreau Wednesday, January 20, 2010 – ATLAS 100, 6pm

Workshop-Your Market: Connecting with your Customers, Tom Keller Wednesday, January 27, 2010 - ATLAS Building, Room 100, 6:00PM

Crash Course: Intellectual Property for Entrepreneurs Wednesday, February 3, 2010 - Wolf Law Building, 6:00PM

Workshop-Selling your Product: Reaching Your Customers, Erick Mueller Wednesday, February 10, 2010 - ATLAS Building, Room 100, 6:00PM

Workshop-Making Money: Finding Economic Sustainability, Frank Moyes Wednesday, February 17, 2010 - ATLAS Building, Room 100, 6:00PM

Workshop-Pitching and Selling Your Business Plan, George Deriso Wednesday, February 24, 2010 - ATLAS Building, Room 100, 6:00PM

Business Plans DUE Monday, March 11, 2010 Finalists and Wild Card Selected Friday, March 5, 2010

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• Networking Upstairs• Meet companies looking for interns

• Form a team to compete in the CU NVC!

• Essential10 (not on flier)• Goldstone Partners• Gravity Cycles (not on flier)• LogRhythm• myUsearch.com

• Rebit• RecordNexus• TravelFli• Zayo Group