Ravi’s Blog

Ann winblad from hummer-winblad came up. It was clear from the get-go that she was very comfortable presenting to large crowds, she started with jokes about her height (she seemed short). Her talk was packed with info and she moved very fast skimming all the slides. It was hard to take notes, but great talk

How to write a Fundable Business Plan

Background
- First fund for software
- IPO in process

2005
- 21.7B 2939 deals
- 35% of all dollars are going to software company
- 13 series A in last year, 2 more closing soon

New Era of innovation
- big companies not doing well, smaller companies doing better
- incumbents are playing whack-a-mole
- 4 year step function of innovation

Challenge for founders
- customer understanding
- unfair competitive advantage (sustainable)
- team

Plan
- IDEA
- Who are the Customers
- What is the Secret Sauce
- Can you Attract Excellence
- Do the numbers make sense

Hook in 15 mins
- voltage
- business plan contest
- voltage replaces PKI with identity based encryption vs. Voltage secures anytime, anywhere business communications
- describe it as business not tech
Do YOU understand the market
- UNMET CUSTOMER NEED + GROWTH

Is the need real?
- vitamin vs pain killer
sacred cow dung.

Market Timing
- Defining the market vs jumping hurdles already in place
- Redefine the market

Up and to the right
- ability to execute vs challenges for vision

Product vs company
company is bigger than product

Will customers beg
- newton vs ipod
- aspirational products

What is your secret sauce
- Technology/IP
- business process
- Partners
- Domain Knowledge

Engineering Roadmap
- build it quick

Can you attract excellence
- founder & CEO has been good for h-w
- early stage vcs will fund 2 people
- rarely fund 1
- no need for management team

Do you know what you don’t know
- Assumptions are ok
- Be clear abotu hypothesis.
- read michael porter’s book (title?)
-

Do you reach software economics

- 80% gross margin - 20% ebitda
- are services big part of revenue
- capitalization < 15M
- COGS COGS>30%
- Sales/Marketing - commissions/quotas in line
- Eng - does eng plan match op plan
- G&A is G&A < 10%
- P&L q over q growth rates
- Model enterprise vs salesforce model
- cashflow - How long does the initial investment last

Market Bats last

What VCs bring to table
- People, partners, process
65 companies funded

Why should I write a b-plan
- no one reads a b-plan
- Exec Summary

Don’t use more than 10 slides
- exec summary
- team
- market analysis
- secret sauce
- Assumptions
- Customers (potential or reference-able)
- Product Plan
- Eng Plan
- Sales Model and marketing outline
- Biz model/financials/cash flow

Lessons learned birthing & building web startups.
Founder of ONElist and BlogLines.

ONELIST sold out to egroups which later sold out to yahoo.

Bloglines
— 200,000$
— one salaried employee
— 4 employees working for stock
— acquired by ask

Garage Philosophy
- passion for idea
- Focus on solving a need you have rather than technological problem.
- cheap technology
- doesn’t have to be perfect
- Release early/release often(web2)
- Involve your users (web2)
- lot of customer support emails are suggestions.

- Moonlighting limits risk
- Friends/Family Funds
- Free Services = less pressure
- Hire a lawyer
- Outsource to elance or Rent A coder
- windows program for bloglines alerts
- 500$, kazhakstan, 2days
- 3500 translated to 6 languages.

- PR is the cheapest marketing you can do
Use stock for PR person
- Dont worry about biz dev
- Focus on viral aspects
- Focus on user growth

Design philosophy
Amy Jo Kim - www.shufflebrain.com/etech06

Software choices

* Linux/apache
* c/c++/bash/python
* DJB
* Berkeley DB
* Memcached
* Avoid NFS
* Avoid Table Locking in MySQL

Better performance results in greater usage

Hardware choices

- Dediated Servers vs buying/hosting (dn.net)
- design for cheap hardware
- ebay!
- APC PDUs for remote power cycling
- HP ProCurve
- Avoid Seagate Ultra-SCSI Drives
- Good Phone for SSH

Architecture Choices

* Copying fils vs client/server
- copying files scales better
* Calculate on the fly vs cache
* Memory vs Disk

Storage Choices

- Relational DB vs flat files
- RAID vs redundant
- Linux software RAID 1

SysAdmin Choices

- DNS Roundrobin for webservers
- Hot back-ups for off-line processing
- Worry about cooling the co-lo

AVOID MAKING STUPID BETS

Page Mailliard from WSGR (Wilson Sonsini et. al) came up next. The big screen had issues and she was bit shaky in the start (stage fright?), but the talk became lively very quickly.
Here is the summary:

- Do it right the first time
- Don’t use other lawyers :p
- WSGR will give you the best stuff from their experience
- Focus on business, let W-s provide you with best legal stuff

- What does it take to set up company
- deleware corp
- Simple is better
- You need C-Corp over S-corp or LLC
- Steps
- 20M common, 5 or 10M preferred
- File papers
- Establish board. Be careful who you get on the board.
- alternate: use board of advisors
- enter into stock purchase agreement with founders
- Set up Vesting
- even for founders set up vesting plan
- examples of partners falling out, circumstances change
- Acceleration of vesting for founders not everyone
- Who owns the technology
- the company owns the technology
- make sure you don’t have conflict of interest with former employer.
- Even the possibility of former employer suing sets the investors scurrying
- the microsoft intern? Don’t talk to microsoft people before incorporating
- Genentech material transfer agreement (they provide stuff and in exchange get everything)
- Who owns the company
- No napkin promises
- No Tithing ? what is tithing?
- Write stuff down
- Financing
- Financing stages
- 4-5 stages,
- Types of equity
- Founders get common
- Preferred goes to investors (they get board seats, so refer back to value of board)
- take less money. Remember to consider option pool before funding.
- First term sheet
- Value proposition and market opportunity
- short presos
- Be credible
- Bring A Players
- Listen to others - revise presos, learn from each interaction
- Listen to yourself
- BEst leverage is another term sheet
- Get the best business partner you can, not best valuation, not best board representative (?)

Notes from joe krause preso:

Joe Kraus
==============

1) Test your business plan early

2) Like olympic trials. Every success leads to a tougher round. Keep enjoying success. Stakes raised every victory.
But important to celebrate and keep motivating

3) Differences between 1996 and 2006
- Easier to start a company, but same difficulty to start a business
- Funding is more available than ever
- more succesful exits than before
- Difference between need/take
- example of funding of 250,000 at 500K premoney
- 3.75M exit = 5x return for the investors
- example of funding at 5M at 10M premoney
- 5x return means a sale price = 75M

- Persist

- Hire people with talent.

Today is startupschool! When i applied to startup school initially, i wasn’t really sure if i’d have my ideas developed this far along by end of april. But, i am in the thick of developing the ideas into a company and i got accepted to startupschool. In fact, i totally forgot about startup school and made other personal travel plans. I came back from it last night and here i am getting out to stanford.

Joe Kraus was the first, I was few mins late and missed a good bit of his talk. The place is packed and it’s got great energy. There is no wi-fi though. Kinda sucks. I am posting this in lunch break from my home.

Notes follow in the next posts. Note: they are very raw

Dave Shen (dshen) is blogging. Dave was the first designer at yahoo! creating the original yahoo! logos, look and feel, the jumping y! guy. He was *the* leader for UED for a long time before moving on couple of years back. Not that he needs my endorsement, but he is an extremely innovative, forward thinking, product/idea guy. Go read his blog.

As I mentioned in the post here, i wanted to think through about some guiding principles for the ideas i am planning to work on. It’s not that i don’t have any ideas that are worth working on, or i have some writers block. I do think that i have some very interesting and compelling product ideas. I am very excited by the possibilities and how these products can improve people’s daily lives. Add to that, there’s real, meaningful (100M+) revenue opportunity and while these products may or may not make that much money, big market sizes attract investment.

On my last day at yahoo!, I got the opportunity to spend a bit of time with James Slavet. James is a VP at yahoo! and a rising star. While the title of VP is obviously official, the rising star tag is my own. I had the good fortune to work closely with him and learnt a lot from him in a short duration. Coming back to my last day, the first thing he asked me in our short meeting that day was my definition of success. I stuttered for a response and he went to tell me how he was asked by someone he respects (Let’s call him James++) that same question. Upon an unsatisfactory answer from James, James++ proceeded to say that he was succesful in life. James++ was successful because he has a happy family, great grand children and they all have really good relationships amongst them. The point was to look at success as something beyond prosperity. Just as paul graham pointed out that money is not wealth, prosperity is not success. This was a great insight, simple but something that we don’t pay attention to in the daily rat race.

I was thinking more and more about what would be success for aXooba (pronounced uh-zooba). Building a product, building a product that’s useful, raising money, making revenues, being profitable, selling the company for a good profit for all involved, and a list of other simiar things, don’t quite seem to hit the mark. I suppose ultimately, everyone and every company should determine the definitions of their own success. Since, aXooba is me at this point, I’ll use my definitions of success. I also know for sure, success is not a milestone, it’s a process, a path. It’s not a stage that a company reaches, but a path.

Once i started looking at various companies’ mission statements, i quickly realized that quite a few of these profit making machines are sensitive. All the companies listed there have some sort of vision, mission, that reflect their definition of success and give insight into their values. Of course, some of them (like kellog) just have a set of values posted. Google, of course, did not even get into the semantics of vision/value/principle, but just posted ten things. Google’s mission statement, is quite a lot more succint. Yahoo’s mission statement , also lists out core values. Reading all those, really no company ever comes out and says that their primary and most important goal is to make ton of money. I guess no surprises there. I think the question to think about is, to what extent that company and it’s employees continue to understand and reflect the values.
The important thing is though, is to clearly state those principles and philosophies what ever they might be, early on in the company’s lifecycle. This does not mean that they are not adaptable. It just means that stating the values upfront means you have better chance of attracting people who agree with that philosophy and overall a better chance of sticking to the values.

For aXooba, I don’t know if I have 10 things or 6 core values. I know for sure that not only do i have to set principles, they have to be tied into clear actionable policies/programs/activities company undertakes.
The first one is about customers. The 2nd about giving back.

Our company’s lawfirm - WSGR - organized a “coaching” session with sequoia for some of the entrepreneurs they represent. My coach happened to be mike moritz - who’s prior successes include google & yahoo. He’s also recognized as #1 midas by forbes.

The format required that i make a short presentation covering the basics of the idea. I had to be in the wsgr offices by 8:20 am and that mean i had about 36 hours. I panicked a little bit, but rushed to create a preso that would work for this meeting.

This morning, i met mike finally. The meeting went off very smoothly. Mike seemed like a very nice, smart guy. It was very helpful and encouraging to listen to discuss the idea. Net/net i walked away with a very positive feeling about the idea, and charged up to execute.

Dorrian (mozes founder) told me in our first meeting that while doing a startup somedays are great and somedays just aweful. This definitely is a great start for the day

Google finance launched last night. I was expecting them to launch google finance for a while, so i wasn’t totally surprised when katie stanton - google finance product manager - pinged me after the launch on messenger.

The front page looks like a simplified version of yahoo! finance. There are no currency links, mortgage rates, links to deeper parts of site (actives, indices, bonds, etfs, options etc). So the home page emphasizes huge search box, top indices summary, Major market news, Most recently looked up stocks and related news. There’s tons of other “crud” on yahoo! finance page, most notably ads (big expand on mouseover ads) and ads pretending as content (For example banking center, credit card center etc) that google did away with that’s very good.

The quotes page itself, again has no ads, has quite a bit of content presented very well. Despite having a lot of content, the page looks organized and here are some early thoughts

Overall a great quotes page. But the best thing about their site is not this page. The feature i love best about google finance is search. You can type in company name, sector, ticker symbol, still get great results. Y! finance ticker symbol look up is pretty bad and they have just chosen not to solve that problem. (Note: I was part of the team that implemented this solution on y! finance - more on that at the end of this post). You can type in random strings and still get decent strings. I tried, “games”, “bonds”, “actives”, “movies”, “wireless”, “wireless chips”, “studios”. Most results are satisfactory. Strange things to note - i got a quote RDY when i asked for actives & I got SIFY in the results back when i typed “movies”. Overall pretty good.

There are quite a few nit picks, including no RSS feeds for news, limited portfolios etc, but overall it’s a really good first effort from Google.

Now for some background. I was part of the Y! Finance engineering team from late 1996 through 2000. I was/am very proud of the product we built there. We built the best finance site on the web. A lot of content that was inaccessible and/or expensive before y! finance was free to use and easy to understand because of our product. Even now, overall Y! finance is a very good site.

However, for a while now, i felt that y! finance stopped innovating, they stopped trying to solve hard problems. Message boards/groups was an acknowledged problem, there’s quite a few other discussions that happen in the finance team. I hope the good folks in finance who want to build better and more innovative products gain strength from the launch of Google Finance. I really hope that there will be renewed focus from yahoo on finance properties. I wish all the Y! Finance folks the very best in beating google, because google finance is indeed a really good product and worthy competitor.

http://www.craigslist.org/pen/eng/142558340.html

if you are the one, write back at ravi at dronamraju dot com