THE EARLY, EARLY STAGE

by Jonah McIntireFor ESCP Alumni in Zürich

Three suggestions for first-time founders

Suggestion #1- Cultivate a ”Theory Stack”

Example Tech Stack

A tech stack implies:• Separation of concerns… discreet solutions to discreet problems• Demarcation of ”best practice” from ”homemade”• Common terminology, i.e. we have can refer to sections of tech easily

Example Start-Up Theory Stack

Funding

Growth Strategy

Staffing & Comp

Leadership

Vision vs. Testing

Founders

Product Strategy Alliances

Examples from my Theory StackStartup Decision Best Management Approach Publication, Author, & Year

What is a Start-Up? A new potential business with high uncertainty

Lean Startup – Eric Ries – 2011Startup = Growth - Paul Graham - 2012

What should a team do to drive a start-up forward?

Fast cycles of building something that will generate data needed to verify assumptions, hence lowering uncertainty

Lean Startup – Eric Ries - 2011

What are the logical stagesfor a start-up as it matures?

Verify Market, Verify Solution, Scale Startup Pyramid – Sean Ellis – 20064 Steps to Epiphany- Steve Blank – 2005Nail It Then Scale It – Nathan Furr –2011Lean Startup – Eric Ries - 2011Running Lean – Ash Maurya - 2012

Where can and should innovations occur?

Innovate the business model, not the product

Business Model Generation - Alexander Osterwalder and Yves Pigneur – 2010Ten Types of Innovation – Doblin - 2013

How to assess the cost and ease of growth if successful?

Find the resource that must be acquired for incremental growth

Scaling Factors– Jonah McIntire, 2015

How should founders divide equity?

In proportion to their foregone salary or direct investments.

Slicing Pie – Mike Moyer

Suggestion #2- Is It a Startup or a Company?

Startups vs. Companies• We have a different word for a reason• Startups are meant to grow quickly and big• Uber is not just a barbershop whose founders were unusually

lucky and hard-working.

Its okay to found companies• Of the millions of businesses registered each year, >95% are

companies without any hope or intention to scale• In the startup scene, these are called ”lifestyle” businesses

Or found a startup and focus on growth• Consider big, threatening ideas. Replace email.• Accept the power distribution: >90% of exit value is created by

the top ten startups founded each year• Only address large markets, intending to monopolize them• Build companies that get more competitive as they grow• Your company has one goal: weekly growth of ~5%

Growth-Check Your Strategy

#2- Which Market to Pursue?

(Where to Play)

#1- What are our Goals? (Become a Huge Monopoly)

#3- What and How We Sell?(How to Win)

#4- What Resources & Activities Are

In-House?(What We Do

Better)

#5- What Resources & Activities Are Outsourced? (What Others Do

Better)

Aspirations

PositioningCapabilities

Growth-Check Your Scaling Factors

Suggestion #3- Focus on Founders

1. Required capabilities:• Engineering• Capital-Strategic• Sales**also: network management for marketplaces or platforms.

2. Required mentality:• Special forces, not regular army• Self-aware, experienced with failure and success• Intrinsically motivated by the problem being solved

3. Formalized relationship:• Found with good friends• Write the divorce paperwork before getting married• Equity split via a contribution-based process (Slicing Pie or

vesting)

Final Thought: Founding in Switzerland

1. Negative: Ecosystem is Not Mature• Regulatory burden: cost, risk to directors, etc. • Few experienced advisers, board members, and entrepreneurs• Access to capital is limited

2. Negative: Adverse Cultural Factors• Golden handcuffs• Risk aversion• Local over global

3. Positive: Leverage Swiss World-Class Advantages• Basic and applied research institutions• Banking talent (but understand their limitations as well, i.e. are

mid-career Credit Suisse staff really able to launch the next FinTech startup?)

• Biotech valley in Basel• Regionally (i.e. EU) good employer rights