StartupLandia Unplugged

“We each have a choice in life: work for somebody, or start something.” - Neal Dikeman

“Anyone can be an expert on anything, given 5 years.” - Bill Salathiel, PhD

Concerned that your startup is not flying

or your town is weak on startups?

Let’s explore what makes a startup tick

Start with the problem statement

So, you want to build a startup or attract startups to your town?

You need to understand how startups and startup herds evolve

StartupLandia Unplugged is a brief storyboard on the key elements of a startup herd from a 7x founder

Herd

Herds are just an aggregation of individual startups. Herds evolve and move fast – customer interest, competitor progress, and investor demand. To build or compete in a Herd, you have to move fast, or evolve, too.

Startup Herd 101

Founding a Startup

To understand how to build an ecosystem, you need to understand the elements that

make a single company

a) able to launch and aggregate capital,

b) able to successful

Startup Herd

How Does a Startup Herd Thrive?

• In the Tier 1 startup markets

• Public - private partnership and nonprofit has a huge role in education, infrastructure, and R&D

• Startup Herd handles company formation, and ecosystem, capital

Money follows teams,

Exits drive repeats.

Teams hunt the next big problems and big ideas and

big customer demand,

How Startups and Herds evolve

There is always capital for good deals

Money and technology does not make a good deal, people and problems do

Sectors get Disrupted

By Themes

To create new Industries

IoT

Blockchain

Machine Learning

The Next Big Thing Themes and Trends are Frustratingly Fast – launching in overlapping waves as short as 9-15 months

Software is eating the world has yet to be proven untrue

… and is dangerous to bet against.

Software

Force multiplier for almost all markets

Underneath, most hubs and trends are the story of just a couple of founders

NetscapeVirginia/Dotcom

Amgen / Genentech

Biotech SFAmazon Seattle Intel Portland

Dell Austin Tesla EVsFirst Solar

CleantechUber Mobility

Twitter San Francisco

Grubhub/Groupon Chicago

Apple Smartphone

Facebook Social

Launching

Launching is not actually about Lean Startup or delivering results – that’s what Winning is about – Launching is about doing what it takes on limited resources to aggregate enough people and cash resources to take a shot on goal.

What matters to launch a startup:

• People

• Problem in a Big Market

• Technology• In that order, then everything else

• and if you only get one, pick people, they can find the other 2

Go

Technology

Problem

People

GoCustomer Traction/ Validation

Fundable

Go

What makes a fundable "deal"

and Accelerating demand, traction, validation and investor interest while you raise

Full team that's either experienced and successful in other startups, or beginning of career, unproven but

displays lightning fast results, command of its problem, and

coachable like a sponge

Sexy as hell technology/innovation that just resonates and knocks the

key barrier to adoption

Customer and user traction on whatever is built/demonstrated so

far

Clear path to make money and scale in a VBM (Very Big Market)

Fundable

Houston, we have a problem

What you think you Need

What you actually NeedI need

money

To hire peopleTo build product

To grow revenues

I have a team

That has customers

For the tech we’ve built

I need money

To deliver my growth faster

A startup can go lightning fast, very big, on very little -- lack of capital is rarely the real culprit

Very little cash and time is actually needed to launch a successful startup if the team knows what they are doing . Good ones can go big, fast. Everyone starts small.

Google - $25 mm in total venture capital to build a company bigger than Shell in barely a decade

• Averaged c. $300K seed investment and 9-12 months to reach a $3-$10 mm A round e.g.

• Zenergy (GridEdge): $300K to $300 mm in 30 months in superconductors

• Smart Wires (GridEdge): $300K $10 mm A round in 15 months lab to field in 330 days

My own startups - 7x founder of startups that raised cum >$250 mm in venture capital

3 skills required in the founding team

It always seems to take 3 – 3 who understand or can learn how to translate skills to a startup environment

Built around a CTO who is just short

of genius.

A rainmaker in sales,

and

A CEO who's got

game

People first

• If the founders can't pull an A team, there is no startup, and he/she/they are no founder

Key message to launch

Winning

Building a business that can win is not always the same as doing what you need to do to get the A round and launch. Once Launch is done, you have enough resources to make a go – now you have to deploy them to build product, make happy customer, grow, scale, and get more resources

You need critical mass of startup talent in your tent to compete.

Young is ok, experienced but new to StartupLandia – not so much.

• other successful startups, and

• top flight technical graduate/undergraduate programs, and top flight MBA programs

• venture funds

Great founder talent tends to be early to mid career, and tends to comes from 1 of 2 places:

• serial entrepreneurs in other startups, and

• venture firms,

• But big company with no startup or tech experience is always risky

Great startup talent in general comes from a range of places

A startup's culture is usually pretty set in the first couple of years – by the first few hires - and your culture is your life.

Ad

visors, b

oard

, incu

bato

rs, con

sultan

ts etc

are really just a co

mm

od

ity (bu

t we

all preten

d th

ey add

value).

Great founders, leaders, sales people, engineers, matter most

Advisors, Board,

Lawyers etc

Incubator/ Accelerator

It’s fast rough and tumble

Startup world is not nice

Ideate, test, aggregate resources, build deliver or fail and try again

Premium on speed –up or out

If you are talking about the same things 9 months from now, you’re already dead

“Baptism by fire”

“Vulture capitalist”

“Up or out”

“Root hog or die”

“What have you done for me lately”

“The only constant is change”

…

Pick your favorite aphorism

…

But don’t stand stillIf you talk “Fail Fast” and “Lean Startup” be ready to walk the walk

Your stuff has to be new and good

Content is still king

Vision matters.

Tech delivers.

Me

too

do

es n

ot

usu

ally

win

as first mo

ver advan

tages are real

It’s the Product Stupid

• Product - what you build and how you take it to market, is as important as the technology in most cases, even in high science tech like life sciences and energy.• If it isn’t going fast or well – look to the product - you generally need Product

Management/Channel/ Product Marketing expertise so bad you can taste it.

Speed kills

• Startups ideas come in waves, aka the “herd mentality” catching waves matters, leading waves wins, chasing waves is death

• The lifecycle of the early stage window and investable front end of a theme or wave in venture tends to be short - 36-60 months max• What investors are talking about now, is what

they invested in LAST year

• A fund commits most of its capital in < 36 months

• A startup has 12-24 months between raises• That’s why call it burn rate

• Often massively parallel can catch from behind as fast as you can add engineers

• You need to measure your actions in days and weeks – and build speed into your team

The only way to kill a startup is to run out of

And if you have one, you can usually get the other … ergo, the only way to kill a startup is to run out of BOTH people and cash …

- Raise cash when you can, as much as you can – your business is good enough to win, you’ll

- Never stop recruiting people and raising cash

- Pay attention to burn rate/time

- Hire from the top down, not bottom up – get exec people who know how to raise cash and get more people

- Get Chiefs who will work like Indians first, not Indians or Chiefs who need to have Indians to work

People or Cash.

.

Bigger stakes, better field

• The lean startup "cookbook" and proliferation of• low cost tech and scaled VC +• competition, grant, social, corporate, ICO,

accelerator and catalyst sources of seed money

• has changed the startup marketplace for the better and lowered the cost of startup entry• Enabling hubs and leveling the playing

field

• This hasn't changed the rules, just upped the prize and the stakes.• The unicorn phenomenon has accelerated

the upping.

Lean startup "cookbook"

Seed Capital

The unicorn phenomenon

Leveled Playing

Field

Massively parallel R&D/ commercialization vs stage gate style

Startups win by going massively parallel on R&D and product development, at the right moment – when they’ve found the pain point, figured out the right product, and nailed the go to market.

…

But we train our scientists and engineers and project teams on stage gate, then teach them Lean to fix it …

Then wonder why they get run over and caught from behind by Agile and Massively Parallel

Component DevP1 R&D P2 R&D

1a 1b 1c 2aMfg Engineering

Component Dev

Pilot Data

2b Pilot Engineering

Startup resource & skills math

c. 50/50 split between $ to get tech/product developed and ready

for market and $ to get tech into market

and sold

Meaning finished R&D is just 1/8th the

resource battle

0 20 40 60 80100

Startup Resource12.5 37.5

50

Prototypical Startup Resource Allocation

R&D Product/Mfg Customer Facing/GTM

Resource allocation usually correlates to skills, plans and valuatione.g. if you overspend R&D/underspend Product/Go to Market in a growth/product play, you’ll struggleIf you starve R&D/IP in a tech heavy play, you’ll get caught

Key message to win

Author Neal Dikeman

7x Cofounder and Seed Investor in startups that raised over $250 mm, 3

continents

CEO, CFO, Chairman, VP, Board, multiple times over

On team @ 9 startups

Investor in 15+ tech deals, Advisor on a dozen others,

2 IPOs, multiple M&A

Jane Capital, Globalgate, Shell, etc.

@ 6 startups achieved >$100 mm in <5 years, 3

as founder

Exp includes: Zenergy(IPO), Yellowpages.com

(AT&T), BlockShield (IPO), Smart Wires (private)

11+ Sectors: Web, SaaS, Cloud, Solar,

Superconductors, Smart Grid, Networking,

Controls, Fuel cells, Electronics, Cleantech

6 Years Big Corporate

Shell Corporate Venture/ Bankers Trust in

Investment Banking

Advisor to $1 Bil + in CVC at Meridian Energy Ltd,

Macquarie, ConocoPhillips, et al

1st company founded in San Francisco, age 25

Bachelor’s Texas A&M

Top industry writer/speaker and analyst

in cleantech

Lived in Houston, NY, SV, and San Francisco