How to Create an Early Stage Pitch Deck

How to Create an Early Stage Pitch Deck

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Starting Your Startup by Joe Stump

Great presentation by Joe Stump, Co-founder & CTO of SimpleGeo.

"Choosing your technology stack is one of many decisions you’ll have to make when creating a company from scratch. Along with this, you’ll need to figure out who you should found a company with, who you should take money from, what the company culture should be, management processes, and who to hire when. Joe will be covering basic technology stack choices (cloud v. hosted, frameworks, etc.) as well as other critical decisions one faces when starting a startup."

Starting your Startup

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"The Next 10 Years Will Be Great For Both Founders And VCs"

Great post that deserves a dedicated link here and a reposting of William's slides:

"The Next 10 Years Will Be Great For Both Founders And VCs" TechCrunch, William Quigley

QUIGLEY_Report_Final

Co-founder Myth = False Prophesy of Entrepreneurship

I came across a new blog, Founders Block, covering the startup scene in NYC and which aims to be a resource for new, young entrepreneurs. Love their idea and mission.

One of their recent blog posts, "The Co-Founder Myth: Why You Might Not Need One, Especially in NYC", was well thought out and somewhat practical, but I thought it was sending the wrong message to new entrepreneurs in NYC. As discussed in their blog post, I am aware of the lack of technical talent compared with Silicon Valley, but promoting the notion of single founder startups is simply short-changing the potential and probability of success for entrepreneurs. Here is my comment on their blog post:


I believe you're seeding a destructive message here for startups and new entrepreneurs. Sort like teaching a minor league baseball player the wrong hitting stance as he's trying to make it to the bigs. Not's just about saving equity or making things easier in not looking for a co-founder, but trying to increase your chances of success.

There are various studies that have tracked the probability of success of technology startups over the past decades, such as MIT's Edward Roberts. The success rate exponentially jumps from one person to two people, and then continues to increase to three and four people. It's been a while since I read these studies, but I believe it flatlines after 4 founders. How many tech titans do you know that were started by one person? Even mid-sized tech company started by one person?

There is a reason why the recent trend of tech incubators prefer teams of at least two people and why prominent long-time VCs, such as John Doerr, focused on the "team". Some random links related to this:

John Doerr's Startup Manual

Why to Not Not Start a Startup

Ron Conway and Paul Graham startup success data


Related to this is the recent trend of social apps and games being funded versus "bigger ideas" and the growth of angel investing, so I understand in these types of startups multiple founders might not be necessary at the concept stage. This is where I agree with Michael Arrington's gripe about the new investor landscape creating a "culture of shooting too low". Investors are funding some of these one-hit wonders and since many of them are angels smaller exits less than $50 million or even $30 million are considered home runs. What would the technology landscape look like if these same entrepreneurs had bigger visions than creating a water ballon fight on Facebook? Or is this just a whole new category of tech entrepreneurship?

Why do you think startups fail? (Namita Bhasin's Answer at Quora)

A follow up to my prior answer at Quora and repost here. I liked Namita Bhasin's answer, so I'm reposting it here:

I did a research project on this in SJSU's MBA dept a few years ago. The short version of my findings:

- Human Capital
Given the choice between a team of rockstars or a less-proven team that works well together, you're better off with the latter. No matter how brilliant people are, if they can't work together, your startup is going nowhere. The synergy between people that collaborate productively can lead to amazing success.

- Social Capital
Weak ties are more useful than strong ones. When you are closely connected to someone, you tend to have many resources in common; when you are more loosely related to someone, they tend to have more resources (connections, money, expertise, etc) that you don't already have access to.

- Financial Capital
Too little money is an obvious problem - but so is too much. You risk spending your money too freely, shortening your runway (seductively high salaries for the aforementioned rockstars) and/or you may spend on the wrong things (logo t-shirts and laptop bags are not the best marketing tools).


Namita's answer also overlaps with my old article on "Building the Perfect Team" for startups, which emphasizes team chemistry and trust.

What's the Best Venture Capital Firm or Angel to Work with as a First-Time Entrepreneur?

My answer over at Peerpong and here are some others.

What's the Best Venture Capital Firm or Angel to Work with as a First-Time Entrepreneur?

Agree that you should focus on a specific partner and how he/she fits your personality, vision and intended company culture. Of course, sometimes you don't have that luxury. Here's my short list:

1. SV Angel (Ron Conway's angel fund)
2. Softtech VC (Jeff Clavier's angel fund)
3. Harrison Metal (Michael Dearing's "super" angel fund, $500K+)
4. Radar Partners (Kevin Compton, former KPCB partner)
5. Foundry Group (Brad Feld is a good mentor type)
6. First Round Capital

Why do you think startups fail?

A question posted at Quora...

Why do you think startups fail?
I have seen founders blame investors, investors blame CEOs, CEOs blaming the R&D people, R&D people say the product is fine, the market just doesn't get it, and marketing people blaming it all on the recession.

In your opinion, what are the major strategic reasons for startup failures?

My answer:

Strategic Reasons
1. The market simply isn't there. The startup could be way too early, too early, or just never was. I just hope you don't get in the last category because there will be all these drug accusations.

2. Poor allocation of resources and money. I've seen startups hire too many engineers, spend too much on marketing, or waste it on private helicopter rides to meetings (which mobile startup was that?) and other really idiotic expenditures.

3. Inability to change your business model midstream. Related to the first point, many successful startups have changed their business model midstream when they hit a roadblock. Is the CEO or management team able to be flexible in their thinking, or will the love of their product or personal stubbornness lead to their downfall?

4. Raised too much money. Sometimes too much money creates laziness or undisciplined management decisions. I've been here, so I just called it "management blindspots" or "big rounds are like crack for entrepreneurs" take your pick. Money burns quicker than most entrepreneurs think. It's not paper, it's paper soaked in gasoline.

5. Raised too little money. I've been here too. This is what I call funding to fail. You raise too little and you're always chasing the next bridge loan or funding rounds to take your company to the next half-step. Being greedy with your equity is good, but when it becomes a drag on product development or growth it becomes stupid. If and when you can raise a decent round, do it and don't assume investors will be there at your beckon call a few months down the road. Most people are beauty queens (or kings) only once.

Non-strategic Reasons
1. Lack of trust. Trust really is essential for a startup's success. If there is a lack of trust in the founding team from day one, it will be a slow poison that kills the company. A subpoint is the lack of chemistry. This soft issue of trust and chemistry has killed many startups.

Story on Pandora's Perseverence

Great story on entrepreneurship and perseverance by Tim Westergren, so this link deserves its own space. He closed his second round after 347th pitches and 11 credit cards.

"How Pandora Slipped Past the Junkyard"

The New York Times
by CLAIRE CAIN MILLER

OAKLAND, Calif. — Tim Westergren recently sat in a Las Vegas penthouse suite, a glass of red wine in one hand and a truffle-infused Kobe beef burger in the other, courtesy of the investment bankers who were throwing a party to court him.

It was a surreal moment for Mr. Westergren, who founded Pandora, the Internet radio station. For most of its 10 years, it has been on the verge of death, struggling to find investors and battling record labels over royalties.

Had Pandora died, it would have joined myriad music start-ups in the tech company graveyard, like SpiralFrog and the original Napster. Instead, with a successful iPhone app fueling interest, Pandora is attracting attention from investment bankers who think it could go public, the pinnacle of success for a start-up.

Pandora’s 48 million users tune in an average 11.6 hours a month. That could increase as Pandora strikes deals with the makers of cars, televisions and stereos that could one day, Pandora hopes, make it as ubiquitous as AM/FM radio.

“We were in a pretty deep dark hole for a long time,” said Mr. Westergren, who is now the company's chief strategy officer.. “But now it’s a pretty out-of-body experience.”... (full article)

Tech Trends for 2010 — A Netscape Moment Coming Up

My third annual technology trends piece is up at VentureBeat...

Tech trends for 2010 — a Netscape moment coming up

When I made my tech trend predictions for 2009, we were in the middle of an economic meltdown. This year, I’m less focused on the recession and — thanks to my one-year old twin girls — am wading my way through a flood of information on baby products, toys and books. My mind has wandered between thoughts of Bugaboos and Ooyalas, Leapfrog and Playfish, or Seuss and Seesmic. Still, here are my tech trends for 2010.

Online Shopping Clubs Will Mature
Online shopping clubs aren’t anything new, but these post-bubble incarnations are. Leaders in this segment tend to hold “flash” sales (limited-time sales) and restrict sales to members only. Luxury goods lead this space with France’s Vente-Privee hitting $966 million in revenues this year and U.S’s Gilt Groupe earning almost $150 million in revenues in 2009. By 2010, within four years since launching in the U.S., the companies in this space will have achieved over $2 billion in worldwide sales. Talk about hockey stick growth!

This same model has transferred to other categories, with many luxury players launching travel offerings under their banners. There are also more narrowly focused sites launching, such as Totsy for moms and One Kings Lane for home décor. Woot in the U.S. and One A Day in Korea are flash sale sites that sell only one item everyday. One A Day hit $13 million this year and projects $28 million in sales for 2010 under this simplified model.

Much of this tremendous growth has been driven by the steep discounts all these sites have provided through access to excess inventory. There are concerns this category might see some trouble once the economy picks up and retailers begin rightsizing their inventory. But I believe it is here to stay because — similar to how Zynga and Playfish brought lazy interactivity to the online casual gaming space — these new e-tailers are pushing products and brand relationships to the lazy shopper. It won’t be just about discounted goods, since players like Gilt are already pushing exclusive, in-season goods. So I predict that 2010 will be a breakout year for this ecommerce category and it will move far beyond discounted luxury goods.

Gaming Will Advance Beyond PCs and Consoles
2009 was a great year for online gaming, with Zynga, Playfish, and others leading the charge and showing the power of Facebook and the social networking ecosystem’s distribution power. The next stage of online gaming will be led by more powerful gaming platforms and engines for mobile and the browser... (full article)

UPDATE: VentureBeat has a syndication partnership with the New York Times, so they select some articles everyday to republish in their Technology section and they picked my op-ed today.

Great Lessons From Entrepreneurs

There were some great posts on startup lessons from entrepreneurs last week. First one I came across was Refin's founder and CEO, Glenn Kelman:

"Good Question! The Eight Best Questions We Got While Raising Venture Capital" TechCrunch

Second one was Steve Blank's insights into Cafepress and their pitch for venture capital, "Lessons Learned from our Customers," which was different than most.

"After VC cash? Show ‘em what you’ve learned" VentureBeat's Entrepreneur Corner

An excerpt:
"Fred and Maheesh had started 9 previous companies in 6 years. Their motto was: “Fail fast and cheap. And learn from it.” Cafepress literally started in their garage and was another set of experiments only this time it caught fire. They couldn’t keep up with the orders."

Kevin Compton's 5 Rules for Success

I recently attended a small luncheon where Kevin Compton was speaking and sharing his insights on success. He framed his discussion within five rules that have helped him towards his path in becoming one of the top venture capitalists in Silicon Valley and co-owner of the San Jose Sharks. Kevin was a partner with Kleiner Perkins Caufield & Byers for seventeen years, which some consider the most successful venture capital firm. Some of their investments include Compaq, AOL, Netscape, Sun Microsystems, Juniper Networks, Intuit, Amazon.com, and Google. KPCB's companies employee over 300,000 people, have annual sales in excess of $100 billion.

Kevin serves on the board of a eight public, private and non-profit entities, which include Citrix Systems (NASDAQ:CTXS) and VeriSign (NASDAQ:VRSN). Prior to joining KPCB, he was Vice President and General Manager of the Network Systems Team at Businessland (now Siemens). While in this role, the company's sales increased from under $70 million to over $1.4 billion, and the company was recognized as the number one supplier in worldwide Local Area Networks for three straight years.

He began his talk with the "Golden Rule" and cited Matthew 7:12, "So in everything, do to others what you would have them do to you, for this sums up the Law and the Prophets."

For Kevin, he explained this was important and effective in all negotiations he was involved in. The "Golden Rule" allowed him to never have a bad experience because his objective was to treat the people on the other side of the table as he would have wanted from them. Of course, they might be vicious and aggressive, but Kevin said he kept it all in perspective and stuck with the "Golden Rule."

His second rule was to always have a sense of urgency. He learned from one of his mentors not to waste time, but just to do it. If it's on your list, why keep it on there if you could do it now? He also discussed how having lists are a good thing because to become successful you need to be doing things and if you don't have things to do then you will not become successful. So having long "To Do" lists are a good thing.

His third rule was to keep on trying. Another way to phrase this, which he didn't state, is do not to be afraid of failure. He gave a football analogy of the '72 Miami Dolphins. They were the only perfect team in NFL history, but do people remember them as well as the great football dynasties? No. People remember and have a close affinity to the Pittsburgh Steelers, Dallas Cowboys, San Francisco Forty-Niners or Greenbay Packers. These teams lost and won in numerous Superbowls. It's better to just try rather than only trying when you know you won't fail or waiting until everything is right. Not a great analogy, but a good message.

I liked how he referred to his written biography as being incomplete. It tells maybe 5% of his career, which of course highlights his successes, but most of what's left off are his failures which drove him to success.

His fourth rule was to think big. He had a great story about one of his players on the San Jose Sharks, who's name I forgot, who came from a small town in Ottawa. This player wrote down when he was in junior high that his dream is to play professional hockey for the San Jose Sharks, and against numerous odds that Kevin described he achieved his dream. So think big and dream big.

Kevin's last rule was to think small, and to ask yourself, "Am I doing the little things right?" In his opinion, the top 5% of NHL players are all the same in terms of talent, but the difference is in the little things. The slightest increased shot accuracy, conditioning, etc. make the difference between being a top player and hall of fame quality.

He recommended to think of those small things in life and work. The small thank you note, a cup of water for someone in thirst, or a helping hand when needed.

Obviously, I cannot convey the energy and tone Kevin Compton projected, but he was at worst impactful and at best inspirational.

"The Funded Publishes Ideal First Round Term Sheet"

Great effort and much needed move by Adeo Ressi. Article from TechCrunch:

Adeo Ressi, founder of The Funded, a site where people rate venture capitalists and the Founder Institute, an incubator of sorts, has long ranted about what he calls “the atrocities of investors.”

Now, a lot of people, including prominent angel investors and venture capitalists, are starting to listen to him. Tomorrow Ressi will announce a new, basic term sheet for use by investors and founders. The goal is to protect founders and reduce legal fees, which average $50,000 or more per venture round...


FFI Plain Preferred Term Sheet -

Berkeley Ventures, A New Startup Accelerator

Another startup accelerator has launched and finally one where its HQ is in the Bay Area.
Berkeley Ventures seems to follow the mold of Y Combinator and Techstars which is helpful for a good segment of entrepreneurs.

They will seed an idea with $5,000 to $10,000 and take 3% to 9% of the company. More from their site:


Berkeley Ventures is an accelerator which helps serious entrepreneurs bring their innovations to the world. We are focused on helping startups in sectors including, but not limited to, internet, software, mobile, clean energy, and gaming. We offer access to mentors and advisers, introductions to investors, incubator space, connections to local talent/resources, and a year round program to help these companies grow.

We are currently accepting applications for companies that are seeking mentorship and seed funding.

Canaan Entrepreneur Pitchbook

Good overview for entrepreneurs by Canaan Partners, a venture capital firm. After seeing my "Startup Fundraising 101" slides, they were nice enough to ping me and let me know about their "Entrepreneur Pitch Workbook."

Canaan Entrepreneur Pitchbook

View more documents from Canaan Partners.

A Funding Round is Never Closed Until Money is in the Bank

My close friend Jimmy Kim that I mentioned in my recent VentureBeat piece ("Startup Fundraising 101") pinged me about a critical point I forgot to list, which is NEVER ASSUME A DEAL IS CLOSED UNTIL MONEY IS IN THE BANK.

We experienced and know of verbal commitments that went south, signed terms sheets that went south, and other situations where investors backed out unexpectedly. So we eventually learned that even a signed document wasn't good enough until MONEY WAS IN THE BANK.

Startup Fundraising 101

My article at VentureBeat's Entrepreneur Corner is up:

"Startup Fundraising 101"

The slides in the article and below are actually from an older version, but the newest one was on my laptop that got stolen this past weekend. Not sure if I'm up for recreating this document since I can't remember all the minor tweaks (e.g. slide 12 mentioning Reed Hastings and Judy Estrin instead of Marc Andreessen) I did :(

Startup Fundraising 101

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5 Best Stanford Tutorials in Financing

VentureBeat's Entrepreneur Corner has some good videos on startup financing:

How Much Money to Raise?

Five Metrics for Venture Success

The Dynamic Relationship Between an Entrepreneur and VC

Silicon Valley: The Capital of Venture Capital

Angel Investing Revealed

"Beginner's Guide to Venture Capital"

Beginners Guide to VC - Free Legal Forms

Clueless Tim Geithner Says Venture Capital Is A Systemic Risk

The Wall Street Street came out with this op-ed that had me scratching my head:

Is Silicon Valley a Systemic Risk?
Treasury decides to treat venture capitalists like hedge funds.

... The confusion began when Treasury Secretary Timothy Geithner recently told Congress that large venture capital (VC) firms should be forced to register with the Securities and Exchange Commission (SEC), and submit regular reports on their investors and portfolios. Data collected by the SEC would then be shared with a new risk regulator to ensure that VCs aren't "a threat to financial stability."

Since then, venture investors have been trying to solve the mystery of how they could possibly threaten the financial system. Their work involves very little banking. Venture firms raise equity from wealthy investors to buy ownership stakes in small companies. The VCs and the companies in which they invest use little or no debt.

"I cannot imagine any venture fund being of a size to pose 'systemic risk,' so they either don't understand the nature of the business, or by including this provision they are sharing that their agenda is not the overt one disclosed," says Jack Biddle of Novak Biddle Venture Partners. What Washington needs to understand is that bank-style regulation could destroy the culture that created the microprocessor... (full article)

I'm sure Geithner is a smart man, but I agree with Jack Biddle above that he probably doesn't understand the nature of the business. Many smart people I met don't know the difference between venture capital, private equity, hedge funds, and other types of investment funds. It can get confusing, but Geithner is our Treasury Secretary! Either he doesn't get it and needs a "Venture Capital 101" class along with "Our Nation's Greatest Wealth and Job Creation Engine 101", or his staff must be really stupid or overworked and provided very poor research to him.

Google Ventures Launched!

Google's corporate venture capital arm is launched. Exciting and interesting to see how they really approach investments and help entrepreneurs. Some information from the corporate blog post:

"At its core, Google Ventures is charged with finding and helping to develop exceptional start-ups. We'll be focusing on early stage investments across a diverse range of industries, including consumer Internet, software, clean-tech, bio-tech, health care and, no doubt, other areas we haven't thought of yet. Central to our effort will be our fellow Googlers, whom we view as a critically important resource to help educate us about potential investments areas and evaluate specific companies."