challenges in the startup ecosystem - stanford innovation group (march 2010)
TRANSCRIPT
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Challenges in Startup Ecosystem
For Stanford Innovation Group3/29/2010
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Why am I talking?
• Co-Founder of [Startup Digest]
• 20k+ subscribers in less than 3 months
• Insight into 32 local startup hubs worldwide
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Unsolved Problems in Ecosystem
VC1. Branding
problem2. VC Math
Problem3. Platform exits
Startups1. Co-Founder
matching problem
2. Speed to monetization
3. Mentor advisor problem
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VC
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VC: Branding Problem
Source: http://www.entrepreneur.com/vc100/stage/early.html
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VC: Branding Problem
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VC: Math Problem
• VC’s paid thru (2%) mgmt fee + carry• Incentive to be larger = $• Risky so 3x gross returns. Ie $600m fund needs
to generate $1.8b return• Investor owns on avg 20% of company• Assume most companies will fail (7/10)• Need to assume $1b+ exits
Source: http://www.avc.com/a_vc/2009/04/the-venture-capital-math-problem.html
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VC: Math Problem
Source: http://paul.kedrosky.com/archives/2006/03/22/no_more_billion.html
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VC: Math Problem
Point: Traditional VC isa hard game.
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VC: Platform Exits (tangential)
• Creating industries vs. Platform Exits
• New focus on $50-$150m deals • Platform buys working model
then adds distribution • New focus product risk, minimize
customer risk, relationships with acquirers
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Startups
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Startups: Co-Founder Matching Problem
• Consistently most clicked items in Digest• No real market solution out their right now
Source: http://entrepreneurialactivism.com/2010/03/25/the-co-founder-matching-problem/
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Speed to Monetization
1. You have $25k investment per founder. 2. At $2k a month that’s 12 months 3. NOT including travel, dev, exp, etc
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Speed to Monetization
• We need to think of creative business models– Subscriptions– Transactions– Job Boards– Events– T-Shirts– ETC
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New Words to Live By
"Make money don't stop.“
- Krutal Desai, aka "Brutal with a K"
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Mentor/Advisor Problem
• Mentors and Advisors are the most consistently asked question
• How do you find great mentors with experience in your space?
• Operational vs. Experiential advice • No market mechanism for this
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Contact / Q&A
Contact: [email protected]: @cmccann7
Signup at: www.thestartupdigest.com
How to I come up with a business idea?
How do I get people to use my product?How do I meet a business co-founder
How do I get more involved at Stanford?
Where can I meet cool people?
What are some of the most exciting platforms?Why should I go to in person events?
Have you heard of Startup Waffles?
Best sources for funding?