ELEC 5701

Technology Venture Creation

Matt Barrie, CEO Matt Barrie, CEO Bill BarteeBill Bartee Stephen MerityStephen Merity

CEOCEO Managing DirectorManaging Director Course Course AssistantAssistant

Freelancer.com Freelancer.com Southern Cross VenturesSouthern Cross Ventures smerity@freelancer.comsmerity@freelancer.com

matt@freelancer.com wbartee@gmail.comwbartee@gmail.com

Prerequisite

• Strong interest/passion in learning how to turn an idea into a real company

Introduction

• In this class you will get the experience of starting a technology company.

• You will form teams (3 - 4) and each assume the role of a founding executive (CEO, CTO, CMO, CFO).

• You will start with an idea and over the course of the semester evaluate the market opportunity for a business, design a profitable business model, and put together a funding-reading business plan.

• You will then pitch this plan to real world financiers and entrepreneurs.

Course Objectives

• Understand the real world aspects of Entrepreneurship by getting out of the building– Analyze and assess an opportunity– Build the product– Get orders– Work with a team

• Learn whether entrepreneurship is for you

What Will you Learn?

• Opportunity/idea evaluation

• Search for a Business Model

• Customer Discovery and Validation

• Operating and decision making in chaos with insufficient data

• Teamwork

“Is This the Right Course for Me?”

• If you are interested in – Following your passion– Starting a technology company– Joining a small technology company– Being a management team member of a larger technology

company then

• We hope to provide you with the tools, frameworks, confidence and encouragement to go out and start the next Google!

The Course ‘By the Numbers’

• Team building exercise 5%

• Class participation 20%

• Written business plan25%

• Oral presentation of business plan50%

5 -10 hours of work a week outside the classroom

Expectations

• All lectures are compulsory.

• Non attendance lectures is grounds for failure.

• Classes are intended to heavily interactive.

• You will be marked based on your class participation! This includes on-time attendance, business plan progress, and in-class participation (quality of questions or comments).

• Culturally - if you need to make a call, tweet etc, please be respectful and do it outside

Mechanics

• Two lectures per week (Friday 4-6pm)

• Guest lecturers from industry leaders each week

• No tutorials or labs however teams are expected to work on their business plans each week.

• We will have a series of checkpoints throughout the semester to ensure teams are working to speed.

• Course blog at http://techventurecreation.wordpress.com – please check this regularly for updates!

This Class is Hard

• You can’t pass by just attending the class

• Your grade is largely determined by the work you do outside the class

• There’s a lot of it

• You are dependent on teamwork and teammates – communication is critical

Teams

• Suggested team size is 3 - 4 people

• Present regularly and for Final– Weekly lessons learned– Final is demo and summary

• Class is about teamwork, discovery and fast iteration

Suggested Readings & Viewings

• Technology Ventures: From Idea to EnterpriseRichard Dorf and Thomas Byers, McGraw-Hill Science.

• Four steps to Epiphany -- Steve Blank

• The Art of the StartGuy Kawasaki

• Crossing the Chasm -- Geoffrey Moore

• Business Model Generation -- Alex Osterwalder

• Techcrunch.com, Venturebeat.com

• FORA.tv, TED.com

• Stanford Entrepreneurship Corner http://ecorner.stanford.edu/

Introductions

Teaching Team

Matt Barrie

• Chief Executive, Freelancer.com, the world’s largest outsourcing marketplace (and Australia’s biggest website).

• Formerly CEO of Sensory Networks, and OEM hardware company in high performance networks security.

• Prior to that, cofounded a telecoms hardware company and worked in Silicon Valley.

• Stanford MSEE ‘98 and USyd Alumni.

Teaching Team

Bill Bartee

• Managing Director, Southern Cross Venture Partners

• Former CEO of Mantara -- transforming securities trading

• Division Director of Macquarie Bank

– Investor in Seek (ASX), Looksmart (Nasdaq), Altium (ASX), Openwave (Nasdaq), etc.

• Founder/co-founder of 3 start-ups

• Operational roles of CEO, VP Sales, VP Operations, Chief Bottle Washer

• Research Analyst

• BS, MBA, JD

Guest Lecturers 2011 (tbc)

• Ryan Junee, CEO of Omnisio (sold to Youtube/Google)

• Mike Cannon-Brookes, CEO & Co-founder of Atlassian

• David Rowe, Investment Manager, Uniseed

• Rich Richardson, Inventor & CEO of Uniloc

• Alan Liddle, CEO, Immune Systems Therapeutics

• John Young, Principal Advisor, KTM Capital

• And Others

Google Field Trip

• Alan Noble (Engineering Director for Google ANZ) has invited the whole of ELEC5701 to a field trip to Google.

• Alan has a fantastic background including being a Stanford grad, co-founder of Netmind (acquired by Puma Technology, which was acquired by Nokia) and CTO of Foursticks (management buyout to found NetPriva, acquired by Expand Networks). Alan is on the board of AIAA and co-founder of SA Angels.

• Alan will share some of his experience, provide a tour of Google’s offices and talk over lunch about how Google approaches the technology business.

• Trip tentatively in September – date TBD.

Expectations

• All lectures are compulsory.

• Non attendance lectures is grounds for failure.

• Classes are intended to heavily interactive.

• You will be marked based on your class participation! This includes on-time attendance, business plan progress, and in-class participation (quality of questions or comments).Entrepreneurship

Entrepreneurship

• “Entrepreneurs identify and pursue solutions among problems, possibilities among needs and opportunities among challenges” (Tom Byers)

• More than just creation of a business and wealth. It’s focused on the creation of a new enterprise that serves society and the and makes a positive change.

• Entrepreneurs respond to challenges:“Ever since I was a teenager, if something was a challenge, I did it and learned it. That’s what interests me about life – setting myself tests and seeing if I can do it” (Richard Branson)

Entrepreneurship is Hard

• Entrepreneurship requires getting out of your comfort zone.

• Entrepreneurship involves taking risks.

• Its about following your passion!

• “The vast majority of Plan As fail. The vast majority of the successes we think about there, the Googles of the world, the Facebooks, the Intuits, the Suns, the Apples; they didn’t succeed with Plan A. That’s a little known fact. People talk about how these companies executed well from idea to conception, from conception to product, from product to customer and customer to business. That’s not how it works.” (Randy Komisar)

• Only ~1/3rd of new ventures survive the first three years.

The 3 Magic Ingredients

1. You need an idea, however ideas by themselves are worthless. Lots of people have ideas. You’d be surprised how many people around the world have the same idea as you!

2. You need there to be an opportunity. Entrepreneurs look for problems to solve where there is clear market need.

• What makes an opportunity attractive? Examples include:– Market timing

– Knowing the right people

– Knowing how to solve a problem

– Having the right resources

– Economic climate

– Social change

The 3 Magic Ingredients

3. Finally, and most importantly, you need execution.

• There needs to be interest, passion and commitment by the entrepreneurial team, with matching- or who can assemble- the right capabilities and skills.

Key Entrepreneurial Skills

• Talent, knowledge and experience within the industry where the opportunity occurs.

• Can create vision for the venture and effectively communicate it internally and externally.

• Can deal with uncertainty and risk, an ever changing environment and active competitors; and actively work to mitigate those risks.

• Identify an opportunities where there is a market the size of Texas.

• Can convert the opportunity into a business.

Key Entrepreneurial Skills

• Can attract, train and retain a first class team with multidisciplinary talent.

• Has internal self drive to pursue an great opportunity when everyone around you tells you its bad.

• Can handle failing often, fail quickly, and bounce back.

• Can multitask.

• Can solve problems creatively.

• Can do all this with limited resources for potentially an extended period of time.

Question

• If you had to compromise one of the three (disruptive technology/product, large market and founding team), which would you choose?

Question

• Most likely the product.

• If the market is small, no matter how good the product is, its hard to make money.

• With a large market, one can make up for the product with iterative product execution.

• Investors will consider an A grade team with a B grade idea, but never a B grade team with an A grade idea.

More startups fail from a lack of customers than from a failure of product development

(focus on “who” more than “what”)

Carpe Diem

• Entrepreneurship is incredibly rewarding

• It’s not easy to do, but its never been so easy

• Capital required to start many businesses has never been lower (e.g. Internet, software, use of online freelancers)

• The Internet has been an incredibly disruptive technology which has allowed businesses to scale quickly and cost effectively

Homework

• Watch “A Panorama of Venture Capital and Beyond” by Marc Andreesson (May 12th, 2010 lecture for MS&E 472, Stanford University on iTunes).

• Also on eCorner at http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2457

• Start to form teams

• Start to think about an idea for a business and what your hypothesis is