QUICK AND DIRTY STARTUPS TED TANNER JR TCTJR

QUICK AND DIRTY STARTUPS TED TANNER JR @TCTJR LINKEDIN MY BLOG 10. 22. 2011

Who Am I? • Charleston SC Native • Have been a part of several startups • Worked as an architect at Apple (OSX) and Microsoft (a bunch of stuff) Skewlz: Umiami, Berkley, Stanford, UC Davis Livermore

Agenda • • • What? Why? How? When? Next?

What is a Start. Up?

What is a Startup? “A startup is an entrepreneurial driven organization that is continually searching for a repeatable and scalable business model” ~ Mark Babbitt

WOW – An Idea! • Guess what? – SO DOES EVERYONE ELSE.

WOW – An Idea! – A real time chat/msgr with 140 char limit (interest graph) – A search engine based upon summing probability distributions over hyperlinks • PR(A) = (1 -d) + d(PR(t 1)/C(t 1) + … + PR(Tn)/C(Tn) – Affinity Graph that allows you to connect friends based upon network theory: • (if A~ B) then (B~A) and (if A~B and B~C then A~C)

WHY? ! • Here are some reasons NOT to do it: – You want to help people - there a number of worthy charitable organizations out there – You want to be as rich as the Facebook guy or some other rich person.

WHY? ! Here are some reasons NOT to do it: – You want a job where you get to hang out with your engineering friends -- form a hacker's club

WHY? ! Here are some reasons NOT to do it: – You want a small business to support a nice lifestyle for you and your family and you know your buddy's IT shop nets $2 M a year.

WHY? ! Here are some reasons TO do it: – You've always wanted to build your own company from the ground up -- you were that kid selling lemonade

WHY? ! Here are some reasons TO do it: – You've been working on what you believe to be a great idea that will make money and you've gotten some smart people interested in doing it with you – PASSION.

WHY? ! Should You? – Willing to devote 100% for 0 -5 years? • Everything you do revolves around moving New. Co forward: – Take Care of you and others – Cut out all extraneous BS – Willing to live on reduced income etc

WHY? ! Should You? – Take NO for an answer? • That is basically all that happens – Passionate? • Do you lay in bed thinking about it? • Stay up trying to code the idea? – Are you honest with yourself? • Otherwise you and everyone else will find out – pronto.

Still with me? Ok lets look at some s t e p s

Steps – Secure domain name – Familarize yo’sef with corp docs and process – Get a great lawyer – Form company (c-corp)

Steps – Educate yourself on funding – Read Brad Felds book and Founders at Work blog – Start working VC network – Do not form a board of directors – Iterate on everything code/ideas/money – Raise round while scaling – Close the round and keep raising

Three T’s • A Ranked list: –Talent – Who ? –Tech – How ? –Timing – When ?

Talent • AKA THE CREW • A great team will turn a grade B idea into • a grade A idea and EXIT • (Also companies buy startups for the team)

Talent • AKA THE CREW – At least TWO founders: • One Operational or Business • Other technical – Initial team needs to be a mix: • Nowadays KILLER front end and User Experience • Backend just as important • Some type of Data. Science

Talent • Some words on Co-Founders – Get a great co-founder. This is too hard to do alone. – If you're not technical but have good domain knowledge in something you're passionate about, get a technical co-founder.

Talent • Some words on Co-Founders – Spend time up front learning if you can trust this person because you will have to trust them, with everything. – Second only to your spouse or partner, this is one of the most important relationships you will have.

Talent • “The only mistakes I regret are people mistakes. ” ~ Brad Feld • “Steve hires the best people. ” ~ Bill

Talent • Create Advisory Board – Knowledge of funding process – Domain expertise – Track record of building startups – Able to listen to crying for hours

Tech • We know it We LOVE it… – Sorry we cannot just code we have to THINK – Nowadays no one really cares about the tech – Framework coding has ushered in a new era – Patents are still important – REALLY Novel algorithms and methods

More Than Code • • from numpy import * from numpy. linalg import norm from time import time from sys import stdout • • def Do. My. Startup (V, Winit, Hinit, tol, timelimit, maxiter): """ (W, H) = Do. My. Startup(V, Winit, Hinit, tol, timelimit, maxiter) W, H: output solution (exit matrix) Winit, Hinit: initial startup state tol: tolerance for not being able to take it anymore (tolerance) timelimit, maxiter: limit of time and iterations #Majik. Happens here… (eg rapid gradient descent to exit) • return (H, grad, iter )

Timing • Everything in life is timing – Time is money ~ Money is Time – Kill bad ideas fast and furious – Apply to all incubators – Apply to all angel venture lists – Start prototyping - yesterday

Process Stuff • Ya gotta do it to make it – C-Corp Filing – NDAs – Offer Letters – One Pager – Convertible Note – CAP Table – Pitch Deck – Biz Plan

C-Corp Filing – Ok for some I can hear the groans Why not an LLC? – I am continually asked by VCs of whom I make intros: • Are they Del Corp C – Just get the 250. 00 and do it

CAP Table – This is who has what equity and at what price – Equity is the name of the game in a startup – Must be VERY simple • Allows you and others to put in various amounts of money raised and address dilution • Lists types of stock and outstanding shares

Convertible Note – Standard method for early stage – Angels understand it, good for friends/family – Converts to institutional round stock – Get enough to complete customer validation – Know the market: read blogs books toilet paper rolls - everything

Non Disclosure Agreement – Or NDA: • • Have one and attempt to have everyone sign it VCs wont so don’t Board members/advisors/janitors Although I have never seen anyone enforce one

Offer Letters – There are various types • • • Above all do not make it complicated! Complicated equals legal crap Legal crap equals time Time equals money You don’t have any of the above

One Pager – This document is your faceplate • • • Discusses company snapshot Founders Industry Business Accountants Current Investors Market and Product Board of Directors Logo and Address

The Pitch Deck – This is the focus – Know it love it sleep with it – Important items: • • Team up front Opportunity – Why your doing it Market What makes you novel Competition Amount of ask 8 -10 slides

Business Plan – While not that important in a seed/angel round – Will come in handy to help you figure out what the hell your making and how to make money. – Nowadays no one really reads them.

Last words on Docs – Please do not get fancy or make them overly complicated. – You don’t have time. • Most who have done this before are not going to screw you • They are in it to make money with a team as well as change the world • If you run into someone who grinds on these items – Drop them. They are not focused on the correct items.

Now what? – Test your idea • If its consumer then talk to “regular” people about it • If they don’t get it in two sentences or less refine the idea or explanation

Now what? – Test your idea • Prototype – liquid code • Backend or heavy laden systems take deeper research • Kill it early if its not working

Now what? Test your idea – Test early and often – Do not fall in love with tech – Fall in love with company – Do Customer validation through prototype

Now what? Test your idea – Make some mockups (i. Mocks is killer) – Also wireframes via a great Ux person – Get feedback fast and hard

Someone Loves Me! • OK so lets say you raised 50 k: • • Get incorporated Set up a HQ in an Epicenter Buy a domain if you haven’t Get a lawyer Get a team hopefully for equity Think simple. Go Big.

Someone Loves Me! • When speaking with other angels VCs: Two sentences or less Be prepared to give pitch • (e) subject: email from ted tanner (no canned emails) • If you are getting traction be choosy • Your lead investor is important

GO BIG OR GO HOME • You are what you build • Think BIG – bigger seperates the average from cutting edge • Watch pennies except for talent • Iterate • Love to hear NO • .

GO BIG OR GO HOME • • FOCUS Listen to your customer Market your company and products Simplicity is key: everything you do must reduce friction • Sell something legal

GO BIG OR GO HOME • Fail Once Fail Many – WTF? – Yea guess what - Everyone fails – As a matter of fact if you haven’t failed and tried again you’re not trying hard enough – In The Valley its expected • .

• Thank you for your time. • @tctjr