Part 2 - Entrepreneurship - Lessons From My 20s by Ryan Allis

Lessons from my 20s

Part II:

entrepreneurship

ABOUT THIS PRESENTATION

THIS presentation can be found Online at www.hive.org/20s

PART 2 TOPICS PART 2 “ENTREPRENEURSHIP” INCLUDES SECTIONS ON

Entrepreneurship The big opportunities Leadership Business Planning PRODUCT DEVELOPMENT Innovation

Venture Capital Marketing Building systems BUILDING A TEAM STRATEGY & EXECUTION Steps to get started

Lessons from my 20s

PART II, Section 1

Purpose-driven entrepreneurship

A definition

Entrepreneurs (n.)

Individuals who build organizations which scalably & sustainably

solve human problems

How Will you Use Your one Wild and Precious Life? Choosing Your PROBLEM

Be a purpose-driven entrepreneur

entrepreneurship Is about solving problems

And creating value

For humanity

The virtuous cycle of purpose-driven entrepreneurship

An entrepreneur can bring immense value to humanity by building a For-purpose Business that earns money that can be used to reinvest in more opportunities that

make the world better

Common traits of entrepreneurs Initiative Drive toward efficiency Bias toward action Ability to take feedback Tolerance for stress Determination Decisiveness Courage Ability to deal with failure

Perserverence Creativity Ability to learn quickly Ability to plan Ability to delay gratification Drive to achieve Ability to prioritize Ability to build a team Ability to inspire & lead

A quote

“Both a sparkplug & catalyst the entrepreneur is at once the driving force behind production and the agent who combines the other resources in what is hoped will be a profitable venture” - McConnell and Brue in Economics

Understand the system

THERE IS AN ENTIRELY DIFFERENT WORLD OUT THERE—A WORLD OF PROSPERITY & UNLIMITED WEALTH You can enter this world IF YOU ARE AWARE IT EXISTS AND YOU WORK HARD


TO ENTER THIS WORLD YOU MUST UNDERSTAND HOW THE SYSTEM OF ENTREPRENEURSHIP

WORKS


THERE ARE THREE WAYS TO BUILD WEALTH THROUGH ENTREPRENEURSHIP THROUGH A SALARY, THROUGH DIVIDENDS, and through THE SALE OF

STOCK YOU OWN

Impacting Billions of lives

So HOW CAN YOU IMPACT THE LIVES OF OVER

ONE BILLION PEOPLE?

Impacting Billions of lives

WELL YOU NEED TO BE WORKING ON A

BIG PROBLEM!

Solving big problems

Big Problems are actually

BIG opportunities!


TOO MANY PEOPLE ARE FOCUSED on TOO SMALL OF A PROBLEM!

Two key steps many aspiring entrepreneurs miss

There are two critical First steps for any entrepreneur

THE Two Steps to success in entrepreneurship

First you must find A problem that you Passionately want

to solve


Next devote your life to building the Team that will solve That problem better than Any other group of humans

That has come before

Step 1: Find a really big problem you are passionate about solving.

Step 2: Devote your life to building the team that best solves the problem


As an entrpreneur If you aren’t solving A problem worth dedicating 20 years of your life to You won’t be able to make it

Through the hard times ahead


A problem Worth dedicating your life to Is often called a

“wicked problem”

To find your problem, you must create your purpose

The problem you wish to solve Must deeply align with the Life Purpose you created

in part 1!

How to do it

work on solving a big Problem aligned with your

purpose

Choosing your sector

Once you find the problem You wish to solve then Find

The most effective sector To work within to solve it

Choose your angle of attack

The most common ways to solve big problems: 1.  2.  3.  4.  5.  6.  7.  8.  9. 

build a purpose-driven business Join a purpose-driven business build a non-profit Join a non-profit Join a government agency Run for political office Become a scientist/researcher Invest in companies solving the problem Convene people who are solving the problem


Much of this part of the presentation is about

building a purpose-driven business

Be a purpose-driven entrepreneur

In many cases, you can Make the most scalable impact

On the world By building a For-profit business that is Socially minded

Example for-profit impact companies

Why Build a for-profit social business vs. a non-profit? Easier to raise funding to scale Ability to use stock options Ability to invest in a more experienced team Better compensation Faster Feedback cycle directly from customers Ability to subsidize lower income customers Ability to invest in R&D


Here is a map of social And economic impact by sector created by Max Marmer in a 2012 HBR article called “Transformational entrepreneurship”

A Map of societal and economic impact Economic) Impact) Exploitative Entrepreneurship

Harmful Small Businesses

High Growth Entrepreneurship

Contributory Small Businesses

Transformational Entrepreneurship

Work here in the green!

Social Entrepreneurship

Societal) Impact) Harmful Non Profits

Ineffective Non Profits

Transformational Non Profits

Look into b Corps

Invest in companies solving big problems

Another angle is to work At investment funds That invest in companies that are Solving big human problems

Venture funds investing in solving big problems

Impact investing leaders

Determining Your PATH IN YOUR Twenties Explore widely to find what makes you come alive Create your life purpose statement

Determine the big problem you want to solve

Decide on sector you want to work in to solve the problem

Government Elected

Appointed

Non-Profit Join Existing

Start New

Business Join Existing

Start New

Don’t a be a cog

Becoming a highly specialized cog in a meaningless machine

Is no way to live a life

What most people do

What most people do is focus on a specific Type of job & specialize on a profession

Don’t do that

What most people do

Don’t specialize on a niche profession Specialize on a

problem

WHAT YOU SHOULD DO

Instead of specializing on a specific job role Specialize on a specific human problem that you are

Dedicated to solving

Live an unleashed life

When you’re spending your years focusing on A really big human problem you end up living a

LIFE of purpose


And when you’re naturally excited by the Work that you do you end up attracting more

Positive and capable people


THIS process creates a self-reinforcing virtuous Cycle leading to greater fulfillment, meaning,

And happiness

Find your mission

FIND A MISSION THAT YOU ARE DEEPLY PASSIONATE ABOUT AND BUILD A BUSINESS TO PURSUE THE heck OUT OF IT

Your motivation

SPEND TIME THINKING AND MEDITATING ON YOUR RAISON D’ETRE AND FIGURE OUT WHAT CONSTITUTES THE CORE MOTIVATIONS FOR WHAT YOU DO AND

What you stand for

Entrepreneurship

BEING AN ENTREPRENEUR IS NOT FOR EVERYBODY. BUT IF YOU FIND IT’S FOR YOU AND YOU CAN FIND A WAY TO SUCCEED, it can be

EXTREMELY REWARDING.

Entrepreneurship

BECOMing A SUCCESSFUL ENTREPRENEUR IS NOT EASY YOU MUST HAVE PERSISTENCE DEDICATED, TENACITY & THE ABILITY

TO DEAL WITH ADVERSITY

What it takes

Entrepreneurship is doing Something others won’t for

10 years so you can do what Others can’t for the Rest of your life

The big opportunities

Next we’ll look at some of the biggest opportunities

In the world right now To build a business That makes a huge impact

A quote

“Entrepreneurship is about passion following a dream and changing the world with plenty of craziness along

the way.” - Jeffrey Bussgang, Flybridge

Lessons from my 20s

PART II, Section 2

The big opportunities

A quote

“I don’t skate to where the puck is. I skate to where the puck is going.” - Wayne Gretzky

An innovation Timeline

To put everything Into perspective here is A timeline of innnovation

An innovation timeline

Farming (15,000 Yrs Ago)

Trade (20,000 Years Ago)

Ships (6000 Years Ago)

Cities Form (6000 Years Ago)

Money (5,000 Yrs Ago)

The Wheel (5,500 Yrs Ago)

Abacus (5,000 Yrs Ago)

Iron (5,000 Yrs Ago)

The Alphabet (3800 Yrs Ago)

Written Language (4900 Yrs Ago)

Steel (2400 Yrs Ago)

The Legal System (3,800 Yrs Ago)

Water Power (2200 Yrs Ago)

Key innovations From 0 to 1800

Gunpowder 850

Paper 105

Movable Type 1040

Compass 950

Microscope 1590

Printing Press 1450

Telescope 1608

Electricity 1600

Binary Numbers 1697

Steam Power 1690

Engine 1712

Smallpox Vaccine 1796

19th century innovation timeline

Battery 1800

Light Bulb 1800

Internal Combustion Engine 1823

Telegraph 1809

Anesthesia 1846

Electromagnet 1825

Telephone 1860

Petroleum 1859

Electrical Grid 1880

Periodic Table 1869

Automobile 1885

Vacuum Tube 1883

Semiconductors 1896

Radio 1897

20th century innovation timeline

Airplane 1903

Quantum Physics 1900

Television 1926

Penicillin 1928

Transistor 1947

DNA 1953

Satellites 1957

Organ Transplants 1964

Manned Space Flight 1961

Nanotechnology 1959

Microprocessor 1971

The Internet 1969

Genetic Engineering 1973

Cell phones 1973

World Wide Web 1991

1978 GPS

Carbon Nanotubes 1991

21st century innovation timeline

Lab Grown Organ Transplants 2000

Smartphone 2007

Human Genome Map 2001

Quantum Computer 2012

?

?

?

?

?

It’s now your opportunity to create the future

?

The Biggest opportunites for millennials

Here are the fields needing Great entrepreneurs between

2015-2050

The Biggest opportunites for millennials Energy & Environment

Health & Wellness

Financial Access

Food & Water Engineering Education

Computing

Energy & Environment

Solar Energy

Wind Energy

Biofuels

Sustainable City Planning

Food & Water

Synthetic Food Production

Vertical Farming

AgTech

Water Desalination

Education

Cloud Education

Low Cost Schooling

Leadership Training

Network Building

Health & Wellness

Synthetic Biology

Brain Mapping

Optogenetics

Personalized Medicine

Reverse Aging

Bionic Eyesight

Low Cost Sanitation

Mindfulness Training

Engineering

Clean Transportation

Self-Driving Cars

Robotics

Space Exploration

3D Printing

Nanotechnology

Long Life Batteries

Low Cost Housing

Financial Access

Mobile Banking

Frontier Market Finance

Digital Currency

Digital Wallets

Computing

Quantum Computing

Converged Smartphones

Data Storage on DNA

Artificial Intelligence

Contact Lens Smartphones

Natural User Interfaces

Government 2.0

Cybersecurity

Climate Engineering

Wearable Computers & HUDs

The Internet of Things / Cloud Devices

Mobile Software

The Biggest Opportunities of Our Generation Energy & Environment Solar Energy Advanced Batteries Biofuels Climate Engineering Sustainable City Planning

Food & Water

Synthetic Food Production Agricultural Technology Vertical Farming Water Desalination

Education

Cloud Education Low Cost Schooling Leadership Training Network Building

Health & Wellness Synthetic Biology Brain Mapping Optogenetics Reverse Aging Personalized Medicine Bionic Eyesight Low Cost Sanitation Mindfulness Training

Engineering

Clean Transportation Self-driving Cars Robotics Space Exploration 3D Printing Nanotechnology Long Life Batteries Low Cost Housing

Financial Access Mobile Banking Frontier Market Finance Payment Processing Digital Currency Digital Wallets

Computing Quantum Computing Converged Smartphones Data Storage on DNA Artificial Intelligence Contact Lens Smartphones Natural User Interfaces Government 2.0 Cybersecurity Wearable Computers Implantable Computers The Internet of Things Mobile Software

The Mobile Cloud

Beautiful & Easy Mobile Cloud Services are

REVOLUTIONIZING EVERYTHING

The Reimagination of nearly everything Books$ Cameras$ Cars$ Channel!Changing$ Check!Out$ CiPzen!AcPon$ CommunicaPon$ Contact!Management$ Doctors!Appointments$ Event!Planning$ Fashion$ Food!Delivery$ Fitness$ Funding$ Global!Outsourcing$ GPS$ Groceries$ InformaPon!Storage$ Job!Searching$ Knowledge$ Lending$ Locks$

1994$

Printed! Film!&!Development! Self:owned! Remotes! Cash!Register! Faxes,!Calls! Postal!Mail,!Fax,!Landlines! Rolodexes! Phone!Call! Mail!&!Telephone! Expensive!BouPques! Phone!Call! Gym! Friends!&!Funding! Plane!travel! Not!available!to!consumers! Local!store! Storage!Cabinets! Fairs!&!Resumes! Encyclopedia!Britannica! Banks! Deadbolts!

2014$

Kindle,!iPad,!Nook! Device:Integrated,!Synced!to!Cloud! GetAround,!Zipcar,!LyF,!Uber! Hand!Gestures! Square!+!Tablet! Change.org! Smartphones,!Email,!SMS,!Facebook,!TwiVer,!WhatsApp,!SnapChat! Connect,!Google!Contacts! ZocDoc,!One!Medical! EventBrite,!Facebook!Events,!YPlan! RentTheRunway,!Gilt! GrubHub,!Munchery,!Sprig,!Spoonrocket! Nike!FuelBand,!FitBit,!Jawbone!Up,!Basis! Kickstarter,!Fundable,!Indiegogo! Crowdflower,!Exec,!ODesk,!Elance,!Guru,!SmarterWork,!Freelancer! GPS!on!your!smartphone! Amazon!Fresh,!Instacart! DropBox,!Box,!Google!Drive,!SkyDrive! LinkedIn,!Hired! Wikipedia,!KhanAcademy,!CodeAcademy,!Udemy,!Coursera,!iTunes!U!! LendingClub,!Prosper,!Kabbage,!LendUp! Lockitron!

The Reimagination of nearly everything 1994$

2014$

Direct!mail,!phone!book,!billboards! Blockbuster! CasseVes!&!CDs! Television,!Radio,!&!Newspaper! Notepads! Landlines! Photo!Albums! Phone!Book! In:house! Word!of!Mouth! Hand:created! Mall! Pens!&!Fax! Bar,!Alumni!Reunion! Post:its! Classifieds! Cable!&!Bunny!Ear!Antennas! Buy!them!at!a!bookstore! Analog! Radio! Leather! Swatch!&!Rolex!

Paid!search,!social!ads,!mobile!ads! Ne[lix,!Amazon,!iTunes,!YouTube,!Hulu! SpoPfy,!Rdio! TwiVer,!Flipboard,!PrismaPc! Evernote,!Google!Docs! Smartphones! Facebook,!Flickr,!500px! HandyBook,!Angie’s!List! Quirky! Yelp! Pinterest! Amazon,!eBay! Docusign,!EchoSign! Facebook,!Instagram,!Google+,!LinkedIn! Trello,!Asana! TaskRabbit,!Zaarly,!Zirtual! HuluPlus,!Ne[lix,!Apple!TV,!iTunes,!Amazon!Fire!TV! Chegg,!Amazon!Textbook!Rental! Nest! Waze,!Google!Maps! Google!Wallet! Pebble,!Basis!!

Maps$ Printed! MarkePng$ Movies$ Music$ News$ Note!Taking$ Phones$ Picture!Storage$ Plumber$ Product!Design$ Reviews$ Scrapbooks$ Shopping$ Signatures$ Social!Network$ Task!Management$ Tasks$ Television$ Textbooks$ Thermostats$ Traffic:InformaPon$ Wallets$ Watches$

Google!Maps,!Bing!Maps!

The Reimagination No longer do we need A car, A music collection, A video collection

Everything is now available on-demand For an asset-light lifestyle

The Reimagination

SOON EVERY GOVernment service will be delivered

VIA THE MOBILE CLOUD

The Reimagination

You can monitor your Heart rate and sleep via your

Android WATCH

The Reimagination

You can now check your Blood sugar via smart

Contact lenses

The Reimagination

Every device will be connected As the internet of things

explodes

Lessons from my 20s

PART II, Section 3

Authentic leadership

Leadership

A leader is a person who is committed to something

bigger than themselves

Leadership

An authentic leader is Someone who has aligned Their personal purpose with

their professional purpose

Leadership

Sadly, way too many people Have never taken the time To create their

Personal purpose

Leadership

Even those who do have Personal purpose, so rarely Make it their full time

Professional pursuit

BE a rare duckling

Be the RARE DUCKLING And actually make your Purpose your full time

Professional pursuit!

BE a rare duckling

It may be harder in the Short run, but in the long run You’ll be more passionate

And create more impact (And if you do it right, earn much higher financial compensation too)

The Authentic Leader! personal purpose!

=!

professional purpose!

The Inauthentic Leader personal purpose!

≠!

professional purpose!

INspiration

How can you possibly expect To inspire A team to greatness If you yourself aren’t working On your purpose with your Full time efforts

The obvious

You think your team won’t be Able to tell whether you’re a Passionless corporate shrill Or lit up on fire

WITH ENERGY??

When your personal purpose is what you work on daily, work becomes greatly enjoyable—no matter the challenge.!

The je ne sais quoi of leadership

The way great leaders get that “Je ne sais quoi” quality about them Is from their deep commitment To creating something that makes the

World better

The je nais se quoi

Imagine the insatiable energy And Charisma you will have When you’re actually working On what you’re passionate about

With your full time effort

Fear?

So what are you afraid of?

Failure?

Fear?

what you should really fear isn’t FAILUre What you should really fear is the Regret you’ll feel when you’re 80 having

never given it a try

Leadership

An authentic leader Hires missionaries

Not mercenaries

Leadership

You can’t be a leader until you know

why you’re leading

Authentic Leaders Know Why & Where They Are Leading

Authentic leaders are vulnerable and open with their team and share their struggles!

Authentic leaders inspire a team to move mountains to achieve the mission.!

Authentic leaders paint a clear vision and communicate it succintly, visually, and repeatedly.

!

Leadership

NEARLY SUPER-HUMAN feats Are possible when a team is DEEPLY passionate about

their MISSION

Advice on authentic leadership

Here are Six thoughts on becoming An unleashed high-integrity

leader

Find a mission that you are deeply passionate about and build a business to make the world you envision real

If you want to have the persistence to build a great business work on solving a problem that you are passionate about that aligns with your life purpose

Don’t begin the effort of building a company if you’re not deeply passionate about the problem you are trying to solve

Too many startups try to solve problems they’re not actually passionate about solving

Building a company is hard. If you’re deeply passionate about solving the problem you’ll get through the years of sacrifice.

Once you’ve determined the change you seek build a company that sustainably creates that change at scale.

Lessons from my 20s

PART II, Section 4

Business planning

Business planning

SOME ENTREPRENEURS choose not to create a plan at all And just start working

On a prototype or Minimum viable product

Business planning

I find that it’s helpful to at least create a short slide deck or exec summary To ensure you know what you’re building & What problem you’re Solving before you start building

What’s in your deck?

1.  PROBLEM you’re solving 2.  PRODUCT & TECHNOLOGY 3.  your recent traction 4.  MARKET & COMPETITION 5.  TEAM 6.  revenue model 7.  FINANCIAL PROJECTIONS

In the first two slides…

CLEARLY ILLUSTRATE THE PROBLEM YOU ARE SOLVING HOW YOU ARE SOLVING IT

AND FOR WHOM

Product section

SHOW PICTURES OF A PROTOTYPE OR WIREFRAMES & MOCKUPS MAKE YOUR SPECIFIC SOLUTION

EASILY VISUALIZED

Product section

SHARE YOUR PRODUCTION TIMELINE AND KEY MILESTONES TOWARD INITIAL PRODUCT DELIVERY AND DISCUSS FUTURE PRODUCTS AND SERVICES

Financials section

ADDRESS THE FOLLOWING IN YOUR FINANCIAL PROJECTIONS REVENUE ASSUMPTIONS COST ASSUMPTIONS Revenue by Month COST BY MONTH BY CATEGORY NET INCOME BY MONTH BY CATEGORY TIME TO BREAKEVEN FUNDS NEEDED TO REACH NEXT MILESTONE TOTAL EXPECTED FUNDS NEEDED

Example 60 month financial projections $1,500,000 $1,000,000 $500,000 $0 ($500,000) ($1,000,000) ($1,500,000) ($2,000,000) ($2,500,000)

0!

6!

12! Revenue

18!

24!

30!

Expenses

36!

42!

Net Income

48!

54!

60!

Financials section Here’s a REALLY BASIC Example annual financial PROJECTION Revenue! Expenses! Net Profit!

2015! 18,127! 103,408! -85,281!

2016! 50,984! 118,539! -67,555!

2017! 143,401! 139,017! 4,384!

2018! 403,340! 287,553! 115,787!

2019! 1,134,461! 640,004! 494,457!

your financial projections Should list out expenses by major categories (Labor, Marketing, Servers, OFFICE SPACE, etc.)

Answer these questions in your deck !  !  !  !  !  !  !  !  ! 

What problem are you solving? Why are you passionate about solving that problem? Who’s on your team? What is their background? WHAT IS THE NEED FOR THE PRODUCT? What is your revenue model / cost per unit? WHAT IS THE SIZE OF THE MARKET? WHAT WILL IT COST TO PRODUCE THE PRODUCT? WHO IS YOUR TARGET CUSTOMER?

Questions you may wish to answer in your deck

! WILL YOU NEED TO ACQUIRE ANY IP? ! WHAT ROLES WILL YOU FILL IN THE FUTURE? ! WHAT ARE YOUR FUTURE PRODUCTS features? ! HOW MUCH IS NEEDED TO REACH BREAKEVEN? ! WHAT ARE YOUR ANNUAL Revenue PROJECTIONS? ! WHAT ARE YOUR ANNUAL COST PROJECTIONS? ! WHAT ARE YOUR ANNUAL PROFIT PROJECTIONS?

INcorporating

Before you start operating it’s important to

INCORPORATE

INcorporating

THE BENEFITS OF INCORPORATING MUCH LOWER TAXES LIABILITY PROTECTION BEING TAKEN SERIOUSLY ABILITY TO OPEN A BANK ACCOUNT ABILITY TO HIRE EMPLOYEES ABILITY TO RAISE INVESTMENT

INcorporating

TO INCORPORATE YOURSELF YOU JUST NEED TO KNOW THE NAME OF THE COMPANy THE STATE YOU WISH TO INCORPORATE IN

THE NUMBER OF SHARES TO CREATE THE INITIAL OWNERSHIP OF THOSE SHARES

INcorporating

IN THE U.S. you can start a S Corp C Corp LLC BENEFIT CORP

Most firms that plan on raising capital are Delaware C Corporations

INcorporating

IN CHOOSING A LAW FIRM LOOK AT REPUTATION & REFERENCES START-up EXPERIENCE INTRODUCTION TO INVESTORS IPO EXPERIENCE PARTNER CHEMISTRY

INcorporating

ONCE INCORPORATED YOU’ll RECEIVE YOUR ARTICLES OF INCORPORATION SET OF BYLAWS SET OF STOCK CERTIFICATES

INcorporating

THEN YOU CAN GET AN EMPLOYER IDENTIFICATION NUMBER FROM THE IRS (YIPEE!) AND OPEN A BANK ACCOUNT

Early equity is based on

1.  How far along firm is when you join 2.  Your position in the company 3.  Amount of capital you invest 4.  What you negotiate

Equity Rules of THumb Time

Pre-founding

Year 1

Time of Joining

Pre-Seed

Post Seed

CEO

55%

40%

20%

15%

10%

8%

COO

15%

15%

10%

5%

3%

2.50%

CFO

12%

10%

7%

4%

2.50%

1.50%

CTO

12%

10%

7%

4%

2.50%

1.50%

SVP Level

N/A

7.50%

5%

3%

2%

1%

VP Level

N/A

4%

3%

2%

1%

0.50%

Manager

N/A

1.50%

1%

0.50%

0.25%

0.10%

Sr. Engineer

5%

1.50%

1%

0.50%

0.25%

0.10%

Engineer

3%

0.75%

0.50%

0.25%

0.10%

0.05%

Staff Member

1%

0.30%

0.20%

0.10%

0.05%

0.03%

Investors

0%

10%

30%

30%

45%

45%

Year 2

Year 3

Year 4

Post Series A

Year 5+

Post Series-B

AS TIME CONTINUES, RISK REDUCES, CAPITAL IS RAISED & VALUE IS CREATED THUS LESS EQUITY iS PROVIDED THE LATER YOU JOIN

Lessons from my 20s

PART II, Section 5

Product Development

The core human desires

Great products fulfill one or more Of the 10 core human desires 1.  Safety / security

6.  Impressing others

2.  Health / survival

7.  Communicating / connecting

3.  Earning money

8.  New experiences

4.  Finding a partner

9.  Finding meaning

5.  Learning

10.  Comfort & relaxation

The 7 characteristics of a great product 1.  2.  3.  4.  5.  6.  7. 

Fulfill 1+ core human desire Easy to use Beautiful design Highly effective at stated purpose 4x or more markup over costs Recurring purchase/supply needed An easy to remember name

The characteristics of a great product

GREAT PRODUCTs BRING JOY to people and

Smiles TO FACES

The characteristics of a great product

GREAT PRODUCTs ARE SIMPLE ON THE OUTSIDE

AND POWERFUL ON THE

INSIDE

What is product management?

PRODUCT MANAGEMENT IS THE PROCESS OF DEFINING And prioritizing WHAT You’RE BUILDING


Good product management Is driven by a vision Of the way the world

Should be


Good product management Takes into account lots of Metrics and feedback But ultimately should be

Vision-driven

The right type of Product manager

YOUR GOAL IS TO BE HERE ON THE SPECTRUM OF PRODUCT MANAGERS “The green zone” Design by Committee hell

Open to feedback and data but driven by a strong vision of the way the world should be.

Maniacal dictator design


YOU WANT TO BE SLIGHTLY RIGHT OF CENTER WITH PM

It is better to have a strong vision And be slightly maniacal Then be unsure about the change You wish to create in the world


GREAT PRODUCT managers ARE ABSOLUTELY PASSIONATE ABOUT THE CHANGE THEY WISH TO MANIFEST IN THE WORLD

Lessons from my 20s

PART II, Section 6

INNOVATION

What is Innovation?

Innovation (n.)

THE PROCESS OF CREATING SOMETHING NEW THAT MAKES LIFE BETTER

Innovation

INNOVATION IS IMPOSSIBLE WITHOUT PASSION

Innovation

Most companies aren’t Innovative because they Lack passion

Innovation

INNOVATORS SEE THE WORLD AS IT SHOULD BE

Innovation

INNOVATORS BECOME OBSESSED WITH MAKING THE WORLD BETTER

Innovation

INNOVATORS FOCUS INCESSANTLY ON BRINGING VALUE TO MARKET


SOME PEOPLE BELIEVE THE GOVERNMENT SHOULD PLAY NO

ROLE IN INNOVATION


THE REALITY IS THAT MANY OF THE BIGGEST INNOVATIONS OF THE past 100 years have COME OUT OF GOVERNMENT PROGRAMS


EXAMPLES INCLUDE •  THE INTERNET •  GPS •  CT SCANS


AND ALMOST EVERY DRUG AND MEDICAL ADVANCE IN THE U.S. COMES OUT OF AN NIh FUNDED PROJECT


Government funding For basic research often comes 10-30 years before

Commercialization is possible

Top MILLENNIAL Innovators At 15 he used carbon nanotube sensors to create a test for pancreatic cancer and won the Intel International Science and Engineering Fair Jack Andraka

Top MILLENNIAL Innovators At 23, she is the CEO of uBeam which is about to launch a device that

beams electricity through the air to charge portable electronics wirelessly Meredith Perry

Top MILLENNIAL Innovators At the age of 18 created a device that could charge a mobile phone in 30 seconds. Won the 2013 Intel Foundation Young Scientist Award. Now a Harvard student. Eesha Khare

Top MILLENNIAL Innovators By 35 he created a public company worth $3B that is bringing internet access to the developing world through wimax wifi networks

Robert Pera

Innovation

HErE ARE FIVE KEYS TO

INNOVATION

Innovation

1

Clearly DEFINE THE PROBLEM you’re trying

To solve

Innovation

2

THROW OUT AS MANY CONSTRAINTS TO YOUR THINKING AS POSSIBLE

Innovation 3

ENSURE THOSE WORKING TO SOLVE THE PROBLEM ARE DEEPLY PASSIONATE ABOUT

SOLVING THE PROBLEM

Innovation 4

BRAINSTORM IN

SMALL GROUPS

Of 3-6 individuals with Diverse perspectives

DESIGN THINKING

Design thinking is one of the Best processes for

innovation

The five step design thinking process

Empathize

Ideate Define

Prototype Test

Key Materials needed for design thinking exericses

1.  2.  3.  4.  5. 

Post-its of different sizes/colors Lots + Lots of whiteboard space Whiteboard markers Pens timer

Step 1: Empathize

Great products start with empathy for the customer And deep problem understanding

Step 1: Empathize

The best way to have empathy for your customer is to solve a problem

you personally have

Step 1: Empathize

If it’s not a problem you personally have spend lots of time in the homes and offices

of your customers or users

Step 2: DEFINE

Define the problem very clearly.

“The problem the customer is facing that we are solving is _______________________________. !

Step 2: DEFINE

Define the human impact of solving the problem

“If we solve this problem, what specific differences will it make in the lives of our customers/users: ____________________________. !

Step 3: IDEATE

Ensure those working with you to solve the problem are deeply passionate about

solving the problem!

Step 3: IDEATE

Brainstorm with a group of 3-6 people with

Diverse BACKGROUNDS & skillsets

Step 3: IDEATE

Initially, throw out all Constraints to your thinking

Enter a No Judgment zone

Step 3: IDEATE

Brainstorm individually on post-its in 5-10 minute timed sessions

before sharing

Step 3: IDEATE

Begin by Brainstorm individually on post-its in 5-10 minute timed sessions

before sharing

Step 3: IDEATE

Capture all ideas visually on post-it notes stuck on whiteboards So they are

easily movable

Step 3: IDEATE

Never criticize an idea in the Ideation phase The crazy stuff can lead to

breakthroughs

Step 3: IDEATE

After PUTTING UP ALL THE ideas on the wall refine down to the best by giving each person a few votes

using small post-its

Step 4: Prototype

Quickly prototype 1-3 possible Working solutions to the problem

Paper sketches or wireframes are often sufficient here If it’s a physical product, use a workshop to create a basic version

Step 4: Prototype

Simpler prototypes are OFTEN BEST FOR ALLOWING

RAPID learning and iteration

Step 5: TEST

Now test the prototypes with Actual potential customers See what they think Then make it better

Step 5: TEST

Keep iterating designs & Improving Until you can convince customers To pay for what you’ve built

THE LEAN STARTUP PROCESS

THE LEAN STARTUP PROCESS IS ANOTHER INNOVATION PROCESS

Designed to lead to QUICK LEARNINGS & RESULTS

THE LEAN STARTUP PROCESS

The benefits of the leAn startup method

1. Fast testing + learning 2. Low cost 3. Fail fast and pivot quickly

THE downsides of the LEAN STARTUP PROCESS 1.  Often doesn’t allocate enough time to the brainstorming process (go straight from idea to build) 2.  Can focus too much on finding “anything that customers will pay for” rather than solving a problem that matters in the world

Lessons from my 20s

PART II, Section 7

VENTURE CAPITAL

Venture Capital

IF POSSIBLE TRY TO GET AS FAR AS YOU CAN WITHOUT RAISING OUTSIDE CAPITAL

Venture Capital

IN THE BEGINNING DO WHATEVER IT TAKES

TO KEEP COSTS LOW

Venture Capital

In a b2b business Focus on getting Revenue from customers

Venture Capital

You’ll have a higher Chance of success if you Get paying customers before raising outside $$ (or at least 10,000+ users)

Venture Capital

The biggest mistake Entrepreneurs make Is raising too much Before they are ready

Venture Capital

AT ICONTACT WE BOOTSTRAPPED

FOR THE FIRST 3 years

Venture Capital

AT CONNECT WE BOOTSTRAPPED

FOR THE FIRST 2 years

What is bootstrapping

Bootstrapping means Operating without

Raising Outside capital


Most companies should Bootstrap for 12-36 mos before they are ready For outside capital


If you don’t have a product Yet, you definitely should Not be raising VENTURE capital (except!in!very!capital!intensive!businesses!like!drug!discovery)!

Test demand before raising money by creating an inexpensive prototype and then improve until customers love your product

Venture Capital

WHERE TO LOOK DEPENDS ON HOW MUCH YOU NEED AND HOW FAR ALONG YOU ARE

The different types of capital available by stage Sources of Funds

<$50k

$50k-$500k

$500k to $1m

$1m to $5m

$5m to $25m

Side jobs

Yes

Credit cards

Yes

Yes

Your savings

Yes

Yes if available

Friends & family

Yes

Yes if available

Kickstarter

Yes

Yes

Yes

Indiegogo

Yes

Yes

Yes

Fundable

Yes

Yes

Yes

AngelList

Yes

Yes

Yes

Yes

Angel investors

Yes

Yes

Yes

Banks

Yes

Yes

Yes

Yes

Super angels

Yes

Yes

Yes

Seed stage VC

Yes

Yes

$25m to $100m

>$100m

Yes

Yes

Yes

Growth stage VC

Yes

Yes

Yes

Mezzanine debt

Yes

Yes

Yes

Late stage VC

Yes

Yes

Private equity

Yes

Yes

Public markets

Yes

PIPES

Yes

Corporate bonds

Yes

Angel rounds

angellist Is the best place To find early stage Angel investors

The power of angellist

In june 2008 Connect raised $2.8M From investors on angellist Like jason calacanis, brad feld, And scot and cyan banister

The power of angellist

Angels often act in packs So it is useful to secure a Lead Angel investor Who will set the terms Before reaching out widely

Syndicates

Top angels have packs of Other angels who follow them And invest in what they invest in

These are called syndicates

Venture Capital

fundable Is another good place To find early stage Angel investors

entrepreneurshi p!

Convertible notes

A convertible note Is a loan that converts Into equity at your Next raise usually at a discount To the future price

Convertible notes

Most early stage seed Deals in silicon valley Are now done as Convertible notes

The Key Terms of a Convertible note

Amount invested Discount rate Valuation cap Pro rata rights Interest rate

Venture Capital

In a b2b business AVOID RAISING MORE THAN 10x your current ANNUALIZED REVENUE

Venture Capital

So if your current Annual revenue run rate Is $500k Raise up to $5M

Venture Capital

if your current Annual revenue run rate Is just $30k Focus on increasing sales Not raising capital

Venture Capital

If you raise too much Your monthly expenses Will get too far ahead Of your revenue

Venture Capital

And when monthly expenses ExceeD revenue by too much

You go bankrupt

Raising an angel round

For b2b software companies The right Time To RAISE An angel round is when You have a working product AND

At least 5 paying customers

Raising an angel round

For b2C applications The right Time To RAISE An angel round is when You have a working product AND

At least 1000 daily users

Your negotiating power is based on

LEVEL OF NEED FOR THE MONEY YOUR EXPERIENCE YOUR TEAM PRODUCT & TECHnOLOGY COMPETITION OTHER TERM SHEETS QUALITY OF YOUR ADVISORS

The most important investment terms

VALUATION OPTION POOL SIZE LIQUIDATION PREFERENCES FOUNDER REVESTING PREFERRED VETO RIGHTS TYPE OF PREFERRED STOCK BOARD SEATS

" THE HIGHEST VALUATION Isn’T ALWAYS BEST

Factors in Selecting Your INvestors

CHEMISTRY WITH THE PARTNER OPERATIONAL EXPERIENCE CURRENT PORTFOLIO ALIGNMENT PARTNER/FIRM EXIT RESULTS EXECUTIVE RECRUITING ABILITY TERMS OF INVESTMENT

TECH PRE-REVENUE VALUATION GUIDELINES

$1m to $25m PMV depending on Factors like •  •  •  •  • 

CEO Past exits TEAM EXPERIENCE NUMBER OF USERS NUMBER OF ENGINEERS LOCATION OF COMPANY

X2 if you’re in silicon valley

Pre-Revenue Valuation example

b2c tech COMPANY RUN BY FIRST TIME ENTREPRENEUR with 1 engineer

Pre-Money Valuation: $1m-$3m


b2c tech COMPANY RUN BY FIRST TIME ENTREPRENEURS who have been through y combinator with a good idea AND 2 engineers

Pre-Money Valuation: $5M-$10M


INCORPORATED tech COMPANY run By experienced CEO with 10 years c-level experience, $100m prior Exit, & 5 engineers

Pre-Money Valuation: $10m-$25m

Raise a Seed round or series A? Typical Seed Round Company

Typical Series A Company

1-10

10-50

6 months-2 years

2-5 years

Traction if consumer

Working product, pre-launch up to 100,000 Daily Active Users

Over 100,000 DAUs

Traction if enterprise

$0 to $50k/monthly revenue

$50k to $500k in monthly revenue

Valuation range in Silicon Valley

$3M to $15M

$10M to $60M

Valuation range elsewhere

$1M to $7M

$5M to $30M

Employees Time since incorporation

post-Revenue Valuation GUIDELINES

AS YOU GO ABOUT FUNDRAISING YOU USUALLY WANT TO CREATE

A COMPETITIVE PROCESS


BUILD a series A FUNDING PROCESS TO ENSURE YOU RECEIVE

MULTIPLE TERM SHEETS


RAISE MONEY only from SMART PEOPLE YOU REALLY LIKE You’LL BE MARRIED to Them FOR THE NEXT

3-10 years

Best venture funds in my opinion Andressen horowitz Sequoia Kleiner perkins accel Benchmark greylock Nea Bessemer Google ventures Founders fund


WAIT TO RAISE your series a UNTIL You HAVE PROVEN MATHEMATICALLY THAT X DOLLARS SPENT BRINGS Y DOLLARS BACK

Ryan’s three rules of entrepreneurship

1.  Create products customers love (by overinvesting in UX testing!) 2.  Spend 1/3rd of your time recruiting excellent people 3.  Don’t raise venture capital until you have proven customer demand

Timing of icontact fundraises Date

Capital raised

Annual revenue

Capital source

Capital type

Pre-money valuation

Post-money valuation

Jun 2003

$5k

$5k

Friend

Loan

N/A

N/A

May 2006

$500k

$1.5m

IDEA Fund

Seed stage

$16m

$16.5m

Jun 2007

$5.3m

$5.5m

Updata

Series A

$27m

$32.3m

Aug 2010

$25m

$38m

JMI Equity

Series B

$100m

$125m

Feb 2012

N/A

$49M

Vocus

Sale of Company

$170M

N/A

Lessons from my 20s

PART II, Section 8

marketing

What is a brand?

A BRAND IS SIMPLY THE AGGREGATEd SUM TOTAL OF EVERY Human BEING’S EXPERIENCE WITH YOUR COMPANY & PRODUCTs

A good brand name

1 or 2 syllables Easily spellable Easily pronounceable

marketing

GOOD MARKETING IS JUST GOOD STORYTELLING ACROSS MULTIPLE MEDIA IN A TRACKABLE AND FINANCIALLY

SCALABLE MANNER

marketing

MARKETING IS GENERATING AN INTERESTED LEAD SALES IS TURNING THE LEAD INTO A CUSTOMER And ACCOUNT MANAGEMENT IS TURNING A CUSTOMER INTO

A LIFETIME EVANGELIZER

marketing

IN TODAY’s WORLD MARKETING STARTS

WITH your PRODUCT

marketing

YOU Can’T SUCCEED MARKETING A CRAPPY

PRODUCT FOR LONG

marketing

SO IF You’re marketing A CRAPPY PRODUCT

STOP

marketing

AND PUT YOUR FUNDS INTO BUILDING A

GREAT PRODUCT

marketing

THEN WHEN YOU HAVE A GREAT PRODUCT

START STORYTELLING

The 6 keys to success with marketing 1.  AMAZING WORD OF MOUTH FROM A GREAT PRODUCT 2.  KNOWING THE LIFETIME VALUE OF A CUSTOMER 3.  A TRACKING SYSTEM THAT CAN TELL YOU COST PER LEAD, cost per customer/user, and CONVERSION RATE PER CHANNEL 4.  CONSTANT TESTING OF NEW CHANNELS, CREATIVE, AND FUNNEL PROCESSES 5.  GREAT STORYTELLING

Always be testing

10% of your MONTHLY Advertising budget Should be spent on TESTING NEW CHANNELS

Know your CAC

You don’t KNOW YOUR CUSTOMER ACQUISITION COST?

ARE YOU SERIOUS?

Know your LTV

You don’t KNOW YOUR Customer LTV?

ARE YOU SERIOUS?

Know your LTV

ROUGH EXAMPLE DETERMINING WHAT YOU CAN SPEND TO ACQUIRE A NEW RECURRING CUSTomER Recurring Customer

Monthly Revenue

Average Customer Life

Lifetime Revenue

What You Can Spend to Acquire a New Customer

$50

48 Months

$2400

Up to $800

Know your LTV

ANOTHER ROUGH EXAMPLE DETERMINING WHAT YOU CAN SPEND

TO ACQUIRE A NEW CUSTomER Non-recurring Billed Customer

Average Purchase Price

Average Number of Purchases Within 3 Years

3 Year Revenue Estimate

What You Can Spend to Acquire a New Customer

$50

6

$300

Up to $100

Know your LTV

SCALE YOUR AD BUDGET SCIENTIFICALLY BY

TRACKING LEAD ACQUSITION COST & CONVERSION RATE BY ADVERTISING CHANNEL

Online Marketing channels SEO – GOOGLE, YAHOO, BING PPC - GOOGLE Adwords / BING ADCENTER SOCIAL PRESENCE – FACEBOoK, TWITTER, youTUBE SOCIAL ADS – FACEBOOK, TWITTER, Youtube ADS DISPLAY – BANNER ADVERTISING AFFILIATES – CJ & LINKSHARE Review SITES – YELP, CITYSEARCH, GOOGLE LOCAL DAILY DEALS – GROUPon & LIVINGSOCIAL EMAIL FOLLOWUP – iCOntact & MAILCHIMP

MOBILE advertising channels

Facebook CPI Ads

nativex

Twitter CPI Ads

Adcolony

TapJoy

Fyber

ChartBoost

Flurry

Vungle

APPIA

Fiksu

Admob

Offline advertising channels

TELEVISION PRINT ADVERTISING RADIO YELLOW PAGES buses

DIRECT MAIL TRADESHOWS EVENT SPONSORSHIPS BILLBOARDS CAMPUS REPS

Offline advertising channels

THE KEY IS TO TEST ALL OF THE CHANNELS AND TRACK THE ACTUAL RESULTS FROM EACH ONE

To grow your sales & Acquire more customers CALCULATE CPL & COnVERSION RATE BY CHANNEL DETERMINE WHAT YOU CAN PAY PER NEW CUSTOMER TEST NEW ADVERTISING CHANNELS SCIENTIFICALLY CREATE A PREMIUM VERSION OF YOUR PRODUCt TEST DOUBLING YOUR PRICE AND SEE WHAT HAPPENS GET MORE AFFILIATES/DISTRIBUTORS OPEN UP MORE SALES OFFICES OPEN UP MORE RETAIL LOCATIONS BUILD ADDITIONAL PRODUCTS HIRE MORE SALES PEOPLE HIRE SOMEONE TO SELL MORE TO EXISTING CUSTOMERS RAISe CAPITAL AND EXPAND YOUR ADVERTISING

Why most startups fail

1.  Co-founder issues 2.  Product doesn’t solve a real problem 3.  Never charge for product 4.  Poor sales and marketing

Icontact revenue growth $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011

Icontact customer growth 70000 60000 50000 40000 30000 20000 10000 0 2003

2004

2005

2006

2007

2008

2009

2010

2011

Connect User Growth six months after launch 1,000,000 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Feb-14

Mar-14

Apr-14

May-14

Jun-14

Jul-14

Primary icontact customer acquisition channels

1.  Google AdWords 2.  Facebook Ads 3.  Affiliate Program 4.  Banner Ads

Google adwords

Facebook Ads

Doubleclick Ad manager

Commission junction

Track your customers by channel

Set up Google Analytics so you can calculate your customer acquisition cost by marketing channel

Google Analytics

Track your iusers by channel

Set up Mobile App Tracking (MAT) so you can calculate your user acquisition cost by mobile ad network

Unit economics

It is extremely important to Understand the unit economics Of your business

Understanding Unit economics

Unit economics include the lifetime value of Each new customer to your business (LTV) As well as the customer acquisition cost (CAC)

A definition of lifetime value

Lifetime value (n) How much a customer is worth to you in revenue throughout their time as a customer with your company.

Icontact ltv example

Avg. Monthly Rev Per Customer = $50 Avg. Monthly Churn = 3.3% Avg. Customer Life = 30 Months LTV = ?

50 x 33 = $1500

How much to spend on marketing

You can spend about 1/3rd of your LTV in sales and marketing expenses to acquire a customer

If LTV = $1500 Max CAC = $500

Example of calculating cac

CAC = =

Total Sales & Marketing Expenses Total Customers Acquired in a Month $2,000,000 4000

= $500

Sales teams

When should you create a sales team? When your product or service costs over over $500/mo, or $5k total.

Lessons from my 20s

PART II, Section 9

CREATING systems

A quote “Achievement comes to someone when he is able to do great things for himself. Success comes when he empowers followers to do great things with him. Significance comes when he develops leaders to do great things for him. But legacy is created only when a person puts his organization into the position to do great things without him.” -JOHN C. MAXWELL

Systems

SYSTEMS ARE A COLLECTION OF PROCESSES THAT RUN

WITHOUT YOU

Examples of Systems

PERFORMANCE REVIEWS OFFICE FOOD DELIVERY NEW EMPLOYEE TRAINING DOWNTIME NOTIFICATION OPERATIONS REVIEWS PRODUCT FEEDBACK PURCHASE ORDERS FINANCIAL PLANNING PAYROLL CLIENT SATISFACTION VACATION REQUESTS

MARKETING TESTING RFP MANAGEMENT EXPENSE REIMBURSEMENT HARDWARE SETUP TAX DOCUMENTATION LEGAL CONTRACTS 360 FEEDBACK JOB DESCRIPTIONS EXTERNAL COMMUNICATIONS INTERNAL COMMUNCIATIONS ACCOUNTING

Systems

AFTER THE FIRST two years Your success is DETERMINED MORE BY THE PEOPLE YOU HIRE THAN BY YOU SO STOP TRYING TO DO

EVERYTHING

Systems

FOR A BASIC ACCOUNTING SYSTEM WE USE

QUICKBOOKS ONLINE

Systems

BE SURE TO TRACK YOUR BOOKS ACCURATELY

FROM THE BEGINNING

Systems

AND ALWAYS SEPARATE PERSONAL AND

BUSINESS EXPENSES

Systems

Investors don’t Invest in systems

That go home at night!

Systems

To create a great Organization You must Build a system to CULTIVATE GREATNESS In others

systems

ONCE YOU GET pAST 20 EMPLOYEES CONDUCT ANNUAL ONLINE

360° Reviews

systems

MAKE SURE YOUR INCENTIVE STRUCTURE incentivizes

THE RIGHT GOALS

Business lessons Learned

GIVE IMMEDIATE AND SPECIFIC FEEDBACK

MORE OFTEN

Lessons from my 20s

PART II, Section 10

Building a team

Building a team

Make sure you’re PASSIONATE ABOUT WHAT YOU ARE LEADING YOUR TEAM TOWARD ACCOMPLISHING. IF You’RE NOT PASSIONATE ABOUT ACHIEVING THIS GOAL

YOU ARE LEADING THE

WRONG ORGANIZATION

Building a team

SURROUND YOURSELF WITH PEOPLE SMARTER THAN YOURSELF PEOPLE WHO HAVE HIGH INTEGRITY AND PEOPLE PASSIONATE ABOUT

ACHIEVING THE SAME GOAL YOU

ARE PASSIONATE ABOUT

Building a team

ONLY HIRE SOMEONE AS A DIRECT REPORT IF HE OR SHE CAN DO THEIR JOB 2x BETTER THAN

YOU COULD

Building a team

NEVER HAVE MORE THAN

SEVEN DIRECT REPORTS SIX if you have to manage the Board of Directors as well

Building a team

MAKE SURE YOU AND YOUR TEAM ARE COMPLETELY CLEAR ON WHAT YOU ARE TRYING TO ACHIEVE, BY WHEN, the definition of success, and why WHAT you’re trying to achieve

MATTERS IN THE WORLD

Building a team

Many leaders HAVE A VISION But don’t COMMUNICATE IT

Don’t make this mistake

Building a team

PAINT A CLEAR VISION AND COMMUNICATE IT SUCCINTLY, VISUALLY, BROADlY, and REPEATEDLY. KNOW WHERE YOU ARE GOING AND THEN

LEAD PEOPLE THERE

Building a team

YOUR JOB IS TO DEFINE OBJECTIVE SUCCESS FOR EACH OF YOUR DIRECT REPORTS AND THEIR JOB IS TO DEFINE SUCCESS FOR EACH OF THEIR

DIRECT REPORTS

Building a team

INTEGRATE SUCCESS FOR THE INDIVIDUAL TOWARD HIS OR HER OWN LIFE GOALS WITH SUCCESS FOR THE PROJECT

AND THE COMPANY

Building a team

DEFINE SUCCESS QUANTITATIVELY THEN TRACK IT ON A

Real-time MONITOR

Visible to all team members

Building a team

MAKE SURE YOUR TEAM KNOWS THAT TRUE LEADERS MAKE A COMMITMENT TO ENSURING THAT THE PERSON WHO FOLLOWS THEM IS BETTER THAN THEY WERE ASK EACH TEAM MEMBER TO IDENTIFY & TRAIN THEIR Replacement before LEAVING and in exchange YOU WILL NEVER SURPRISE THEM WITH TERMINATION

Building a team

ASK YOUR TEAM TO NEVER LET SOMETHING IMPORTANT

GO UNSAID

Building a team

LISTEN & proACTIVELY SEEK OUT INFORMATION

FROM YOUR TEAM

Building a team

GOOD LEADERS SEEK OUT & ASK FOR UNPOPULAR OPINIONS FROM THEIR TEAM

Building a team

ALWAYS TAKE THE TIME TO EXPLAIN THE MENTAL MATH BEHIND

YOUR DECISIONS

Building a team

IF YOU WANT TO ACHIVE A DIFFICULT GOAL

CREATE An INCENTIVE PRIZE WITH CLEAR GUIDELINES AND PUBLICIZE IT (Why hackathons & XPRIZE work so well)

Building a team

EVERY MEMBER OF YOUR TEAM SHOULD HAVE A SIGNIFICANT PORTION OF THEIR COMPENSATION TIED TO pre-DEFINED COMPANY SUCCESS METRICS

Building a team

TREAT your PEOPLE WITH RESPECT

AT ALL TIMES

Building a team

WORK HARD & ALONGSIDE

YOUR TEAM

Building a team

DON’t be

TOO SERIOUS (Life is short. Have fun with what you’re doing)

Building a team

MAKE SURE EVERYONE KNOWS THEY CAN

TALK TO YOU

ANYTIME

Building a team

BUILD CARING RELATIONSHIPS WITH

YOUR DIRECT REPORTS

Building a team

COMMEND MORE THAN

YOU CRITICIZE

Building a team

CONsCIOUSLY BUILD AN

AMAZING CULTURE

Building a team

create an environment in which Each team Member can do the

Most Inspired work

Of their lives

A startup ceo’s role includes

VISION STRATEGY PRODUCT CREATION FINANCING MEDIA RELATIONS

CULTURE LEADERSHIP TEAM RECRUITING OPERATIONS BOARD RELATIONS

The role of the ceo

As you grow, you’ll hire experienced People for each of the major roles Like sales, marketing, recruiting, HR, engineering, design, operations, product & customer support

You can recruit via

Your c-level team SHOULD BE EXCLUSIVELY

MADE UP OF JEDIS

The role of the later stage ceo

1.  2.  3.  4.  5.  6. 

Set strategy & vision Set production direction Recruit & lead senior team Oversee resource allocation Communicate to stakeholders Build a great culture

The role of the ceo

Your role as CEO is not to micromanage It’s to hire people more experienced than you in their areas and provide the

big picture

GREAT CEOS are good at

Public speaking Connecting deeply with team Sharing their passion Raising funding Understanding customer needs

My Favorite interview questions to ask

WHAT ARE YOU PASSIONATE ABOUT? TALK ABOUT SOME OF THE EXPERIENCES IN LIFE THAT HAVE BEEN VERY CHALLENGING WHAT CHANGE DO YOU WANT TO MAKE IN THE WORLD IN YOUR LIFETIME? IF YOU MET AN ALIEN, HOW WOULD YOU DESCRIBE YOURSELF? TELL ME ABOUT YOUR FAILURES TELL ME ABOUT THE GOALS YOU HAVE

You can recruit via

EXISTING EMPLOYEE REFERRALS COMPETITORS linkedin Hired/angelList YOUR INVESTORs’ CONTACTS CORPORATE RECRUITERS PRESS PICKUPS

The best team

THE BEST TEAM MEMBERS ARE OFTEN THE ONES WHO ARE CURRENTLY

EMPLOYED

Let people go who aren’t working out

IF SOMEONE ISN’T WORKING OUT LET THEM GO AND FREE THEM UP TO DO SOMETHING THEY

ARE GOOD AT

Building connection & Familiarity within your team

HERE ARE 4 retreat Exercises that are Worthwhile to do with

Your team

Team Retreat Exercises

Exercise 1: Inner and outer story

ASK each TEAM member TO share: 1. 120 seconds - ACCOMPLISHMENTS and resume (OUTER STORY) 2. 240 seconds – YOUR HIDDEN INNER STORY Deep down inside what do you worry about? What are you insecure about? WHAT HAVE YOU STRUGGLED WITH MOST IN THE LAST 2 years? What are you afraid of BEHIND THE FAÇADE? FOR A SUCCESSFUL EXERCISE, BE SURE TO TAKE THE TIME TO Create a setting of confidentiality and openness to being vulnerable

Exercise 2: the change you wish to make 1.  HAVE EACH team member SPEND 5 minutes to think about and then WRITE DOWN in NO MORE THAN 10 words THE ANSWER TO: “what change do you want to make in the world WITH YOUR LIFE?” 2.  Then have each person share their 1 sentence with the group 3.  THEN have EACH PERSON ONE AT A TIME STAND UP AND ANSWER THE QUESTION “WHY DO YOU DO WHAT YOU DO?” For 4 minutes For a successful exercise •  If the speaker finishes talking before the 4 minutes is up, ask them the question again and have them answer it again •  Don’t allow any other question to be asked during the 4 minutes

Exercise 3: Pivotal moments

1.  HAVE EACH PERSON WRITE DOWN 4 pivotal moments in their life 2.  HAVE EACH PERSON SHARE THE 4 pivotal moments and how they handled them and dealt with them with the group FOR A SUCCESSFUL EXERCISE •  CREATE AN ENVIRONMENT OF CARE AND CONFIDENTIALITY

Exercise 4: Crucible moments

1.  PAIR OFF INTO TWOs IN A QUIET LOCATION 2.  HAVE ONE PERSON TAKE 5 minutes to share the story of the most difficult and vulnerable MOMENT IN THEIR LIFE 3.  HAVE THE PARTNER ASK EXACTLY 3 follow-up questions 4.  THEN SWITCH ROLES FOR A SUCCESSFUL EXERCISE •  ALLOT AT LEAST 30 minutes for the exercise as the exercise can bring up difficult emotional situations that require time to process BEFORE THE SESSION CONTINUES

Lessons from my 20s

PART II, Section 11

Strategy & Execution

strategy

Your strategy should be TO BE THE BEST in the world AT ONE THING

So CHOOSE CAREFULLY

strategy

STRATEGY IS THE COLLECTION OF UNIQUE PROCESSES THAT WORK IN UNISON TO ENABLE YOUR FIRM TO BE THE BEST IN THE WORLD

AT ONE THING

strategy

STRATEGY IS ABOUT

TRADEOFFS YOU MUST CHOOSE WHAT NOT TO DO

strategy

STRATEGY INVOLVES CHOOSING TO PERFORM ACTIVITIES DIFFERENTLY

THAN others

strategy

NEVER CREATE STRATEGY IN A ROOM OF MORE THAN

FIVE PEOPLE CHOOSE FIVE

CEO Head of Product Head of Technology Head of Sales Head of Service Head of Marketing Head of OPERATIONS

Operational execution

At your quarterly Planning sessions with your senior team Update your one-page

strategic plan

See an example at: bit.ly/1pagestrategy


BUILD CONSENSUS WITH A SMALL CORE

BEFORE YOU SHARE WIDELY


ONCE YOU ALIGN THE CORE ALIGN THE NEXT LAYER THEN THE NEXT

THEN THE NEXT


WAY TOO MUCH TIME IS SPENT in

MEETINGS


At your company ADOPT a

MAKER’S SCHEDULE See: www.paulgraham.com/makersschedule.html


Engineers and creatives Need at least 4 hour blocks Of Uninterrupted time

To get anything done (so stop overscheduling them in meetings)


At most Have one daily standup meeting In which you actually stand So it takes less than 15 mins


Once your company gets beyond 30 employees hire a COO to keep the trains running on time and to focus on cross department projects & metrics


All creative or technical CEOs Need a really good

Ops Person


Create numerical goals in advance with each of your team members Hold them accountable to the goals

not to methodology!


Hold a quarterly 2-day planning sessions each quarter and an annual 4 day team retreat


ONCE YOU AND YOUR TEAM HAVE YOUR PLAN COMMUNICATE IT in A MEMORABLE WAY WITH VISUAL AND NUMERICAL REINFORCEMENT TO THE FULL TEAM THEN FOCUS ON EXECUTING WITH FANATICal DISCIPLINE & RECOMMUNICATE AND REINFORCE AT LEAST

MONTHLY


HOLD PEOPLE ACCOUNTABLE TO PRE-DEFINED MEASURABLE RESULTS NOT TO THEIR METHODOLOGy AS LONG AS THEY ARE TREATING

PEOPLE WELL


ONCE YOU’RE CLEAR ON STRATEGY DON’T SKIMP ON OPERATIONALIZING THE STRATEGY PLAN TEAMS IN LARGER COMPANIES GET OFF TRACK HERE FIGURE OUT WHAT RESOURCES ARE NEEDED TO ACHIEVE TEAM GOALS AND FIGURE OUT THE METRICS THAT ENABLE THE FOCUS NECESSARY AND TRACK

THEM VISUALLY


Track your key metrics visibly on a

real time dashboard


SHOW results for up to 5 COMPANY-wide goals IN REAL TIME AND ON A MOUNTED AND VISIBLE MONITOR MAKE YOUR RESULTS AND KPIS VISIBLE AND CLEAR BE TRANSPARENT to your full company and

MEASURE what MATTERS


CONSTANTLY be TESTing. As jim collins says FIRE BULLETS TO FIND WHAT WORKS SEE WHAT WORKS THEN FIRE CANNONBALLS

When to hire key team members

Office Manager/EA

10 employees

CFO

20 employees

COO

30 employees

Dir of HR

40 employees


PART OF THE CEO’s JOB IS TO FIND & HIRE PEOPLE WHO CAN DO THEIR ROLES MUCH BETTER THAN THE CEO COULD


WHEN YOU SEE SOMEONE DOING A GOOD JOB

TELL THEM!


THERE IS GREAT POWER IN DEADLINES

CREATE SOME!

What a CEO Does in Year one Team Size 1-3

Key Actions •  It’s all you to start. •  Incorporate and get an EIN. •  Get a bank account. •  Find a business partner with a complementary skillset if needed. •  Make sure you have $25,000 saved up to get started •  Focus on product development and getting something to market that solves a customer need. •  Create something of value to others and sell, sell, sell! •  Get customer feedback and use it to make your product better.

What a CEO Does in year two Team Size 4-9

Key Actions •  Do all you can to enable the company to survive •  Build an Advisory Board •  Hire your first employees •  You should be in charge of product or sales or both •  Set up a basic low cost office space

•  Outsource your payroll

What a CEO Does in year THREE Team Size 10-25

CEO Role •  •  •  •  •  •  •  •  •  •  •  •  •  • 

Hire an outside bookkeeper/accountant to produce monthly financial statements by the 20th of the following month Put real time visible dashboards in place Everyone won’t report to you anymore. Start putting managers in place. Figure out your unit economics and consider raising funding to invest in growth. Hold a weekly meeting with either the whole company or all the key operational individuals Hire people more experienced than yourself for the role you are hiring for, even if you have to wait a bit longer to be able to afford them. Keep the organization focused on selling and growing. Put in place an employee handbook Define your values Define your mission and vision Put in place a formal performance review process and ensure a manager conversation and performance review is completed at least every 12 months, including 360 reviews in which peers and staff review their managers. Set up an options plan Install a CRM system

What a CEO Does in year Four Team Size 26-50

Key Actions •  •  •  •  •  •  •  •  •  •  •  •  • 

Start a weekly meeting with your Senior Leadership Team, Leadership Team, and Managers Start a weekly meeting with just your Senior Leadership Team Hire a COO, Controller or CFO, a Director of Human Resources, and an Administrative Assistant. Make sure your Controller/CFO begins providing monthly accurate financial statements to you by the 20th of the following month in GAAP format and Managerial format Document your systems and processes in an employee handbook. Set KPIs and have your team report on them weekly. Put in place documented incentive compensation systems. Think about creating systems to ease internal employee communication, like internal wikis, company meetings, external events, and retreats. Start using a One Page Strategic Plan with a quarterly theme. Have formal annual planning meetings to set or communicate both strategy and budgets for the upcoming year. Start investing consciously in shaping your company culture. Start investing consciously in managerial and leadership development courses for your managers and future managers. Hire an Auditor to audit your annual financial statements

What a CEO Does in year Five and six Team Size 51-200

Key Actions •  •  •  •  •  •  •  •  •  •  •  •  • 

Define your company’s hedgehog concept (what you can be the best in the world at, what you’re passionate about, what drives your economic engine?) Implement The Five Dysfunctions of a Team Material throughout the organization Launch a formal corporate social responsibility program Start thinking about what new markets your organization can go into the future and figure out what your next product cycle will be Think about what the next big thing will be in your broad industry and position your company to be the leader in it Start top-grading your people and letting go of the bottom 10-20% annually Constantly ask yourself what will be driving revenue growth most in 24 months? Put in place a system that will enable you and your leaders to know everyone’s name Launch an HRIS to automate your human resources functions like talent recruitment, performance management, compensation, and employee training. Implement the Service Profit Chain from Peak Switch to a Big 4 Auditor Launch a Corporate Development Department Hire an Investment Bank If Needed to Evaluate M&A opportunities

What a CEO Does in year SEVEN AND EIGHT Team Size 200+

CEO Role •  Consider scaling yourself by separating the organization into different business units with GMs or Presidents •  Your role is now divided into five parts, described below. •  Set Strategy and Vision •  Manage the Senior Team •  Communicate with Stakeholders •  Oversee Resource Allocation •  Build the Culture

Recommend Books on Execution

1.  Good to Great by Jim Collins 2.  Built to Last by jim collins 3.  Execution by Ram Charan 4.  Peak by Chip Conley 5.  Mastering the Rockefeller Habits by Verne Harnish 6.  The Future of Management by Gary Hamel

Lessons from my 20s

PART II, Section 12

the steps to get started

100 Steps in review

1.  FIGURE OUT WHAT CHANGE you WANT TO MAKE IN THE WORLD 2.  BEGIN RESEARCHING THE INDUSTRY AND COMPETITORs 3.  DETERMINE HOW TO CREATE YOUR PRODUCT 4.  TALK TO POTENTIAL CUSTOMERS FOR FEEDBACK 5.  COME UP WITH NAME FOR YOUR COMPANY/PRODUCT

100 Steps in review

6.  BUILD YOUR PITCH DECK 7.  CREATE PRO FORMA FINANCIAL PROJECTIONS 8.  DETERMINE CAPITAL NECESSARY TO GET TO CASH FLOW POSITIVE 9.  GET FEEDBACK ON PITCH DECK FROM ADVISORS 10. FIND A CO-FOUNDER IF NEEDED

100 Steps in review

11.  12.  13.  14.  15. 

SELECT A QUALITY CORPORATE LAW FIRM IN YOUR AREA INCORPORATE & OBTAIN AN EIN OPEN A COMPANY BANK ACCOUNT TALK TO YOUR ATTORNEY ABOUT MAKING an 83b election BUILD BASIC PRODUCT PROTOTYPE/Minimum viable product

100 Steps in review

16.  CREATE EMPLOYEE AGREEMeNTS FOR EVERYONE 17.  CREATE CONFIDENTIALITY AGREEMENTS FOR EVERYONE 18.  HOLD INITIAL BOARD OF DIRECTORS MEETING 19.  CREATE YOUR RSU/STOck options plan 20.  ISSUE STOCK CERTIFICATES

100 Steps in review

21.  FUND YOUR BANK ACCOUNT AND ORDER CHECKS 22.  DETERMINE IF YOU NEED OUTSIDE CAPITAL TO START 23.  RAISE ANY INITIAL STARTUp CAPITAL NEEDED 24.  GET A COMPANY DEBIT/CREDIT CARD 25.  SET UP YOUR ACCOUNTING SOFTWARE

100 Steps in review

26.  SELECT YOUR PAYROLL PROVIDER 27.  TRADEMARK THE NAME(S) of your company / Product 28.  DESIGN YOUR LOGO 29.  CREATE BUSINESS CARDS 30.  FIND OFFICE SPACE TO WORK OUT OF

100 Steps in review

31. FURNISH YOUR OFFICE AS NEEDED 32. PURCHASE ANY SOFTWARE/HARDWARE YOU WILL NEED 33. GET WIRELESS INTERNET ACCESS SETUP AS NEEDED 34. OBTAIN A UPC IF YOUR PRODUCT WILL BE SOLD IN STORES 35. DESIGN LABELING/PACKAGING IF NECESSARY

100 Steps in review

36.  37.  38.  39.  40. 

FINISH PRODUCT ALpHa/PROTOTYPE GET INITIAL USER/CUSTOMER FEEDBACK ORDER INITIAL INVENTORY OF PRODUCTS IF NEEDED REGISTER YOUR DOMAIN NAME DESIGN YOUR COMPANY WEB SITE

100 Steps in review

41.  42.  43.  44. 

INSTALL GOOGLE ANALYTICS ON YOUR WEB SITE IF NEEDED, INSTALL SHOPPING CART ON WEB SITE APPLY FOR MERCHANT ACCOUNT TO ACCEPT CREDIT CARDS SIGN UP FOR EMAIL LIST TOOL like icontact or mailchimp 45.  Optimize your web site for search engines & ADD BLOG

100 Steps in review

46.  47.  48.  49. 

INSTALL A CRM SYSTEM HIRE INITIAL STAFF AS NEEDED CREATE COMPANY VALUES & MISSION STATEMENT ANNOUNCE PROdUCT LAUNCH TO LOCAL/RELEVENT MEDIA 50.  HOLD LAUNCH EVENT & START SELLING

100 Steps in review

51.  HIRE A TEAM TO FULFILL ORDERS & PROVIDE CUSTOMER SERVICE 52.  START An AFFILIATE OR DISTRIBUTOR PROGRAM 53.  BUILD UP AFFILIATES & DISTRIBUTORS 54.  SET UP An AD TRACKING SYSTEM 55.  TRY CPC/CPI/CPA ADVERTiSING WITH TEST BUDGET

100 Steps in review

56.  GET RESULTS FROM THIS ADVERTISING 57.  OPTIMIZE AND SCALE AS NEEDED 58.  DETERMINE COST OF ACQUISITION A LEAD FOR EACH CHANNEL 59.  DETERMINE CONVERSION RATE FOR EACH CHANNEL 60.  DETERMINE LIFETIME VALUE OF A CUSTOMER

100 Steps in review

61.  Test CPC/CPI/CPA Ads with bigger budget now that you know LTV 62.  TEST SOCIAL ADS & DISPLAY ADS & CALCLATE ROI BY CHANNEL 63.  SCALE ADVERTISING UNTIL MARGINAL COST = MARGINAL RETURN 64.  OPTIMIZE ADVERTISING to bring down CAC 65.  COLLECT TESTIMONIALS FROM INITIAL USERS/CUSTOMERS

100 Steps in review

66.  CREATE SOCIAL WORD OF MOUTH FOR YOUR PRODUCT 67.  CREATE youtube video promoting your product 68.  ATTEND AN INDUSTRY TRADE SHOW 69.  CONSIDER SELLING YOUR PRODUCT in BULK AT WHOLESALE 70.  BRING ON A BOOKKEEPER TO AUTOMATE ACCOUNTING

100 Steps in review

71.  72.  73.  74.  75. 

CREATE AN EMPLOYEE DIRECTORY REVIEW YOUR P&L & balance sheet monthly COMPARE INITIAL FORECAST WITH ACTUAL RESULTS HIRE A SALESPERSON CREATE A SALES COMPENSATION PLAN

100 Steps in review

76.  77.  78.  79.  80. 

SET UP A COMPANY HEALTH CARE PROGRAM ESTABLISH YOUR VACATION POLICY TEST OFFLINE ADVERTISING CAREFULLY CREATE A COMPANY INTERNAL INTRANET CREATE a digital company handbook

100 Steps in review

81.  OPEN UP A CREDIT LINE WITH YOUR BANK 82.  CREATE AN OFFSITE WORK POLICY 83.  ONCE YOU CAN SHOW $1 in means $4 in revenue, raise capital 84.  CREATE A LIST OF FIRMS TO RAISE INITIAL GROWTH FUNDING 85.  UPDATE YOUR PITCH DECK

100 Steps in review

86.  87.  88.  89.  90. 

BUILD RELATIONSHIPS WITH INDUSTRY BLOGGERS SEEK PRODUCT REVIEWS HIRE AN EXECUTIVE ASSISTANT/OFFICE MANAGER HOLD YOUR FIRST COMPANY RETREAT TAKE CUSTOMER FEEDBACK AND IMPROVE YOUR PRODUCT

100 Steps in review

91.  GET CONNECTED TO INVESTORS FROM PEOPLE YOU KNOW 92.  HAVE INITIAL GET TO KNOW YOU MEETINGS FOR FEEDBACK 93.  UNDER PROMISE AND OVER DELIVER ON RESULTS FOR NEXT 90 DAYS 94.  DETERMINE HOW MUCH CAPITAL TO RAISE 95.  RETURN TO FIRMS YOU LIKE FOR PARTNER PRESENTATION

100 Steps in review

96.  DO 20 partner presentations in 2 weeks 97.  Get 2 term sheets 98.  NEGOTIATE & SIGN TERM SHEETS 99.  COMPLETE DILIGENCE 100.  CLOSE ON CAPITAL

Lessons from my 20s

PART II, Section 13

Business lessons


Don’t get stuck In analysis paralysis

Take action NOW!


It is UP TO YOU to GET OUT THERE, DO IT &

TAKE THE INITiATIVE


Don’t be Afraid to

FAIL!


RECOGNITION & PRAISE CAN BE BIGGER MOTIVATORS THAN

Salary & BONUSES!


ALWAYS COMMUNICATE FREQUENTLY & OPENLY TO CUSTOMERS & STAKEHOLDERS DURING NEGATIVE EVENTS


ONCE YOU HAVE 80% OF THE NEEDED INFORMATION MAKE THE CALL

You’ll be better off By ACTING QUICKLY LEARNING & Iterating


WHEN THINGS ARE GOING WELL financially IT IS TIME TO PREPARE FOR Difficult times

Business Lessons Learned

BUILDING A BUSINESS is like MOVING SOMETHING heavy IT TAKES TIME to GET INERTIA GOING. BUT ONCE YOU DO, THINGS CAN MOVE QUICKLY


HAVE ALL TEAM MEMBERS SHARE THEIR PERSONAL stories

WITH THE TEAM


WHEN YOU GET TO 30 EMPLOYEES

HIRE A COO


YOU MAY NOT BE ABLE TO DO EVERYTHING AT ONCE TAKE A LONG-RUN APPROACH & PLAY LIFE LIKE A

LONG-TERM GAME


IF YOU PRESENTLY DON’T HAVE THE FINANCIAl RESOURCES, THE EXPERIENCE OR A GOOD BUSINESS IDEA, INTERN OR GET A JOB AT A COMPANY YOU ARE PASSIONATE ABOUT AND START BUILDING YOUR NETWORK & experience


ALWAYS FOCUS ON BUILDING QUALITY & GIVING RELATIONSHIPS WITH

GOOD PEOPLE


REGARDLESS OF WHAT You’RE DOING MAKE SURE You’RE CONSTANTLY

LEARNING


TAKE A PROACTIVE ROLE IN PLANNING, GOAL SETTING, &

PERSONAL EVALUATION


Don’t be afraid to ask for help People are often very willing to HELP YOU IF YOU ASK

GENUINELY


GET Experience however you can Build your network Have confidence And BE IN IT TO

Help Others


IF AND WHEN YOU SUCCEED

GIVE BACK

There are many brothers & sisters Who have not been as fortunate

Part 2 - Entrepreneurship - Lessons From My 20s by Ryan Allis

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