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

Lessons from my 20s
entrepreneurship
Part II:
ABOUT THIS PRESENTATION
THIS presentation can be found
Online at
PART 2 TOPICS
Entrepreneurship
The big opportunities
Leadership
Business Planning
PRODUCT DEVELOPMENT
Innovation

PART 2 ENTREPRENEURSHIP INCLUDES SECTIONS ON
Venture Capital
Marketing
Building systems
BUILDING A TEAM
STRATEGY & EXECUTION
Steps to get started

Lessons from my 20s

Purpose-driven
entrepreneurship
PART II, Section 1
A definition
Individuals who build organizations
which scalably & sustainably
solve human problems

Entrepreneurs (n.)
Choosing Your PROBLEM Choosing Your PROBLEM
How Will you Use Your one Wild and Precious Life?
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
protable venture
- McConnell and Brue in Economics
Understand the system
THERE IS AN ENTIRELY DIFFERENT
WORLD OUT THEREA 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 arent solving
A problem worth dedicating
20 years of your life to
You wont 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. build a purpose-driven business
2. Join a purpose-driven business
3. build a non-profit
4. Join a non-profit
5. Join a government agency
6. Run for political office
7. Become a scientist/researcher
8. Invest in companies solving the problem
9. 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
Harmful Small
Businesses
Harmful Non
Prots
Exploitative
Entrepreneurship
High Growth
Entrepreneurship
Contributory
Small Businesses
Ineffective
Non Prots
Social
Entrepreneurship
Transformational
Non Prots
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Transformational
Entrepreneurship
Work here in
the green!
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
Determine the big problem you
want to solve
Create your life purpose
statement
Decide on sector you want to
work in to solve the problem
Government Non-Prot Business
Elected Appointed Join Existing Start New Join Existing Start New
Explore widely to nd what
makes you come alive
Dont 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
Dont do that
What most people do
Dont 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 youre spending your years focusing on
A really big human problem you end up living a
LIFE of purpose
And when youre 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 DETRE 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
ITS 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 wont for
10 years so you can do what
Others cant for the
Rest of your life
The big opportunities
Next well 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

The big
opportunities
PART II, Section 2
A quote
I dont 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
The Wheel
(5,500 Yrs Ago)
Iron
(5,000 Yrs Ago)
The Legal System
(3,800 Yrs Ago)
Ships
(6000 Years Ago)
Written Language
(4900 Yrs Ago)
The Alphabet
(3800 Yrs Ago)
Water Power
(2200 Yrs Ago)
Cities Form
(6000 Years Ago)
Money
(5,000 Yrs Ago)
Abacus
(5,000 Yrs Ago)
Steel
(2400 Yrs Ago)
Farming
(15,000 Yrs
Ago)
Trade
(20,000 Years Ago)
Key innovations From 0 to 1800
Printing Press
1450
Movable Type
1040
Paper
105
Compass
950
Gunpowder
850
Microscope
1590
Electricity
1600
Telescope
1608
Engine
1712
Steam Power
1690
Binary Numbers
1697
Smallpox Vaccine
1796
19
th
century innovation timeline
Electromagnet
1825
Internal
Combustion
Engine
1823
Telegraph
1809
Battery
1800
Anesthesia
1846
Petroleum
1859
Telephone
1860
Vacuum Tube
1883
Periodic Table
1869
Electrical Grid
1880
Automobile
1885
Light Bulb
1800
Radio
1897
Semiconductors
1896
20
th
century innovation timeline
Transistor
1947
Penicillin
1928
Television
1926
Airplane
1903
DNA
1953
Organ
Transplants
1964
Satellites
1957
Microprocessor
1971
Nanotechnology
1959
Manned
Space Flight
1961
Cell phones
1973
Quantum
Physics
1900
Genetic
Engineering
1973
The Internet
1969
1978
GPS
World Wide Web
1991
Carbon
Nanotubes
1991
21st century innovation timeline
?
?
Smartphone
2007
Quantum Computer
2012
?
? ?
?
Its now your opportunity to create the future
Lab Grown Organ
Transplants
2000
Human Genome Map
2001
The Biggest opportunites for millennials
Here are the fields needing
Great entrepreneurs
between
2015-2050
The Biggest opportunites for millennials
Energy & Environment
Food & Water
Education
Health & Wellness
Engineering Computing
Financial Access
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
Articial 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
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
Synthetic Biology
Brain Mapping
Optogenetics
Reverse Aging
Personalized Medicine
Bionic Eyesight
Low Cost Sanitation
Mindfulness Training

Clean Transportation
Self-driving Cars
Robotics
Space Exploration
3D Printing
Nanotechnology
Long Life Batteries
Low Cost Housing
Quantum Computing
Converged Smartphones
Data Storage on DNA
Articial Intelligence
Contact Lens Smartphones
Natural User Interfaces
Government 2.0
Cybersecurity
Wearable Computers
Implantable Computers
The Internet of Things
Mobile Software
Health & Wellness
Engineering
Computing
Financial Access
Mobile Banking
Frontier Market Finance
Payment Processing
Digital Currency
Digital Wallets
The Mobile Cloud
Beautiful & Easy
Mobile Cloud Services are
REVOLUTIONIZING
EVERYTHING
The Reimagination of nearly everything
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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

Authentic
leadership
PART II, Section 3
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
Youll be more passionate
And create more impact
(And if you do it right, earn much higher nancial compensation too)
personal
purpose
=
professional
purpose
The Authentic Leader
The Inauthentic Leader
personal
purpose
"
professional
purpose
INspiration
How can you possibly expect
To inspire A team to greatness
If you yourself arent working
On your purpose with your

Full time efforts
The obvious
You think your team wont be
Able to tell whether youre a
Passionless corporate shrill
Or lit up on fire

WITH ENERGY??
When your personal purpose is what
you work on daily, work becomes
greatly enjoyableno 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 youre actually working
On what youre passionate about

With your full time effort
Fear?
So what are you afraid of?
Failure?
Fear?
what you should really fear isnt FAILUre
What you should really fear is the
Regret youll feel when youre 80 having
never given it a try
Leadership
An authentic leader
Hires missionaries
Not mercenaries
Leadership
You cant be a leader
until you know
why youre 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
Dont begin the effort of
building a company if
youre not deeply
passionate about the
problem you are trying to
solve
Too many startups try to
solve problems theyre not
actually passionate about
solving
Building a company is hard. If
youre deeply passionate about
solving the problem youll get
through the years of sacrice.
Once youve determined the change
you seek build a company that
sustainably creates that change
at scale.

Lessons from my 20s

Business
planning
PART II, Section 4
Business planning
SOME ENTREPRENEURS
choose not to create a plan at all
And just start working

Minimum viable product
On a prototype or
Business planning
I find that its helpful to at least
create a short slide deck or exec summary

To ensure you know what youre building
& What problem youre Solving
before you start building

Whats in your deck?
1. PROBLEM youre 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
($2,500,000)
($2,000,000)
($1,500,000)
($1,000,000)
($500,000)
$0
$500,000
$1,000,000
$1,500,000
0 6 12 18 24 30 36 42 48 34 60
Revenue Expenses Net Income
Financials section
2015 2016 2017 2018 2019
Revenue 18,127 50,984 143,401 403,340 1,134,461
Expenses 103,408 118,539 139,017 287,553 640,004
Net Prot -85,281 -67,555 4,384 115,787 494,457
Heres a REALLY BASIC Example annual financial PROJECTION
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?
! Whos 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
its important to

INCORPORATE
INcorporating
MUCH LOWER TAXES
LIABILITY PROTECTION
BEING TAKEN SERIOUSLY

ABILITY TO OPEN A BANK ACCOUNT
ABILITY TO HIRE EMPLOYEES
ABILITY TO RAISE INVESTMENT

THE BENEFITS OF INCORPORATING
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
rai si ng capi tal 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 YOUll
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
Time of Joining Pre-Seed
CEO 55%
COO 15%
CFO 12%
CTO 12%
SVP Level N/A
VP Level N/A
Manager N/A
Sr. Engineer 5%
Engineer 3%
Staff Member 1%
Investors 0%
Year 1
Post Seed
40%
15%
10%
10%
7.50%
4%
1.50%
1.50%
0.75%
0.30%
10%
Year 2 Year 3
Post Series A
20% 15%
10% 5%
7% 4%
7% 4%
5% 3%
3% 2%
1% 0.50%
1% 0.50%
0.50% 0.25%
0.20% 0.10%
30% 30%
Year 4 Year 5+
Post Series-B
10% 8%
3% 2.50%
2.50% 1.50%
2.50% 1.50%
2% 1%
1% 0.50%
0.25% 0.10%
0.25% 0.10%
0.10% 0.05%
0.05% 0.03%
45% 45%
AS TIME CONTINUES, RISK REDUCES, CAPITAL IS RAISED & VALUE IS CREATED
THUS LESS EQUITY iS PROVIDED THE LATER YOU JOIN
Lessons from my 20s

Product
Development
PART II, Section 5
The core human desires
Great products fulfill one or more
Of the 10 core human desires
1. Safety / security
2. Health / survival
3. Earning money
4. Finding a partner
5. Learning
6. Impressing others
7. Communicating / connecting
8. New experiences
9. Finding meaning
10. Comfort & relaxation
The 7 characteristics of a great product
1. Fulfill 1+ core human desire
2. Easy to use
3. Beautiful design
4. Highly effective at stated purpose
5. 4x or more markup over costs
6. Recurring purchase/supply needed
7. 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 YouRE 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
Design by
Committee hell
Maniacal
dictator design
The green zone
Open to feedback and data but
driven by a strong vision of the
way the world should be.
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

INNOVATION
PART II, Section 6
What is Innovation?
THE PROCESS OF
CREATING SOMETHING NEW

THAT MAKES LIFE BETTER
Innovation (n.)
Innovation
INNOVATION
IS IMPOSSIBLE

WITHOUT PASSION
Innovation
Most companies arent
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
Jack Andraka
At 15 he used carbon
nanotube sensors to
create a test for pancreatic
cancer and won the Intel
International Science and
Engineering Fair
Meredith Perry
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

Eesha Khare
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.
Robert Pera
By 35 he created a public
company worth $3B that
is bringing internet
access to the developing
world through wimax wi
networks

Innovation
HErE ARE FIVE
KEYS TO

INNOVATION
Innovation
Clearly DEFINE THE
PROBLEM youre trying

To solve
1
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
Dene
Prototype
Ideate
Test
Key Materials needed for design thinking exericses
1. Post-its of different sizes/colors
2. Lots + Lots of whiteboard space
3. Whiteboard markers
4. Pens
5. 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 its 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 specic 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 sufcient here

If its 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 youve built
THE LEAN STARTUP PROCESS
IS ANOTHER INNOVATION PROCESS
Designed to lead to
QUICK LEARNINGS & RESULTS
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 doesnt 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

VENTURE
CAPITAL
PART II, Section 7
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
Youll 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 dont have a product
Yet, you definitely should

Not be raising
VENTURE capital
(excepL ln very caplLal lnLenslve buslnesses llke drug dlscovery)
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
<$50k
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
$50k-$500k $500k to $1m
Yes
Yes if available
Yes if available
Yes Yes
Yes Yes
Yes Yes
Yes Yes
Yes Yes
Yes Yes
Yes
Yes
Sources of Funds
Side jobs
Credit cards
Your savings
Friends & family
Kickstarter
Indiegogo
Fundable
AngelList
Angel investors
Banks
Super angels
Seed stage VC
Growth stage VC
Mezzanine debt
Late stage VC
Private equity
Public markets
PIPES
Corporate bonds
$1m to $5m $5m to $25m $25m to $100m >$100m
Yes
Yes
Yes Yes
Yes Yes
Yes Yes Yes Yes
Yes Yes Yes
Yes Yes Yes
Yes Yes
Yes Yes
Yes
Yes
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

enLrepreneurshl
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 IsnT 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
CEO Past exits
TEAM EXPERIENCE
NUMBER OF USERS
NUMBER OF ENGINEERS
LOCATION OF COMPANY
X2 if youre in silicon valley
$1m to $25m PMV depending on Factors like
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
Employees 1-10 10-50
Time since incorporation 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
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
YouLL 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

Ryans three rules of entrepreneurship

1. Create products customers love (by
overinvesting in UX testing!)
2. Spend 1/3
rd
of your time recruiting
excellent people
3. Dont 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

marketing
PART II, Section 8
What is a brand?
A BRAND IS SIMPLY THE
AGGREGATEd SUM TOTAL

OF EVERY Human BEINGS
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 TODAYs WORLD
MARKETING STARTS

WITH your PRODUCT

marketing
YOU CanT SUCCEED
MARKETING A CRAPPY

PRODUCT FOR LONG

marketing
SO IF Youre 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 dont
KNOW YOUR CUSTOMER

ACQUISITION COST?

ARE YOU SERIOUS?
Know your LTV
You dont
KNOW YOUR
Customer LTV?

ARE YOU SERIOUS?
Know your LTV
Monthly Revenue Average Customer Life
Lifetime
Revenue
What You Can Spend to
Acquire a New Customer
Recurring
Customer
$50 48 Months $2400 Up to $800
ROUGH EXAMPLE
DETERMINING WHAT YOU CAN
SPEND TO ACQUIRE A NEW
RECURRING CUSTomER
Know your LTV
Average Purchase
Price
Average Number of
Purchases Within 3
Years
3 Year Revenue
Estimate
What You Can Spend
to Acquire a New
Customer
Non-recurring
Billed Customer
$50 6 $300 Up to $100
ANOTHER ROUGH EXAMPLE
DETERMINING WHAT YOU CAN SPEND
TO ACQUIRE A NEW CUSTomER
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
Twitter CPI Ads
TapJoy
ChartBoost
Vungle
Fiksu

nativex
Adcolony
Fyber
Flurry
APPIA
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 doesnt solve a real problem
3. Never charge for product
4. Poor sales and marketing
Icontact revenue growth
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
2003 2004 2005 2006 2007 2008 2009 2010 2011
Icontact customer growth
0
10000
20000
30000
40000
50000
60000
70000
2003 2004 2005 2006 2007 2008 2009 2010 2011
Connect User Growth six months after launch
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
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 1/3
rd
of your LTV in sales and
marketing expenses to acquire a customer

If LTV = $1500

$500
Max CAC =
Example of calculating cac
=
CAC =
Total Sales & Marketing Expenses
Total Customers Acquired in a Month
$2,000,000
4000
$500
=
Sales teams
When your product or service costs over over
$500/mo, or $5k total.

When should you create a
sales team?
Lessons from my 20s

CREATING
systems
PART II, Section 9
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.
Signicance 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 dont
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

Building a
team
PART II, Section 10
Building a team
Make sure youre PASSIONATE ABOUT
WHAT YOU ARE LEADING YOUR TEAM
TOWARD ACCOMPLISHING. IF YouRE 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 youre trying to achieve
MATTERS IN THE WORLD
Many leaders HAVE A VISION
But dont COMMUNICATE IT
Building a team
Dont 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
Real-time MONITOR
THEN TRACK IT ON A
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
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
DONt be
TOO SERIOUS
(Life is short. Have fun with what youre 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
Building a team
A startup ceos role includes
VISION
STRATEGY
PRODUCT CREATION
FINANCING
MEDIA RELATIONS
CULTURE
LEADERSHIP
TEAM RECRUITING
OPERATIONS
BOARD RELATIONS

The role of the ceo
As you grow, youll 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. Set strategy & vision
2. Set production direction
3. Recruit & lead senior team
4. Oversee resource allocation
5. Communicate to stakeholders
6. Build a great culture

The role of the ceo
Your role as CEO is not to micromanage
Its 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 arent working out
IF SOMEONE ISNT 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 FAADE?

FOR A SUCCESSFUL EXERCISE, BE SURE TO TAKE THE TIME TO Create a setting of confidentiality and
openness to being vulnerable
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
Dont allow any other question to be asked during the 4 minutes
Exercise 2: the change you wish to make
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 3: Pivotal 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
Exercise 4: Crucible moments
Lessons from my 20s

Strategy &
Execution
PART II, Section 11
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
CEO
Head of Product
Head of Technology
Head of Sales
Head of Service
Head of Marketing
Head of OPERATIONS
CHOOSE FIVE
At your quarterly
Planning sessions
with your senior team
Update your one-page
strategic plan
See an example at:
bit.ly/1pagestrategy
Operational execution
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
MAKERS 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 &

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

PEOPLE WELL
ONCE YOURE CLEAR ON STRATEGY DONT 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 CEOs 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 Key Actions
1-3
Its 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
4-9 Do all you can to enable the company to survive
Build an Advisory Board
Hire your rst employees
You should be in charge of product or sales or both
Set up a basic low cost ofce space
Outsource your payroll

What a CEO Does in year THREE
Team Size CEO Role
10-25
Hire an outside bookkeeper/accountant to produce monthly nancial statements by the
20th of the following month
Put real time visible dashboards in place
Everyone wont 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
Dene your values
Dene 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
26-50
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 nancial 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 nancial statements
What a CEO Does in year Five and six
51-200
Dene your companys hedgehog concept (what you can be the best in the world at, what
youre 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 gure
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 everyones name
Launch an HRIS to automate your human resources functions like talent recruitment,
performance management, compensation, and employee training.
Implement the Service Prot 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 CEO Role
200+
Consider scaling yourself by separating the organization into
different business units with GMs or Presidents
Your role is now divided into ve 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

the steps to
get started
PART II, Section 12
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. SELECT A QUALITY CORPORATE LAW FIRM IN YOUR AREA
12. INCORPORATE & OBTAIN AN EIN
13. OPEN A COMPANY BANK ACCOUNT
14. TALK TO YOUR ATTORNEY ABOUT MAKING an 83b election
15. 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. FINISH PRODUCT ALpHa/PROTOTYPE
37. GET INITIAL USER/CUSTOMER FEEDBACK
38. ORDER INITIAL INVENTORY OF PRODUCTS IF NEEDED
39. REGISTER YOUR DOMAIN NAME
40. DESIGN YOUR COMPANY WEB SITE
100 Steps in review
41. INSTALL GOOGLE ANALYTICS ON YOUR WEB SITE
42. IF NEEDED, INSTALL SHOPPING CART ON WEB SITE
43. APPLY FOR MERCHANT ACCOUNT TO ACCEPT CREDIT CARDS
44. 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. INSTALL A CRM SYSTEM
47. HIRE INITIAL STAFF AS NEEDED
48. CREATE COMPANY VALUES & MISSION STATEMENT
49. 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. CREATE AN EMPLOYEE DIRECTORY
72. REVIEW YOUR P&L & balance sheet monthly
73. COMPARE INITIAL FORECAST WITH ACTUAL RESULTS
74. HIRE A SALESPERSON
75. CREATE A SALES COMPENSATION PLAN
100 Steps in review
76. SET UP A COMPANY HEALTH CARE PROGRAM
77. ESTABLISH YOUR VACATION POLICY
78. TEST OFFLINE ADVERTISING CAREFULLY
79. CREATE A COMPANY INTERNAL INTRANET
80. 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. BUILD RELATIONSHIPS WITH INDUSTRY BLOGGERS
87. SEEK PRODUCT REVIEWS
88. HIRE AN EXECUTIVE ASSISTANT/OFFICE MANAGER
89. HOLD YOUR FIRST COMPANY RETREAT
90. 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

Business
lessons
PART II, Section 13
Dont get stuck
In analysis paralysis
Take action NOW
It is UP TO YOU to
GET OUT THERE, DO IT &
TAKE THE INITiATIVE
Dont 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

Youll 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 DONT 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 YouRE DOING
MAKE SURE YouRE CONSTANTLY
LEARNING
TAKE A PROACTIVE ROLE IN
PLANNING, GOAL SETTING, &
PERSONAL EVALUATION
Dont 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

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Lessons from my 20s

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