Silicon Valley 2.0: The Lean VC (Waterloo)

The Lean VC : a Silicon Valley 2.0 Story Dave McClure 500 Startups ( @DaveMcClure ) http://500startups.com Entrepreneur Week – Waterloo, Nov 2010 Re-Inventing Venture Capital Investing through Innovation, Incubation, & Iteration

Changes. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Dave McClure: Bio ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

500 Startups Seed Fund Mountain View, CA – Founded 2010 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

500 Hats LLC (Personal Investments: 13 deals, 2004-2008, ~$300K) Results: 1 exit @ $170M (9x), +3-6 future wins 2 addtl exits @ $50M, $70M (advisory roles) Bix (acq YHOO) Jambool (acq GOOG)

Founders Fund (Incubator/Seed Program: 43 deals, 2008-2010, ~$3M) Results : 8 raised seed rd $500K+ 3 small exits Results : 6 raised Series A $2M+ 2 raised Series B $5-10M+ 1 early exit @ 4x FanBridge Facebook fbFund 22 incubator deals ($850K) FF Angel LLC 21 seed deals ($2M)

500 Startups LP Fund I (60+ investments @ ~$100K avg) Wildfire Crave Tello AwayFind Indinero MyGengo Revnetics Mogotix EcoMom Zencoder GazeHawk Crocodoc SayHired Recurly AppBistro Foodspotting Gantto Medialets Rapportive TransFS SiteJabber GinzaMetrics Estately FlowTown OneForty Twilio Postling Plancast ElaCarte WePay Zappli Format Baydin GroupSpaces Rapportive Apsalar Bunndle Udemy Brainient ReadyForZero Graphicly StoryJumper OtherInbox Viikii Zozi One True Fan Formative Labs Networked Blogs

Venture Capital 2.0 (smaller, faster, better) Venture Capital 1.0 “ Super” Angel (aka Micro-VC)

Silicon Valley Investor Ecosystem True Ventures First Round Capital Benchmark Accel Angels & Incubators ($0-10M) “ Seed” Funds ($10-50M) VC Funds ($50-250M) VC Funds (>$250M) Y-Combinator TechStars SoftTech (Clavier) FloodGate (Maples) Felicis (Senkut) SV Angel (Conway)

Venture Capital: Still Relevant? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

More & Smaller Acquisitions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],* Mint acquired by Intuit in Sept 2009 for $170M

Platforms 2.0 Search, Social, Mobile

Web 2.0 : Good Times . ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],R.I.P. *BAD* TIMES

Platform Viability Successful Platforms have 3 Things: 1) Features 2) Users 3) Money Users . . Money Features Growth Profit Profitable Growth Nirvana

Distribution Platforms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Web 2.0 Business Model: KISS (“Keep It Simple, Stupid”) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Startup Incubators Lots of Hot, Cool, Web 2.0! (+ lots of FAIL .)

Incubator 2.0: Fast, Cheap, FAIL ,[object Object],[object Object],[object Object]

Incubator 2.0: Education, Collaboration, Iteration ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

fbFund REV ,[object Object],[object Object],[object Object],[object Object]

Startup Metrics & The Lean Startup Measure Shit, Iterate .

“ What Metrics Should I Measure ?” Users, Pages, Clicks, Emails, $$$...? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],the good stuff.

Read Geoffrey Miller Sex + Evolution + Consumer Mktg = Awesome Sauce

Other Great Shit. Psychology + Comics

Discover Meaning What Do Users Care About Enough to F**k or Kill ? Kathy Sierra: “ Creating Passionate Users”

The Lean Startup ,[object Object],[object Object],[object Object],[object Object],[object Object]

Discover Customers (Steve Blank, SteveBlank.com)

Iterate : Learn, Measure, Build. (Eric Ries, StartupLessonsLearned.com) LEARN BUILD MEASURE IDEAS CODE DATA

Product/Market Fit Before “Launch” (Sean Ellis, Startup-Marketing.com) [email_address] Blog: startup-marketing.com

Startup Metrics for Pirates ,[object Object],[object Object],[object Object],[object Object],[object Object],(note: If you’re in a hurry, Google “Startup Metrics” & watch 5m video) AARRR !

AARRR! : 5-Step Startup Metrics Model Website.com R evenue $$$ Biz Dev Ads, Lead Gen, Subscriptions, ECommerce A CQUISITION SEO SEM Apps & Widgets Affiliates Email PR Biz Dev Campaigns, Contests Direct, Tel, TV Social Networks Blogs Domains R etention Emails & Alerts System Events & Time-based Features Blogs, RSS, News Feeds

Q: What is My Business Model? ,[object Object],[object Object],[object Object],[object Object],[object Object]

Lean Startup Challenges ,[object Object],[object Object],[object Object],[object Object]

Role: Founder/CEO ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Role: Product / Engineering ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Role: Marketing / Sales ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

M AARRR keting Plan ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

One Step at a Time. ,[object Object],[object Object],[object Object],“ You probably can’t save your Ass and your Face at the same time… choose carefully .” – DMC

Investor Metrics: “Super Angel” -> Lean VC Not “Spray & Pray”, but rather “ Quantitative, Incremental, Selective Follow-on ” Investing. (Product, Market, Revenue.)

“ Lean Investor” Model ,[object Object],[object Object],[object Object],[object Object]

Investment #1: Incubate (“Product”) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Investment #2: Seed (“Market”) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Investment #3: Venture (“Revenue”) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Summary ,[object Object],[object Object],[object Object],[object Object],[object Object]

Silicon Valley 2.0: The Lean VC (Waterloo)

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Silicon Valley 2.0: The Lean VC (Waterloo)

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