Haas Entrepreneurs 11-17-09

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  • 8/6/2019 Haas Entrepreneurs 11-17-09

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    Adrenaline Startups and Rapid-Fire Marketing

    @

    www.TandemEntrepreneurs.com

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    Where is Your Risk?

    Private & Confidential

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    Capital

    Conventional Funding Milestones

    Risk ()

    Valuation

    Idea isFeasible

    Product Traction

    SeedFunding

    R&DCapital

    Go-to-MarketCaptial

    ExpansionCaptial

    $0.5M $3.0M $8.0M $13.5M $150M

    Based on slides fromVinod Khosla

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    Proven

    Team

    Proven

    Value

    Proven

    Business

    Proven

    Channel

    A Different Set of Milestones

    CustomerValidation

    CustomerDiscovery

    ProductValidation

    PartnerDiscovery

    ChannelDiscovery

    PartnerValidation

    ProductTuning

    PricingDiscovery

    ChannelScaling

    ChannelValidation

    ProductExpansion

    PricingOpt

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    Today: Market Fit is Cheaper to Explore

    Private & Confidential

    Build Young Teams, Open Source

    Deploy With Low Cap-Ex: The Cloud

    Market With Social Distribution/Marketing

    10x lower Cost to Establish Adoption

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    Proven

    Team

    Proven

    Value

    Proven

    Business

    Proven

    Channel

    Heads I win, Tails I dont Lose Much

    CustomerValidation

    CustomerDiscovery

    ProductValidation

    PartnerDiscovery

    ChannelDiscovery

    PartnerValidation

    ProductTuning

    PricingDiscovery

    ChannelScaling

    ChannelValidation

    ProductExpansion

    PricingOpt

    $0.5M $1.5M $20M

    Burn

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    Conventional Venture Capital

    Private & Confidential

    5 yr returns are negative

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    Whats Changed : Exits Are Smaller

    12%

    73%

    57%

    23%

    Data from

    100M+

    < 30M

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    Proven

    Team

    Proven

    Value

    Proven

    Business

    Proven

    Channel

    Model Supports Many Possible Exit

    CustomerValidation

    CustomerDiscovery

    ProductValidation

    PartnerDiscovery

    ChannelDiscovery

    PartnerValidation

    ProductTuning

    PricingDiscovery

    ChannelScaling

    ChannelValidation

    ProductExpansion

    PricingOpt

    $0.5M $1.5M $20M

    Burn

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    Investment Models Compared

    Private & Confidential

    Conventional Model Invest in a 5% chance of creating a few 100M+ Business

    Capitalize the business with US $3-5M - A Round

    Success = Big Exitsand founders make 10s of millions

    New Model

    Invest in the likely chance of creating MANY 10M+ Businesses

    Capitalize the business with US $500,000 of initial capital Success = Cash Flow or Exits where founders make millions

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    Increasing the Probability of Success

    Redefine Success to include Smaller Exits

    Contain the Market Risk Quickly and Cheaply

    Get an A+ Team

    Private & Confidential

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    Tandem Entrepreneurs

    Seasoned Entrepreneursworking in tandem with multiple

    Small Founding Teams

    applying

    Modest Capital

    to efficiently build

    Simple Highly Leveraged Services

    and take companies to

    High Probability Exits

    Private & Confidential