early stage startup advice (march 10 2016, jonah)
TRANSCRIPT
THE EARLY, EARLY STAGE
by Jonah McIntireFor ESCP Alumni in Zürich
Three suggestions for first-time founders
Suggestion #1- Cultivate a ”Theory Stack”
Example Tech Stack
A tech stack implies:• Separation of concerns… discreet solutions to discreet problems• Demarcation of ”best practice” from ”homemade”• Common terminology, i.e. we have can refer to sections of tech easily
Example Start-Up Theory Stack
Funding
Growth Strategy
Staffing & Comp
Leadership
Vision vs. Testing
Founders
Product Strategy Alliances
Examples from my Theory StackStartup Decision Best Management Approach Publication, Author, & Year
What is a Start-Up? A new potential business with high uncertainty
Lean Startup – Eric Ries – 2011Startup = Growth - Paul Graham - 2012
What should a team do to drive a start-up forward?
Fast cycles of building something that will generate data needed to verify assumptions, hence lowering uncertainty
Lean Startup – Eric Ries - 2011
What are the logical stagesfor a start-up as it matures?
Verify Market, Verify Solution, Scale Startup Pyramid – Sean Ellis – 20064 Steps to Epiphany- Steve Blank – 2005Nail It Then Scale It – Nathan Furr –2011Lean Startup – Eric Ries - 2011Running Lean – Ash Maurya - 2012
Where can and should innovations occur?
Innovate the business model, not the product
Business Model Generation - Alexander Osterwalder and Yves Pigneur – 2010Ten Types of Innovation – Doblin - 2013
How to assess the cost and ease of growth if successful?
Find the resource that must be acquired for incremental growth
Scaling Factors– Jonah McIntire, 2015
How should founders divide equity?
In proportion to their foregone salary or direct investments.
Slicing Pie – Mike Moyer
Suggestion #2- Is It a Startup or a Company?
Startups vs. Companies• We have a different word for a reason• Startups are meant to grow quickly and big• Uber is not just a barbershop whose founders were unusually
lucky and hard-working.
Its okay to found companies• Of the millions of businesses registered each year, >95% are
companies without any hope or intention to scale• In the startup scene, these are called ”lifestyle” businesses
Or found a startup and focus on growth• Consider big, threatening ideas. Replace email.• Accept the power distribution: >90% of exit value is created by
the top ten startups founded each year• Only address large markets, intending to monopolize them• Build companies that get more competitive as they grow• Your company has one goal: weekly growth of ~5%
Growth-Check Your Strategy
#2- Which Market to Pursue?
(Where to Play)
#1- What are our Goals? (Become a Huge Monopoly)
#3- What and How We Sell?(How to Win)
#4- What Resources & Activities Are
In-House?(What We Do
Better)
#5- What Resources & Activities Are Outsourced? (What Others Do
Better)
Aspirations
PositioningCapabilities
Suggestion #3- Focus on Founders
1. Required capabilities:• Engineering• Capital-Strategic• Sales**also: network management for marketplaces or platforms.
2. Required mentality:• Special forces, not regular army• Self-aware, experienced with failure and success• Intrinsically motivated by the problem being solved
3. Formalized relationship:• Found with good friends• Write the divorce paperwork before getting married• Equity split via a contribution-based process (Slicing Pie or
vesting)
Final Thought: Founding in Switzerland
1. Negative: Ecosystem is Not Mature• Regulatory burden: cost, risk to directors, etc. • Few experienced advisers, board members, and entrepreneurs• Access to capital is limited
2. Negative: Adverse Cultural Factors• Golden handcuffs• Risk aversion• Local over global
3. Positive: Leverage Swiss World-Class Advantages• Basic and applied research institutions• Banking talent (but understand their limitations as well, i.e. are
mid-career Credit Suisse staff really able to launch the next FinTech startup?)
• Biotech valley in Basel• Regionally (i.e. EU) good employer rights