Exit
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Planning Your Exit From Day 1
Startup Camp 5: San Francisco, May 4-5, 2008
Session Notes
Hosted by Yobie Benjamin
If you contributed to this discussion, feel free to add your thoughts and notes below.
AtulSuri
Yobie Benjamin was very informative and candid about Companies he has founded and funded. He shared with us lesson learned from each of them which are invaluable.
- How can you raise money or find partners or vc funding
- Talk to People , Send Emails to everyone who know.
- Is my startup idea good
- Send emails to your network. Everyone has atleast 500 people they can send this request to. Yobie uses around 2000 people to send out this email.
Pictures
Audio
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RyanTharp
(If you would like more info about a point or note, please add a note and I'll try to clarify, or if you can clarify yourself please feel free)
- Top competitor might be your #1 acquirer
- VCs can crush you by banding together
- CEOs get fired
- Running a company sucks
- Answer: why would someone buy me?
- no LLC (Very bad). Delaware C-corp
- A lot of information in Annual reports
- A quick/friendly acquisition will be a minimum of 3 months
- Look for holes in market, no competition. a Tight Niche.
- Disease communities are a good target.
- Buy a Laundromat if you want cash flow
- Plan from beginning to sell the company in 15-18 months.
- Invest in business not technology.
- Not every business model is complete
- Business model just a simple straight forward spreadsheet
- Perfect execution is important.
- Having the correct employees is important
- Having experience/senior level staff is important
- One of his companies only had 15 employees
- Method to Perfection
- Business plans he started are still valid, still the same today
- A established brand is more important than debt
- One company at a time
- Pay yourself
- Find a partner you can trust
- If you're over your head, you're heading for failure, get help immediately
- Be able to explain your business and sell them in the first 10 seconds (Elevator Pitch)
- Persistence pays off
- Think about importance of your idea to the world and society (Big Picture)
- Its the same amount of work to raise $10k as $100M, the least amount of investors the better
- Keep as much equity as you can
- BizDev: Call people, just get on the phone
ChristineChau
Companies Yobie founded and/or funded -
- Lotus 1-2-3
- Cambridge Technology Partners
- Gamers.com
- Good Storm
- Crunchy Roll
- Method
- Core Intelligence - current start-up, started last week
"Planning Your Exit from Day 1" is another way of saying "Beginning with The End in Mind".
Starting a web company is not about creating a cash-flow business. If you want to create a cash business, go start a laundromat.
Passion is a number 1 driver for successful companies.
Finding the right product -
- In the old days, semiconductor businesses basically look through Cisco's catalog, identify what's missing, what might be good media attention grabbers, and identify the product to go after.
- With Method, the 2 Stanford grads who started the company basically went to the supermarket, saw that the longest aisle is the cleaning aisle, and that's how they decided to start the "soap" company!
- Similarly, with a web business, don't just start a company. Look at what potential acquirers need/would want, and decide on the product/startup to go after.
Tips on getting acquired -
- Have a 1-sentence pitch ready. Make sure it's really easy to understand
- Ask yourself - What is your value proposition? Why should acquirers buy you?
- Being a C-Corp would make a company more friendly for acquisition.
- Keep your friends up-to-date on what you're doing (and not just when you need them). They are often your best contacts. You're probably just 1-degree from the VC or investor you're looking for.
- Don't feel shy about just calling up the Business Development department of the company you're targeting (to acquire your company).
- 83b election shares (founder shares) can be granted to anyone at anytime, as long as the board approves. This election max-es out the tax at 15%, instead of income tax/capital gains
- Always take cash or stock
- Earn-out == bad
Importance of niche - MySpace CPM is < $1, whereas DailyCandy, with a much, much smaller audience (40% of them are women from Manhattan who are trend setters) demands a $46 CPM!
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- Thoughts & notes
