Week 30: Exits, Second Markets, M&A & Thunderlizards

Stanford GSB Sloan Study Notes, Week 10 (30), Winter quarter

Originally planning out March I was quite sure that next week will be a complex one, after all, it is still labelled in calendar as the “exam week”. In reality, the Winter Quarter pretty much culminated today, with the last Finance class where the entire Sloan class was together in the same lecture. We do have one more core in Spring, but it will be in sections, so between all electives and split schedules, it will be mostly social when we meet from here on.

This week was mostly about delivering papers and presentations. With one team we built a business plan and pitched a crowdsourced service for proofreading and language learning feedback to dyslexics, foreign students and white-collar immigrant workers. With another team, we designed an elaborate proposal for taking a real public company private, shifting their product portfolio for higher exit multiples, levering up the non-existant debt, restructuring operations (yup, the founder’s private jet and golf tournaments need to go) and getting out at 10X of our money in 5 years. With third group, we pre-analysed and went through 6 real startup pitches along with a real VC mentor and decided to maybe just to give money to one of them.

Despite of the chaos of trying to schedule ~20 people into these different groups at conflicting times, I really enjoyed actually doing stuff (as opposed to just discussing in class) with my MBA peers. The ease and breakneck speed at which almost anyone in this school can deliver complex quant models and high quality analysis still amazes me. And then you can pull pretty much anyone on stage with a 5 minute heads up to present the outcome with coherent, engaging story line.

I have jus two final exams this quarter, three hours of Entrepreneurial Finance (cap tables, term sheets and anti-dilution math) done last night and Core Finance (WACC, optimal portfolios, options and bonds) to be done next week. Then onto the East Coast study trip and the saddening final 10 weeks here.

Study notes covered in this issue:

  • Alternative equity markets filling the IPO gap
  • More Exit talk, especially Mergers & Acquisitions
  • Real pitches from real startups
  • Hunting for the Thunderlizards
  • Guests: Barry Silbert of SecondMarket, Peter Currie, Louis Elson from Palamon, Mike Maples of Floodgate

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Weeks 28-29: Bootstrapping, Europe(?!), Options & Private Equity Operators

Stanford GSB Sloan Study Notes, Weeks 8-9 (28-29), Winter quarter

So there: it takes about 28 weeks in Stanford to finally have someone mention Europe in any other context than a semi-joke about Greek macro environment in the short term. And these two weeks suddenly opened the floodgates: there was the first European company case this far, we spent some time on the (quite miserable) comparative venture financing stats between the continents and – most importantly – the rotationally geography-themed Sloan TGIF parties finally turned to the European night (affectionately dubbed as the “Estonia & the Rest of Europe” evening). Relieved with a sigh with my Swedish, Dutch, German, Swiss, French, Italian etc classmates: we have not entirely disappeared from the world map as seen from the West Coast yet, and will keep working on that threat.

Partially supported by the annual Stanford Entrepreneurship Week, the last weeks were super-exciting for the flow of external speakers – there is a separate post summarising those you should not miss. And we did do the Final View presentations of the LOWKeynotes program, including your’s truly’s 9 minutes on how hard it has been to adjust to somewhat surprisingly lacking digital living infrastructure here, coming from Estonia – videos for which will be online in 1-2 weeks. Stay tuned.

Covered in this issue:

  • Bootstrapping, venture debt and swimming against the tide in Europe
  • Exit planning and IPOs in venture deals
  • Thinking like a limited partner, structuring PE deals, operational turnarounds and the visible future of Private Equity
  • Derivatives and options – both financial and real
  • Academic research on VC compensation and incentives
  • Guests from: The Foundry, Avik Ventures, AngelList, Astia, Makena Capital, TPG, TSG Consumer Partners, Sierra Ventures, YouTube, Trulia, OpenLane, Fayez Sarofim, Accel, Meritech Venture Partners…

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Week 26: Debt, Seed Money, Private Equity and Firing Founders

Stanford GSB Sloan Study Notes, Week 6 (26), Winter quarter

Tahoe Vista

 

The picture reflects the exact view I have from where I’m sitting posting this. When you live in Northern Europe, “good snowy ski weather” usually means you have to give in on other things (such as clear skies and light). Not in Tahoe – and that’s why a mission of Sloans have landed here again for a long Presidents’ Day weekend.

But no play without hard work, right. There were quite a bit of extra-curricular activities on campus (I made it to several BBLs even!), some long-planned and inspiring 1:1 coffees with MBA colleagues, a few guests I would bucket in “personal heroes” category. And a fun roleplay of 8am termsheet negotiations, with lawyers at each table and all.

Covered in this issue:

  • Differences in financing with debt vs equity – and some irrationalities caused by taxation
  • Seed financing – how to survive until Series A
  • Intricacies of convertible note structuring
  • European startups: plasma drilling in Slovakia and why you should move to Berlin
  • When and why founder CEOs get fired
  • Introduction to Private Equity
  • BBLs on Crowdfunding and Big Data
  • More guests from: Geothermal Anywhere, Soundcloud, Intellicap, Twitter, Benchmark Capital, Hellman & Friedman, PubVest, LinkedIn

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Week 25: Midterms, Cost of Capital and Founders in Rounds

Stanford GSB Sloan Study Notes, Week 5 (25), Winter quarter

This midterm week was quite light for classwork – as my elective set happened to have no actual midterm exams.

There was some time to think about an own group project (a business plan for a language teaching/feedback service that plugs into your daily communications flow in foreign language), help out a group of MS&E students writing a project on Skype and another group researching management approaches for their Paths to Power class, reminiscence of the good old days with Howard (the first investor in Skype), drop by the very maltheesque-looking Rdio offices, have calls with two new startups with impressively useful mobile apps in development, visit a stealth mode space startup about to launch some beautiful tech off this planet and then celebrate the Chinese New Year and Gustav’s birthday. And finally play a full round of golf at the Stanford Course.

Wow, actually sounds like a busy week now. The good busy.

Relative short study notes covered in this issue:

  • Optimal portfolios and cost of capital
  • More VC term nuances, especially around founder control
  • Guests: founders on SunRun & Intuit, VCs from Accel & Foundation Capital. And Christy Turlington.

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Week 24: Medical Devices, Space Tourism and Russian E-Commerce

Stanford GSB Sloan Study Notes, Week 4 (24), Winter quarter

Steve Jurvetson

The relative (& temporary, I’m sure) breather on reading volume this week left some much awaited time to deal with things out of the classroom: we’ve gotten over the home stretch in our core marketing course with some brand audits and presentations, on Tesla Model S. And it was even more fun to work with my MBA-mixed study groups for venture financing and business planning.

My highlight of the week was doubling the Estonian population on campus when Steve came to join our Sloan class for an evening lecture and smaller breakfast to discuss the most inspiring trends he sees as an investor (no separate notes – but see notes from the Science panel at the Intersection Event for a hint on his direction).

And I even got out of campus for a bit: to a fun chat between Eric Ries and Marc Andreessen at A16Z office on the Lean Startup movement and diversity issues in the valley. Highland Capital Partners threw a GSB mixer at the legendary Old Pro. I was also lucky to have two different insightful conversations with a physicist (one turned VC, the other a space entrepreneur, as it is customary here) in one week, on maximising impact. I am grateful for weeks like this.

Covered in this issue:

  • State of Space Tourism in 2013
  • Risk & Return – was it sensible for Airbus to build the A380?
  • Structuring financing deals and more terms sheets
  • Building an eCommerce firm in Russia
  • Writing a business plan and pitching to VC partner meeting
  • Advanced body language tips to presenters
  • More guests & speakers from Virgin Galactic, XCOR Aerospace, Mohr Davidov Ventures, Wikimart, DeRemate, Wealthfront, Exploramed, Bare Escentuals…

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Week 22: IRR, Fishbones, Term Sheets & Angels

Stanford GSB Sloan Study Notes, Week 2 (22), Winter quarter

Fishbone

I think we’re getting back in the rhythm here. Continuous flow of external guest speakers and occasional valuation models to be built are bringing more variety to just swallowing hundreds of pages of cases. I did drop my across-the-street strategy class to get back to 19 units and thanks to that even made it to a few BBLs and a GSB High Tech Club company visit to Box. There is a long weekend coming up. Life is good.

Covered in this issue:

  • Finance: NPV and IRR, including pitfalls
  • Entrepreneurial finance: unit economics in business models and real options
  • Angel & VC finance (and a E-Club BBL): life of an angel investor
  • Negotiating Term Sheets, especially on valuation
  • Marketing and Mastery of Communications: more stories, including analysing viral videos & TED talks
  • Guests: Sand Hill Angels, Tory Burch, Pattie Sellers, James Buckhouse, Gil Penchina, Jeff Erickson

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Week 21: Finance, Ventures, Stories and Space

Stanford GSB Sloan Study Notes, Week 1 (21), Winter quarter

The pace of the new year has been just mindblowing, and not just compared to the Christmas break down time but to almost any of the school weeks from previous quarters. I guess this is what happens when you can almost fully customize your class schedule. And you want to get out of GSB to “across the street” schools for a bit. And you get accepted to this year’s LOWKeynotes speaker series, with dozens of hours scheduled for prep-work and coaching before the big stage. And…

I’m saying “almost in control,” because I have had close to no time to spend with family, sleep over 6 hours or socialize these last five days. And I do intend to do those things this quarter too. Exhausted, happy, but realizing this kickoff pace will not be quite sustainable as is. Let’s see what next week brings with its reading volume and booting up several project groups.

Covered in this issue:

  • Finance basics: free cash flow, annuities, perpetuities & NPV calculations
  • Business planning: financial business modelling, life time value of customers, Dropbox freemium example
  • Venture Capital: industry history and sizing, how VCs think, how they move money and get paid
  • Marketing: stories, stories, stories – creating and delivering them (videos)
  • Strategy: Grabber-Holder model explaining disruptive tech innovation via ultimate nothingness from Taosim and Yin-Yang cycle
  • Space entrepreneurship: an inspiring event on synthetic life with the Student Space Flight club
  • Guest speakers throughout the week: Vinod KhoslaNancy DuarteCraig Hanson and John Cumbers

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