Extracurricular Fireworks: Friendster, Prezi, Rovio, Bonobos + O’Reilly & Doerr

With the end-of-quarter groupwork frenzy I am behind on posting the academic lecture notes – hope to get to that this weekend. But meanwhile, as the flow of new thoughts from extracurricular guest visitors in just last seven days has been mind-blowing I’ll post them for your enjoyment.

See further for tips, startup plugs, book recommendations and videos from:

  • Jonathan Abrams (founder of Friendster, Socializr, Nuzzel, Founders Den)
  • Peter Halacsy, Peter Arvai (co-founders of Prezi, Hungary)
  • Peter Vesterbacka (Mighty Eagle, Rovio)
  • Andy Dunn (CEO and co-founder, Bonobos)
  • Tim O’Reilly (O’Reilly Media, O’Reilly Alphatech Ventures)
  • John Doerr (Kleiner Perkins Caufield & Buyers)

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Week 27: Tech IPOs, Seed Investing, Bankruptcies & International Trade

Stanford GSB Sloan Study Notes, Week 7 (27), Winter quarter

After the public holiday last Monday (which I realized could not have been more eclectic between sick kid babysitting, running, building a unit economics model for a startup business plan assignment and babysteps in hacking social graph analysis in Mathematica) there was no breathing room throughout the rest of the week.

Eric Schmidt taught his legendary IPO class, we took a bunch of convertible note based seed financing setups apart and put them back together, the original mad-scientist-turned-CEO Art Levinson shared his thoughts on scaling innovation, we discussed how different can be the approaches to seemingly similar private equity investments, I finally made it over for a long-overdue visit to Stanford Technology Ventures Program and there was a fun reunion with ever-joyful Meg Whitman whom I hadn’t seen since the good old pre-politics and pre-HP days of her more regularly hanging out with us at Skype, in Tallinn and elsewhere.

When I was walking towards the study rooms on late Friday afternoon to get at least a bit of the two different finance group projects due Monday on the way, ahead of the expectedly busy Estonian Independence Day weekend, I got rerouted in a room where Craig Barrett, long-time Intel chairman & CEO was having a candid small class discussion about navigating global business structures despite of government interventions. Only in Stanford. Good news: what he figures competitive nations are supposed to do is pretty much aligned with where the 95-year-old birthday state of Estonia is heading.

And after all this, the most unexpected meeting of the week? Perry, the original Shrek donkey. (He is on YouTube too)

Covered in this issue:

  • How and why Google ended up running an unusual IPO process
  • Changing landscape of seed & angel investing + rare data on performance
  • Scaling innovation from startups to large public companies
  • Inner workings and different flavours of Private Equity partnerships
  • How defaulting and going bankrupt is different between US and various EU markets
  • Practical guide to managing through international trade barriers
  • Guests: Meg Whitman (eBay/HP), Art Levinson (Genentech/Google/Apple), Craig Barrett (Intel), Google Ventures, Snapchat, Private equity partners from General Atlantic, TA Associates, Francisco 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 23: Sourcing, Screening, Valuing and Pitching

Stanford GSB Sloan Study Notes, Week 3 (23), Winter quarter

A large group of Sloan Fellows honoured Martin Luther King Jr on his day by driving up to Lake Tahoe. It was great to find out that snowboarding is like riding a bike – fun even despite of the ~7 year break I had.

The classes on free Mondays are not cancelled at Stanford, just moved to normally “open” Wednesdays. As a result, the past four working days were just insanely busy at school, but I fortunately still managed to make it to a visit to Dropbox HQ and attend a demo days preview at 500 Startups.

Covered in this issue:

  • Nuances of valuing bonds and stocks
  • Venture capital pipeline sourcing and screening
  • Avoiding the pitfalls of pattern recognition in picking VC investments
  • Managing a venture portfolio through economic crisis
  • Pitching tips
  • Creating a consumer brand of tech components and using social media
  • Eric Schmidt was back in his co-teaching class + many guests from Illuminate Ventures, Highland Capital, Accel, Intel, Klout, Gilt, Edelman

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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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Toolkit for Evaluating a New Venture

Several entrepreneurship-related classes at Stanford refer to a simple conceptual framework developed by Professor William A. Sahlman of Harvard for planning and evaluating new ventures. In short he proposed looking at People, Opportunity, Context and Deal of a venture and analysing how they Fit with each other in this particular combination at hand. You can read all about the model from his article, Thoughts on Business Plans (on Google Books) which in turn comes from an essay collection Sahlman edited in the 90s.

What inspired me in this material was a systematic use of simple, but carefully targeted questions. I decided to extract a condensed reference of them below – still mostly Sahlman with minor revisions, but I’ve added a few more, and would be happy to keep the list living if anyone proposes more useful questions from their arsenal in comments.

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Winter Quarter Courses

As the Sloan year has passed the equator, I’ve signed up for the following classes kicking off next week. It is going to be quite intense, 22 units in total and Mondays going from 8am to 9pm…

Core classes:

Yes, just two this time, leaving more precious time for electives.

Electives: Read the rest of this entry »