Deep Dive Seminar for Entrepreneurs! Day Two

Deep Dive, Day Two

Brian Jacobs, General Partner, Emergence Capital Partners

24 years as a VC

- initially semicondactor investments
- 2003 focused SaaS & Cloud Computing (PaaS, SaaS, IaaS) - invested in sf.com and success factors
- 3 partners -> really fast decision making
- invest in companies with paid customers
- work where opportunity is emerging (technology & other changes over time)
- finding in the past 7 years: consumer SaaS - more media based, decided to focus on B2B SaaS
- synergy between portfolio companies - executive network (all CFO talk about recurring revenue model, etc)

Typical deal flow

- 100 entrepreneurs -> 80 pass, 20 meet
- 20 meet -> 10 pass, 10 meet for again for details
- 10 -> invest 1 or 2    

to invest VCs want start to be aligned ;)

- strong management team
- large potential market
- BM validated by customers
- high margin and capital efficiency    

goto market strategy is very important:

- sf.com blueprint is quite slow ;)
- sf.com -> $2bln in 10 years
- success factors -> $200mln
- freemium model found extremely usefull to penetrate biz environment    

freemium examples:

- yammer - growing very fast (1.5 mln registered -> 150.000 paid)
- yousendit - 15 mln registered -> 300.000 paid
- sf.com - chatter in freemium model
- sf.com might acquire dimdim.com - good freemium product, possible feature in CRM    

 

 toll booth - very good way to think about freemium

- where do you put your toll booth ?  right at the entrance ? will users show up? deeper inside? what are users action ? what is the conversion ?
- you always ask yourself these questions and balance between users activity & revenues / conversions
- putting the toll booth in the right place is always about analyzing human behaviour

shall you talk to customers as you build SaaS product?

- SaaS has a lot of similarities to online consumer products
- you have to use data & statistics to understand customer behaviour

what sales model should be used?

- to sell $100k+ software you are to fly ;) - classical software sales approach
- SMB & divisional sales - common approach to use telexsales for less then $50k deals
- inside sales $500k quota, $100k OTE
- very expensive field sales still needed for enterprise deals
- comission paid for first 12 months of the contract
- devide sales to hunters (win new clients) and farmers (watch customers, analyze, retain existing)

presentation discussion comments:

- bottom-up approach can be used to better calculate market potential
- remember about estimating market vs estimating segment
- top-down approach - how many people buying today?
- existing market - differentiating factor is the key! 
- new market - market potential / adoption is the key 
- different options to charge: per # conferences, # people per conference, space used
- how many companies are using? what are the usage patterns?
  - storage per user? 2TB for 200 customers?
  - $$ to store one hour of video? 10MB per 1 hour conference?
  - what is scale-up cost structure of the business?
  - customer acquisition cost ?
  - how much $$$ you invested in datacenter? $100k ?
  - how many customers request storage? 20% ?
- overall impression - early to invest :)

From Mark Iwanowski, Partner, Trident Capital
* analytics http://www.the451group.com/, Gartner, IDC
* metrics: EPS, CPS
* stay focused & agile: challenge yourself with ROI questions, but always look for opportunities!
* make it happen vs let it happen

Download slides HERE:
http://www.tecglobal.org/blog/20101202_mark_iwanowski

Books to read:
- The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business (Collins Business Essentials) by Clayton M. Christensen
- Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter

Next: Marylene Delbourg, Serial Entrepreneur, one of the first women entrepreneurs coming form Europe (France!), experienced CEO and a coach (very much recommend!)

Main points on company presentations:
* first 30 sec - directly to the point, rehearse it 30 times! Play your role well, you are an actor!
* remove words with no energy - adjectives, "permit", "allows", "possible"
* let me show you what our product does
* we work with ... , our competitor is ...
* be direct! straight forward! be proud of what you do!
* script everything you say - every word, every slide, rehearse !!
* very simple, small words

  relate to a usecase / life situation. visualize !!!

* "graphical relational database" vs
* "imagine you have a lot of files ... "
Download slides HERE:
http://www.tecglobal.org/blog/20101202_marylene_delbourg

What They Say About Us

"The wonderful thing about entrepreneurs is that their passion for starting new companies transcends languages and geographic boundaries."

Ron Conway, Founder and Managing Partner of the Angel Investors LP funds, early stage investor in Google and PayPal

"Networking is very important for start-ups. The challenge for them is often not money: it is mentoring and finding people who can give good advice from experience."

Esther Dyson, Founder, EDventure Holdings

"This conference is clearly a labor of love for a group of dedicated professionals who care deeply about the Eastern European entrepreneurs. From the value-packed educational panels, to the star-studded key note speakers' line up, to an amazing quantity of venture capitalists – this is a not to be missed event for any high tech entrepreneur,"

Richard Guha, President of the Marketing Executives Network and Managing Partner at MaxBrandEquity

"As Stanford MBA students, we were exposed to a lot of VC firms both from the Valley and abroad. It is at Stanford that we met Anna Dvornikova, an absolutely amazing business leader and (by our big luck) our friend, who was the center of the Russian Silicon Valley professional community, and was doing a huge work to connect Russia and the Valley. Anna helped us a lot with kick-starting Wikimart, put us to our first-ever conference, introduced us to most of Russian VCs. And all that happened in a very short time span! It was the beginning of a six-month journey that despite the particularly tough times resulted in an extraordinarily group of investors backing our start-up."

Maxim Faldin and Kamil Kurmakayev,
co-CEOs, Wikimart