Startup Team Dynamics Attracting Talent & Assembling Startup Teams Naeem Zafar IEOR191 Class 2 Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Agenda Last class: Reflections & Questions Today: Startup Teams Deliverable: Refined idea with team formed for green light Guest speaker: Mike Hodges, ATA Ventures Next week: Opp Identification [read Veridicom Case] What problem is Veridicom trying to solve? Who are Veridicom’s customers & who needs them more? If you were Tom Rowley, how will you set the strategic direction? How are the team dynamics here as a startup team? Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Teams & Projects Selecting ideas Do preliminary market research to validate ideas Finalize teams Select a CEO Request a mentor Seek green/yellow light Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Market Size Startups should approach large & growing markets How do you size the market? Naeem Zafar (c) 2016 all rights reserved

Sizing the Opportunity BizEducationWorkshops.com & ConcordiaVentures.com Sizing the Opportunity Will this be worth your time? Will this idea be easy to raise money for? Big idea attract investors What is wrong with smaller markets? Naeem Zafar (c) 2016 all rights reserved All Rights Reserved (c) Naeem Zafar

Naeem Zafar (c) 2016 all rights reserved Market Sizing Total Available Market (TAM) Range of right answers Naeem Zafar (c) 2016 all rights reserved

BizEducationWorkshops.com & ConcordiaVentures.com Size The Opportunity Market size = # of people who can buy X price X # of times they will buy per year Naeem Zafar (c) 2016 all rights reserved All Rights Reserved (c) Naeem Zafar

All rights reserved © Naeem Zafar 2016 Apple’s Core All rights reserved © Naeem Zafar 2016

All rights reserved © Naeem Zafar 2016 Imagine you are Wozniak and you just found out about Break-Out What would you do? All rights reserved © Naeem Zafar 2016

All rights reserved © Naeem Zafar 2016 What's your assessment of Apple's founding team? Take account of what each founder brings to the venture, including their goals, values, skills All rights reserved © Naeem Zafar 2016

All rights reserved © Naeem Zafar 2016 What qualifies a person as a "founder"? Who is the true founder, Jobs or Wozniak? All rights reserved © Naeem Zafar 2016

Framework for Co-founders Rewards Relationships Roles All rights reserved © Naeem Zafar 2016

All rights reserved © Naeem Zafar 2016 Take-Aways Finding right set of co-founders is not easy Better to have explicit conversations at the start than face crises later Values alignment matters Roles clarity is important Who will make what decision? All rights reserved © Naeem Zafar 2016

Remote Teams: Issues to Consider Geographic locations Agile development Role of culture Naeem Zafar (c) 2016 all rights reserved

BizEducationWorkshops.com & ConcordiaVentures.com Building a Team Naeem Zafar (c) 2016 all rights reserved All Rights Reserved (c) Naeem Zafar

Naeem Zafar (c) 2016 all rights reserved Team Small number of people with complementary skills who are committed to a common purpose set of performance goals approach for which they hold themselves mutually accountable Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Team Recruiting The hardest & most exciting part of a startup Look for: Shared vision Can they do what you need – test them! Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Hiring “A” players attract “A” players, but “B” players attract “C” players Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Team Composition Cofounders Specialists Advisors Professionals Board of Directors Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Lessons Learnt Hire people for skills or skills potential - not personality Set early goals, forced deadlines Establish performance & quality standards Clear rules of behavior Fresh data to refocus team – drive common purpose Use positive feedback to include all Communicate & celebrate often Naeem Zafar (c) 2016 all rights reserved

What Do You Look For in Team Passion Hunger Alignment of vision Technical competence Leadership ability (earn other’s respect) Prior experience matters less How do you test for these qualities? Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Board of Advisors Domain experts Market experts Channel expertise Technology experts Personal coach & mentor Celebrity Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Board of Directors Fiduciary responsibility Come with money Unless their name will generate extreme credibility Limit size & be very choosy No family or relations Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Hiring Philosophies Hire people who have major strength? Hire people who lack major weakness? Newsflash: People with major strengths tend to have major weaknesses as well Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Issues Founders not getting along Hiring process Board management Advisors IP Ownership Culture Decision making process Running meetings & setting objectives Role of the CEO Naeem Zafar (c) 2016 all rights reserved

Demystifying Equity Dilution How does dilution works Who gets what on a startup team? IEOR191 All rights reserved © Naeem Zafar

Issue Puzzling Founders What if one founder fizzle out? What happens to her equity? What about death or disability? IEOR191 All rights reserved © Naeem Zafar

All rights reserved © Naeem Zafar How To Protect Equity Vesting It is your stock/shares but you have to be here working hard to “get” them Typically 2% per month vesting  48 months to get it all Biz Model 191 All rights reserved © Naeem Zafar

All rights reserved © Naeem Zafar Cliff Vesting Year 1 Year 2 Year 3 Year 4 100% 25% 2% per month Biz Model 191 All rights reserved © Naeem Zafar

Vesting Ownership established over time Exceptions? One has to stay & work hard to get all her shares If people don’t work out within a year you are not out with too many small shareholders Exceptions? Biz Model 191

Naeem Zafar (c) 2016 all rights reserved Equity Distribution Naeem Zafar (c) 2016 all rights reserved

Naeem Zafar (c) 2016 all rights reserved Take-Aways Find people who share your vision Network & keep a secret “A” list Team issues are complicated, be prepared & seek mentors Naeem Zafar (c) 2016 all rights reserved

Mike Hodges Joined ATA Ventures in 2006 Managing Director in 2008 Reputation successful CEO with several successful turn–around efforts, including Tellium (that completed a public offering of $1.5B in 2001). Division president at Spectra-Physics during which time the company grew to a $300M, division President Barcode Laser Scanning Telephony Magazine named him as “The Best CEO You’ve Never Heard Of.” “Mike is money. He’s the first guy you should turn to when the game is on the line and the last guy you should ever bet against.”. Mike graduated from U.C. Berkeley, receiving BSEE ,MSEE