Let’s Go Crazy

Agenda Signing on with a startup Starting a company

Negotiating with a Startup

Big Companies vs. Startups Big companies Formal training Long career path Corporate fun systems Full of drones Stable income Startup Massive responsibility Battlefield promotions Intense friendships Full of freaks Hey, you won’t be unemployed long…

A Few Interview Tips “Generate the offer” (then decide) Ask for your interviewers’ names & Google If you like the company say so (hate its competitors) Use –ed words: focus on accomplishments Let the beast out: talk about your passion Answer questions directly & be brief Understand the question (why is she asking?) Good answers start with yes, no, a number Say what you came to say, too Go back & correct yourself if you screwed something up “Wait, there’s one thing you missed about me…”

Negotiating an Offer Generate demand Communicate needs Gather information Understand terms Decide where you want to work Prepare for the negotiation What do you care most about What are you willing to accept An offer is never revoked Sometimes it’s good to leave money on the table (then ask for a six-month review)

Understand All the Terms Salary Stock options Vacation Insurance Benefits

What Is An Option The right to buy stock at a low price Strike price: Term: usually 10 years, or 30 – 90 days after you quit Vesting schedule One-year cliff: you get nothing if you leave in less than a year Four-year or five-year vest: 1/4 th then 1/48 th every month Acceleration in vesting for senior employees is possible Example Grant: 10,000 options to buy Grover.com’s stock at $1.00 Vesting: you work at Grover.com two years  5,000 options By then Grover.com stock is worth $6.00 Your profit: $30,000 - $5,000 = $25,000 Bonus: taxes likely lower on stock sale vs. salary

Types of Stock Preferred stock Liquidation preference Anti-dilution protection Participation rights Voting rights Common stock

When Stock Becomes Valuable The company goes public Stock bought & sold in a public market (NASDAQ) Usually the company has profits, $100M in revenues The company is acquired by a public company The company is acquired for cash

Valuing Options: What’s My Percentage? Percentage of company you could own is your grant divided by… Preferred stock owned by investors Common stock owned by employees Options on common stock granted employees Options on common stock reserved for future employees Anticipated dilution: future financing, option pool replenishment Example: grant of 10,000 shares Investors own 500,000 shares Founders own 250,000 shares Employees granted 250,000 options: 150,000 already granted, 100,000 reserved You own 10,000 divided by 1 million, or 1% Company expects one more round of financing: 20% dilution, 250,000 shares sold You will own 10,000 divided by 1.25 million, or.8%

Percent Ownership: Rough Ranges < 10 employees:.2% < 25 employees:.1% < 100 employees:.05%

Valuing a Company Value of company: the numbers Valuation at last round of financing Valuation on acquisition: $1M - $2B Valuation on IPO: $100M+ Value of company: what really matters Team Market Product Competition

Questions You Should Ask Any Start-Up Employer How should I think about the value of these shares? How many shares and options are out there? What was the company valued at in its last round of financing? If the company is sold is the money split between investors and employees according to the number of shares they own? How many rounds of financing will it take to build the company? How many more shares do you expect to have to sell? Are you losing money now? How much per month? When do you run out of money? What has to change for the company to start making money? When will that happen? How big can this company be? What’s the market size? What keeps you up at night?

Questions You Should Ask Yourself Do I believe in these people? Have they been successful before? Would I avoid them in a mall? Are they coin-operated? Are they trying to do anything meaningful Is it a gimmick? Is it kind of small & pathetic? Would I use this product? Do I know anyone who would? Will I make a difference to these people? Is that what I want?

Starting a Company

Year -2: Go Crazy or “Can I turn the light on?” “No.” Nerd greeting: “hey homey!” “Is it sweet?” “You are a cost center.” “Gold help you if you are the weakest link.”

Year -1: Stop Being Miserable “All of you should be fired.” “If today were the last day of my life, would I want to do what I am about to do today?”

Year Zero: “Let’s do the Big Thing” “A VC” (Fred Wilson) on entrepreneurs Smartest person in the room Engaging, compelling, social personalities Insatiable passion for creating things Expertise & focus on the product Ability to mediate between the market & development Hungry for the big hit Flair for PR & marketing Ability to listen to & really hear what others are saying Only crazy people start companies

The Idea “Write what you know” “We’ll figure it out” Keep it simple Every airplane has something wrong with it

Roll Up Your Sleeves Two types of entrepreneurs… “What’s your prediction for the fight?”

Year One: Raise Money Pitch: keep it simple & short Lots of people will pay for it Special sauce: we can build it better There’s a way to get to $100M & profits Customer validation Presentation Wiffy’s: keep moving Don’t leave without the ball “My fucking ears are lying on the fucking floor” “I don’t know”

Don’t Screw Up Undue concern over dilution, loss of control COO, CFO, GC, BD: your friends A large office, an assistant Patented business models The pogo stick, the futon “It’s complicated” Big-company DNA Go straight down the middle

Year Two: Build a Team Don’t be a lonely freak Build it & sell it Find the maniacs Be generous with shares Hire slow, fire fast: bozos replicate “You want to win a World Series? Give me nine players in their contract year.”

Year Two, Continued: Build the Product A picture: worth a thousand words 1 st & 2 nd moments of customer delight What can we do that they can’t? Keep it simple (XP programming) “Work will set you free.”

Year Three: Street-Fighter Radical openness: the truth will set you free Make the rules: don’t try to sound grown-up Think like a journalist Two beers & a friend Write the headline, imagine the story Start something Standards body Trade-show Magazine Blogging Speed kills: what don’t they want me to do? MOVE! MOVE! MOVE!

Year Four: Build a Culture Everyone is a leader We are excited by ideas We value speed in everything we do Everyone sweeps the floors Everyone is respected We never say “I” We put the customer first We do the right thing

Your Five: Grace “I don’t know.” “You don’t have to have the job.” “Be desireless.”

Year Six: Manage Others “Do you have a minute?” Keep your door open; be available at consistent times Plenty of sleep: No Incredible Hulk Be on time, no or cell Go to them Gather information, make decision Little-league rule Shackleton rule “Do you trust me?” When Ray Lane walks into a room, everyone feels better

Year Seven: Endurance It’ll always be hard work “I don’t know how to do anything else” “Give, control, sympathize”

Year Eight: If You Lose, Lose Nothing “Do the right thing.” “The operative word is, I think, love” “There the fault lies all in the not-done, all in the diffidence that faltered.”