Evaluating Business Opportunities Jamie Goldstein nbvp.com

Evaluating Business Opportunities The Deal Scorecard Real World Feedback Q&A

The Deal Scorecard 1. Management 2. Market 3. Competition 5. Ability to Forecast Results 6. Capital Intensity Product/Technology

Management Good Teams have: Done their jobs before (no OJT) Experienced ramp from startup to big company Relevant industry experience & contacts Specialized expertise and insight Ability to adapt to change Brains and hunger Example: SilverStream Senior Team Proven Record No Operating Experience 10 1

Management A Good Incomplete Team Vision Energy and hunger Efficient Wants to be the best and hire the best Appropriate role for each person Acknowledges management gaps Values muscle building over time Example: HighWired.Net

Market > $1 Billion CAGR > 30% Stagnant 10 1 Attractive Markets: Big Adopt new products quickly Customers that feel real pain Customers that can be reached economically The time is (will be) right Example: Centra

Competition Potential for Leadership Several Established Players 10 1 Leading Companies: Typically first to market Leaders define “Market” Leaders get market share Market share critical to success Example: MyTeam.com, B2B marketplaces

Product/Technology Clearly Superior Providing Leverage No Advantage 10 1 Leading Products: Difficult to replicate Special technical skills required Special domain knowledge required Proprietary technology (patents) Many man*months (time, $) Improve rapidly with customer feedback Example: Phase Forward

Ability to Forecast Results High Low 10 1 Great companies create and execute operating plans: Plan is financial expression of strategy Defines business model Shows interrelation of timelines, functions, hires Reflects detailed understand of the business Example: 2nd Century Communications

Capital Intensity Low High 10 1 A function of: Capital expenditure needs Working capital needs Gross margins Sales and marketing expenses Example: SmarterKids.com

No Single Recipe 1. Management 2. Market 3. Competition 5. Ability to Forecast Results 6. Capital Intensity Product/Technology ABC

Real World Feedback Friends and family Interviews with: Customers, Analysts, Potential hires, Potential partners, Other CEOs Where is the pain? Would you buy? How many? How do you buy? What could we do better? Listen, Listen, Listen Example: Rajmataj

Q&A