1. Entrepreneurial Lessons Rafi Gidron rafi@prologue.co.il

2. Prologue – Parallel Entrepreneurship Prologue is an investment and entrepreneurship organization that invests intellectual, financial and management resources to create and nurture early-stage ventures targeted at high growth markets and applications

3. The Prologue Parternership Principals: –Dr. Rafi Gidron Chromatis (founder), Scorpio (founder), AST, Columbia University –Orni Petruschka Chromatis (founder), Scorpio (founder), Cellaris, ECI, Bellcore, Cornell –Albert Olier Chromatis, Scorpio, ZettaLight, IAF, Technion –Nimrod Goor (US Office) –Model N, Devicescape, MedSim, Banner Aerospace, HBS

4. High-Tech Commercialization – Drivers Capital Technology Market Entrepreneurship

5. Prologue – Value Proposition Undeployed Capital Technology Backlog Large Markets

6. The Prologue Concept

7. A Company is Born

9. Entrepreneurial Lessons

10. From $0 to $4.75 billion in 27 Months Ha’aretz, June 2000

11. Lucent’s Share

12. August 2001

13. From Acquisition to Closure in 14 Months Ha’aretz, August 2001

14. “Because it is there” George Mallory, British Mountaineer, before attempting to climb Mount Everest in 1924

15. The Challenges Market Technology Finance Business Execution Exit (financial reward) Fun

16. The Means Team Product selection Execution and culture Finance Timing Luck

17. The Team Core team Employees Venture capital Board of directors, board of advisors

18. Team Selection - Core Team and Employees Balanced and seasoned founding team Founders from the target market and from Israel Employees with high B/E (Brain/Ego) ratio Preference to potential vs. experience Enhance the management team with expertise according to the company’s life stages

19. Road to Success –The right product at the right cost point (Marketing, R&D, CTO) –Development execution (R&D) –Bugs free easy to operate systems (R&D) –Be in front of the customer (Sales) –On-time delivery (Operations) –Customer support (Sales, R&D) –Infrastructure (HR, Finance, Administration) –Financing, coordination, management

20. Team Selection - Venture Capital Resources to support the company over time Chemistry with management Leading US-based VCs for their reputation and contacts base Israeli VC for comfort level for US-based VCs Strategic investment: dilemma

21. Team Selection - Directors and Advisors Enhance board with external director Name recognition Experience Contacts to client base Contacts to strategic partner base

22. Product Selection - Tradeoffs Market opportunity is not obvious - some selection criteria: –Market needs vs. Market trends –Execution riskvs. Technology risk –Nichevs.Mainstream –Geographical focus vs. Worldwide –Point productvs. Platform Numerous roadmap choices (depending on product complexity) Product selection is only a basis for change!

23. Product Direction Keep an open mind Be in the face of customers Listen to customers Listen to your colleagues, peers, subordinates, supervisors

24. Execution Company setup Focus Focus Focus Professionalism Culture and values

25. Company Setup Target market based company - facilitates access to market and strategic partners Israeli R&D Avoid usage of government aid programs with strings attached Significant target market presence from Day 1 Over time move center of gravity to the target market as company matures

26. Professionalism Take responsibility - no “small head” Dedication Be on time Challenging, not impossible milestones Balance between orderly and creative processes - know, or ask, when it is ok to cut corners Raise a red flag the moment you identify the problem Do your utmost to solve the problem

27. Company Culture and Values We are all partners Listen and communicate Team work Hierarchy does not mean much Talk at eye level internally and externally Help recruit more good people No bullshit

28. Timing is Everything Market development and product introduction phases: Prefer time to market over completeness Financing rounds Exit considerations

29. IPO vs Acquisition Build the company solely for IPO When an acquisition opportunity comes up, consider shareholders value in light of IPO track risks: –stock market volatility –political risks –execution risks

30. Luck

31. “I have climbed my mountain, but I must still live my life” Tenzing Norgay, first to climb Mount Everest together with Sir Edmund Hillary

32. Lessons Learned the Hard Way A few examples: –Strategic investment - created misperception in the industry –Operations support was started too late –Product definition zigzag –R&D performance could be even better –Late in correcting staffing mistakes