Start-Up: Personal Experience

Start-Up: Personal Experience Amir Ofer ProSight / BRM

Presentation Structure • Background • Searching for a $1,000,000,000 idea • Execution

Section 1 Background  Searching for a $1,000,000,000 idea  Execution

Reasonable success in former startup Lack-of-interest in current position (VP R&D in software-testing company) Economical ability to risk few years Personal Background Conclusion: Look for a new startup

Look for fare & honest investors (based on former bad experience) No easy solutions. Real business takes time Walk against the stream Assumption: it is too crowded there, and I am less smart than (at least some of) the others When identify an idea - do not waste time. TTM is the most expensive resource Personal Guidelines

The Story: • Identify a major problem • Find a solution for the problem • Establish a company that will implement the solution • Lead the company to IPO and beyond A mandate from BRM to:

Market > $1,000,000,000 Emerging market High entry barrier Software-oriented product BRM must have added value (engineering / management / marketing / HR / …) - not only money BRM Guidelines

Section 2  Background Searching a $1,000,000,000 idea  Execution

Overall Frame (1) • Team of two - both veterans of former startups (One successful / One failure) • 6 months time frame • Absolute lack of supervision

Overall Frame (2) • Lot of support when needed • Management time • Help in ideas analysis • Support in overseas connections and market validation • No budget limit

Search Methodologies & Techniques (1) • Sitting together in the same room • Flying to several important expos • Gartner ITExpo • Internet World • Reading many books • Important source: Advertisements (PC Mag., etc)

Search Methodologies & Techniques (2) • Exposing ideas in their embryonic stage - no time to waste • Distributing the rumor - inside and outside • The winning card: Attention to small details and personal experience

Validation Methodologies & Techniques - In-house (1) • Massive use of patent repositories • IBM (free) • Others (expensive) • Hundreds of hours of internet search • Similar products • Other solutions to the same problem • Competitors

Validation Methodologies & Techniques - In-house (2) • Internal reviews with BRM technical staff • An expert in almost any area • Internal reviews with BRM business-oriented staff & managers

Validation Methodologies & Techniques - Outside • Reviews with BRM’s “friends and families” • Meetings with relevant Israeli managers • Omri Padan (LEVI’S, McDonalds) / Rami Belinkov (012 Kavei Zahav) / …. • validation trips in US • 3Com, Data General, EDS, Bank Of America /...

Search and validation phase: The bottom line Semi academic phase with a guillotine above our head. Every passing day requires stronger nerves as ideas reservoir is drained and “back to square 0”

Required Features During the “inventive” phase • Creative / inventive nature • Ego kaze katan • Ability to listen to others • fast context switching • Broad understanding in many disciplines. Otherwise: Looking for the coin under the lamp • Understanding of business & technology • This is not academy - this is business

Examples for rejected ideas (1) • AVL (“Ituran”) based on short range interaction • Reason for rejection: Need for standardization before the system is efficient

Examples for rejected ideas (2) • Breaking the mediation gap - bypassing the food supermarkets by Internet-controlled orders Reason for rejection: It is marketing - nothing to do with technology - no advantage - huge risk - huge investments

Examples for rejected ideas (3) • Compass-like device that shows direction to Mecca to 1,000,000,000 Moslems and the direction to the emperor’s palace to 120,000,000 Japanese Reason for rejection: Nobody is praying to the Japanese emperor any more (and 1 other small reason. Guess).

Examples for rejected ideas (4) • Internet based LCR - opening the telephony market to free competition. 1% for me if you translate it into a product

Results • Breakthrough achieved within 3.5 months • Two serious ideas Serious = Worth evaluation outside the ‘inner circle’ of entrepreneurs+BRM • One of them is ProSight Personal Note: This should be regarded as an exceptional success. I suspect my ability repeat the same process again with such high-demanding guidelines.

Idea 1: Fighting Against Faked Products • Source: accidental meeting with friend who wore faked shoes • 10% of the world trade are faked products • Damage caused to brand names by fakers is greater then by competitors

Idea 2: ProSight • Source 1: Personal experience - hiding information from external project supervisor • Source 2: Gartner ITExpo books

Section 3  Background  Searching a $1,000,000,000 idea Execution

Is this a global or local problem? Answer: it is a $100,000,000,000 a year problem Do we have a solution? Answer: Yes. It is mainly due to lack of information - and I think I found a novel and unique solution for this. Step by Step(1): Identifying the Problem Identifying a problem: Recalling the lack of supervisor's control when managing a software project

Step by Step (2): Comparing to Guidlines • $1,000,000,000 Company?  • Emerging market?  • High entry barrier?  • Software oriented?  • Added value to BRM capabilities?  Conclusion: Go ahead to serious market research

Step By Step (3): Concept Evolution Initial concept: Tool for improving software PM After 3 weeks tour: Application for portfolio and PM. Focus on ERP applications After 3 months: Application for portfolio and PM. Focus on financial institutes (banks, insurance companies) Today: Aligning IT with business. Focus on E-Commerce

Conclusion 1: Never stick to your original idea • It is new - you do not know much about the market • The market is not static - It is moving all the time. The worst thing is to develop a system for yesterday’s market. Fact: 80% of successful startups make their money by changing direction. Examples: BackWeb / Mirabilis / …

Crisis During Development (1) • Inventors are not necessarily good managers • After the initial enthusiasm, switching to routinely development requires different skills • Bitter conflicts on the product shape • difficulties in recruiting the right team. • Nobody did it before - so everybody is learning (and making mistakes)

Typical Crisis During Development (2) • Investors begin to lose money and become nervous • Competitors emerges • Communication problems with the American team.

Conclusion 2: Leave Your Ego Outside the Office • It is for your benefit to ask for help when you do not know what to do. • Example: Do not delay a marketing document if you never wrote one. Ask for help • Find the niche that fits you. Ignore titles.

Reminders (1) • You will win when the company goes public. Not when you are “CEO and President” of nothing. • Startup today is not a 2-months garage development. These days are gone. It is a high-risk, industrial process which requires many skills, a lot of money (and a lot of luck).

Reminders (2) • None of you is a “computer genius”. At most you are good technicians. Ignore the social status. Do not flatter yourself. • It is better to have 3% of 100,000,000 than 25% of nothing. • The idea is (may be ) 5% of the value. The rest of it are execution, marketing, sales, etc.

Reminders (3) • Your chances to succeed when you are equipped with your university experience are minimal. • Spend 2-3 years in a real startup environment before trying your own. • Create interest of key-figures. • In order to make love you must undress. Be confidential, not paranoid.

Start-Up: Personal Experience