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Entrepreneurial Lessons

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

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Entrepreneurial Lessons

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

  2. Prologueis aninvestmentandentrepreneurshiporganization that invests intellectual, financial andmanagement resources tocreate and nurtureearly-stageventurestargeted athigh growth markets and applications Prologue – Parallel Entrepreneurship

  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 Technology Entrepreneurship Market Capital

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

  6. The Prologue Concept

  7. A Company is Born

  8. 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 risk vs. Technology risk • Niche vs. Mainstream • Geographical focus vs. Worldwide • Point product vs. 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 FocusFocus • 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

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