3 stages to any business

1. 3 stages to any business • Starting it • Growing it • Selling it What do all these stages have in common?

2. The 3 things every entrepreneur needs to know about MONEY How to … make it grow it give it away

3. HOW TO MAKE IT (and tips for starting a company)

4. Do you have what it takes to start a company?? Q: Why are most startup companies started by mediocre people? A: The really smart ones know better!

5. How to recruit really good people • Take your time • Network • Advertise in places where great people NOT looking for jobs would be • Example: • We’re hiring software engineers at Propel.

6. Nobody’s Perfect • No perfect CEOs • No perfect engineers • … • The whole trick is getting people to work effectively together to complement each other

7. Know your strengths and weaknesses • Focusing all your time on your strengths is a trap (e.g., technology, product) • Spend at least as much time in filling your weaknesses (e.g., marketing) • People tend to keep making the same mistakes over and over again (e.g., under hiring)

8. When recruiting remember: Skills are easy to acquire but simple behavioral change is nearly impossible • Example: • The “toilet seat down” problem • Solution: • Learn how to compensate • I’ve known excellent management consultants who consult for years before they realize this

9. The single biggest mistake you can make when starting or running a company and how to avoid it Hiring the wrong CEO (like yourself)

10. People don’t always tell the whole truth • My 4 yr old… “I didn’t do it!” • Our President … • Bill Gates ...

11. Can you imagine Bill saying…? • “I switched to Linux on my desktop because I wasted too much time rebooting NT.” • “Yeah, bundling IE into the OS was a brilliant afterthought.” • “We could have easily complied with the Sun Java contract.”

12. How I personally made over $200 million in a year 1) Infoseek went from 5 to 100 in little over a year 2) Having 6M shares didn’t hurt either

13. How I made $10 million for my second startup company as a result of attending a 4 hour free course taught at a hotel Negotiation skills

14. Two courses everyone should take after they graduate from college • Presentation skills • Negotiation skills • Survey…how many have taken these?

15. How to sell $30 worth of lemonade in only 20 minutes on the Stanford campus and how it relates to commerce on the Internet

16. The most important skill for success in the real world isn’t taught at MIT, but that’s starting to change Interpersonal skills

17. How to precisely value Internet companies • Finally…for the first time...the secret formula revealed… • Say someone asks: “Is Yahoo overvalued?” • You say... Well… If you have to ask, you just don’t get it, do you?

18. How AOL makes big money... The 2 step TOP SECRET strategy revealed here for the first time…. • Make it really EASY to sign up • Make it really HARD to cancel

19. My two biggest mistakes • Refusing to acquire Yahoo for $20M in 1994 because I thought it was overvalued • Telling Michael Robertson to “pound sand” when he wanted me to buy his company for $20M

20. Michael Robertson’s top secret business technique for instant wealth • “If at first you don’t succeed, try, try again” • “It doesn’t hurt to be: • in the right place • at the right time • with the right product”

21. 10 minute instructional video • “How to make really big money using the Internet” • Includes secret techniques used by Gates, Diller, Geffen, Spielberg, … • Illustrates step by step techniques Robertson used in mp3.com NOT AVAILABLE IN STORES

22. HOW TO GROW IT

23. How to legally avoid paying capital gains taxes forever Always sell at a loss Donate the stock Die A complicated technique...

24. How to consistently get a 60% average annual return in the stock market Buy and hold 10 stocks max Microsoft, Cisco, Dell, EMC, AOL, Sun, Intel, Worldcom, Nokia

25. What your stockbroker doesn’t want you to know: why trading stocks may be riskier than gambling in Las Vegas Spreads + Stocks are completely unpredictable over the short term = YOU LOSE

26. Company announces great earnings (above expectations) but its stock tanks. Why? “Who the hell knows?” • Market explanations are always done AFTER the fact

27. Why mechanical trading systems don’t work Because I’ve lost money in every proven, tested system I’ve tried

28. Never invest in one stock • Never > 20% of your portfolio; preferably under 10% • I used to think that investing in Microsoft was safer than US government T-bills • Now I’m looking at an even better investment…

29. The perfect investment…Can you guess what it is? • Recurring revenue stream • High margins/High ASP/Low cost producer • underpaid workforce, overpriced service, zero COGs, low overhead • Large user base • No competition • Established, well known brand name • Service never goes out of style • No manufacturing or shipping costs • Doesn’t need to worry about customer satisfaction • They pay nothing in taxes

30. HOW TO GIVE IT

31. Charitable giving agenda • Why? • How? • Where?

32. “I worked really hard to make it” “… we’re talking REALLY hard …nights…weekends…holidays… gave up sex for 2 years…” “Now you are asking me to give it away?!?” “Are you nuts?”

33. “Where do you want your estate to go tomorrow?” CHOOSE ANY TWO: Family Taxes Philanthropy Who gets to spend your dough? You? Or the government?

34. Giving statistics in Silicon Valley One of the richest areas on the planet, yet for high net worth households (assets >$1M not including their home) : • 45% give < $2,000/yr • 6% give $0 Source: Community Foundation Silicon Valley

35. The best things in life aren’t all that expensive • House • Car • Vacations • Subscription to Fortune • Replay/Tivo box • Private jet • Assets for guaranteed income for rest of your life So now what?

36. So we had a choice... • Sit on our assets or • Put those assets to work in a way that will benefit: • ourselves • our kids • future generations of our family • our friends and community

37. No tax advantages to giving after you are dead No personal satisfaction to giving after you are dead Giving can ultimately benefit you or your family presbyopiahair losssleep apnea/snoringlactose intolerancepsoriasisreceding gumsnear sightedtorn ACLtype I diabetes susceptiblemacular degenerationringing in my ears Why it is better to donate to charity sooner than later

38. Example • Ten years from now, you might be diagnosed with: • Heart disease/stroke • Cancer • ALS, Parkinson’s disease, … • At that time, starting a giving plan will be too late to have an impact on your health • In hindsight, would you think keeping your assets sitting in stocks was the right move?

39. Life changing advice • SK: “How do you get people to donate large sums?” • LE: “You know, there are some people in this world who are looking for places to give money away” • SK: “Say what? What have you been smoking?”

40. Was he right? Let’s find out... What kind of person do you want to be? In “A Christmas Carol,” did you like Scrooge better BEFORE or AFTER ?

41. Virtually all who try philanthropy stick with it • 100% donor satisfaction at CFSV: • No donor advised endowment funds have closed (except if the donors move)

42. Giving need not be altruistic • Can be totally pragmatic • Example • We give because we get a higher return on our assets • Our one-time $80M donation may cure cancer, diabetes, or arthritis; save the world; help reduce pollution; … • Was that a good use of $80M? Or should I have invested it in stocks? For whose benefit?

43. Giving need not be altruistic • Or giving can be in your self-interest • Example: donate to causes that affect or may affect you or your immediate family • aging research • heart disease • asteroids

44. Giving may actually make you money! Example: • You donate to a CRT when your stock is locked up at $50 • Trust can short other shares (of the same stock) to lock in the gain • Trust pays you back your donation over time Result: • You can actually end up with more money in your pocket than if you sold that stock at $25 in a selling window

45. “Why Give?” Summary • We DO give to make a positive difference in our own lives and the lives of people we care about. • We DO NOT give not out of a sense of obligation or payback or civic duty or because it is “the right thing to do” or “to create a legacy”

46. Why give • Your wealth gives you an opportunity to make a difference • If you don’t take advantage of it, who are you trusting to look out for your interests? • We are the leaders we’ve been waiting for • One person CAN make a difference

47. Progress a little at a time Funding NEOS discovery Funding nuclear disarmament Funding medical researchers Funding campaign finance reform Immediate gratification Cured cancer in rabbits Helped clean up the air Passed AB71 and designed the sticker Got top government support for SB1726 Funded smog check measurements in California Helped education Funded buildings at MIT and DeAnza Raised millions for Tech Museum You can make a difference

48. Agenda • Why? • How? • Where?

49. Giving survey • Would you rather donate: • your own money • someone else’s money

50. Giving options • Charitable Lead Trust (income to charity now, later assets pass to heirs) • Charitable Remainder Trust (income to you now, later assets pass to charity) • Donor advised fund • Supporting organization to a community foundation • Private foundation