entrepreneurial lessons rafi gidron rafi@prologue.co.il
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Entrepreneurial Lessons
Rafi Gidron
rafi@prologue.co.il
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
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
High-Tech Commercialization – Drivers
Capital
Technology
Market
Entrepreneurship
Prologue – Value Proposition
Undeployed Capital
Technology Backlog
Large Markets
The Prologue Concept
A Company is Born
A Company is Born
Entrepreneurial Lessons
From $0 to $4.75 billion in 27 Months
Ha’aretz, June 2000
Lucent’s Share
August 2001
From Acquisition to Closure in 14 Months
Ha’aretz, August 2001
“Because it is there” George Mallory, British Mountaineer,
before attempting to climb Mount Everest in 1924
The Challenges
• Market
• Technology
• Finance
• Business
• Execution
• Exit (financial reward)
• Fun
The Means
• Team• Product selection• Execution and culture• Finance• Timing• Luck
The Team
• Core team• Employees• Venture capital• Board of directors,
board of advisors
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
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
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
Team Selection - Directors and Advisors
• Enhance board with external director
• Name recognition
• Experience
• Contacts to client base
• Contacts to strategic partner base
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!
Product Direction
• Keep an open mind• Be in the face of customers• Listen to customers• Listen to your colleagues, peers,
subordinates, supervisors
Execution
• Company setup
• Focus Focus Focus• Professionalism
• Culture and values
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
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
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
Timing is Everything
• Market development and product introduction phases: Prefer time to market over completeness
• Financing rounds
• Exit considerations
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
Luck
“I have climbed my mountain,
but I must still live my life”Tenzing Norgay, first to climb Mount
Everest together with Sir Edmund Hillary
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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