An Alternate View to Startups

1. @
www.TandemEntrepreneurs.com
Adrenaline Startups and Rapid-Fire Marketing

2. Where is Your Risk?
Private & Confidential

3. Conventional Funding Milestones
Based on slides from
Vinod Khosla
Idea is Traction
Product
Feasible
Valuation
$0.5M $3.0M $8.0M $13.5M $150M
Risk (ß)
Capital
Seed R&D Go-to-Market Expansion
Funding Capital Captial Captial

4. A Different Set of Milestones
Customer Partner Channel
Discovery Validation Validation
Customer Channel Channel
Validation Discovery Scaling
Product Product Product
Validation Tuning Expansion
Partner Pricing Pricing
Discovery Discovery Opt
Proven Proven Proven Proven
Team Value Business Channel

5. Today: Market Fit is Cheaper to Explore
Build Young Teams, Open Source
Deploy With Low Cap-Ex: The Cloud
Market With Social Distribution/Marketing
10x lower Cost to Establish Adoption
Private & Confidential

6. Heads I win, Tails I don’t Lose Much
Burn → $0.5M $1.5M $20M
Customer Partner Channel
Discovery Validation Validation
Customer Channel Channel
Validation Discovery Scaling
Product Product Product
Validation Tuning Expansion
Partner Pricing Pricing
Discovery Discovery Opt
Proven Proven Proven Proven
Team Value Business Channel

7. Conventional Venture Capital
5 yr returns are negative
Private & Confidential

8. What’s Changed : Exits Are Smaller
73%
57%
< 30M
23% 100M+
12%
Data from

9. Model Supports Many Possible Exit
Burn → $0.5M $1.5M $20M
Customer Partner Channel
Discovery Validation Validation
Customer Channel Channel
Validation Discovery Scaling
Product Product Product
Validation Tuning Expansion
Partner Pricing Pricing
Discovery Discovery Opt
Proven Proven Proven Proven
Team Value Business Channel

10. Investment Models Compared
Conventional Model
 Invest in a 5% chance of creating a few 100M+ Business
 Capitalize the business with US $3-5M - A Round
 Success = Big Exits and founders make 10’s of millions
New Model
 Invest in the likely chance of creating MANY 10M+ Businesses
 Capitalize the business with US $500,000 of initial capital
 Success = Cash Flow or Exits where founders make millions
Private & Confidential

11. Increasing the Probability of Success
• Redefine Success to include Smaller Exits
• Contain the Market Risk Quickly and Cheaply
• Get an A+ Team
Private & Confidential

12. Tandem Entrepreneurs
Seasoned Entrepreneurs
working in tandem with multiple
Small Founding Teams
applying
Modest Capital
to efficiently build
Simple Highly Leveraged Services
and take companies to
High Probability Exits
Private & Confidential