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10 Rules for Stanford Entrepreneurs in the Post-Bubble Economy January 27, 2004 Agenda • Voltage Security Introduction • 10 Rules for Post-Bubble Entrepreneurship • Voltage Security Today 2 Voltage Security • Founded in 2002 by at Stanford by Dan Boneh, Matt Pauker, Rishi Kacker and Guido Appenzeller • Uses Identity-Based Encryption to solve an old problem: Secure, yet easy to use encryption • Funded by top venture capital firms • Hummer Winblad, Morgenthaler, Menlo Ventures • Experienced management team • Sathvik Krishnamurthy – CEO • Terence Spies (VP Engineering), Wasim Ahmad (VP Marketing), Joe Jose – (VP Sales) • Now 30 people and growing... 3 Agenda • Voltage Security Introduction • 10 Rule for Post-Bubble Entrepreneurship • Voltage Security Today 4 Rule #1: Now is a great time to start a company • Funding is harder to raise, Valuations are down, Customers are hesitant to spend money… However: • It’s easier (but still not easy) to attract good people • VC’s have less quality deals, more bandwidth • Costs is down (rent, equipment, salaries…) • Fewer competitors, less “noise” in the marketplace • If you survive today, you will do well if economy picks up Maybe harder to start, but chances of success are higher 5 Venture Environment 1995-2003 Venture formation decreased dramatically 1600 350 1400 300 1200 Investment # of Deals 250 1000 200 800 150 600 100 400 50 200 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 6 Source: PWC/ Thomson Venture Economics/NVCA MoneyTree Survey • 12 companies funded in Q4 2002,of which 5 were in the software space • Unemployment in 2002 is at 7.9%, worst in Silicon Valley since national recession of 1983 Rule #2: Strong Technology is Key (Again) A Strong Core Technology Provides: • Unfair Advantage • Defensibility (needs expertise to replicate, patents) • Differentiation in the Marketplace • A potential exit strategy However: You can’t sell a technology to customers • Customers buy solutions (or maybe products) • If you don’t know the difference take MS&E 271 7 Related Rules on Core Technologies • If no one understands your technology, that’s good • If no one understands the application, that’s bad • If it is the “next hot thing” in Wired, it’s too late • Example: Identity-Based Encryption 8 Rule #3: Everything you need to know about High-Tech Entrepreneurship, you can learn at Stanford • STVP/BASES is probably the best education for starting a technology Start-Up you can get • Corollary to Rule #3: Almost everything I knew about marketing when we started, I learned in MS&E 271 • E-Challenge is a great for feedback, visibility and contacts 9 Rule #4: Stanford is a great Resource – Use it! • Leverage human resources • Faculty with startup experiences • BASES E-Challenge • Great people looking for exciting opportunities • And don’t forget the facilities • Great Internet connection • Great office space! 10 Rule #5: Work with people you trust • Teams breaking down is the #1 cause why Start-Ups fail • You need a team that works even if things go downhill • Pick your co-founders and early employees carefully • Find VCs who share a vision and believe in the team 11 Lesson #6: Cheap is beautiful • Being cheap should be part of the company culture… • Founders, Management has to lead by example • Helps future rounds of funding, valuation • The good news is that we have a recession! • Auctions for furniture, equipment • EBay for phones, equipment • BYOD (Build your Own Desk) • Rent is cheap… really, really cheap • Don’t be cheap on people (salaries, benefits, fridge etc.) 12 And the strange things you find at a bargain… 13 Lesson #7: Mix of Skills, Common Culture • When hiring, look for skills and team fit • Most important for early management • Understanding and respect for each other • A mix of recent graduates and industry veterans 14 Rule #2: Customer focus is easy in theory, but not in practice Pretty much any company claims “customer focus” In reality… • Technology driven companies tend to focus on technology instead • Core Functionality is everything (if customer needs it or not) • User experience an afterthought • Service/Deployment is not even on the agenda However: You can’t sell a technology to customers • Talk to customers as muhc as possible 15 Agenda • Voltage Security Introduction • 7 Lessons Learnt about Entrepreneurship • Voltage Security Today 16 Yesterday’s Security Model • In Yesterday’s model – • “Secure the Perimeter - Secure the Enterprise” The Outside World Security The Enterprise 17 Today’s Model is More Ad-Hoc • Today’s organizations operate as Virtual Hubs for numerous spokes that must securely communicate and share data on an ad-hoc basis. The Outside World Government Agencies Partners The Enterprise Customers Security 18 European Division European Partner Platform Delivers Secure Flexibility Voltage SecureDoc Voltage SecureVoice Voltage SecureIM Voltage SecureFile Voltage SecureMail Partner enabled Applications Voltage IBE Developer ToolKit Voltage SecureContent Server Voltage SecurePolicy Suite Key Server Enrollment Server Voltage SecurePolicy Service Key Service Enrollment Service Voltage IdentityManagement Adapter 19 Who is Voltage Today 20 • Located in Palo Alto, close to Stanford • 30+ Employees • On the front page of Wall Street Journal, business section of NYT • Voted “Top Ten Technology Companies” by Bank Technology News • Recently closed second round of funding – backed by Hummer Winblad, Menlo Ventures, Morgenthaler Ventures We are hiring! Openings in Engineering, Marketing, BizDev and Services! [email protected] 21