Speed Is the Ultimate Startup Weapon

Mike Cassidy
 Speed brings great advantages

• Rapid product rollout/updates makes it extremely difficult for

competitors to gain traction against you (2 weeks vs. 18 months)

• Rapid success builds strong team morale (which leads to more

success)

• Rapid success generates more PR (which leads to more revenue,

strategic partnerships, key hires, etc.)

• Fast growth drives higher company valuations when fundraising or

using equity for strategic deals
 Launch in 4 months

Explore Hire core

ideas team &
open office
Raise Build
money product

2 wks 1 day 2 wks 3 months

Launch in 4 months
 Four startups: 1st “something”

Stylus Innovation: computer telephony software

- 1st Windows based tool, Visual Basic custom control
- Sold 2 years after launch for $13M

Direct Hit: internet search engine

- 1st search engine based on tracking user voting
- Sold 500 days after launch for $500 million

Xfire: instant messenger for PC videogamers

- 1st IM to track and connect videogamers
- Sold just over 2 years after launch for $110 million

Ruba: recommendation engine

- 1st search engine based on recommendations from friends
- Sold 2 years after launch to Google
 Speed up all parts of a startup

• Fundraising
• Opening an office
• Hiring
• Getting new employees started
• Product development
• Business development
• Changing direction
Fundraising
 3 tips on raising VC money quickly

• Raise when conditions in your favor

– Direct Hit Series A: 1998, portals growing rapidly
– Direct Hit Series B: as AOL deal is closing
– Direct Hit Series C: as MSN/Lycos deals are closing
– Xfire Series C: Social networking “hot”, steep growth curve
established

• Get all decision makers in room

• Bring “if/then” contracts with customers to your VC meeting

Opening an Office
 Every minute counts

4/21 8:15am pitch DFJ; 4:30pm get term sheet; dev team gives notice
at current jobs
4/22 Fly back to Boston
4/23 Negotiate lease on office space; order Dell computers
4/24 Order network software, phone system, office alarm system, DSL,
office LAN/phone wiring
4/27 Incorporate, set up bank account, Paychex, desks/chairs
4/28 Source control software, property insurance
4/29 Hardware arrives, set it up
4/30 Set up LAN, phones, desks
5/4 Open office, first day team has been hired, have C++, email, PC,
LAN, payroll, etc. (13 days after term sheet received)
Hiring
 Hire team members in one day

– Group huddle during last interviewer

– Offer letter ready before interviewee arrives

– Make offer on same day

Getting New Employees Started
 Speed starts the first day a new team member arrives

• Before the first day

– Give her material to read the day she accepts the job
– Give mundane “first day” paperwork before arriving

• First day
– Absolutely have desk, phone, email account, etc., set up in advance
– Absolutely have goals/projects/deliverables written down; give to new hire
immediately

Set tone for speed

Product Development
 Which is faster…?

A. Incremental development. Build 1 module/feature at a time and

then launch. Add features as you go. Figure out over time what
features users want and then try to add them.

OR

B. Spec your product CAREFULLY. Make sure you do great customer

research! Hit the market with a rich, compelling product because
you only get ONE first impression. If the product is lame, people
will never come back.
 Examples of “minimum viable product”

• Stylus Innovation
– Visual Voice 1.0 let people build a 2-line IVR system
– Added digital 32-line capability within 6 months (plus fax, a dozen other features)
– 3.5 months from “go” to launch
• Direct Hit
– Patented algorithm included two dozens variables (time spent at a URL, related
searches, time of year)
– Launched with small subset of this feature set
– 3.5 months from “go” to launch
• Xfire
– Launched with 2 features: presence detection and 1-click join
– Added a new feature every 2 weeks 1st year and every 3 weeks 2nd year
– 3.5 months from “go” to launch
• Ruba
– Launched first version 3.5 months after company start
– Changed course and launched new product 2.5 months later
Business Development
 Biz dev deals: fast or never

• “Probability of a deal ever closing declines by 10% each day it

doesn’t close”

• Changes the way you negotiate

 Role play

• Who has a biz dev deal you’re trying to get right now?

• Role play it – RIGHT NOW

Changing Direction
 If something isn’t working – change it decisively

• Stylus Innovation
– Original name = “Dial-a-Fish”
– Changing the way Americans shop for groceries, with $1500 in capital
– Decision to change to Visual Voice took less than 2 weeks
– Once decided, 100% of company effort immediately shifted

• Xfire
– Original name = “Ultimate Arena”
– Play to win $$
– Decision to change to Xfire took less than 2 weeks
– Once decided, majority of company effort immediately shifted

• Ruba
– Original name = “FriendsTips” then “Kudo”
– Decision to change to Ruba took less than 1 month
– Once decided, 100% of company effort immediately shifted