Entrepreneurial Lessons

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Entrepreneurial Lessons

• Rafi Gidron
• rafi_at_prologue.co.il

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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

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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

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High-Tech Commercialization Drivers
Technology
Entrepreneurship
Capital
Market
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Prologue Value Proposition
Technology Backlog

Undeployed Capital
Large Markets
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The Prologue Concept
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A Company is Born
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A Company is Born
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Entrepreneurial Lessons
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From 0 to 4.75 billion in 27 Months
Haaretz, June 2000
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Lucents Share
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August 2001
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From Acquisition to Closure in 14 Months
Haaretz, August 2001
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• Because it is there George Mallory, British
  Mountaineer, before attempting to climb Mount
  Everest in 1924

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The Challenges

• Market
• Technology
• Finance
• Business
• Execution
• Exit (financial reward)
• Fun

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The Means

• Team
• Product selection
• Execution and culture
• Finance
• Timing
• Luck

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The Team

• Core team
• Employees
• Venture capital
• Board of directors, board of
  advisors

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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 companys life stages

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Road to Success

• The right product at the right cost point
  (Marketing, RD, CTO)
• Development execution (RD)
• Bugs free easy to operate systems (RD)
• Be in front of the customer (Sales)
• On-time delivery (Operations)
• Customer support (Sales, RD)
• Infrastructure (HR, Finance, Administration)
• Financing, coordination, management

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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

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Team Selection - Directors and Advisors

• Enhance board with external director
• Name recognition
• Experience
• Contacts to client base
• Contacts to strategic partner base

22
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!

23
Product Direction

• Keep an open mind
• Be in the face of customers
• Listen to customers
• Listen to your colleagues, peers, subordinates,
  supervisors

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Execution

• Company setup
• Focus Focus Focus
• Professionalism
• Culture and values

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Company Setup

• Target market based company - facilitates access
  to market and strategic partners
• Israeli RD
• 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

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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

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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

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Timing is Everything

• Market development and product introduction
  phases Prefer time to market over completeness
• Financing rounds
• Exit considerations

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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

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Luck
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• I have climbed my mountain,
• but I must still live my life
• Tenzing Norgay, first to climb Mount
• Everest together with Sir Edmund Hillary

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Lessons Learned the Hard Way

• A few examples
• Strategic investment - created misperception in
  the industry
• Operations support was started too late
• Product definition zigzag
• RD performance could be even better
• Late in correcting staffing mistakes