Startups

Listen to your customers and your noncustomers, emphasizes Kawasaki. People who are not your customers are going to buy your product and use it in ways that you would not expect, he says. It is a good thing to see people using your product in a way you didn't intend means that your product means something to them, he adds.

[Introduction by David Cassak] Tom Fogarty explains that he became interested in medicine "by accident." He discusses his early design development and how he turned a clinical problem into a device that could solve the problem: "In this situation...it was almost like a lightbulb that went off. If you put a thin catheter system down, and you can make it bigger and then withdraw it and control the volume during withdrawal, you get the clot out. Essentially, I took what they call uretheral catheters, which are long, thin tubes. I cut the baby finger off a number 5 glove. I tied it on the cather system...and that was the first balloon catheter.

Yock talks about the costs versus the charges of medical stents. A cynical approach is that the actual metal stents themselves cost 80-90 cents to make and their charge is about $1200. However, there is an enormous amount of R&D effort to get it approved, he says. For example, a clinical trial can cost as much as 10 millon dollars.

Yock talks about further developments moving from radiations to using drugs with the stents as a carrying mechanism. This is a blockbuster idea which has dropped the recurrence rate from 20% to essentially 0.

In areas of the world that can't afford new technologies, there is progress in making them available, he says. Yock gives an example of how this is being done. Money is being invested in appropriate technologies as cardio vascular disease is spreading to other developed nations.

Hawkins talks on the importance and inevitability of portablity. With portability comes small size, low cost, simplicity and the need for less power. With wireless networks on their way to becoming very inexpensive, Hawkins envisions a T1 line with high horse power and large memory in the pocket! The need for portability will make the item in your pocket the center of your universe, he says. He notes that there will be obstacles, but believes that this shift is inevitable.

I never had a technology company, says Hawkins. He believes that products come out of product marketing people who really love and understand products. He asks his employees to use competitor products to learn something from them. The focus should be on what people want and what they need, rather than only on technology.To build a successful product one has to innovate continuously, focusing on what people do and not what they say. And if you build a product, use the thing yourself.

Founder of the Palm Jeff Hawkins shares his story of graffiti, a handwriting recognition software, and the intuitive leap of using a keyboard to show that users can and will adopt to new technology. He elaborates on the role of market research, as well as how to listen to customers and follow your intuition and vision for the future.

Hawkins discusses how the cell phone took over mobile devices in the realm of personal computing. He projects where Handspring will go in the future with this transition.

Hawkins never really wanted to start a company, he admits. He considers himself an accidental entrepreneur who was approached by two venture capitalists while planning on building a small product.

Khosla shares his view on technology-driven entrepreneurship and predicts the growing impact of technology on life, society, and the economy.

In Kleiner Perkins perspective, Khosla argues, the traditional model of giving is broken. Social entrepreneurship and ways to leverage money are very important. Although there is not enough money in the world to solve the world's problems, if you apply and multiply, there are, in fact, solutions to some of these problems. Examples of companies providing these solutions include Gramine Bank and Aprotech.

Khosla talks about how Juniper Networks started, and the role of customer feedback in the product development. There was not one vendor thinking of building an OC48 router for the internet. Juniper perservered and took a risk in the technology, despite the majority of customer feedback.

Things aren't ever as good or as bad as we think. Today (2002) is one of the best environments to be an investor. The last three or four years were not a lot of fun--if Khosla went to someone to build a reasonable business, the response he would get was that another company was willing to give more money for less work. He would have to explain that the role of a VC was to help companies develop a real economic model and to give an honest valuation.

Roizen gives an inside glance at what VCs hopes to invest in. Her company, Mobius, is looking to invest in various fields from nanotechnology to component level architecture, to systems and wireless space.

Roizen believes that in the VC business, most companies fail. Therefore, the rare successes of their portfolio companies has to be big. Often you hear 10X, i.e. you should see 10 times your capital coming back, she says. It is also calculated as dollars in, dollars out, or internaI rate of return (IRR). The Mobius fund today has an IRR of 90%. Roizen notes you will almost never hear a VC use IRR.

Heidi Roizen, managing director for Mobius Venture Capital, explains that Mobius Venture Capital has $1.5 B under management in current fund, $1 B in prior fund, and 100 active portfolio companies. There are ten VCs at Mobius who invest mostly in software, communication, wireless, next generation and web services, she says.

Timing is everything when starting a company, Roizen says. Mobius raised their money in a good time and now have a lot of gas in the tank, she notes. Some companies needed money in June 2001 when people were not answering phone calls. She considers this an example of bad timing.

Roizen talks about performance and limited partners in venture capital. Smaller funds on the most part are suffering. A large funds success depends on what a startup's past performance has been.

Roizen says VCs look at how companies behaved during the downturn. Mobius was upfront with their LPs about where they stood and this paid back. Entrepreneurs that were gracious and upfront will be backed again, she notes.

Levinson believes it is easy to feel like a little fish in a big pond when you're starting your company. He talks about leveraging what you have to make your company stand out from the rest, and it all comes back to customers.

Levinson offers the following bit of advice to brand new entrepreneurs: Talk to customers. Identify potential customers and pick their brains: What do they want? Would they buy what you're selling? And how much would they pay?"

Number 2 in Frank Levinson's Top 10 Things You Must Have to Start a Business. Levinson talks about how a real business involves selling to customers and receiving money in return. He warns new businesses not to shy away from selling their products early on. He also gives advice on recognizing a real customer.

Number 9 in Frank Levinson's Top 10 Things You Must Have to Start a Business. Let people know you're in business, says Levinson. Name your company and put a sign up as soon as possible. Your main motivator should be the customers, he adds.