Great time at our “Founders Helping Founders” dinner at the #rsaconference celebrating the 10 year history of @duosec with founders @dugsong and @jonoberheide. Similar to most startups, they had many twist and turns before ultimately being acquired for $2.35 billion. Best quotes:
“People ask me what we did right and wrong in the first three years. The honest answer is I don’t really remember there were so many iterations. I think all we really mastered was how to iterate” (@dugsong)
“We started our company post the financial crisis and there is nothing better for a startup than a downturn. When there is budget pressure from customers you know what’s really important” (@dugsong)
“My first job before starting Duo was at Quiznos. I suggest every founder work in food service before starting a company – there is no better way to learn empathy for the customer” (@jonoberheide)
“Do I want to start another company? After going through 10 intense years, I just can’t imagine what it would be like to do that again” (@jonoberheide)
“Do I want to start another company? After going through 10 intense years, I have a different perspective. I can’t imagine NOT trying to do something like that again!” (@dugsong)
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(1/5) The VC industry has the highest level of dry powder after a record breaking fundraising season and a summer slowdown in deal pace. There is ~$290 B in dry powder available for startups in VC funds - when will the funding floodgates open?
(2/5) Dry powder is a strong indicator of future pace - the numbers suggest that the VC industry will have only a modest slowdown this year and will see record levels of investment in 2023 and 2024. When the floodgates open, there will be a tidal wave of new capital for startups:
(3/5) Just as snowpack in the mountains makes it easier to forecast water flowing downstream, VC industry dry powder ultimately follows the law of gravity. Eventually the funds must flow to founders
(1/4) The NBA finals begin tonight - it was only a few months ago that the league almost cancelled the entire season. With ~$1 B at stake, the "NBA Bubble" should be recognized as one of the fastest and most successful digital transformations in sports:
(2/4) Hundreds of health + tech vendors, startups, and onsite + remote staff brought the Bubble online in ~100 days. Players had wearable devices for contact tracing and bio signals - analytical models were built to create an early warning system for COVID based on health data
(3/4)The fan experience was reimagined - season ticket holders were brought "inside" the arena through streaming video and displayed courtside on flat panel displays. New infrastructure and compression algorithms had to be used to create low latency video over the Internet
(1/4) Timing can be everything in a transformational acquisition - and you have to give @Microsoft credit where it is due. Their last major social media acquisition of @LinkedIn back in 2016 was spectacularly timed and is one of the best performing M&A deals of the past decade:
(2/4) Microsoft paid $26 B for LinkedIn in June 2016 - then a ~50% premium over the market price. But timing could not have been better - LinkedIn's valuation had fallen from ~$33 B in late 2015, to ~$14 B in 2016 in an unexplainable software selloff. They were at a cyclical low:
(3/4) Did Microsoft get a good price? In 2016, LinkedIn had a revenue forecast of $3.6 B, and traded for ~4x forward revs. Microsoft acquired them for~ 7x forward revs. Today most recurring revenue software companies trade on average for ~10-12x forward revs
Today we go live w/ @Cisco's head of M&A and Investments @didemoto to dispel the myths of getting acquired. We'll get specific on the DO's and DON'Ts in M&A and how to create long term exit options for your startup.
Many founders hope to be acquired someday. But they are coached not to focus on exit and believe “companies are bought and not sold”
This is a myth - many startups use corp dev playbooks to ensure they are close to buyers
When in doubt, be proactive. Hope is not a strategy
Myth #2 in M&A - startups are told it is “too early” to talk to acquirers. In a promising company it is often the case that it is too early to sell. But relationship building with buyers takes time. Many regret waiting until too late in the game to start the process
Myth #3 in M&A - startups are told “don’t share too much information” with acquirers. It is always smart to keep your secrets to yourself. But many founders use elusive gamesmanship before the game has started. If possible, try to be transparent to build a relationship
(1/4) We're excited to announce that @otawakol, founder of Voicea (acq @Cisco) and Bluekai (acq Oracle) has joined @DecibelVC as a Founder Advisor. Omar has built startups across three decades and is an incredible resource for founders in today's world:
"Entrepreneurship can be like surfing. Surfers don’t create waves – they learn how to listen to, read, and ride their power. There is a natural humility that comes from respecting where a wave comes from and where it may go"
(3/4 ) "Speed is everything in a startup. But there is a difference between making a fast decision and making the right decision. When you feel the pressure to do something quickly, you should remember that you more often make the right decision by not making the fast decision"